FrogData Visualized Real-Time Data
May 2022
Dealership Group Increases Average Used Vehicle Gross Profit 54% by Leveraging Enterprise Analytics
Aggregated and visualized real-time data, across dealership sources, helps managers track inventory trends, highlight areas of opportunity, and identify used vehicle acquisition and sales improvements.
BACKGROUND
Dealership: First Team Automotive
Location: Chesapeake, Virginia
Sales Volume: 700 - 900 per month
History: A six-store dealership group founded in 1946, First Team Automotive has been family-owned and operated for three generations.
Fun Fact: The current COO, Ashton Lewis, Jr., is a former NASCAR Busch Series driver. During an 11-year racing career, he competed in 226 races – achieving a top ten finish 37 times. Among the highlights of his career was a second-place finish at Darlington during the team’s final season.
SITUATION
Inventory challenges make trade-ins scarce, driving auction prices up and profits down
Like just about every dealership or dealer group these days, First Team Automotive has been struggling to find the right used vehicle inventory mix and volume. Trade-ins are down, and acquiring vehicles at auction is fraught with challenges. Skyrocketing wholesale used prices and an overheated competitive environment driven by rental car companies and large national used car retailers such as CARMAX and Carvana make it almost impossible to buy used vehicles at prices that would allow a reasonable rate of return.
Dealerships like First Team Automotive are seeing used vehicle retail sales shrinking and margin pressure due to the higher cost of acquiring used vehicles. The micro-chip shortage further compounds the issue: No new vehicles means no trade-in activity and more pressure on auction acquisition. With virtually every dealer scrambling to stock their lots by purchasing vehicles at auction, prices sky-rocket and profits go out the door.
CHALLENGE
On average, thousands of dealership hours per day are wasted creating reports that no one can understand. That’s approximately 1 billion hours lost per year, to useless reports based on confusing data
First Team Automotive wanted to better understand how they could acquire more used vehicles in a way that would control costs, especially so that they could make up lost revenue resulting from chronic inventory shortages. Knowing that most dealerships would be in a similar situation, they wanted to leverage the power of their historical data to gain an advantage in how to optimize their vehicle acquisition strategy.
The real challenge, above and beyond issues with inventory? Pulling together up to 10 disparate sources of siloed and overlapping data into a comprehensive and visual reporting platform that teams could use to improve their output. Data is, after all, supposed to help with problems like this. Too often data can make the problem worse by sending teams looking in the wrong places for the right answers and wasting time on confusing reports. The result is inefficient and ineffective use of time, not to mention confusion for managers and management.
Data is only as good as your ability to use it. Over the years we’ve struggled to use our own data to understand how we sell cars, what kind of models we sell…and who is most likely to buy and trade-in valuable vehicles. It was so frustrating! Now, with FrogData, we’re able to leverage our data to understand the nature of our business, find organic solutions, and increase our sales results – even in a tough market.”
Ashton Lewis Jr.First Team Automotive COO
By unifying and aggregating data into a comprehensive and easy-to-understand dashboard, dealership groups save time. That creates efficiencies across teams and creates their own sales and sourcing advantage.
Solution
Data visibility through Used Vehicle by Source Report enables a "Vehicle First” marketing strategy that revs up trade-in profits
Used Vehicle by Source Report
> Identified volume & gross profit by acquisition type (Trade-in/Purchase)
Improved trade-in appraisals via data insights
> Offset acquisition costs
Vehicle first marketing strategy
> Pinpointed vehicles with best resale gross and turn potential
No auction fees & controlled reconditioning costs
> More $$$ to purchase from customers
Historical sales data + used vehicle buying optimizer
> Precise decisions on what to buy and how to price
First Team Automotive assessed how they typically acquired their vehicles with one question in mind: what can we change, or do, to gain an information advantage that helps drive more accurate, profitable decisions? By using the FrogData Used Vehicle by Source Report, they could see their volume and gross profit by acquisition type (Trade-In or Purchase).
They knew they had a brand advantage: First Automotive could always get franchise vehicles easier than non-franchise vehicles and hold gross profit better. But the data also showed opportunities to improve the way they appraised trade-ins – and that would help offset the high cost of auction acquisition. The team began to think in terms of a "vehicle first” marketing strategy, one that focused on attracting customers with vehicles that would provide the best overall resale gross and turn scenario. This gave First Team Automotive the ability to pay up for vehicles from existing customers by eliminating auction fees and controlling reconditioning costs.
Two data points were key to this strategy:
The historical sales data in FrogData helped identify which vehicles made the most sense to pursue, and the used vehicle buying optimizer in FrogData showed the team exactly what they needed to purchase, how many, and which models/trims produced the best overall results. With these insights at their fingertips, First Team Automotive dealerships were able to make precise decisions about what to buy and at what price – all based on specifics around sales history and model sales.
As a result, First Team Automotive has seen a 45%* increase in average gross profit on "Other Brand Trade-ins” and a 69% increase in average gross profit on "Franchise Brand Trade-Ins.” Moreover, they’ve held their used car retail volume steady* and have seen a 54%* increase in average gross profit on all used vehicles.
RESULTS*
YOY increase in Average Gross Profit (PVR)
YOY increase in Average Gross Profit on non-franchise trades
YOY increase in Average Gross Profit on franchise-specific trades
YOY increase in Average Gross Profit on franchise-purchased used vehicles
YOY increase in Average Gross Profit on non-franchise-purchased used vehicles
*2021 to 2022 YTD
Real-Time FrogData Report
Used Vehicle by Source (Trade/Purchase)
and Average Gross Profit
and Average Gross Profit
Real-Time FrogData Report
Average Gross Profit for Used Vehicles
"I look at the homepage dashboard every day to see if something needs my attention. Once I see something out of line, I’m able to dive into the reports and analytics to determine the root cause and put a game plan in place to improve our performance.”
First Team Automotive COO
Below are other FrogData reports that Lewis says have generated improved results for First Team Automotive:
Trade-In Analysis
"Trades are more valuable than ever. We can spot process breakdowns just by looking at the report. It’s been priceless to see how each store adjusts to pipeline selling and not losing trades.”
Labor Trend Report
"It’s our go-to report for our Service Manager’s Meeting to compare each store’s performance and find areas of opportunity.”
Contract to Cash
"It gives us a good view of what’s between F&I and Accounting and what’s in CIT’s. The total cash picture!”
Expense Analysis
"It’s the best report to see how each department’s expenses are trending over time and relative to sales and GP.”
About FrogData
FrogData is the automotive industry leader in data analytics. FrogData Analytics Platform delivers Advanced Reporting, Business Insights and Predictive Analytics to Auto Dealers, helping them make better decisions to improve their business performance. FrogData is based in San Francisco, CA. (www.frogdata.com)
