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Car 101: independent used car dealers -- an introductory course.

Article Excerpt
Used car dealers offer a great marketing opportunity for your firm. Focus your sales efforts on the privately owned independent used car dealers and not the used car division of a local new car dealership. Dealers often obtain their accounting services via relationships with new car manufacturers and floor plan providers.

The first questions to ask an independent car dealer are how many vehicles and what kinds of vehicles are sold each month. Do they sell "class iron" meaning late model vehicles? Are they using seller financing by offering "buy here/pay here"?

The majority of dealers operate from only one location and do business in a very competitive atmosphere. The inventory is maintained at their location and delivery usually occurs at the lot. However, a few dealers are selling on the Internet and have sales nationwide. These out-of-state sales create title and sales tax issues for the dealer.

The auto auction is a place to obtain new inventory; credit often is provided to the dealer. Some of the smaller auctions are only held a few days each month but larger operations sell several times a week. Different auctions offer different types of vehicles, and dealers may attend several auctions each week.

Dealer auctions are a common meeting ground for potential clients. If you provide good service to just one used car dealer, they will often talk you up at the auctions. Many auctions allow non-car suppliers access to sell their wares. Advertising suppliers, forms' vendors, wheel cover firms, etc., can often be found at auctions.

Auctions usually require an annual financial report from those dealers to whom they have extended credit. Dealers often seek additional floor plan credit, and this is a common client request. Each auction has a controller, and you should visit with them to determine their criteria for credit. This is especially true of small, independent auctions.

The car jacket is the key record for each vehicle. Typically, the dealer creates a file for each vehicle purchased and assigns it a stock number. This file includes the purchase, freight, and reconditioning cost information. It is often kept in a file pocket, but can be maintained in an envelope, file folder, or pile of papers stapled together. The car jacket is sometimes called the "deal jacket" or "customer file."

Most dealers apply a simple system to create codes for their stock numbers. For example, stock number C02-KLAS-052 would translate to a vehicle purchased in March (C) of 2002 (02) and cost the dealer $4,125 (KLAS). A simple number substitution is often used for cost (e.g., the word BLACKSMITH has...