used car management

[j_corwin]

Have 2 dealerships , would like to put man on the road to keep used units fresh and on the money. Need pay plan that makes sense and will increase turn. Have the right man I just need to have pay plan that works for everyone. HELP

[This message has been edited by j_corwin (edited 08-04-2000).]

[davidmc]

j,

Exactly what do you mean by "Putting a man on the road", do you mean going to the auctions and buying fresh units on the money. And also what is your main objection, increase sales, lower days supply, etc. What is your current days supply, and also your dollar days supply...might have some suggestions with a little more info....

[j_corwin]

Would like to increase turn at both locations. Currently not capable of selling used units at the same volume as new. Would like to increase unit sales , turn , keep as much water out as possible. Have a man with good u/c skills who is honest and dependable. Currently he is a sales manager but real strong suit is used. Need to structure pay plan so that he has some security plus incentive to accoplish our goals

[Wile E. Coyote]

If the person already works for you and you have high hopes, then pay a salary for the first year with a year-end bonus that is based on you sitting down and conducting a subjective review of how well you have accomplished the goals you set out (increasing turn, volume, etc., reducing wholesale losses, etc.), and what kind of job the person has done in accomplishing those goals. That way, at least for that year, the person will be focused truly on accomplishing the goals rather than "gaming" the pay plan.

The bonus should have a range of $0 to a top-end that's a reasonably healthy number, probably around 20% of the annual income number, with a "target" somewhere in the middle. The target is what the person gets for a reasonably acceptable level of performance, the top end only if dramatic improvement is achieved.

Then, if it works for both sides, you can keep it that way, or you can shift to something that's linked as a percentage or commission off those goals. For used cars especially, monthly pay plans are tough because sometimes you don't really know how you did, until those trades get turned into cash or those auction purchases get sold. What kind of buys were they? You only know when they're down the road, which even if you maintain a 60-day turn policy still could be two months later.

The worst way of all to pay a buyer like this is the way most of them get paid -- per unit purchased. You'd be better off with a salary and no bonus at all -- at least if the guy needs a few extra bucks he doesn't have an incentive to buy you a truckload of cars you don't need.