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Everett Miller
Everett Miller

How Velocity 2.0 Can Transform Your Used Vehicle Department - A Review of Dale Pollak's Book



Velocity 2.0 Book Review: How to Boost Your Used Vehicle Sales




If you are a car dealer or a manager of a used vehicle department, you know how challenging and competitive the market is today. You have to deal with savvy customers, online platforms, economic fluctuations, inventory issues, pricing pressures, and more. How can you stand out from the crowd and increase your profitability?




Velocity 2.0 Books Pdf File



One possible answer is Velocity 2.0, a book by Dale Pollak, a retail automotive industry expert, entrepreneur, and former dealer. In this book, Pollak reveals new ROI-based management metrics and processes that can help you operate more efficient and profitable used vehicle departments.


In this article, we will review Velocity 2.0 and show you how it can help you improve your used vehicle sales performance. We will cover the following topics:


  • What is Velocity 2.0 and why should you read it?



  • How to implement Velocity 2.0 in your dealership



  • How to measure and improve your Velocity 2.0 performance



By the end of this article, you will have a clear understanding of what Velocity 2.0 is, how it works, and how it can benefit your business.


What is Velocity 2.0 and why should you read it?




Velocity 2.0 is the second book by Dale Pollak, following his first best-selling book Velocity: From the Front Line to the Bottom Line. In his first book, Pollak introduced the concept of velocity management, which is based on the idea that selling more used vehicles faster at lower margins can generate higher profits than selling fewer vehicles slower at higher margins.


In his second book, Pollak builds on his previous work and presents new insights and strategies for achieving velocity management in today's used vehicle marketplace. He argues that the market has become more challenging and volatile than ever before, due to the power of the Internet and the troubled economy.


To succeed in this environment, dealers need to adopt new ROI-based management metrics and processes that can help them optimize their inventory, pricing, merchandising, sourcing, reconditioning, and selling decisions.


The author and his background




Dale Pollak is a well-known figure in the automotive industry, with over two decades of experience as a dealer, technology entrepreneur, and author. He is the founder of vAuto, a leading provider of inventory management software for dealerships.


Pollak started his career as a dealer in Chicago, where he ran several successful franchises. He then became interested in technology and innovation, and developed a system that could analyze market data and provide real-time pricing recommendations for used vehicles.


This system became the basis of vAuto, which he launched in 2005. Since then, vAuto has grown to serve over 10,000 dealerships in North America, helping them improve their used vehicle operations.


Pollak has also written several books on the topic of velocity management, including Velocity: From the Front Line to the Bottom Line, Velocity 2.0: Paint, Pixels, & Profitability, and Like I See It: Obstacles and Opportunities Shaping the Future of Retail Automotive. He is also a frequent speaker and consultant for the industry.


The main concepts and principles of Velocity 2.0




Velocity 2.0 is based on the premise that dealers can achieve higher profits by selling more used vehicles faster at lower margins, rather than selling fewer vehicles slower at higher margins. This is because selling faster reduces the holding costs and depreciation risks of the inventory, and selling more increases the volume and turnover of the inventory.


To achieve this goal, dealers need to adopt a set of metrics and processes that can help them manage their inventory more effectively. These metrics and processes are:


  • ROI-based pricing: This means pricing each vehicle based on its expected return on investment, rather than its cost or market value. This allows dealers to adjust their prices according to the age, condition, demand, and supply of each vehicle, and to maximize their profit potential.



  • Market days supply: This means measuring the supply and demand of each vehicle in the market, and using this information to determine how long it will take to sell each vehicle. This allows dealers to balance their inventory mix and avoid overstocking or understocking.



  • Inventory turn: This means measuring how fast each vehicle sells, and using this information to set sales goals and incentives for each vehicle. This allows dealers to increase their sales velocity and reduce their holding costs.



  • Online merchandising: This means presenting each vehicle online in a way that attracts and engages potential buyers, using high-quality photos, videos, descriptions, reviews, and ratings. This allows dealers to increase their online visibility and conversion rates.



  • Reconditioning efficiency: This means repairing and preparing each vehicle for sale in a timely and cost-effective manner, using standardized processes and quality controls. This allows dealers to improve their vehicle quality and customer satisfaction.



  • Sourcing effectiveness: This means acquiring vehicles that match the market demand and the dealership's inventory needs, using data-driven tools and methods. This allows dealers to optimize their acquisition costs and inventory levels.



The benefits and challenges of applying Velocity 2.0




By applying Velocity 2.0 metrics and processes, dealers can enjoy several benefits, such as:


  • Higher profits: By selling more vehicles faster at lower margins, dealers can increase their gross profit per unit sold, as well as their net profit per unit sold.



  • Higher customer satisfaction: By offering competitive prices, high-quality vehicles, and transparent information, dealers can attract more customers and earn their trust and loyalty.



  • Higher market share: By adjusting their inventory mix and pricing to match the market demand, dealers can capture more sales opportunities and gain an edge over their competitors.



However, applying Velocity 2.0 also comes with some challenges, such as:


  • Cultural change: By adopting a new way of thinking and doing business, dealers may face some resistance from their staff, vendors, or customers, who may be used to the traditional methods of selling used vehicles.



  • Technology adoption: By relying on data-driven tools and software, dealers may need to invest in new technology infrastructure and training for their staff, as well as deal with potential technical issues or glitches.



  • Market volatility: By operating in a dynamic and unpredictable market, dealers may need to constantly monitor and adapt to the changing market conditions and customer preferences.



How to implement Velocity 2.0 in your dealership




If you are interested in implementing Velocity 2.0 in your dealership, you may wonder how to get started and what steps to follow. Here are some suggestions:


The key metrics and tools you need




The first step is to measure your current performance using the key metrics of Velocity 2.0. These metrics are:


  • Gross profit per unit sold (GPU): This is the difference between the selling price and the acquisition cost of each vehicle.



  • Net profit per unit sold (NPU): This is the difference between the gross profit per unit sold and the holding cost per unit sold.



  • Holding cost per unit sold (HCU): This is the cost of keeping each vehicle in inventory until it is sold, including interest, depreciation, insurance, maintenance, etc.



  • Market days supply (MDS): This is the number of days it would take to sell all the vehicles in a given segment or category in the market.



Inventory turn (IT): This is the number of times each vehicle is sold in a given period of time (usually a month or a year).




Inventory turn is a measure of how fast you sell your vehicles, and how often you replenish your inventory. A higher inventory turn means you sell more vehicles in less time, which reduces your holding costs and increases your cash flow.


To calculate your inventory turn, you need to divide the number of vehicles sold by the average number of vehicles in inventory. For example, if you sold 100 vehicles and had an average of 50 vehicles in inventory in a month, your inventory turn would be 2.


To increase your inventory turn, you need to price your vehicles competitively, market them effectively, and source them strategically. You also need to set realistic sales goals and incentives for each vehicle, based on its age, condition, and market demand.


Online merchandising: This means presenting each vehicle online in a way that attracts and engages potential buyers, using high-quality photos, videos, descriptions, reviews, and ratings.




Online merchandising is a crucial part of selling used vehicles today, as most customers start their shopping journey online. According to a study by Cox Automotive, 61% of buyers use third-party websites to research vehicles, and 46% use dealership websites.


To capture the attention and interest of online shoppers, you need to showcase your vehicles in the best possible light. This means using high-quality photos and videos that highlight the features and benefits of each vehicle, as well as the condition and history.


You also need to write compelling descriptions that provide relevant and accurate information about each vehicle, such as the make, model, year, mileage, color, options, warranty, etc. You should also include any unique selling points or value propositions that differentiate your vehicles from others in the market.


Additionally, you should leverage social proof and customer feedback to build trust and credibility with online shoppers. This means displaying reviews and ratings from previous buyers or third-party sources that validate the quality and value of your vehicles.


Reconditioning efficiency: This means repairing and preparing each vehicle for sale in a timely and cost-effective manner, using standardized processes and quality controls.




Reconditioning efficiency is a key factor that affects your profitability and customer satisfaction. Reconditioning is the process of fixing any mechanical or cosmetic issues that may affect the performance or appearance of each vehicle before selling it.


To achieve reconditioning efficiency, you need to follow a standardized process that ensures each vehicle meets your quality standards and expectations. This process may include inspecting, diagnosing, repairing, cleaning, detailing, certifying, and documenting each vehicle.


You also need to monitor and control the time and cost of reconditioning each vehicle. The longer it takes to recondition a vehicle, the more holding costs you incur. The more money you spend on reconditioning a vehicle, the less margin you make on selling it.


Sourcing effectiveness: This means acquiring vehicles that match the market demand and the dealership's inventory needs, using data-driven tools and methods.




Sourcing effectiveness is a critical factor that affects your inventory quality and quantity. Sourcing is the process of acquiring vehicles from various channels, such as auctions, trade-ins, wholesalers, or online platforms.


To achieve sourcing effectiveness, you need to use data-driven tools and methods that can help you find the right vehicles at the right price. These tools and methods are:


  • Market data: This means using market data from sources like vAuto, CarGurus, or Kelley Blue Book to analyze the supply and demand of each vehicle in your market, and to identify the best opportunities and deals.



  • Stockwave: This is a wholesale vehicle sourcing software from vAuto that allows you to access over 300 online marketplaces and find the vehicles that match your inventory needs and budget.



  • Upside: This is a new service from Cox Automotive that redefines the reward/risk equation for wholesale sellers. You can sell your wholesale holding inventory to Cox Automotive at a guaranteed price, and share in any upside if they sell it for more.



  • Enterprise: This is a feature from vAuto that allows you to centralize appraising and allocate inventory across all your rooftops, to increase profitability in every store.



How to measure and improve your Velocity 2.0 performance




Once you have implemented Velocity 2.0 in your dealership, you need to measure and improve your performance on a regular basis. This means tracking and analyzing the following indicators and benchmarks:


The indicators and benchmarks you should track




The indicators and benchmarks you should track are:


  • Gross profit per unit sold (GPU): This is the difference between the selling price and the acquisition cost of each vehicle. The average GPU for used vehicles in 2022 was $2,500 according to Edmunds.



  • Net profit per unit sold (NPU): This is the difference between the gross profit per unit sold and the holding cost per unit sold. The average NPU for used vehicles in 2022 was $1,800 according to Edmunds.



  • Holding cost per unit sold (HCU): This is the cost of keeping each vehicle in inventory until it is sold, including interest, depreciation, insurance, maintenance, etc. The average HCU for used vehicles in 2022 was $700 according to Edmunds.



  • Market days supply (MDS): This is the number of days it would take to sell all the vehicles in a given segment or category in the market. The ideal MDS for used vehicles is between 30 and 60 days according to vAuto.



  • Inventory turn (IT): This is the number of times each vehicle is sold in a given period of time (usually a month or a year). The ideal IT for used vehicles is between 10 and 12 times a year according to vAuto.



  • Online conversion rate (OCR): This is the percentage of online visitors who submit a lead or contact request after viewing your vehicle listings. The average OCR for used vehicles in 2022 was 1.5% according to Dealer.com.



  • Reconditioning time (RT): This is the number of days it takes to recondition each vehicle from acquisition to sale-ready. The ideal RT for used vehicles is between 3 and 5 days according to iRecon.



  • Reconditioning cost (RC): This is the amount of money spent on reconditioning each vehicle. The average RC for used vehicles in 2022 was $1,200 according to iRecon.



  • Sourcing cost (SC): This is the amount of money spent on acquiring each vehicle. The average SC for used vehicles in 2022 was $20,000 according to Edmunds.



The feedback and reviews you should collect




The feedback and reviews you should collect are:


  • Customer feedback: This means soliciting feedback from your customers after they purchase a vehicle from you, using surveys, emails, phone calls, or online platforms. This allows you to measure their satisfaction, loyalty, and referrals.



  • Online reviews: This means encouraging your customers to leave reviews and ratings on your website or third-party websites, such as Google, Facebook, Yelp, or DealerRater. This allows you to build your reputation, credibility, and visibility online.



  • Employee feedback: This means soliciting feedback from your employees after they complete a task or a transaction, using surveys, meetings, or performance reviews. This allows you to measure their engagement, motivation, and productivity.



The adjustments and innovations you should make




The adjustments and innovations you should make are:


  • Pricing adjustments: This means changing your prices according to the market conditions and customer demand, using data and analytics. This allows you to stay competitive and profitable.



  • Inventory adjustments: This means changing your inventory mix and levels according to the market supply and demand, using data and analytics. This allows you to avoid overstocking or understocking.



  • Process improvements: This means improving your processes for reconditioning, merchandising, sourcing, and selling, using best practices and feedback. This allows you to increase your efficiency and quality.



  • Technology innovations: This means adopting new technology tools and software that can help you optimize your velocity management, such as vAuto's ProfitTime GPS, Stockwave, Intelligent Promotion, iRecon, Wholesale Hub, Upside, or Enterprise. This allows you to leverage data and automation.



Conclusion




In conclusion, Velocity 2.0 is a book by Dale Pollak that reveals new ROI-based management metrics and processes that can help dealers operate more efficient and profitable used vehicle departments. The book covers the following topics:


  • What is Velocity 2.0 and why should you read it?



  • How to implement Velocity 2.0 in your dealership



  • How to measure and improve your Velocity 2.0 performance



By applying the concepts and principles of Velocity 2.0, dealers can enjoy several benefits, such as higher profits, higher customer satisfaction, and higher market share. However, they also need to overcome some challenges, such as cultural change, technology adoption, and market volatility.


If you are interested in learning more about Velocity 2.0 and how it can help you boost your used vehicle sales performance, we recommend you to read the book or visit vAuto's website for more information.


FAQs




Here are some frequently asked questions about Velocity 2.0:



  • What is the difference between Velocity 2.0 and Velocity?



Velocity 2.0 is the second book by Dale Pollak that builds on his first book Velocity: From the Front Line to the Bottom Line. In his first book, Pollak introduced the concept of velocity management, which is based on the idea that selling more used vehicles faster at lower margins can generate higher profits than selling fewer vehicles slower at higher margins. In his second book, Pollak presents new insights and strategies for achieving velocity management in today's used vehicle marketplace.


  • Who is Dale Pollak?



Velocity 2.0: Paint, Pixels, & Profitability




Velocity 2.0: Paint, Pixels, & Profitability is the title of the book by Dale Pollak that we have been reviewing in this article. The book was published in 2010 by New Year Publishing and has 224 pages.


The book is divided into three parts: Part One: The New Used Vehicle Marketplace, Part Two: The New Rules of Used Vehicle Management, and Part Three: The New Tools of Used Vehicle Management.


In Part One, Pollak explains how the Internet and the economy have changed the used vehicle market and created new challenges and opportunities for dealers. He also introduces the concept of ROI-based management and how it differs from the traditional cost-based or market-based management.


In Part Two, Pollak presents the new rules of used vehicle management that dealers need to follow to achieve velocity management. He covers topics such as pricing, market days supply, inventory turn, online merchandising, reconditioning efficiency, and sourcing effectiveness.


In Part Three, Pollak showcases the new tools of used vehicle management that dealers can use to implement velocity management. He reviews the features and benefits of vAuto's software products, such as Provision, Stockwave, iRecon, Wholesale Hub, Upside, and Enterprise.


The book is written in a clear and engaging style, with real-life examples and case studies from successful dealers who


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