Make “Real Profit” On Every Used Car Sale Full Name I Company I Job Title I Email Make “Real Profit” On Every Used Car Sale How to Maximize Your Pre-Owned Profits in a High Supply Market Doug Hadden I ADESA I Dealer Consulting Services I Doug.Hadden@adesa.com

Agenda Data Driven Inventory Profit per day True Return on Investment Aging / Pricing Plan Inventory Sourcing

Data Driven Inventory 3G Method Use Data Like Vehicles, Higher Than Average Gross, Faster Than Average Turn Inventory Management System AAX-Inventory+ vAuto FirstLook RedBumper Others

Data Driven Inventory Market Performer Low Days Supply High Profits Faster Turns

Profit per day Scenario 1

Profit per day Scenario 1 Front-end gross profit $2,000 Finance and insurance gross profit + $1,000 $3,000 30% commission $ 900 $2,100 Days in inventory $2,100 / 20 Profit per day $105 Scenario 1

Profit per day Scenario 2 Front-end gross profit $500 Finance and insurance gross profit + $1,000 $1,500 Flat / finance and insurance $ 600 $ 900 Days in inventory $900 / 68 Profit per day $13 Scenario 2

Profit per day Scenario 3 Front-end gross profit $3,000 Finance and insurance gross profit + $1,000 $4,000 30% commission $1,600 $2,100 Days in inventory $2,100 / 90 Profit per day $26 Scenario 3

Profit per day Scenario 1 Scenario 2 Scenario 3 Front-end gross profit $500 Finance and insurance gross profit + $1,000 $1,500 Flat / finance and insurance $ 600 $ 900 Days in inventory $900 / 68 Profit per day $13 Front-end gross profit $3,000 Finance and insurance gross profit + $1,000 $4,000 30% commission $1,600 $2,100 Days in inventory $2,100 / 90 Profit per day $26 Front-end gross profit $2,000 Finance and insurance gross profit + $1,000 $3,000 30% commission $ 900 $2,100 Days in inventory $2,100 / 20 Profit per day $105 Scenario 1 Scenario 2 Scenario 3

True Return On Investment Front-end gross profit $500 Finance and insurance gross profit + $1,000 $1,500 Flat / finance and insurance $ 600 $ 900 Days in inventory $900 / 68 Profit per day $13 Front-end gross profit $3,000 Finance and insurance gross profit + $1,000 $4,000 30% commission $1,600 $2,100 Days in inventory $2,100 / 90 Profit per day $26 Front-end gross profit $2,000 Finance and insurance gross profit + $1,000 $3,000 30% commission $ 900 $2,100 Days in inventory $2,100 / 20 Profit per day $105 APR=255.52% APR=32.21% APR=56.78% Scenario 1 Scenario 3 Scenario 2

Iiii=P⋅i⋅t=IP⋅t=210015000⋅0.05479=2.5552=255.52% per year Problem You deposit $15000 into a bank account and received $2100 simple interest after 20 days. What had been the interest rate? Explanation STEP 1: Convert 20 days into years.  20 days =20/365 years=0.05479 years STEP 2: Find interest rate by using the formula I=P⋅i⋅t, where I is interest, P is total principal, i is rate of interest per year, and t is total time in years. In this example I = $2100, P = $15000 and t = 0.05479 years Result The interest rate was 255.52% per year.

Pricing / Aging Inventory management systems How many like vehicles How long Price drops

Pricing / Aging Non-Core = 10 / 20 / 30 / 45 / 50 Core = 10 / 30 / 55

Inventory Sourcing Data Mining Current Customers Service Drive AM Shift Free Appraisal

Inventory Sourcing Auctions Online Inlane Dealer to Dealer

Dealer Consulting Services Contact Doug Hadden ADESA Dealer Consulting Services Doug.Hadden@adesa.com