At Andy Mohr Avon Nissan, the service lane leads directly to the sales floor.
To help drive new- and used-vehicle sales, the suburban Indianapolis dealership has turned to equity mining its service department customers — determining which of them has positive equity in their car or truck that might make them candidates for a new purchase.
Every vehicle that arrives at the service drive in Avon, Ind., has its license plate scanned to retrieve the VIN. Within minutes, software identifies trade-in prospects by analyzing factors such as amount of equity in the vehicle, its residual value and available factory incentives. Following a physical inspection of the vehicle and an assessment of service work needed, the customer then receives an offer to trade in their vehicle for a new or certified pre-owned one.
The process drives more than 15 percent of Andy Mohr Nissan’s monthly sales, or about 50 of the 300 vehicles the store sells every month on average, said General Manager Tim Dement.
“Every vehicle that comes into the service center is a potential trade-in candidate,” Dement said. “These customers are easier to sell to because they’ve done business with you; they are servicing with you. So it makes for an easy transition and easy conversation.”
Equity mining helps dealerships identify customers who are in a good position to get out of the vehicle they have and into a new one for about the same monthly payment. That builds loyalty by helping service customers use the equity in their used vehicles to buy new ones. It’s also a cost-efficient way to turn vehicle inventory because it minimizes marketing cost.
The service center practice creates a revenue cycle for the dealership’s other businesses, including the new and pre-owned departments and finance and insurance. It also benefits the service department, since the vehicles traded in must be prepped for resale and have parts replaced. Profitability from the new-car and trade-in sales have both increased through equity mining.
“Service customers are the most valuable customer, and it became apparent we were missing so many on a daily basis,” Dement said. He said the missed opportunity became clear to him when he noticed his service department lounge filled with people waiting for their cars.
“I couldn’t understand why our salespeople didn’t see those customers as opportunities,” Dement said. “Now we look at every service customer as an opportunity to sell new vehicles.”
Andy Mohr Nissan spends about $7,800 a month on equity-mining software from Hunter Systems and AutoAlert.
“A couple of car deals a month take care of the monthly investment in the technology,” Dement said.
But in addition to boosting sales opportunities, equity mining is also a way to source higher-quality used cars, Dement said. Cars coming into the dealership for service are typically late models or current leases, and they tend to be in better condition than vehicles bought at auction.
“I know the history on that car,” he said. “I know what it needs in the service drive. So I’m not finding out after I bought the car that it needs new brakes or a new transmission. And if it does need those repairs, I know it upfront, so I can apply it to my trade-in valuation.”
Andy Mohr sources about 40 percent of its used vehicles via trade-ins. With the equity-mining system in the service drive, the business hopes to boost that share to about 65 percent. About 40 percent of the trade-ins are resold as high-margin certified pre-owned vehicles.