You can’t sell empty spaces

When talking about trends in the motor trade it has become quite difficult to be totally accurate given all the different aspects which go towards announcing exactly what is happening.

It is confusing for car dealers but even more so for customers who may rightly be thinking exactly what is a good deal? A deal struck 2 weeks ago could look like an expensive mistake today but conversely as stock becomes harder to source and therefore more expensive on the wholesale market a used car bought 2 weeks ago might appear far more expensive in today’s classifieds.

All our guys have been visiting auctions up and down the country and have noticed a sudden increase in prices for stock which was hardly selling a few weeks ago. Not necessarily because it is particularly desirable but more because that is all there is.

Car dealers have to predict what is going to happen to a certain extent and the fact that wholesale prices go through the roof is not necessarily down to increased retail demand. Therefore the gamble is whether the price hikes can be passed onto customers whilst still retaining a sensible margin. This is the current situation; we know that cars with a USP will continue to sell and sell profitably but if those cars aren’t available then dealers, who cannot afford to have empty selling spaces, have to make a decision. Should they stock their forecourts with cars which are maybe a bit more in abundance and present the buyer with a much wider search choice? Doing so brings price very much into play.

One dealer told us that, because his company views each display space as a cash amount which has to be turned often to earn its keep, they even display cars which are almost a “loss leader” in that the car itself is unlikely to make a profit but sales execs are encouraged to maximise all other opportunities bolted to the car, like f&i, service plans, accessories etc. The car is just a vehicle (pardon the pun) for other profit opportunities. That way the space the car occupies is still turning a margin.

A high risk strategy maybe but as anyone in the trade will tell you “you can’t sell empty spaces” and successfully managing a portfolio of cars takes skill, expertise, lots of experience and a slice of good fortune. The successful dealers are usually the ones who have the most attractive displays with highly prepared cars at competitive prices, engaged employees and strong managers who are committed to gaining and retaining a dwindling audience looking for any kind of cost savings during this dreadful recession (or whatever the hell it is).

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13 Responses to You can’t sell empty spaces

  1. Ling Valentine September 19, 2011 at 11:05 am #

    ‘as anyone in the trade will tell you “you can’t sell empty spaces”‘

    … but YES you CAN.

    I don’t have any “spaces” with cars parked in them, but I manage to move loads of new cars a month. It is all about imagining what you can do. Why on earth can’t these dealers do what I do and supply customers with what they want, with not a single car of physical stock?… Because they DON’T THINK THEY CAN.

    The industry perpetuates this myth that people need to see the cars, touch the cars, drive the cars… well, no they don’t. And if people say “ah, well you just move NEW lease cars, Ling”, they there is no reason why these dealers cannot do the same thing and put people in new cars of all makes, not just their franchise brand.

    It’s all an attitude. In a world moving more and more to electronic sales, internet browsing and online clicks, why fixate on physical stock??? Surely someone can see the potential? Just blow the bloody doors off!

    The problem is, dealers have invested so much in old-fashioned physical operations. Really, it’s about time that things moved forward, eh?


  2. carnutter666 September 19, 2011 at 6:14 pm #

    You make some good points Ling but if nobody can see or touch a car first how are they ever going to know whether they want to invest £sss of their hard eraned cash into something they have not even tried first? It’s all very well talking about how car selling is evolving but surely the customers who place orders with you have gone to a dealer to do their reaserch have a test drive and get some figures before finding you online and asking you to beat the deal. Without those dealers and the physical stock I dont know whether you would have quite as many customers Ling, think about it – you couldn’t actually do without them they are actually helping you sell cars by doing all the work for you. Be careful what you wish for, isn’t that what they say?

  3. Mark R September 21, 2011 at 8:09 am #

    Ling, there is a huge difference between New and Used selling, believe me, this approach would NEVER work in the used sector, i agree that people will buy cyber cars but very few would part with tens of thousands of pounds for the premium brands without seeing the product first, you talk a good talk Ling, but you do not have the Holy Grail answer to retail selling although it appears you think you do !…………………..

  4. Ling Valentine September 21, 2011 at 9:22 am #

    Well, I think there are a large number of people who will buy (or lease or acquire) a car without touching it, physically (given the chance). Cars can be consumer goods, like TVs or fridges.

    However, if few dealers ever try and facilitate this, it will be slow to happen. This is the status quo, many people have their money invested, keeping things the same, afraid of things being different. Most people are scared of change, but surely at some time the market will be changed by some bright spark who blasts a way through the old ideas.

    It happens in every industry eventually -, look how Ryanair transformed air travel (with the best product), and how Amazon destroyed Borders (with the best product). When someone discovers the way of successfully moving cars online, the industry will transform. I know how to do this… and the thing stopping this (apart from a bright spark) is TRUST. The reason customers want to touch cars is because THEY DON’T TRUST DEALERS. As soon as they trust what they are getting will be as described, there will be no reason to touch the physical cars.

    Currently, adverts often lie, salesmen lie, dealers lie, people have to touch the cars to get to the truth and see through the lies people tell. Customers are sceptical of the information they are given. It’s not rocket science.

    The industry should be ASHAMED that customers feel the need to check the cars, before buying.


  5. carnutter666 September 22, 2011 at 11:31 pm #

    you hit the nail on the head ling tvs £300, firdges £200, flights £500, books £10, CARS TEN THOUSAND POUNDS AND MUCH MUCH MORE it just doesnt bear comparison and do consumers get attached to the other products you mention like books and fridges? no way get real Ling you clearly have some success with pople who already have an idea of what they want and are happy to shop around for a deal but there is no way you will change customer behaviour whilst there is so much product and price choice and getting it wrong could cost thousands.If you can come up with a way that customers can decide what car they want without ever having tested it touched it or felt it then you will have the keys to the crown jewels my friend,until then keep on doing what you are doing and be happy with the business you are receiving!!!

  6. Mark R September 26, 2011 at 8:54 am #

    Ryanair the best product Ling? c’mon, even you don’t believe that do you? Cheap is definitely NOT always best Ling, cheap lease cars are just that, CHEAP! what you are doing bears no resemblance to every day car sales, as car nutter says, the day you transforrm the car buying public and get their 100% trust to buy anything on line with no questions asked, you have cracked it! until then the great buying public will continue to want to touch, see, drive, and most importantly negotiate the deal they are looking for, huge difference between a TV and a car price wise, as for Ryanair, i personally wouldn’t fly them, i expect and want a lot more for my hard earned money as do the vast majority of the car buying public ……………..

  7. Mark R September 27, 2011 at 7:55 am #

    BUT Ling, you are VERY good at what you do, in the lease world you are definitely the Queen, i am always willing to congratulate success and in that field you are tops, no doubting that………………….

  8. Ivan Kwok October 3, 2011 at 8:07 am #

    Ling you certainly talk a good fight but having watched you on the recent Dragons Den retrospective I am left a bit puzzled. Mr Bannatyne revealed that he was glad he did not to invest in your business as you were only making 30k profit (turnover is vanity profit is sanity). Anyway you revealed the numbers as something along the lines of a million visitors a year, a hundred deals a month and an average profit per unit of “£300-£400”. Turning over £40 million of car value a year and still only making 30k profit? Sounds to me like you should have taken the investment.

  9. Ling Valentine October 3, 2011 at 2:11 pm #

    Ivan, (and also Editor Tweeting Ivan’s post, for views)…

    You can remain puzzled if you can’t figure this out. Which would you rather believe? An edited performance by Bannatyne justifying my rejection of his investment offer. He wanted to invest, I refused him… twice. What do you want to believe, an entertainment show or figures lodged at Companies House?

    …You all seem to believe the sh1t that Bannatyne talks on TV. If anyone cares to check Companies House, I have posted my latest Mar 2011 accounts early (because I knew this show would be on) and you can see that my net worth has increased substantially this year (by more than £30k), and I am pleased to announce my profit was in 6 figures (ie. greater than £100,000… not just £30,000). Profit is sanity, eh, Ivan? God knows where the BBC and Bannatyne got that £30k figure from, it just shows how wrong they can be :)

    Of course, Ivan, you should realise that I never lay out 1p on cars. *THAT* to me, is sanity.

    Creditsafe say about LINGsCARS:

    The company’s credit rating has increased from 76 to 83 which indicates very good creditworthiness.
    In the previous 12 month trading period Net Worth increased by 32%.
    A 14.1% growth in Total Assets occurred in the previous 12 month trading period.
    The company saw an increase in their Cash Balance of 16.3% in the previous 12 month trading period.
    The company is exempt from audit.
    No recent changes in directorship are recorded.
    The company is not part of a group.
    The positive change in the P&L Account Reserve suggests that the company made a profit after tax and other appropriations.
    The company was established over 4 years ago.
    The company has recently filed accounts at Companies House.

    Thanks very much Creditsafe.

    …Back to Duncan and Jackanory. These Dragons want unrealistic returns and they are greedy. If he had invested £25k at his terms, he would have had £100k + his £25k back (or his investment would have remained). That’s all signed off by my accountant. Getting £100 for doing nothing would not have been bad.

    Luckily, I did not need Bannatyne’s £25k, or Farleigh’s £25k. That’s why I rejected them. I went on DD for the publicity, worth far more than Bannatyne’s cash. But thanks for the offer anyway, chaps.


    In fact by focussing on this silly cash game, you miss the real benefit of 12 minutes of free publicity on BBC2 (twice) plus all the future Dave repeats, and all other associated publicity. To buy that audience as adverts nationally would cost well over £250,000, apart from the extra benefit of real editorial (not adverts).

    Some people are just shortsighted or blinkered, eh?


  10. Val Codling October 3, 2011 at 4:40 pm #

    That is a very interesting perspective. I have long believed that a lot of the participants on Dragons Den are there more for the publicity than anything else (and I include the Dragons in that). I also wonder about the actual pedigree of the Dragons themselves. For example if Peter Jones was worth as much as they say he is why would he demean himself in those awful adverts if he didn’t really need the money? Why does Theo Pahitus drive around in a chrome plated Maybach if it isn’t becasue he wants (craves?) the attention. Deborah Meadon’s wealth is inherited isn’t it? In any case she seems to have had a “leg up”. Anyway you take my point and it is refreshing to learn that yoy went on the show purely for the publicity it would generate for your business but are you saying that you never had any intention of accepting ANY offer?

  11. Ling Valentine October 3, 2011 at 5:18 pm #

    Val, of course… it’s a TV show. I explain:

    I asked for £50k because it was the minimum amount allowed to ask for. But, I figured that the minimum amount meant the most tickles for my pitch, so I went in at minimum. It would have been daft to ask for more. I didn’t need a penny, what do I need their money for? I deliberately turned them down, whatever they would have said.

    It was quite planned. Get a bite (I got two) and then reject them. Pitch and run. I don’t think anyone had done deliberate rejection before. I spent 4 hours filming on that day in the Den, repeating questions again and again. To get 10 minutes original show. Some of the questions are asked by producers, while the Dragons are not there.

    In fact it worked out better than I thought, because I flat refused the 2 dragons… then Bannatyne and Farleigh both lowered their margins and tried again. I rejected again. They don’t like it up em.

    Also interesting – you should know that I **did not** apply to go on the programme, the BBC producers canvassed me (several times). So the assertion that I “applied” for investment is a lie by the BBC – although I am sure many people do. It was after I won the entrepreneur award that they contacted me. They also requested me to wear my “hezbollah” (terrorist) trousers and Mongolian goatherder jacket in an attempt to get P Jones criticising me for attire, he did that a lot in those days (but he didn’t bite).

    I practised those lines “chinglish” and “eat dragons for breakfast”, and made sure my refusal was absolute and strong, not wet and apologetic. They must also have some jepoardy. It cannot be 100% favourable. Viewers do not want that, as we have found out with Ivan above, people like the negative hook. “oh no, you screwed up, eh?”

    The BBC want controversy/emotion to get viewers. The Dragons want TV exposure. So did I. But many people who go on think it is really an investment show, and to me that is daft. I could have got £50k on bank loan or credit cards in 2007 by sneezing. To me, the value is in the 2 million viewers, plus all the repeats on Dave and associated PR Yesterday I had 6,000 visitors, to buy them on AdWords for “car leasing” would cost me £6000. Why go on TV and simply look an asshole or look clever? The main thing is to get the viewers (an excellent demographic watching this show) to visit your website, and then knock their socks off, etc.

    From everyone who watches it, some will support me, others will side with the dragons. I don’t care. i want them on my website, so next time they need a car they remember to check out the mental Chinese bird with the rocket.

    It’s not rocket science hahaha.

    Same with the latest TV one, I utterly don’t care what Bannatyne said, apart from that it made compelling TV with some jeopardy. Chrst, I bought a £7k tank to make the film memorable and wore a Nazi helmet! Hahaha. I wanted a 12 minute long slot, not a 30 second review, so I knew I had to give the BBC some eye candy in order to attempt to dominate the show (and overshadow Bannatyne to a degree).

    Heil Hitler! hahaha

    Sorry to ramble.


  12. Ling Valentine October 3, 2011 at 5:43 pm #

    I don’t know much about cars, but I know about bloody Dragons’ Den hahahaha!

  13. carnutter666 October 4, 2011 at 7:15 pm #

    Well I say fair play to you Ling those dragons are far too smug for my liking and if it has helped you generate hits to your site from potential new customers then even better, go for gold nutty chinese bird!!

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