The Crystal Ball: Understanding Sales Trends in your Market

One of the first steps in being successful is not only knowing your numbers, but what drives them. The people that concentrate on the drivers usually stay ahead of the curve.

What drives sales? The obvious answers are: inventory, purchasing, and your process. The best success is made by having the ability to identify trends.

We all know what we need today, right? That’s the good news. The bad news is, when we find ourselves in need of certain items, so do others. As a result, there is more competition for this certain product and the price is always higher. The best time to buy inventory is when you don’t need it. If you have a way to identify trends, you can stay ahead of the curve and buy these vehicles before everybody else does.

How do you do this? You can use your data within your Yard Management System (YMS). The data you should be looking at are the following:

  • Quantity on Hand (QOH): How many do you have.
  • Lookups: How many requests have you had?
  • Sales: How many have you sold?
  • Average Days in Stock
  • Average Selling Price

You make your money when you buy the car. Regardless of what you pay for a vehicle, those parts that you sell are only worth so much. After all, a one-hundred-dollar part is worth one-hundred-dollars. It doesn’t matter if you paid one dollar or a million dollars for that vehicle.

Simply put, if you want to increase sales, you have to increase your purchasing. For most of us who are late-model, full-service Auto Recyclers, we buy a variety (mix) of vehicles. With 20 purchases, the breakdown would be this: 2-4 vehicles on the higher-end. These are vehicles that typically have an average cost in excess of $3,500. These vehicles can take the longest to recoup, however over time they generate the most profit. These are considered long-term purchases. 10-12 vehicles are middle of the road, or what I refer to as “meat and potato” type vehicles. These will have an average cost of $1,500-$3,000. These are the ones that generate the most profit within a reasonable amount of time. Rounding out these 20 purchases, will be some of the older type vehicles. These are considered short-term purchases. They have the lowest cost of goods, and you can break-even fairly quick. The problem is once you hit the break-even point, these cars don’t perform very well after that. The emphasis on all of these purchases, especially older, is to buy quality.

If you wish to track your purchases and performance as a buyer, you should look at your purchases in groups of 20. Look at them in 3 months, 6 months, and a year. Once you do this with these 20 purchases, you will see that some perform very well, some did okay, and some did not. As a buyer, we all have had our share of stinkers, as well as home runs.

It might be better to concentrate on auctions that are closer to you, as long as you can get the product that you need. If you have customers in your area, are you driving 2 hours away to deliver parts and driving past the customers in your own backyard to do so? The same should be said about buying cars.

Have an accurate description that the “average Joe” can understand. Have quality images. Like Theresa Colbert always says,” Describe your parts like you have no pictures. Picture your parts like you have no images.”

Reviewing your prices and keeping them current and competitive is probably one of the most important and most neglected tasks that we do. This can be very tedious. I refer to pricing as a “moving target.” There are some programs in your YMS that can do this for you, but with this being so critical, it is important that on your best moving items, that you are monitoring this yourself. If you are pricing, remember, parts don’t sell for one of three reasons: It’s either overpriced, a bad part, or there is simply no demand for it. Every YMS has the data to show you this.

How do you handle and dismantle these vehicles? Do you have a system in place to minimize damage? Are you setting proper expectations with your customer?

Customer Feedback
What are others saying about you? Monitor your reviews. Seek feedback on how to do a better job.

E-commerce comes in many forms, whether it’s E-bay, Amazon,, or Insurance Companies putting you on an estimate. All of the aforementioned will either attract customers to your store, or drive them away. The thing to remember here is, you only know what you know. We know when they are calling us to inquire about a part, but do we know when they are passing us by for somebody else? The answer for most of us is, No.

Sales Growth
Where do you want your business to be one year from now? Five years from now? Your goal should always be to grow your business. With this in mind, remember that sales revenue in itself can be deceptive. It’s not what you make, but what you keep. All too many times, business owners get wrapped up in increasing sales revenue, only to find out that their final net income does not grow with these additional sales. Your goal should be a 5-6% growth rate year over year. This is manageable, controllable, and sustainable. This would be your best approach.

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Marty Hollingshead

ARA Secretary · Northlake Auto Recyclers — Hammond, IN

Hollingshead has been in the professional automotive recycling industry for 45 years, including 34 years as President/Owner of Northlake Auto Recyclers, one of the industry’s leading facilities. Hollingshead prides himself on taking a hands-on approach in the business, employing the use of checks and balances for quality control to ensure customers only receive the highest quality parts. Northlake was one of the first automotive recycling facilities in the state of Indiana to receive from the Indiana Department of Environmental Management the Indiana Clean Yard – Gold Level Certification in 2009. Northlake was certified as one of the Indiana Certified Automotive Recycler Exemplary Standards (INCARES) program’s inaugural medalists and was the highest scoring facility in Indiana in 2014, 2015, 2016, 2017, and tied for first place in 2018. Northlake was also the recipient of the 2016 ARA Certified Automotive Recycler of the Year award, having been nominated by his peers in the industry.