1. SEAN
GUNN
Gunn Automotive
Group
page 22
Vol. 18 No. 12
December 2011
Leadership:
Six Ways to Build your
Capacity to Produce!
page 10
Expense Management:
Setting your 2012 Spend
Management Objectives
page 20
Fixed Operations:
Quick Service In-depth – How the
Other Half Lives!
page 59
Pre-owned Vehicles:
Three Key Prongs of a
Provisioning Strategy for
Used Vehicles
page 66

2. Title Washing Jumps by
39 Percent in Three Years
Pre-owned Vehicles
Joshua Steffan
A
recent analysis conducted of our
AutoCheck vehicle history report
database revealed that more than
257,000 vehicles were title-washed (the
practice of removing a title brand when a
vehicle is registered in another state) in the
first six months of 2011.This is a 39 percent
increase compared to the first six months
of 2008, when 185,000 vehicles were
title-washed.
Inaddition,title-washedvehiclesmakeup
asubstantialportionoftitle-brandedvehicles
overall. There were 1,528,285 title-branded
vehicles in the first half of 2011, meaning a
full 16.8 percent were title-washed. If dealers
donotremainvigilantwhenacquiringaused
vehicle — either at auction or in a trade-in
situation—theyruntheriskofunknowingly
beingavictimbyaddingoneofthesevehicles
to their lot.
The ramifications of acquiring a title-
washed vehicle have two logical conclusions
— both of them negative.
First, any dealership that passes on a title-
washed vehicle to a valued customer puts its
reputation at risk. As Warren Buffett said,
“It takes 20 years to build a reputation, and
five minutes to ruin it.” Given the explosion
of social media tools and consumer review
websites, a negative customer experience
related to a title-washed vehicle can spread
through a dealer’s customer base literally as
fast as it takes to hit the “send” button.
The second reason is the detrimental
financial effect of acquiring a flawed vehicle.
According to Kelley Blue Book, the value of
a2008SaturnOutlookinexcellentcondition
is $15,700. What is the value of a similar
vehiclewithframedamage?Itisjust$13,200.
If a dealership has a title-washed, frame-
damaged vehicle on its lot, a well-informed
customer will only want to pay the lower
price. Ultimately, missing this title brand
could cost the dealer $2,500. That’s a quick
way to erode profits.
Whatshoulddealersbelookingforrelative
to title-washed vehicles? The majority stem
from major mechanical or structural flaws.
The top five types of title-washed brands in
the first half of 2011include:
1. Salvage: 39.61 percent
2. Rebuilt/rebuildable: 26.32 percent
3. Prior salvage: 9.47 percent
4. Reconstructed: 7 percent
5. Insurance loss: 6.1 percent
Clearly, dealers need to be cautious when
acquiring used vehicles. We give dealers the
sameadvicewegiveourconsumercustomers
whenshoppingforausedvehicle.First,always
use a vehicle history report. Even when a
vehicle has crossed state lines and has had a
title removed, a vehicle history report is like
DNA to a crime scene investigator. It is this
trailthatisvirtuallyimpossibletoremoveand
should not be ignored.
Second, visually inspect the vehicle.
Sometimes it takes time for accidents to get
reportedandthereforebecomeavailabletoour
vehiclehistorydatabase.Ifthesevehicleowners
try to rush a sale, a visual inspection can be a
good backup to a vehicle history report.
Third, whenever possible, have one of
your mechanics give the vehicle a thorough
inspection. This will help locate additional
mechanical or engine issues.
Obviously, these are common-sense
approaches, but because used vehicle
inventory has been tight recently, we’ve seen
manydealerstrytocutcornerswhenitcomes
to used vehicle acquisition. When a vehicle
looks like it might be too good to be true, it
usually is.
Withtheeconomyasstagnantasitistoday,
manypeoplearetryingtoturntheirusedvehicle
headachesintoquickcash.However,ifdealers
armthemselveswiththerightinformationand
takeprecautionswhenacquiringusedvehicles,
theycanmakesuretheydon’tacquiresomeone
else’s headache.
JoshuaSteffanisdirectorofproductmanagement
for Experian Automotive. jsteffan@dealer-
communications.com
For more articles, blogs
and daily news visit
us at www.Dealer-
magazine.com.
Dealer-magazine.com December 2011 Dealer 65