It’s a seller’s market right now. That’s pretty incredible when you consider all we’ve been through in 2020. But dealers shouldn’t celebrate just yet. After all, more demand means more competition — and widespread inventory shortages are making it tough to fight back.
So how can dealerships outmaneuver competitors and take advantage of this seller’s market? By focusing on stocking the right inventory, at the right price, for the right audience. We’re here to help dealers do just that. Follow these tips to maximize gross and turn while the market is still hot.
Focus on Used Inventory
Sourdough starters haven’t been the only product to benefit from the pandemic. Individuals wanting to avoid public transit, or just get out of the house, have flocked to dealerships looking to purchase a new car.
However, production delays have made new car inventory impossible to find. Only 2% of vehicles currently on dealers’ lots are next year’s models — compared to 11% at this same time last year.
Demand for used vehicles has skyrocketed as a result. Acquiring used inventory has become the key to creating record dealership profits in today’s market. Of course, that’s easier said than done. Demand for used inventory is just as high among dealerships as it is with buyers. That’s why you need a strong used car appraisal and sourcing strategy to take advantage of current demand.
Win on Appraisals
High demand for used vehicles has led to record high trade-in prices. Some dealers are even offering to buy out lease contracts from drivers just to acquire inventory. It’s true that having cars on the lot is important. But you also don’t want to cut into your profits just to get your hands on new inventory.
That’s why a winning appraisal strategy is so crucial.
Offers should be based on the price & turn rate of similar vehicles in your market. You’ll also want to factor in things like reconditioning costs, trim level, etc. This way, you’re ensuring each vehicle is acquired at a price fair to both parties.
Source Smarter, not Harder
Choose the right inventory
Don’t worry about stocking every high-demand vehicle in your area. Instead, focus on stocking more of your dealership’s best-selling products. Review your sales each month. Which vehicles sold the fastest and at the highest margin? Inventory optimization tools like VinCue can tell you exactly which vehicles to stock based on these questions. Seek out more of your most valuable inventory.
Find Better Deals at Auction
Success at dealer auctions isn’t about finding the best prices — it’s about finding the best deals. A solid auction strategy is all about preparation. That means creating a strong buying plan and deciding on the optimal cost for each vehicle. Use your inventory optimization tool to choose your target vehicles and their target prices.
Build Your Own Vehicle Buying Center
Dealers will still need to expand their search to find affordable inventory. That’s where an in-house Vehicle Buying Center (VBC) comes in. A VBC allows you to acquire new inventory directly from the public. Not only does this help you find more of the right vehicles — it can also lead to higher profits.
VBCs also enable you to buy the cars you want instead of whatever’s available at auction. Buying vehicles from the public is a critical piece of every successful sourcing strategy.
Reach new Customers
Getting the right vehicles on your lot is only half the battle. Dealers need to ensure they’re reaching the right buyers as well.
That used to mean investing ad spend into traditional marketing channels and third-party listing sites. Unfortunately, both continue to get more expensive each year. Not to mention the fact that neither can guarantee actual results for dealers.
Thankfully, it’s never been easier for dealers to run their own direct digital advertising.
Online advertising helps dealers cut out the middleman and increase their marketing ROI. Using new digital marketing tools, you can serve custom ads directly to active local buyers. These customers are then sent directly to your website and VDPs.
Standing out against the competition is critical to moving inventory in a crowded market. Use direct digital advertising to help reach your ideal customers.
Use an All-in-One Dealership Platform to Maximize the Seller's Market
Are you missing out on this historic seller’s market? Dealerships who use data-driven inventory management strategies can stock more of the right vehicles at the right price. This requires having the right technology to power your team.
That’s why successful dealers are switching to VinCue. Its all-in-one platform uses real-time market data to help you make better decisions on finding, buying, and advertising your inventory. Plus, it comes with all the features you need to power your in-house Vehicle Buying Center. The market could flip at any moment. Take advantage of this seller’s market by sourcing smarter and earning more.