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Traditionally — and under more normal circumstances — this is the time of year that car dealerships would be preparing for a summer slowdown. Peak demand in the auto industry historically occurs during the spring and fall but today, it is anyone’s guess as to what the coming months will hold.
According to the most recent Cox Automotive Dealer Sentiment Index, more than 60% of retailers expect the market for vehicles in their area to look strong three months from now, indicating optimism that current trends will continue.
While record-low inventories and record-high listing prices have created challenging circumstances for both car buyers and manufacturers, they have also created opportunity for dealerships with available inventory to capitalize on the surging consumer demand.
So is a summer slowdown coming? In the spirit of the old saying, “hope for the best, prepare for the worst,” here are some key acquisition and audience strategies for you to consider in preparation for the summer sales season and to remain successful long term.
Vehicle Inventory Acquisition Strategy: Focus on CPO and car-finder solutions
If anything is clear about the automotive industry today, it’s the persistence of historically low inventory levels; 64% of dealerships cite the issue as the top factor that held back business in Q2. With no end in sight for tight inventories, wise dealerships should zero in on their inventory acquisition strategies.
Given the chip challenges facing manufacturers, acquisitions should focus on certified pre-owned (CPO) and used vehicles. Case in point: more than 268,000 CPO units sold in May 2021, a 13% year-over-year increase.
To that end, you should advertise your willingness to buy cars privately. One easy step is to merchandize on your website and other third-party marketplace sites that you will buy cars from consumers — even if they’re not a current customer or prospect.
Further, online car-finder solutions expand the reach of inventory acquisition outreach, with products like Kelley Blue Book’s Instant Cash Offer allowing you to immediately put forth a value on a used car to potential sellers. Not only can a private acquisition strategy yield valuable deals, but also you can get a better feel for the car by turning the key, driving the lot and more. We all know that dealers make money buying cars, not selling them!
Digital Audience Strategy: Use your own data and lean into digital marketing
As you fine-tune your acquisition strategies, you should also strengthen your approach to targeting customer audiences, as now certainly is not the time to stop marketing. When it comes to consumer audiences, efficiency is key. That starts with managing and maintaining customer data in your own CRM to ensure it is quality and up to date. From there, you can find ways to build and activate digital audiences.
From that quality CRM data, dealers can shift their marketing focus to specific areas and audiences. For example, current lease customers have positive equity in their cars; start sales outreach now if their lease is up soon, along with advertising on Facebook and other platforms to encourage trading in the lease early. Ensure that an outbound strategy is in place for your current customers to encourage trade-ins, generate leads and push shoppers farther down the sales funnel.
Partner for predictive data
The efficiencies can come full circle when you leverage data into real-time behavioral insights. With Cox Automotive, these capabilities allow dealers to accurately identify in-market shoppers that are 15 times more likely to buy in the next 30 days versus your average shopper.
In addition, the insights can accurately predict the make the consumer buys over 92% of the time. Coupled with the powerful algorithms developed by Autotrader and Cox Automotive, you will have a better understanding of what cars to buy, and subsequently find a buyer for that car, based on market activity they can see online.
Cast a line at the right time
Strategy really opens when you can identify in-market shoppers relative to DMA. Think of this like a “fish finder.” We can quickly identify if there is enough opportunity in your backyard, or if it’s time to look at expanding your market.
There is amazing potential in automotive digital marketing around matching inventory to audience.
As for whether dealerships can expect the traditional summer slowdown, only time will tell. But with the right acquisition and audience strategies in place, you will be poised for success regardless of the market conditions.
If you’re ready to get started, get in touch with your local Dealer Success Consultant today.