Estimated reading time: 5 minutes
Dealers in many areas have witnessed increased shopper demand over the last couple of months, in some cases leading to record sales months. That sounds great, but there’s a downside that you’re probably feeling the effects of – inventory scarcity.
With all this metal moving off the lots, how can dealers replace their inventory?
Inventory scarcity is one of the biggest struggles I’m hearing from dealers today. I’ve literally been reading about dealers selling their shuttle vans and having to take Ubers home because they’re selling out of their inventory. Amazing!
Cox Automotive’s COVID-19 Auto Market Update from July 21 reveals that new inventory levels are the lowest they’ve been in almost nine years.* Used days’ supply is usually around 45 days, but it’s now at only 34 days.*
Is your dealership struggling to acquire affordable used vehicle inventory?
Low days’ supply is one issue, but we’ve also got to talk about wholesale and retail prices. You’ve undoubtedly run into challenges finding affordable used inventory. The dealers I’ve been talking to certainly have. As of July 21, wholesale prices are up 9.7% since the beginning of the year, while retail prices are up only 3.2%.* So what do we do?
In these market conditions, you’ve got to have a unique inventory acquisition strategy.
Remember, you’ve got more control when you acquire inventory privately. You can turn the key and get a real feel for the car. Right now, you don’t get that luxury at the auctions. When wholesale prices are high and available inventory is low, buying from local consumers may be easier and more cost effective. Let’s talk about some strategies.
Work your CRM and great APRs for a win-win.
Recently, we’ve seen APRs that are the best in years. A good friend, Jim Wilkinson, GSM of Fred Haas Toyota in Houston told me he’s creating a great win-win for his business and customers. He’s finding past buyers with expensive interest rates and helping them shed negative equity by upgrading into a new car with lower rates.
“What we’re seeing right now will help a lot of people in the middle of the market by giving them the opportunity to upgrade, putting them in a better position without upping investment to do so. Now we recycle that trade, which we have all service records on, combined with all-time low certified rates, and we have an attractive piece of inventory for the seller and buyer.”– Jim Wilkinson, GSM of Fred Haas Toyota
Talk about turning lemons into lemonade! They’re helping customers and creating that positive experience. I can only imagine that’s a customer who will come back their next purchase, as well.
Turn service customers into an inventory source (and maybe your next trade-in buyer).
Your service bays are your built-in source of used vehicle inventory with a low acquisition cost. You’ve got traffic coming through your service center. Are you letting your service customers know that you’re looking to buy cars?
As a car is sitting waiting for service, have one of your employees run the VIN to develop a price. Hang the price on a tag off their rear-view mirror so they don’t miss it. You may end up increasing your inventory and making your next sale.
With the right trade-in offer tool, you can generate a real trade-in price for each service customer, a price that the consumer will trust and that is reliable and no-risk for you. Kelley Blue Book Instant Cash Offer prices the cash offer using live market data. There are a number of options to choose from, depending on whether you’re looking to receive leads from KBB.com and Autotrader or just to generate Instant Cash Offers in person and on your dealership website. And you get seven days to decide if you want to hold onto the inventory or sell it back to Kelley Blue Book at the offer price.
Let local consumers know that you’re buying.
Times are tough. Some people in your area may be looking for less expensive transportation or may need to offload a vehicle. Your sell-for-cash or trade-in offer may be just what they’re looking for.
You don’t have to wait for the shopper to come to you. Advertise that you’re looking to buy cars, even from consumers who aren’t looking to buy. Use cost-effective channels like social, email and your dealership website to get the word out to targeted audiences. If you’ve got a trade-in tool like Instant Cash Offer on your website, let them know that they can get a value right away.
Helping your customers and fueling your business
The lack of affordable used inventory out there is a real challenge, but not an insurmountable one. Putting customers first always pays off, but perhaps even more so right now. Get real sell-for-cash and trade-in offers to your customers through your service bays and inexpensive marketing channels and get creative with your existing customer database to see if you can turn yesterday’s high APRs into trade-in sales today.
You’ll be helping your customers and fueling your business.
To keep on top of changes in inventory supply, values, consumer intent and more, check out the weekly COVID-19 Auto Market Update videos, from Jonathan Smoke, Chief Economist of Cox Automotive.
More articles from Kevin LeSage
- Now & after COVID-19: At-home vehicle sales & service
- Driving more vehicle sales by selling outside your local market
- Vehicle inventory scarcity & low-cost acquisition
- Expanding Used Vehicle Sales Outside Your DMA
*Cox Automotive’s COVID-19 Auto Market Update from July 21, 2020; for details and to get the current update, visit https://www.coxautoinc.com/insights