No matter what you call it, “the New Normal, Pre-Covid, Post-Covid Era” in this ever-evolving market, dealers want one thing to remain the same – the continued profitability that many have experienced in the last few years. But just as the market has evolved, dealers need to meet consumers where they are and evolve their processes to continue to yield the same results. This may leave you wondering, “Where or how do I start?”
Imagine a puzzle – each piece represents a part of your dealership’s profitability. To understand the story, you need all the pieces to create the full picture of your dealership’s performance. When you can see the full picture, you can make more strategic business decisions resulting in higher profits by having the right car, for the right consumer, for at the right price, with the right strategy… you’ll have the tools to increase your ROI and realize greater profitability.
It all starts with having what shoppers want and demand. In the current market, your acquisition and stocking strategy needs to be customer- and market-driven. Together, we will get back to the basics and dive deeper into quality inventory and acquisition strategies you can start implementing today to maximize your dealership’s profit potential.
Profitability Begins with Acquisitions
In the past, dealers often decided which vehicles to show customers. Today, the situation is reversed – shoppers come into the dealership already knowing which vehicle they want to purchase. Having what shoppers want and demand is key. Here are the top recommendations for dealers looking to unleash their profit potential through vehicle acquisitions:
Know the Demand: You need to know what is in demand in your market and if you have any holes in your inventory. Historic sales data is essential, but it’s not enough. Tools that use current market data and help you understand the vehicles your consumers are seeking can have the most impact. If you aren’t factoring in market data, you’re missing a big piece of your puzzle.
Expand Your Acquisition Channels: Once you know what’s in demand, you need to acquire it. We all know that there’s no secret watering hole filled with used car inventory, but the good news is that you can get creative with several channels that already exist. Don’t be afraid to explore new sources and processes to fill inventory gaps like online auctions, private sellers, and your service lanes. When you have the right inventory, then you can attract the right customer.
Maximize Profit: Getting the maximum profit for every vehicle doesn’t just come from selling it, it all starts with the acquisition. Imagine covering seven times more ground to find the inventory that your dealership needs. With Cox Automotive solutions, you can get a view of what, shoppers demand while ensuring that you’re maximizing your profit investment. Scale all of your channels to help you source the vehicles that your consumers are looking for and the ones that will give you the highest profit potential by using predictive analytics to identify undervalued vehicles and negotiate effectively –, getting you the most bang for your buck!
Appraisals Matter
Now that you’re putting your vehicle acquisition pieces together to find the right cars to have on your lot, appraisals play a crucial role in this process. It is essential to work across your organization to make your acquisition and marketing process seamless. Here are a few ways to drive more profit from your appraisal process:
Alignment on Processes: Continuously collaborate between your Used Car Manager and Acquisition or Service Manager to share best practices while having ongoing discussions to talk through operational inefficiencies.
Data-Driven Appraisals: Leverage market data and appraisal tools to assess trade-ins accurately. Consider factors like mileage, condition, and market demand. Use historical data to determine fair prices and avoid overpaying.
Service Drive Insights: Monitor which cars are coming through your service drive. These vehicles represent potential trade-ins. Train service advisors to identify customers interested in upgrading. Use this information to align your acquisition strategy with service trends.
Market Trends: Stay informed about market trends. Are SUVs gaining popularity? Is there increased demand for electric vehicles? Adjust your appraisal process accordingly and consider offering incentives for specific models to attract trade-ins.
Navigating the Customer-Centric Market
You don’t need us to tell you that shoppers are evolving and they have access to more information than ever when it comes to researching vehicles and online shopping resources. They are also willing to travel further to purchase the right vehicle, all while doing more of the purchase process online.
On average, customers tell us that they are willing to purchase a vehicle up to 161 miles away. This number was 50 miles only a few years ago.*
To maximize profitability, dealers need to lean into consumer behavior and make sure they’re evolving their strategies as fast as consumers are adapting theirs.
Putting the Pieces Together
To have the complete profit picture, the right car starts with quality inventory and smart acquisition processes. Dealers must lean into this new market and leverage the right tools and data to maximize profits.
Remember, the complete profit picture requires all the pieces – Cox Automotive has the most connected and comprehensive view of the automotive industry and offers unmatched data and insights into consumer behavior, automotive trends and operational best practices. Whatever your goals, we can help you get there faster to stay a step ahead and successful in today’s marketplace.
Ready to discover how to drive higher profit potential in today’s market? Be one of the first to register now for The Complete Profit Picture series so you can close out 2024 strong and discover the new of ways working in today’s market to modernize your strategies and drive more ROI and capture more profit in each and every vehicle.
Register today: https://www.coxautoinc.com/retail/thecompleteprofitpicture/registration/
*Source: 2023 Cox Automotive Car Buyer Journey