Strategies for Dealer Success Amid Inventory Shortage - AutoSuccessOnline
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Strategies for Dealer Success Amid Inventory Shortage

Beyond dealerships’ physical inventory, new lead generation and audience creation online will be essential for combatting current supply constraints and increasing profitability.

Kevin LeSage influences product development as well as sales and marketing strategy at Autotrader. Kevin began his career launching SEO and advertising for and then transitioned into an account manager role, where he oversaw dealers’ online strategy success. Kevin went on to sales, where he finished in the top 3% across Cox Automotive, helping customize digital strategies for dealers across the U.S. Next, he managed the analytics product for Cox Automotive, before moving to Autotrader to focus on digital marketing strategy.

The automotive industry is facing a big issue in the form of a global shortage of semiconductors, and the scarcity of these chips used in today’s vehicles may persist for at least the rest of the year. With nearly 1.1 million fewer vehicles in inventory at dealerships this April versus last April, this problem has caused serious new-car inventory supply constraints for dealerships across the country, particularly as demand remains high among consumers. 

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With this issue likely to stick around for the foreseeable future, dealerships need to develop strategies for success to work around inventory shortages. From doubling down on certified pre-owned (CPO) programs to evaluating lead generation and data approaches, there are a few tactics that dealerships should prioritize to maximize their efficiencies in the months ahead. 

Focus on CPO

When new-car inventories are this low, used cars will be a next-best option for many shoppers. Dealerships can enhance their used inventories and provide consumers with the benefits of a new car at a less-than-new-car price through manufacturer-backed CPO programs. CPO programs give consumers an option that provides many of the benefits of a new car at a more affordable price. Amid ongoing tight inventories, this clearly has been a popular option. In fact, according to Cox Automotive estimates, sales of CPO vehicles increased 80% year-over-year in March 2021 and increased 36% month-over-month compared to February. 

Utilize Date to Maximize Your Advantage

Beyond dealerships’ physical inventory, new lead generation and audience creation online will be essential for combating current supply constraints and increasing profitability. Retailers can accomplish this goal by creating and targeting custom conquest audiences. A conquest audience is designed to bring in a new shopper and expand a retailer’s market share. This adds more people to a dealership’s CRM and provides valuable first-party data about a customer. 

Importantly, dealerships should focus their digital efforts on the quality of the data they acquire. High-quality leads — encompassing up-to-date information about potential customers and their buying preferences — greatly benefit a dealership through providing higher conversion rates and a better return on the resources spent acquiring those leads.


Imagine this scenario: A customer is shopping for a Corvette, and his wife tells him she’s pregnant. A life event occurs, causing that consumer to change his shopping behavior from sports car to SUV. If a dealership’s data doesn’t regularly update to reflect similar shifts in consumer habits and preferences, it spends money targeting someone who is no longer in-market for that type of vehicle. Clearly, the accuracy and quality of a potential buyer’s profile data matters — underscoring the importance of sourcing information from the right places, such as third-party sites that prioritize data accuracy and quality customer experience.

Digitize Your Dealership

Ultimately, dealerships can maximize the power of this quality data by putting the right digital tools in place that allow them to not only identify high-quality leads but also to capitalize on them. One way to do so amid such high vehicle demand is to expand the reach and exposure of a retailer’s current inventory beyond its designated marketing area (DMA), allowing it to reach more potential buyers who might not be finding the vehicle they want locally. Dealers should look for solutions that show a dealership’s inventory outside of its physical trade area, enabling shoppers to view vehicles from dealerships across many locations.


Once dealers have identified a lead and initiated a sale, they should make the buying process as simple and streamlined as possible by implementing such tools as digital retailing that bring more steps of the process online — especially if a shopper is not in their DMA. Finally, dealerships should keep close tabs on their digital investments in order to track performance and tweak those investments accordingly. Analytics dashboards are a great way to derive real-time insights and track the ROI of digital spending. 

Ultimately, nearly half of franchise dealers cited generating more qualified leads as an important benefit of using digital retailing over the last year. This advantage will only increase in importance in the coming months, since inventory shortages likely will continue well into 2021. Amid rebounding consumer confidence and government financial support, demand will remain strong — and in light of these rapidly evolving dynamics, dealerships should focus on what they are doing to respond to consumer demand.

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