Used car sales continue to rise month over month, starting with a 3% increase from January to February 2022 in Q1. In contrast, analysts have reported new vehicle sales are projected to drop 24% to 26% in 2022 due to part shortages and inflation increasing, cited by Cox Automotive. As a result, dealers continue to rely heavily on auctions and trade-ins for fulfilling inventory shortfalls.
With so much demand on pre-owned vehicles to fulfill inventory needs, taking a moment to evaluate how you invest in your acquisition and reconditioning processes is very important to stay competitive. Without proper investment in vehicle information and reconditioning, you can be putting yourself in a financial situation where you are allowing substantial amounts of money to slip through the cracks — real dollars being wasted, every single day. Give your efforts a boost with five steps that will help you acquire your inventory smarter, get them retail-ready faster, while keeping your high-demand customers engaged.
Step 1: Be Nimble and More Educated at the Auction
Auctions move fast, and with all dealers competing for the same inventory, you must be quick in making your decision to bid — win or not. But being quick doesn’t mean you have to be uninformed about the vehicle’s value, features or history. Avoid investment pitfalls by using an original OEM window sticker tool that integrates into your inventory management system and auction platforms. This integration will allow easy, VIN-specific access for reviewing each vehicle’s original build information and pricing. Using original window stickers is a valuable resource to ensure the vehicles you are buying have the features that meet your consumer buying needs.
Key Thought: The key is to have access to all your window stickers in one place — you do not have time for multiple logins or having to jump around searching for information by brand or through sister stores. This kills your speed and accuracy.
Step 2: Be Better Informed on What You Are Appraising
It’s impossible to know every detail about every make and model that customers present for trade-ins. Just as window stickers are a valuable auction resource, they are extremely useful for properly appraising customer trade-ins. When window stickers are used as part of the appraisal process, your team can quickly access the original OEM build details and use the information to present a fair price based on the actual cash value. Your customers will appreciate this level of transparency and have a better understanding of your pricing strategy, which in turn will help you avoid losing the deal due to inaccurate appraisals and bookouts. If we undervalue the unit, we can lose the customer to a competitor. If we overvalue the unit, we lose our profit margin.
Key Thought: You’ll win more trades because you are presenting more accurate values with data, versus someone’s guess or gut feeling of what the vehicle may be worth. This information matters and it has to be easily accessible.
Step 3: Cut Your Recon Time in Half
Most dealers struggle with the ability to truly account for how long it takes to get a used vehicle retail-ready. For some it might be 72 hours, but others it can take up to 15 days to move each vehicle through the recon process to the front line. For every day a vehicle isn’t available for sale, your gross profit declines. Implementing a digital workflow process that incorporates time management, automated smart routing, as well as accessing real-time and VIN-specific recall notifications will give you insight to where your bottlenecks exist and how to fix them.
In addition, use the recon software to manage your vendors — this allows you to control what needs to be done, who performs the work and when it needs to be completed. The system will create accountability and open communication lines, via text and push notifications, so you never lose sight of where the vehicle is in the recon process.
Make reconditioning a priority by taking control of the time it takes to get your used inventory to market faster so you can maximize your investment and achieve higher margins.
Key Thought: You can’t improve what you can’t measure. Use data-driven technology to improve your process and make your people better.
Step 4: Go Back to Basics to Create Consumer Confidence
Vehicle pricing is at an all-time high and customers want justification for what is often perceived as inflated pricing. Gain their trust and create buying confidence by going back to basics with a modern approach to what we used to call “Worry-Free Folders” or “Evidence Manuals.”
With every pre-owned listing, give your customers a digital folder/manual/portfolio, which can be automatically emailed through your CRM and showcased on every SRP and VDP. Each portfolio is VIN-specific and provides your customers a complete view of the vehicle, just as if they were looking at it on site. Each portfolio should offer:
• Original OEM window sticker
• Vehicle inspection reports
• Recall services performed
• Cosmetic or mechanical work completed
• OEM brochures
• Photos and 360-video displays
• Dealership reputation testimonial
• Financial tools
Sharing this information in tandem with your vehicle pricing will help mitigate pricing objections. Your customers will be more informed about the steps you’ve taken to ensure they are buying a safe and reliable vehicle, at a fair price.
Key Thought: Standout from your competition and get better results by getting back to basics with a modern, mobile approach. Use a platform solution that automatically shares your worry-free folders digitally, before they ask for it. Do what other dealers don’t do, so you can win every time.
Step 5: Move Your Customer Further Through the Digital Buying Process
Brick-and-mortar dealerships aren’t going away anytime soon, however, if you don’t invest and continually update how you market your inventory online, you will be left behind. Reports show used car buyers are spending 8 hours or more shopping online, comparing costs, features and availability, while new car buyers average around 5.5 hours, per Kelley Blue Book.
Give every customer who engages with your pre-owned inventory that “new car” buying experience, as it will make a difference in how you move them through the digital buying process. With more vehicle sales shifting to online purchases, keeping them engaged with your inventory is key.
Make a vehicle “love connection” by offering a digital portfolio presentation for every vehicle listing — set up an automated CRM workflow via email or text and display online. Just like we discussed in Step 4, you want to highlight the vehicle features accurately using the OEM window sticker and ensure the unit is properly merchandised to optimize customer searches. Educate the customer on what investment you’ve made to ensure the vehicle is safe and reliable, while enhancing the buying experience with high quality vehicle photos, videos and the original OEM brochure. Create a virtual “in-person” experience that invokes trust by giving them the information they need to confidently make the purchase through your digital sales team.
Key Thought: Your customers will not complete an online transaction without the information they need to make an informed buying decision. Eliminate the frustration with a neatly packaged vehicle portfolio that they can use to take action and make a purchase they will feel good about. This is an essential part of your digital retailing strategy. It’s a win-win for both you and your customers.