Automotive Retail is Changing. Dealers Need to Change with It.
It’s no secret that dealerships have had to operate in an ever-changing environment these past few years. Identifying and unlocking operational efficiencies has been top-of-mind for many dealers, but in the wake of global microchip shortages, supply chain issues, COVID restrictions and more, doing so is easier said than done.
While there are still plenty of challenges dealerships must overcome, the light at the end of the tunnel is still visible. Even amongst unprecedented change, dealerships have been able to evolve their traditional automotive retail models and embrace innovative sourcing and selling strategies to keep their dealership profitable and productive.
It’s impossible to predict what the future of automotive retail looks like, but CarOffer believes there are a few key insights dealerships should take notice of in order to prepare for the road ahead. Let’s look more closely at how your dealership can evolve its operational processes in order to change alongside the evolving automotive landscape.
Don’t Ignore the Digital Retail Space
Even as COVID restrictions start to ease and a sense of normalcy begins to return, dealerships shouldn’t abandon the digital retail strategies that carried them through the pandemic. Data suggests that customer decisions and experiences are being increasingly shaped by online touchpoints, with 80% of consumers using online sources during their purchase-consideration period.
Even before the onset of the pandemic, industry experts predicted that the automotive retail space would soon be overhauled in favor of digital solutions that replaced some of the more traditional means of wholesaling and selling to consumers. Seventy percent of car buyers view the presence of a physical car as the main reason for their visit to a dealership, but prefer to research, negotiate, and finance their used vehicle online.
Dealerships that fail to embrace innovative mobility concepts and digital retail formats will likely struggle to stay afloat in the coming years. In order for your dealership to remain agile and competitive going forward, it’s important to make digital retail solutions an integral part of your sourcing and selling strategies.
Explore New Profit Centers
No surprise here, but your dealership relies on a steady stream of profits in order to remain competitive. Traditionally, selling directly to consumers has been a reliable source of profit for used car dealerships, but global microchip shortages, COVID-related hesitations, and the emergence of digital car-buying platforms have somewhat dried up the direct-to-consumer channel for many dealerships.
Putting all of your eggs into one basket is a surefire way to limit your dealership’s ability to maximize revenue in the long run. Being ready for whatever the future of automotive retail holds means establishing reliable profit centers that you may not have previously tapped into.
For example, look at your inventory in a new light and consider its value to a wholesale buyer. Establishing wholesale as a primary profit center for your dealership is a worthwhile investment that’s already been proven to work well for other industry leaders. Platforms such as CarOffer can ensure wholesale is working in your favor by guaranteeing wholesale purchases at appraisal time and providing "exit offers" for what a vehicle may be worth in 45 days.
Explore new profit opportunities, from wholesale to trade-ins and everything in between, in order to give your dealership the best chance at not just surviving, but thriving as new challenges present themselves in the years to come.
At in-person auto auctions, dealers would often fall prey to hunches or panic purchasing to drive their buying decisions. They might spend more on a car that’s outside their budget because they believe it has high-profit potential, or purchase a vehicle that they haven’t had on their lot before because they’ve got a hunch it’ll sell quickly. Or (and most often the case), they get outbid on their preferred inventory and settle for something less than ideal for their lot and more than they wanted to spend.
Incorporating automation into the buying and selling strategies helps remove the emotional aspects of inventory management and enables dealerships to implement consistent, cost-effective solutions.
For example, CarOffer’s Buying Matrix automatically fulfills buy orders based on customizable buying preferences. Dealers simply input the model and year of the cars they’re looking for, how many are needed, and budget spend . The platform gets right to work on matching buy orders to vehicles dealers are selling. The Buying Matrix takes the guesswork out of sourcing and ensures dealers can keep up with inventory demands.
Let Core Inventory Data Guide Your Decisions
Similar to embracing automation, leaning on core inventory data to guide buying and selling strategies is key for dealerships looking to evolve with the changing automotive landscape.
Understanding which vehicles make up core inventory helps determine what’s generating the most profit and, more importantly, which vehicles are cutting into the bottom line. Determining the best sellers and profit killers enables dealers to optimize sourcing strategies with greater confidence and control.
The ability to achieve long-term success lies in the commitment to letting inventory data guide business decisions. Adopting a data-driven mindset to automotive retail helps dealers rest easy knowing their buying and selling strategies are backed by insightful analytics.
Give CarOffer a Test Drive
Automotive retail is changing. CarOffer can help your dealership change with it. If you’re ready to leave the traditional ways of managing used inventory in the past, we’re here to help. Our dedicated support staff coupled with our advanced technologies ensures we get you the exact cars you need at the right price, and at the right time.
Additionally, we can help you make sense of your core inventory and ensure you’re able to move aged or stale inventory off your lot quickly. Together, we’ll work to bring back valuable time and resources to your business and, in turn, increase car dealership revenue and position you well for long-term success.
Contact us today to request a demo or learn more about our inventory solutions.