Are You Mismanaging Your Dealership Inventory?
To say that dealerships have been through a lot in recent years would be an understatement. Even as COVID-19 restrictions start to ease and in-person auto auctions are returning, dealers are still grappling with supply chain issues, surging gas prices, and an overseas war, all of which are affecting the way dealerships buy, sell, and trade used vehicles.
The good news? Would-be new-car buyers are instead turning to used car dealerships for their next purchase. Seeing a high demand for used cars, automakers are giving dealerships even more opportunities to turn a profit by enabling them to expand their selling options. For example, Hyundai recently expanded its CPO programs so dealerships can now sell CPO vehicles up to ten years old.
Even with used car demand at an all-time high, dealerships should still seek out ways to optimize their dealership inventory strategies for peak performance. Whether it’s minimizing sunken costs or maximizing marketing reach, there are a number of ways your dealership can enable year-over-year growth.
Let’s take a closer look at some of the most common ways dealerships mismanage their inventory. By better understanding the areas of improvement, you can know what to look out for as you manage your own dealership inventory.
An Unintelligent Reconditioning Process
Customers will look to your reconditioning process as a means of determining the condition of a used car, its overall cost of ownership, and whether or not it's a worthy investment. And while the reconditioning work you put in should ultimately work to satisfy your customers, it also needs to be profitable on your end. If you’re assuming that every vehicle that comes to your lot will cost roughly $1,000 to recondition, it’s time to rethink your processes and implement smarter reconditioning strategies.
For example, pouring more reconditioning work into a used 2017 Tesla Model 3 is likely worth the extra effort, as these vehicles typically sell in 16 days or less for an average price of $47,453. In this instance, it makes sense to spend more time on the reconditioning process so that a customer has no hesitations when it’s time to sign on the dotted line.
On the flip side, if you acquire a used 2012 Toyota Corolla, odds are customers won’t expect this vehicle to function and look like a brand new car. Since reliability and safety are likely the most important factors for shoppers of the Toyota Corolla, you can likely save money on fully reconditioning the vehicle and ensuring the work you put in aligns with their expectations.
Developing a smarter reconditioning process that takes into account the make, model, year, mileage, and market price of your dealership inventory can help save money, time, and resources in the long run.
Not Thinking Like Your Customers
The way customers learn about your dealership inventory is changing. Instead of coming into your dealership to inspect your vehicles and ask questions, people prefer to start their search online. 88% of prospective car buyers will research their options online before stepping into a dealership, meaning the way you market your vehicles online is critical to maximizing your profits.
Customers should be able to get all the information they need about your vehicles from the comfort of their own homes. If you only post a handful of vehicle pictures online and limited information on a car’s history, prospective buyers will be quick to look elsewhere. To give your dealership inventory the best chance of selling, ensure customers are provided with the complete rundown on your vehicles through a digital setting.
60% of prospective car buyers spend six or more months on their search, with up to 24 marketing touchpoints along the way. In order to create a user-friendly shopping experience that caters to the modern-day customer, work to fine-tune your advertising efforts in a way that maximizes the potential of digital marketing.
Failing to Track Your SRPs & VDPs
Search Result Pages (SRPs) and Vehicle Detail Pages (VDPs) are two ways that dealerships can measure the marketability of their vehicles. When a prospective car buyer searches for a specific vehicle that’s on your lot, ideally your dealership will show up in relevant search results. SRPs are used to track when a customer starts a search and is presented with a list of vehicles, while VDPs track when a customer visits the page for a specific vehicle.
Keeping an eye on your SRPs and VDPs can help you better understand what search results are driving the most traffic to your website. If you see that a certain vehicle is consistently generating steady traffic to your website, you can work to acquire more of those vehicles to sell on your lot. Similarly, vehicles that aren’t making a splash online may want to be phased out of your dealership inventory.
Again, the marketability of your vehicles will be important in boosting your SRP and VDP numbers. Having all the vehicle information customers expect to find online will help drive more traffic to your website and, in turn, generate more leads for your business.
Take CarOffer for a Test Drive
The traditional ways of managing dealership inventory simply don’t cut it anymore. That’s why CarOffer is working to give dealerships the tools and resources they need to thrive in the ever-evolving automotive landscape. 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 increase car dealership revenue in the long run.
Contact us today to request a demo or learn more about our dealership inventory solutions.