Obtaining clean, preowned inventory that is market oriented is one of the biggest challenges that dealerships face in today’s competitive environment. As pre-owned and CPO sales continue to climb at dealerships, the challenge to keep pre-owned lot inventories fully stocked with clean, fast turning vehicles is becoming increasingly more difficult.
Dealer auctions are a good resource for vehicles but dealerships often find themselves in bidding escalations with other dealers in their markets on desirable units because auctions provide the majority of fast turning, high ROI pre-owned inventory. Add in the lane fees, transport and time it takes to bring the vehicle into the dealership to begin the inspection, reconditioning and detail processes and the dollars add up quickly.
What started out as a desirable unit quickly turns as the “cost to market” metric exceeds 90%.
Trade in’s can be a great way to build customer loyalty and are often a necessity to complete new vehicle sales. Trade-ins can be a good source but it’s a reactive process that is dependent on what’s brought in to the dealership. The drawback to trades as a sourcing strategy is the lower volume and restrictive selection.
One of the most effective ways to offset sourcing challenges is to add a percentage component of private party sellers to your pre-owned inventory mix. By pursuing private party vehicles in your market, you can engage customers you would not normally have the opportunity to interact with, and who are likely adding or replacing a current vehicle.
For starters, instant cash offers and appraisal tools can be useful resources for sellers visiting your website. Things like these allow sellers to engage with your virtual dealership and obtain information which can help build trust and rapport virtually.
Of course, when you offer these things you want to advertise the fact that you do, to send more sellers there. Therefore you need a marketing strategy that places your dealership before private sellers out in the marketplace as a destination to sell their vehicle.
Another method is to search for vehicles in the marketplace. Not only do private sellers list their vehicles online, but they also often place “For Sale” signs on the car. By equipping your personnel with the right acquisition tools tools, such a VIN scanner to run history reports on the fly, your team members can make instant cash offers on vehicles they encounter.
Buying and selling used cars profitably isn’t easy business and the majority of dealers have only a reactive strategy. Deploying alternative ways to source used vehicles, such as from private sellers, is a key step in the right direction of a more proactive and profitable strategy.