If you’ve been to your local auto auction lately, you know one thing for certain: Acquiring quality vehicles isn’t as easy as it used to be. Margins are compressed, and demand for clean, sellable cars at a national level has made it difficult for the average dealership to compete for inventory. As a result, most stores are forced pick up less-than-ideal vehicles or pay a premium for the cars they want, putting profitability at risk.
But even in the face of the auction process, there’s an opportunity. Today, a record 258 million vehicles operate on U.S. roads, and each one of them has the potential to end up on your lot through a consumer trade-in or sale for cash. Few managers realize that nearly one in five consumers plans to offload their vehicle in the next six months, meaning there’s a sizeable yet largely untapped pool of inventory for your dealership to capture.
Car owners are wary of trading their vehicles to dealerships. In fact, a recent report from C+R Research shows that, of the 42 percent of consumers who initially consider selling or trading in their vehicle to a dealership, only 10 percent actually do. Fearing low-ball offers and a dragged out valuation process, car owners opt to sell independently or turn to major auto warehouses for cash.
Bridging the Gap
The good news is that both franchise and independent dealerships can curb misperceptions and entice consumers to sell by simply delivering on experience. The same C+R study shows that sellers seek a convenient, no-haggle process in which the valuation of their vehicle is not tied to a future purchase. Though it requires a shift in both mindset and process, by offering consumers a quick and transparent method to sell or trade their vehicles, your dealership can increase its total number of used vehicles acquired and improve net profitability. Moreover, the positive interaction sellers have with your dealership has the potential to pay dividends with future vehicle purchases and referrals.
Beyond the local auction, dealership-to-dealership trades and lifecycle marketing programs, it’s imperative to explore new online and mobile channels to diversify your dealership’s inventory. For example, digital offerings like the Cars.com Sell & Trade platform allow you to connect with an incremental audience of vehicle sellers and increase used-car supply.
However, failing to evolve tactics can lead to a decline in used-car inventory and may mean bad news for the long-term profitability of your dealership.
By updating processes, taking advantage of new online solutions and harnessing the power of your dealership’s presence on Cars.com, you can start to give vehicle owners the no-hassle selling experience they desire and continually replenish used-car inventory.