Automotive retail is having a bit of a boom right now. While the automotive industry as a whole is suffering on a few accounts, car dealers have found themselves in the position of being able to get more gross on every transaction. Because inventory is tight, there is a swing in supply and demand. As a result, prices are up, customers are flocking to stores, and dealerships can’t keep their lots full. What has come from this is that there is now a waiting list for vehicles. Customers simply show up, put their name down, and wait for their new vehicle to arrive. Sales have changed from an all-day affair to something that can be done in under an hour. With these changes rapidly consuming the automotive retail industry, what can dealers do to be proactive?
The answer is simple: stay on top of inventory. There is so much going on right now that dealers need to watch the market and make sure their prices are set correctly. To do this, you need more than a simple pricing strategy. You need a robust system for evaluating price fluctuations and matching these shifts to your actual inventory. The goal is to build value through transparency.
We all know that prices keep clawing north. Will this trend be around for much longer? Probably not. The automotive retail industry has a history of pivoting with the world and economy around it. COVID accelerated the adoption of digital retailing for buying and selling cars. The pandemic also altered public perception of the value of semiconductor chips, causing a shortage of supplies needed to produce new vehicles. Once the automotive industry fully bounces back, you can be assured that there will be changes and progress made on the production front for new vehicles.
But for now, dealers need to hone in on their inventory like a hawk. What once was a weekly or even monthly cadence for evaluating inventory and pricing has become a daily task. With each passing hour comes a new opportunity to match your price to market demands. This is why we’ve seen vehicle pricing climb to unprecedented levels. And this goes beyond simply slapping a new sticker on a car each day.
As prices fluctuate, consumers realize that their demand for quality new or used vehicles increases, thereby decreasing their odds of finding their dream vehicle (or at least getting it any time soon). Yes, monitor your prices. You don’t want to leave money on the table. But don’t discount the customer experience. If you are over-eager in your pricing, you will still turn customers away. Or worse, the customer will pay, but will leave you a nasty review. Your reputation is on the line with every customer you speak to.
While you build a new strategy that includes staying on top of your inventory, consider the various solutions that deliver you opportunities to truly drive value and gross. You can’t cut corners. Honesty is considered an important factor in purchasing a vehicle. Loyalty comes from transparency. And return customers are earned, not bought.
Don’t get greedy, but do stay on top of market conditions. Price accordingly, but be certain to reexamine daily. There is no telling what tomorrow will bring. With that said, take advantage of all the positives going on in the world today. There is too much negativity in the news to not take the opportunity to make more money lightly. Continue to stay disciplined and consistent in what you do. Monitor your inventory and invest in new solutions that will help you move beyond simply surviving and turn your dealership into thriving.
MAX Digital supplies next-generation solutions to the automotive retail industry. From inventory management to tools for trade and appraisal, MAX Digital is capable of taking your dealership to the next level. Our suite of solutions exists to help you hold more gross by driving value and transparency for your dealership. Reach out to one of our consultants today and uncover the solutions available to help you achieve your goals.