The race to the bottom isn’t fun. It’s tedious, draining, and frustrating. Yet, time and time again, dealers find themselves in this inevitable situation. You are constantly matching wits, inventory, and pricing against other local dealers. And with the rise of digital retailing, this level of fierce competition will extend beyond your backyard to a wider audience. Dealers can’t keep racing to the bottom. It isn’t sustainable for anyone involved and at the end of the day…everyone loses. With that being said, what can be done to stop this practice from happening? There are certain measures and solutions available to help you out.
5. Accurate Pricing for Sales
Your pricing needs to be competitive with other dealerships. That won’t change. But what can change is the numbers behind every car you sell. When it comes to new and used inventory, you need to be backed with the appropriate data necessary to destroy the competition. Consumers know the fair value and worth of vehicles, but they are searching for the best possible deal. To prevent yourself from racing to the bottom, know the worth of your inventory while also being privy to competitor pricing. Then, when you put a value on a vehicle, you will know that it is the most accurate to the market, fairest for the customer, and helps you to continue to improve your margins.
4. Write Better Ad Descriptions with Packages Included
The modern consumer wants to know every feature of a vehicle when they are in “shopping mode”. Being scant on details is a disservice to your customers. Unfortunately, it is easy to do this when you are racing to the bottom. All too often, the time consuming and grueling task of writing descriptions is overlooked for its importance. This means that customers will come into your store misinformed and looking for a deal that simply isn’t available. By merchandising your vehicles correctly and writing better descriptions that include different technology or safety packages available on your inventory, you are providing a fair platform for pricing, as well as increasing the transparency of why your vehicles are priced the way they are. Couple that with an inventory management system capable of showing comparative information, and you will be able to fully and fairly defend your pricing without having to resort to running down costs to overcome competition.
3. Fair Trade-ins
Every car has a story. Sometimes that story is tragic. Sometimes that story is jolly. In either regard, when a customer brings in their car as a trade-in, it’s a great opportunity for you to increase inventory. However, it’s possible to race to the bottom and find yourself offering too much for the car. Dealers need to be in the know of the story behind a customer’s potential trade-in. What’s more, is that they need to also be able to illustrate the true value of the car. Customers will have a number in mind and will be ready to make you race to the bottom to beat the deal of the store across the street. Be open and honest with how you are evaluating a car and show the customer why you are priced accordingly. Their time is valuable, but so is yours. Leverage the data and technology solutions available to ensure you are being competitive with pricing, but also strategic to your own overall market goals.
2. Holding More Gross
This is the golden egg for many car dealers. However, holding or improving gross is nearly impossible if you are racing to the bottom. The key is to arm yourself with as much data as possible so you are making profits on both sides of a transaction. Getting inventory is important, especially in today’s climate. Utilizing data gives you the right price on a vehicle that you are trying to purchase while also delivering the right price of the cars you are trying to sell. It all comes down to data. The more you know, the more gross you will hold, and the less you will be racing to the bottom.
1. Increasing Inventory
When it comes to the competitive nature of selling cars, you need to have as much of the right inventory as you can. It is necessary that you get as creative as possible in the ways that you acquire inventory. This includes identifying high-value vehicles that you should be targeting. When you have a robust inventory, your lot is more attractive to customers. You have options for them to select through a variety of vehicles which increases the likelihood of a sale. Build a framework for a retail-first culture, and be proactive in knowing when to hold or when to dispose of a vehicle.
The race to the bottom is fruitless. Everybody loses. Prepare yourself with the right solutions to give yourself an edge over your competitors. MAX Digital has a suite of solutions that will provide dealers with data for inventory management, digital retailing, fair value trading, appraisals, and more. Schedule your demo today!