We have spent the last two weeks discussing how to hold more gross in the ever-evolving automotive retail industry. It’s true that the cyclical nature of selling cars has changed. Digital retailing has been accelerated by diverse shopping habits. Sales enablement has moved from a lofty goal to a practical process. With a scarcity of new inventory, you naturally feel the heat when it comes to a customer wanting competitive pricing. So, how do we as an industry hold our ground? Let’s start by identifying some key factors.
First, when you survey your lot, it is important that you take note of your inventory. Is your stock sluggish since COVID-19 or the semiconductor shortage? Chances are you need to pump up the numbers of your inventory. The best way to do that is by sourcing used vehicles. We know there are two ways of accomplishing this: auctions and trade-ins. While this isn’t news to you, what might be is which of the two options helps you hold more gross.
In most cases, trade-ins spend less time on the lot than vehicles purchased at auction. And, those same trade-ins typically sell for more than a vehicle secured via auction. So when it comes to building your lot, you have to get creative in how you acquire inventory. Understanding how the market has changed will help you truly grasp how to improve your margins.
Now, couple that with how vehicles are currently being sold. We discussed the scarcity of inventory for both new and used vehicles. This shift changes how you sell to customers. Currently, I’m seeing a lot of dealers that likely have the ability to sell their New vehicles at or close to MSRP depending on the make and model of the vehicle. So, to properly hold more on total grosses, you need to strategically attack the trade-in process. Customers are savvier than ever before. They understand the process, research the trends, and read the books. But what if the books are thrown out the window?
At the end of the day, whether you are currently rocking the market or struggling, your goal is to make more money and sell more cars. The current environment is yours. So take advantage of it. I mentioned earlier about getting creative with sourcing used inventory. One such way to do this is by securing “homegrown cars”. If you aren’t currently participating in this practice, I urge you to seriously consider monitoring cars originally purchased from your dealership to ensure they are well maintained and pampered during the ownership process. Essentially because the owner has done all the required services at your dealership and you can therefore validate its quality, it is more profitable. Engage with customers in your service drive and let them know the value of their car and encourage them to step into a new vehicle while they are waiting for their current vehicle to be serviced.
While doing this, you must build transparency with a solution for active trade appraisals. Utilizing a tool for this puts the customer in the driver’s seat. You can walk around the vehicle and point out valuable information about the vehicle’s condition. By being transparent in how you are rating the trade-in, you create trust between both parties. The customer will come to understand the true worth of their vehicle while you can hold more gross.
Each day brings a new shift in how the automotive retail industry operates. You must be proactive in how you are getting inventory. But that doesn’t mean the customer experience needs to suffer. Bring the customer into the trade-in process with an active trade appraisal. Be honest and straightforward when valuing a vehicle and help the customer best understand the true worth. The best place to start is partnering with a company that can help you deploy solutions for active trade appraisals. MAX Digital can provide you with a roadmap and the tools needed to be competitive in sourcing vehicles and to hold more gross on each transaction. Schedule your free consultation today.