There are many questions that continually pop up around dealerships across the country: Should we keep this vehicle or send it to auction? Is this vehicle worth reconditioning for the lot? How far out should your used car department start planning for seasonal demand?
These questions are even more pressing today amid semiconductor shortages and subsequent production delays. According to IHS Markit in February, nearly 1 million fewer light vehicles are anticipated to be produced in the first quarter of 2021 due to supply interruptions.
As these vehicle inventory-specific questions continue to mount and challenge dealership leaders to react, it is critical dealers take control of their vehicle inventory by leveraging time-tested inventory management best practices – fueled by customer and industry data.
In this blog post, we share three best practices for dealership inventory management including:
Make Data-Driven Inventory Decisions
In today’s rapidly changing automotive market, dealers have an incredibly powerful tool at their disposal: data. Locked away in your dealership’s DMS and CRM is a wealth of customer data critical to building and maintaining a profitable used car inventory – especially when acquiring vehicles through trade.
Ensure your sales leaders are not only staying in-the-know regarding changing consumer demands and preference, but they’re also regularly analyzing your dealership’s customer data to identify localized trends and market demand. This includes identifying makes and models that have sold consistently well over the last 30-90 days – and which vehicles have sat on your lot the longest.
Proactive dealerships around the country have taken this one step further by leveraging behavior prediction technology that integrates their CRM, DMS and inventory data. The reports generated by these advanced marketing tools, coupled with OEM updates related to their incoming inventory, empower dealers to automatically make data-driven decisions when it comes to their dealership’s inventory based on the wants and needs of their audience in real-time.
Maximize Your Current Pre-Owned Vehicle Inventory
Heading into 2021, strong wholesale pre-owned prices prompted some dealers to send more vehicles to auction than they did in the past. However, slowing prices and inventory challenges are prompting dealers to rethink the process and keep some older models on their lot.
Coupled with growing consumer interest in pre-owned vehicles and retail typically generating less overhead than auction, this car dealership inventory strategy is incredibly valuable to dealers who can accurately identify which trades pose both prime reconditioning and retail opportunities.
Of course, there are plenty of factors to consider when weighing which vehicles to keep, spanning from a vehicle’s maintenance and accident history to changing consumer buying behaviors. Forward thinking dealers are leveraging a similar approach to the previously mentioned data-driven inventory strategy to predict reconditioning costs and market demand more accurately, helping maximize the profitability of their pre-owned inventory.
Not only does behavior prediction technology allow dealers to identify and engage owners of in-demand makes, models and trim-packages, this approach also empowers dealers to think ahead and proactively map prospective buyers to their available and incoming inventory – minimizing the number of days vehicles sit on the lot and maximizing their inventory profitability.
Create and Maintain a Strong Homegrown Inventory of Pre-Owned Vehicles
Maximizing your current inventory and using robust data and advanced marketing tools to make decisions are two critical elements for dealerships building a strong homegrown inventory. Representing the pinnacle of profitability, vehicles in a dealership’s homegrown inventory were once sold as a new vehicle sale, returned to the original dealership for service and eventually traded back in to be reconditioned and sold again as a pre-owned vehicle.
Committing energy and resources to the development of a strong homegrown inventory strategy equates to added revenue and profitability to each department in your dealership long after the original new vehicle sale – all while building loyalty and defending against customer defection through ongoing communication.
Dealership tools powered by behavior prediction technology like Market EyeQ maximize profitability at every step by largely automating this process from the first new vehicle sale to identifying and engaging the best pre-owned prospect for that vehicle later down the line. In fact, dealer partners who utilize Market EyeQ report an average cost-per-sale of $115 on average, significantly lower than the industry average of $624.
While dealers around the U.S. have continually faced evolving inventory challenges in the last year with little immediate reprieve in sight, overall consumer demand remains strong. Instead of waiting and hoping for a quick industry recovery, opportunity awaits dealers who take control of their future success with a data-driven management strategy.
Want to learn more about how Mastermind can help you maximize your dealership’s available inventory? Contact us for a free Market EyeQ demo.