Unconventional thinking is helping dealers find the right cars for their customers despite intense competition in the used car market.
Looking back over the last 18 months, dealers have faced a lot of challenges.
First, it was having retail activities curbed and modified due to the onset of COVID-19 and then, growing inventory shortages for new vehicles due to temporary plant shutdowns and semiconductor chip shortages.
Throw in the growing demand for vehicles among consumers due to more wanting private vehicles and fewer of them willing to take public transit and the result has been huge pressure on the used vehicle market.
On both sides of the border, dealers are simply struggling to get cars and when they do, often end up paying for a premium for them.
So how do you effectively navigate such an environment, ensuring that you’re not only able to source the right vehicles for your customers but that you’re also able to retail them profitably while at the same time building customer relationships for the future in a more stabilized marketplace?
Digital auction benefits
At Cox Automotive Canada, the parent company of Manheim Auctions, Pierre Fauchille, Managing Director, Physical and Digital Solutions, says that with so few vehicles on the market companies such as Manheim are encouraging dealers to track available inventory using online digital auction platforms such as the MUVIT.
“They can use it to track vehicles every single day,” says Fauchille who notes that to make things simpler, dealers only require a single password which can be used for multiple Manheim digital solutions including MUVIT and Simulcast, meaning they can quickly access available inventory and make bids as efficiently as possible.
Additionally, given the scarcity of inventory either from OEMs or through auction channels, trade-ins have become significantly more important with savvy dealers quickly identifying which cars are likely to sell and keeping them for retail rather than wholesaling them.
Fauchille says that Manheim can also help them through solutions such as its Private Store, which allows dealers to manage vehicles by using a phone capture tool to take pictures, have an inspection performed and then have each vehicle fed into a virtual “private” store.
He says the real benefit here, is that if you are a dealer group with multiple stores, you can share these vehicles right across all of your locations, providing better access to inventory for individual dealerships within the group.
James Tani, Executive Vice President; Dealer Sales at KAR Global notes that given the current market situation of tight inventory, dealers really need to think outside the box.
“One of the great things about the digital revolution,” he explains, “is how it really shrinks the world and removes geographic boundaries.”
As a result, dealers are able to cast a far wider net when it comes to finding the right vehicle at the right price as well as obtaining accurate condition reports.
Additionally, advances in logistics mean that it’s easier and more efficient than ever to have that vehicle quickly sitting on your lot and ready for an eager buyer.
Given how hot the used vehicle market currently is, cars and trucks that dealers are able to source today often quickly get snapped up by customers.
That being said, even in a hot market, it does pay to tread carefully.
Tani says it’s extremely important during times like these to really understand the dynamics of your local market and the pricing of the vehicles you’re looking to source.
He notes that tools like ADESA’s Market Guide, provide both national and local post sale results, as well as market guide averages.
This means that dealers can quickly determine current market values, making the decision process to buy cars faster and easier.
“When you’re buying, it’s also important to know your upper limits,” says Tani.
“Stick to them and don’t get caught up in the heat of the moment.”
Competitive environments often lead to inventive solutions for businesses that operate within them.
When it comes to used vehicles, today’s market dynamics mean dealers need to leverage each and every tool and strategy at their disposal when it comes to sourcing inventory.
Lauren Donalson, Senior Director, National Accounts at Pure Cars, which provides digital marketing services for dealers in both Canada and the U.S. says that when it comes to acquiring used vehicles, finding the right cars at a lower cost today can help dealers get ahead of the competition.
One way they can do this is via tools such as Google’s discovery ads, drumming up interest on social media and sourcing cars through non-traditional channels such as their own service department.
Also, by incorporating a lead form or easy to use trade appraisal function on their website, dealers can provide customers with a fast and convenient way of inputting trade-in information, allowing customers to see what they can likely get for their old vehicle in a clear, transparent fashion, while at the same time enabling dealers to determine whether the trade-in is a car they can retail on their own lot for a healthy profit.