Dealers across the nation are on a quest to meet the needs of buyers sidelined by inventory shortages. David Long and the All Thing Used Cars community got together to share strategies for inventory that will not be available for three to six more months. The conversation centered around the difficulty managing trade values for future purchases and keeping a customer engaged through the purchase lifecycle. Purchase timelines around making their way up to anywhere from 5 to 12 months away on new vehicle purchases for many brands. This presents a challenge for new vehicle dealers when structuring deals with trades involved.
The Pipeline. Data shows inventory levels for April 2022 are 800K vehicles lower than 2021 and a massive 2.2M vehicles lower than 2020. The reality of the market isn't that interest is cooling, but that people are waiting for the cars they want. An estimated 4 to 5 million buyers are waiting for cars to arrive on order to are sidelined in the market due to lack of availability.
Strategies For Selling & Trading.
The All Things Used Cars community was able to pull from the question a few applicable mindsets instead of a one-size-fits-all plan of action.
K.I.S.S.
Keeping the process simple is the foundation for every successful strategy shared and explored by the community. A simple process means easy to follow, easy to communicate to the customer, and easy to explain and adapt in other dealerships operating in different markets.
Giving a customer an appraisal that is good for seven days will usually be enough to decide. If they come back in 8 days or seven months, a reappraisal is the easiest way to know the actual value of that car at that time.
Transparency
Customers hate ambiguity. Bringing the facts you have and being upfront about potential shifting within the information based on the timeline goes a long way to helping customers feel supported through the process.
Letting a customer know the data, market trends, and projections available to you when giving them a number for a buy, sale, or trade-in will significantly help them understand a different number if/when they come back in 3 months.
"Very specific language."
States have standards for marketing trade-ins. Knowing the exact rules for sales of inventory you are waiting for is critical for avoiding unnecessary complications. Consult your state dealer association or Attorney General.
Customers with a written quote could potentially cause issues if the rules are not strictly adhered to or communication is not clear at the time of the appraisal.
Stick with it.
The trick is to build a process you can stick with no matter the current shape of the market.
Build processes that work for your team and customer and then stay consistent. It is repetitive and not exciting, but it works.
Consistency is what makes the difference.
The business is changing, and the industry has to change with it. In some ways, new paths have to be forged, but in many instances, a return to tried and true basics seems to be the rallying cry of those closely watching the shifting market. The production crunch will be here another 12-18 months and there is little anyone can do to change that suddenly. What matters now is the decisions and actions made by dealers facing reality as it is.
Listen to the entire replay on Clubhouse.