Autotrader Autotrader's Director of Digital Marketing Kevin LeSage Discusses Inventory Scarcity and Making an Acquisition Plan

Dec 5, 2019
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Below is an article written by Autotrader's Director of Digital Marketing, Kevin LeSage, featured on our Dealer Advantage Blog. We wanted to share it with you and see if you have any comments or feedback.

Inventory is scarce and expensive. So, let’s build a proactive acquisition plan.

Dealers in many areas have witnessed increased shopper demand over the last couple of months, in some cases leading to record sales months. That sounds great, but there’s a downside that you’re probably feeling the effects of – inventory scarcity.

With all this metal moving off the lots, how can dealers replace their inventory?

Inventory scarcity is one of the biggest struggles I’m hearing from dealers today. I’ve literally been reading about dealers selling their shuttle vans and having to take Ubers home because they’re selling out of their inventory. Amazing!

Cox Automotive’s COVID-19 Auto Market Update from July 21 reveals that new inventory levels are the lowest they’ve been in almost nine years.*
Used days’ supply is usually around 45 days, but it’s now at only 34 days.*

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Is your dealership struggling to acquire affordable used vehicle inventory?

Low days’ supply is one issue, but we’ve also got to talk about wholesale and retail prices. You’ve undoubtedly run into challenges finding affordable used inventory. The dealers I’ve been talking to certainly have. As of July 21, wholesale prices are up 9.7% since the beginning of the year, while retail prices are up only 3.2%.* So what do we do?

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In these market conditions, you’ve got to have a unique inventory acquisition strategy.

Remember, you’ve got more control when you acquire inventory privately. You can turn the key and get a real feel for the car. Right now, you don’t get that luxury at the auctions. When wholesale prices are high and available inventory is low, buying from local consumers may be easier and more cost effective. Let’s talk about some strategies.


Work your CRM and great APRs for a win-win.

Recently, we’ve seen APRs that are the best in years. A good friend, Jim Wilkinson, GSM of Fred Haas Toyota in Houston told me he’s creating a great win-win for his business and customers. He’s finding past buyers with expensive interest rates and helping them shed negative equity by upgrading into a new car with lower rates.


“What we’re seeing right now will help a lot of people in the middle of the market by giving them the opportunity to upgrade, putting them in a better position without upping investment to do so. Now we recycle that trade, which we have all service records on, combined with all-time low certified rates, and we have an attractive piece of inventory for the seller and buyer.”
– Jim Wilkinson, GSM of Fred Haas Toyota
Talk about turning lemons into lemonade! They’re helping customers and creating that positive experience. I can only imagine that’s a customer who will come back their next purchase, as well.

Turn service customers into an inventory source (and maybe your next trade-in buyer).
Your service bays are your built-in source of used vehicle inventory with a low acquisition cost. You’ve got traffic coming through your service center. Are you letting your service customers know that you’re looking to buy cars?

As a car is sitting waiting for service, have one of your employees run the VIN to develop a price. Hang the price on a tag off their rear-view mirror so they don’t miss it. You may end up increasing your inventory and making your next sale.

With the right trade-in offer tool, you can generate a real trade-in price for each service customer, a price that the consumer will trust and that is reliable and no-risk for you. Kelley Blue Book Instant Cash Offer prices the cash offer using live market data. There are a number of options to choose from, depending on whether you’re looking to receive leads from KBB.com and Autotrader or just to generate Instant Cash Offers in person and on your dealership website. And you get seven days to decide if you want to hold onto the inventory or sell it back to Kelley Blue Book at the offer price.


Let local consumers know that you’re buying.

Times are tough. Some people in your area may be looking for less expensive transportation or may need to offload a vehicle. Your sell-for-cash or trade-in offer may be just what they’re looking for.

You don’t have to wait for the shopper to come to you. Advertise that you’re looking to buy cars, even from consumers who aren’t looking to buy. Use cost-effective channels like social, email and your dealership website to get the word out to targeted audiences. If you’ve got a trade-in tool like Instant Cash Offer on your website, let them know that they can get a value right away.


Helping your customers and fueling your business

The lack of affordable used inventory out there is a real challenge, but not an insurmountable one. Putting customers first always pays off, but perhaps even more so right now. Get real sell-for-cash and trade-in offers to your customers through your service bays and inexpensive marketing channels and get creative with your existing customer database to see if you can turn yesterday’s high APRs into trade-in sales today.

You’ll be helping your customers and fueling your business.

To keep on top of changes in inventory supply, values, consumer intent and more, check out the weekly COVID-19 Auto Market Update videos, from Jonathan Smoke, Chief Economist of Cox Automotive.


*Cox Automotive’s COVID-19 Auto Market Update from July 21, 2020; for details and to get the current update, visit
https://www.coxautoinc.com/insights
 
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Alex Snyder

President Skroob
May 1, 2006
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1,639
First Name
Alex
Work your CRM and great APRs for a win-win.

Recently, we’ve seen APRs that are the best in years. A good friend, Jim Wilkinson, GSM of Fred Haas Toyota in Houston told me he’s creating a great win-win for his business and customers. He’s finding past buyers with expensive interest rates and helping them shed negative equity by upgrading into a new car with lower rates.
With reduced staff and a struggle to keep up with incoming leads and ups, some dealers’ competition are far from proactive like this. This is a good time for the wise dealers to hop on the “refinance with new wheels” train. Lots of people are getting new mortgages right now. I hear the boat market is depleted. It looks like selection of RVs is down too. People are dying to spend some money in a socially acceptable way right now.
 

TaylorBerndt

Green Pea
Jul 28, 2020
4
2
First Name
Taylor
I found this topic really interesting and sent an email out from our new Business manager for High APR and I sent this Email out to customers with negative equity who bought from us 1.5 years ago-5 years ago with negative equity greater than $1500! So far we have received 5 leads from it in the last 6 hours! Hopefully can turn them into a deal!


Hi [CUSTOMER FIRST NAME],


Happy August! I wanted to reach out because currently, we are seeing the highest wholesale prices I have ever seen in my over 30 years of appraising vehicles. I know everyone's situation is different when it comes to financing. However, this month we are reaching out to our friends to take advantage of this historic time to eliminate any negative equity in their vehicle and help them start with a clean slate! No gimmicks, no fake coupons, no smoke, and mirrors, we just feel we would be doing a disservice if we did not try and help all our customers who we consider family.

To make things even better we are seeing the best interest rates in the history of the car business. We know your time is valuable, feel free to call us or email me personally and we can see if this historic time can work to your benefit.

Looking to get a cash value price right now? WE BUY USED CARS. Click HERE to be directed to our website for our Carfax Cash Value page!

Thank you for your time and I look forward to my team helping you.


[General Managers Name]
[Dealership Name]
[Dealership Address]
[Dealership Phone]
 
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