Sometimes, a threat emerges that takes everyone by surprise. You may have handled the past two years very well—and high customer sentiment is proof—but an ongoing inventory crisis is testing dealers like never before. So, what do you do when your lot is looking bare, your inventory is lean, and you can’t sell your way out? With car volumes at 43% below 2020 levels, it’s time to formulate a plan.
Tip 1: Use Data to Make Inventory Decisions
You’ve been in business long enough to understand the value of data when making important decisions. Data can help you know where to look for cars, which models to go after, and how to price used inventory. The data that your dealership already has on its previous sales and on shopper interest—search volumes on your own website, for example—will teach you which used cars are most popular and which could be most profitable.
Tip 2: Source inventory From Everywhere
Armed with the knowledge of which cars are in demand, you can use your database and your customer records to find current owners of those cars who might be motivated to sell. Specifically, look at upcoming lease expirations and reach out early to begin discussing trade-in options. You can also find inventory by mining recent digital retailing leads with trade-ins attached. Finally, look through your database of existing customers for repair-weary owners who might be ready to sell—those who have recently made service appointments or declined service recommendations, for example.
Tip 3: Rethink Your Marketing
During periods of lean inventory, many dealers decide to cut back on advertising or cut it out altogether. While it might be tempting to try and save some marketing money while you have fewer cars to sell, the strategy generally backfires. In fact, companies that cut their advertising during the pandemic saw a 7% drop in leads while those that continued saw a 2% increase. Instead of eliminating your ads, focus on adjusting the message to focus on vehicles with more availability. You can also pivot your promotions to cover used inventory, vehicle service, and “we’ll buy your vehicle” campaigns.
By now, you’ve learned to deal with just about every challenge this industry could possibly throw your way. The current inventory shortage, brought about by global supply chain disruptions, is also nothing you can’t handle. By following these tips, and by getting a little bit creative, you can develop a cross-departmental strategy that keeps your profits high even as inventory is low.
To learn more dealership survival tips, including more information about how top dealers are thriving in today’s environment, download our eBook, A Dealer’s Guide to Dealing with (Almost) Everything.