7 Ways to Increase Pre-Owned Profits
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Managing pre-owned operations has become increasingly challenging in today’s crowded market. Competition for quality vehicles that can price and sell quickly is fierce, and costs to transport, recondition, and prepare vehicles for the showroom continue to rise. Dealerships should consider new strategies to increase pre-owned profits to combat these inflationary pressures and improve the bottom line.
7 Strategies to Increase Pre-Owned Profits
The following are seven profit-boosting strategies that all dealerships should consider:
1. Select the Most Appropriate Vehicles for Your Market
Not all vehicles sell equally in any given area, and successful dealers use market-driven data to decide which vehicles to add to their inventory. The factors they consider include which makes and models:
- Have a low supply vs. demand ratio
- Have performed well historically at that dealership
- Are most popular in the surrounding metro area
2. Be Proactive Online
The internet has given purchasers considerable power over pre-owned sales because they can quickly and easily find the best deals by comparing inventories online. This digital shift puts customers in primary control of negotiations.
However, this does not mean dealers need to (or should) be defensive or reactive. Instead, dealers might proactively market their vehicles online by stepping into the customer’s shoes.
More specifically, the dealer might:
- Inspect competitor websites daily for prices and exclusive offers
- Review competitor inventory for make and model shortages that the dealer’s inventory might fill
- Leverage these data points to choose which vehicles to highlight on the website
To stay ahead in today’s competitive marketplace, dealers must avoid adopting a passive inventory and marketing management approach.
3. Revamp the Website
In today’s digital world, buyers begin their vehicle search online, making a user-friendly, informative, and accurate website essential. The website serves as the online showroom that attracts would-be customers to the dealership.
Successful dealership websites include three critical components, each addressing a particular issue:
- A well-stated value proposition that addresses customer pain points
- Testimonials and social proof that the dealer can solve customer problems
- A call to action that encourages buyers to conduct business
4. Buy from Current Customers
Buying cars at auction is becoming increasingly pricey, and dealers might pay near-retail rates for a vehicle that still requires costly repairs before introducing it onto the lot.
Instead, dealers might use equity mining to get vehicles from current customers. The dealership is already familiar with the car – through the initial sale or ongoing service – and there are no transfer or auction fees.
Also, the dealer does not compete against competitors for the business and might even double down if they can sell the buyer another vehicle.
5. Keep the Inventory Moving with an Experienced Manager
Dealers can move inventory faster by hiring an experienced and motivated pre-owned vehicle manager who can combine relevant statistics with expertise to manage the operation like an entrepreneur.
Critical areas for the manager to oversee include:
- Inventory management
- Accurate and fast evaluations
- Profitable trade-in negotiations
6. Nurture Leads
The goals are to maintain a steady inflow of vehicles, keep sales churning, and move inventory.
Although the pre-owned sales cycle is usually shorter than that of a new vehicle, it is still essential to follow up on leads.
Dealers should consider examining the CRM’s daily sales activities, such as:
- Outbound calls
- Connecting calls
- Call lengths
7. Reduce Input Times
Repairs, reconditioning, and storage charges all add to the overall cost of a vehicle. Keeping these costs low means a higher profit margin on each car, so getting inventory through repair and clean-up as soon as feasible is critical.
It is vital to measure and monitor how long it takes to successfully move vehicles through the transport, service, and retail operations while assessing throughput times.
Dealers might consider taking the following steps:
- Identifying steps that the dealer could skip or shorten
- Exploring innovative technologies to help complete tasks more quickly and efficiently
- Determining whether expensive repairs will pay off
Every little bit helps when looking to raise margins. The quicker and more efficiently dealers can make a vehicle accessible for sale, the faster they benefit from it.
Find the Tools That Help Increase Traffic
Although the market is fiercely competitive, there are chances to increase pre-owned profits for those dealers who understand demand and implement the proper marketing and sales tools. New vehicle inventories remain tight, and dealers need solutions that stockpile trade-ins.
Contact us today and discover how Affinitiv’s Trade-In Valet can help you boost pre-owned traffic, trade more consistently, and sell more cars.
All | May 02, 2023