Benefit from a consistent flow of used vehicles to your dealership.
All we seem to hear about in the news is how vehicle production is down because of supply chain issues caused by the global shortage of microchips. With new vehicle production down, the focus is now squarely on used vehicles.
Recent Cox Automotive studies show that over 68 per cent of consumers are in-market for a used vehicle right now, and this has been increasing by four per cent year-over-year for several years.
This is not a new phenomenon; it is just amplified now because of the shortage in new vehicles. While some dealers are “waiting it out” others are taking the matter into their own hands, and are using a strategic approach to building their used vehicle pipeline.
How do you build a used vehicle acquisition pipeline?
There are many sources for acquiring used vehicles, and every dealership has its own approach. The most organic way to acquire used vehicles is through trade-ins, service drives, and tapping into your owner base. Most of you are doing this already, and if you are not—you 100 per cent should be.
With new innovative technology available to dealers now, some dealers are looking beyond the obvious. Some car dealers are now setting up digital buying centres and opening B lots, while others are targeting private sellers (that are advertising on Trader, Kijiji and Facebook Marketplace) up to 500 kms from their dealership.
We asked Terry Haitas, General Manager of Welland Honda, how his team is adapting to this changing marketplace. His response? He knew the vehicle shortage was coming.
“We have been stockpiling used vehicles for a few months now and we have opened a B lot to showcase these used vehicles, and we created a new brand to promote these cars,” said Haitas.
When prompted, he went on to say that “we cannot sit here and wait, this is the opportunity we have been waiting for to capture more market share—and we are making it happen.”
Mindset matters when building used vehicle inventory
Looking at used vehicle inventory levels at dealerships across the country, it is a story of the haves and the have nots. Why are some dealership back lots filled with used vehicles, while others are struggling to find inventory? Many believe that with every problem there is an opportunity, and the way you see things will determine the actions you take.
Todd Shivers, General Manager of NewRoads Chrysler, said “we cannot be worried about the things we can’t control. It is what it is. What we can control is used inventory, so we plan to use any means necessary to stockpile our inventory with the used vehicles our customers are asking for. We expect to win!”
The global pandemic has certainly added to the complexity of the situation. The daily car rental companies are not feeding the used vehicle pipeline like they normally do, further reducing the available inventory.
Michael Carmichael, Owner and President of UpAuto, said the number of new vehicles coming their way is limited.
The global pandemic has certainly added to the complexity of the situation. The daily car rental companies are not feeding the used vehicle pipeline like they normally do, further reducing the available inventory.
“I think the real opportunity for the foreseeable future is in used cars,” said Carmichael. “We have some exciting plans in the works to maximize this opportunity. We really don’t want to waste this opportunity that the global pandemic has provided us.”
Will you ride the wave when customers flood your dealership?
While many Canadians lost their jobs and suffered financial hardship during the pandemic, others remained employed. This has resulted in an unprecedented increase in savings in 2020 of roughly $5,800 per Canadian. With these newfound savings, many believe it will be the return of the roaring twenties.
Some dealers have worked diligently to ensure they have enough used vehicles to better serve their customers when customers start flooding their dealership. This includes Adam Gladwin, VP of Bruce Auto Group, who said they are ready to “ride this wave.”
“We are a nimble group and we have modified our approach to acquiring used vehicles,” said Gladwin. “Our amazing staff has embraced this change and not only are (we) winning more used deals now, but we are well positioned to keep winning.”
Dealers are jockeying for position and winning (or losing) market share. When customers start flocking to your dealership, will you be ready to ride the wave?
