Winning trade-ins: Making the case for tech-forward inventory

It’s no secret that a strong trade-in program is critical to dealership success. The demand for used cars remains high and the profit they drive for dealers is still outpacing that of new cars. Having a solid inventory strategy in place could be the difference between seeing red or black on your bottom line, and trade-ins are a critical piece of that puzzle.  

Your dealership’s trade-in strategy should closely mirror consumer demand — which is beginning to see a greater shift toward hybrids, electric vehicles (EVs) and tech-forward cars. According to a recent Cox Automotive study, 51% of buyers are considering the purchase of an EV in the next 12 months¹. And McKinsey & Company predicts that at the current adoption rate, EVs will account for over half of vehicles on the road by 2030².   

Whether buyers are looking for a hybrid, an EV or a traditional internal combustion engine (ICE) vehicle, one thing is true across the board — they’re all looking for a tech-forward car. As modern technology becomes ubiquitous in new cars, more and more used-car buyers are demanding safety, connectivity and convenience technology features, too. 

Tools like Kelley Blue Book^Ⓡ Instant Cash Offer can help your dealership quickly identify trends and tailor your used car acquisition strategy around those. Used hybrids and EVS will need an acquisition strategy that considers the different market factors at play. Kelley Blue Book Instant Cash Offer can help your dealership navigate the complexities of this emerging used car market. 

What the driver wants, the dealer gets 

Hybrids and EVs 

Many drivers are becoming more environmentally conscious and are looking for fuel-efficient options like hybrids and EVs. The cost of these vehicles is declining, making them more accessible to a wider range of customers. As prices continue to fall, you can expect to see more and more customers looking for these fuel-efficient vehicles at your dealership. 

Hybrids and EVs often retain a higher resale value with the potential for higher dealership margins, which makes them a great addition to your used-car inventory if consumer demand supports it. 

While demand for these vehicles is up overall, it’s climbing faster in areas with high fuel prices, better tax incentives and better infrastructure (a network of EV charging stations). Your dealership’s location will play a huge role in the level of consumer demand you get for used hybrids and EVs. 

Technology 

The EV market has sped up the adoption of technology in cars, and consumers now expect used cars to have nearly the same level of technology as new cars. Sourcing used cars with the right technology is becoming an increasingly important aspect of your trade-in program. 

These are some of the technology features today’s consumers are looking for: 

• Safety features, like back-up cameras, blind-spot monitoring and collision avoidance systems 
• Convenience features, like remote start, keyless entry and advanced navigation  
• Infotainment features, like digital dashboards, touchscreens and voice-activated controls  
• In-car connectivity features, like mobile app integration, Wi-Fi hotspots and wireless charging 
• EV features, like integrated navigation for charging stations, over-the-air updates and regenerative braking systems  

A shift in demand means a shift in strategy 

There’s no doubt more used-car consumers are looking for hybrids and EVs. Whether your specific market will be slow or quick to transition to meet the demand, there are a few factors you’ll want to consider as you prepare to incorporate more of these vehicles into your used-car inventory. 

Low inventory 

Hybrid inventory in particular is low, which means sourcing them can require more work. Utilizing online tools like Kelley Blue Book Instant Cash Offer can help you source these harder-to-get vehicles and incorporate them into your inventory. 

Depreciation 

As battery technology continues to evolve and become more reliable, hybrids and EVs are depreciating slower. You’ll need to keep a close eye on this trend so you avoid over- or underpricing your vehicles. 

Certification and specialized training 

Investing in specialized training and certified pre-owned programs will help consumers feel more confident that the vehicle they’re purchasing is a good investment and your dealership will be able to make any necessary repairs in the future. 

Battery life and warranties 

Battery life is one of the biggest concerns EV and hybrid consumers have, especially when shopping for used cars. Providing information about a vehicle’s battery health and offering warranties can help reassure consumers they’re making a sound investment.   

Maintenance and service 

Hybrids and EVs typically require less maintenance than a traditional ICE vehicle because there are fewer moving parts. This could mean fewer service visits over the life of the vehicle. 

Regulatory policies 

Staying current on emissions standards in your area, as well as incentives offered for low emissions vehicles, can help you determine whether your dealership has enough clean vehicles in your inventory mix. 

What’s the true cost to market for hybrids and EVs? 

There are several factors that make the cost to market for hybrids and EVs different from a traditional ICE vehicle. 

Higher initial acquisition cost 

Higher prices coupled with low inventory make hybrids and EVs more expensive up front and more difficult to source. However, higher resale values and long-term gain for your dealership may make the effort worth it. 

Marketing and sales costs 

Both dealership staff and used-car consumers will require a higher level of education about hybrids and EVs, including battery health, charging infrastructure and maintenance differences. This takes more time, and therefore more initial investment from your dealership, but can pay off long-term. 

Creating a tech-savvy buying experience 

While having the right mix of hybrids, EVs and tech-forward cars on your lot is the most important factor in creating a healthy used-car inventory, don’t forget about the buying experience your dealership creates. Today’s EV shoppers are looking for an seamless buying experience, and 84% of them used a third-party site like KBB.com to shop¹. Using tools like Kelley Blue Book Instant Cash Offer can help ensure your staff is creating a seamless experience for consumers. Whether they’re looking to buy or trade-in, shoppers can begin their journey with online research, quickly receive an online offer on the vehicle they’re interested in purchasing or selling, then walk into your dealership knowing your staff has all of the information about their offer and can close a deal without hassle. 

How KBB ICO can help you find the right eco-friendly and tech-forward used cars 

Utilizing online tools is paramount to creating a healthy used-car inventory that includes more in-demand vehicles like hybrids, EVs and tech-forward options. Kelley Blue Book Instant Cash Offer integrates with Autotrader to bring you the right cars and the right buyers at the right time. The Buying Center feature allows you to set very specific parameters for your search, so you pinpoint the right used hybrids and EVs. Once you find the car you’re after, Dealer Boost can help you make a winning offer. 

As your dealership looks to incorporate more hybrids, EVs and technology into your used-car inventory, Kelley Blue Book Instant Cash Offer can help you dial into the right mix. Speak to a team member today to get started. 

Sources 

1. 2023 Cox Automotive Car Buyer Journey Study: Summary 

2. A turning point for US auto dealers: The unstoppable electric car (McKinsey & Company)