Vehicle inventory recently hit historic lows. Consumers who wanted to buy new cars certainly felt the squeeze. However, those who work within the industry took the biggest hit. Far too many dealerships were unprepared because they didn’t utilize many of the best practices for auto inventory sourcing and procurement. This was disastrous for some.
Now more than ever, car dealers have a unique opportunity to implement inventory management strategies that can benefit them now and in the event of another industry interruption. Integrate these into your normal operations, and you’ll quickly see results.
1. Use fixed ops in auto inventory sourcing
Many dealers fall into the trap of thinking that best practices for auto inventory sourcing all involve marketing. As you’ll see in the rest of this guide, this isn’t an over-the-top assumption. However, it turns out your parts and service department can also be an incredible resource. These comprise the fixed ops of a dealership, and employees in this department see a constant flow of clients.
Dealers already understand how essential parts and service departments are. The National Automobile Dealers Association says that this revenue should cover 60% of a dealership’s overall costs. Since customers who visit this department often face large repair bills, though, there’s a prime opportunity for them to “trade up” to a new vehicle.
This is one of the best practices for auto inventory sourcing and procurement for several reasons. For instance, more people choose dealer service centers over general repair shops. Upcoming service appointments are also easier to track, so it’s simple to target clients who have high-demand vehicles. Let your service folks handle procurement for you!
Visit our guide on Increasing Fixed Ops Revenue to learn other ways your parts and service department can help.
2. Offer trade-in incentives
Many of the best practices for automotive inventory sourcing have been around a long time. Offering trade-in incentives is one of them. During the recent automobile shortage, we saw this tactic escalate dramatically. Not only did more dealerships start going this route, but many got rid of nearly every discount and rebate other than trade-in bonuses.
Just think what this means for your dealership. For every vehicle you sell off the lot, you get a new one coming through. It’s hard to envision a shortage developing in such a situation. This is why offering high-level trade-in incentives is easily one of the best practices for automotive inventory sourcing and procurement.
3. Use data points to target priority customers
You’ll sometimes hear marketers and executives say “data is king.” This saying is one of the truest you’ll ever hear when it comes to targeting customers. For instance, what if your collected data showed that 98% of a particular vehicle’s sales were attributable to individuals between the ages of 25 and 35? Who do you think you should target your marketing at then?
Data is just as important when learning the best practices for automotive inventory sourcing. In this situation, procurement is less of a focus. While it’s still incredibly important, there are a variety of different procurement strategies you can use after finding autos. However, sourcing the vehicles is as simple as taking a look into your dealership’s data.
Look for clients who meet one or more of the following criteria:
- Have high monthly payments or a high interest rate
- Make frequent visits to the service department
- Hold high equity value in their vehicle
In these situations, someone might have already considered a new car. Even if they haven’t, they’re likely at least amenable to the idea. This best practice for automotive inventory sourcing becomes even more powerful when you realize you can target certain vehicles. For instance, someone with high interest rates and an in-demand vehicle is the best of both worlds.
Data is king, and if your dealership hasn’t yet realized that, it’s time to make a change.
4. Utilize simple and proven acquisition tools
Consumers prefer simplicity. Perhaps that’s why one of every three car purchases now takes place online. There’s little doubt that perusing auto selections online is far simpler than visiting multiple lots. Fortunately, there are ways to offer this ease to consumers while also improving your inventory acquisition. It all comes down to using proven tools.
For instance, Kelley Blue Book Instant Cash Offer removes the friction associated with consumers visiting dealerships not knowing what to expect. Instead, they can get an offer redeemable from Kelley Blue Book in just minutes online. This is easily one of the best practices for auto inventory sourcing because it simplifies things for those who want to sell or trade in their vehicles.
Of course, it offers an array of benefits for dealers as well:
- Connect with customers from Autotrader and Kelley Blue Book who are transaction-ready
- Lower your acquisition costs by avoiding things like transportation, auction fees, etc.
- Accessing vehicles online means you can source from anywhere
- Option to put the vehicle on your lot or sell directly to Cox Automotive for full offer value
Some of the best practices for automotive inventory sourcing require hard work. After all, getting started in data management isn’t a simple process for those new to it. That’s why using proven tools that simplify tasks for both you and consumers is ideal.
Instant Cash Offer is one of those tools, and signing up is easy and can bring quick results. This resource also comes with a variety of integrations that help in other areas — including data management — and that’s something you should look for in every dealer tool.
Visit the Kelley Blue Book Instant Cash Offer page today to see how much more successful you can be at inventory acquisition.
5. Let customers handle the heavy lifting
Wouldn’t it be great if your customers could do all the hard work at your dealership? Unfortunately, there aren’t many willing to do so. What they might be amenable to, however, is recommending your dealership to others. This is more than just one of the best practices for automotive inventory sourcing and procurement. Customer referrals are the backbone of many industries.
In a perfect world, happy customers would simply tell others about the great deal they got. This would convince their friends and family to visit your dealership when the time came to buy, sell or trade in a vehicle. Since it doesn’t always work like that, though, consider offering incentives to customers who get others to trade in or sell their vehicle to you.
Many of the best practices for automotive inventory sourcing involve getting the word out. Offering customer incentives is no different. By putting your customers to work for your dealership — particularly after they’ve sold a vehicle to you — you can make money on each client multiple times.
Use these best practices for auto inventory sourcing today
Auto sales and inventory will eventually bounce back. It’s important not to forget, however, the lessons learned from the vehicle inventory shortage. For one, such a move would leave you unprepared if similar problems arose in the future. More importantly, maintaining appropriate inventory levels can help your dealership succeed even when a pandemic isn’t going on.
Kelley Blue Book can help you in this endeavor. In addition to our Instant Cash Offer tool — easily one of the best practices for automotive inventory sourcing — our blog also offers a wealth of knowledge completely free of charge. The strategies provided in these pages can take your dealership to the next level. Visit our blog today to learn more.