Winning Trade-Ins: Strategies for Closing More Deals

In the competitive world of automotive sales, dealerships are constantly seeking ways to improve their trade-in numbers, Look to Book rates and Cost to Market metrics. One powerful tool that has emerged to address these challenges is Kelley Blue Book® Instant Cash Offer.

In this blog post, we’ll highlight the importance of including trade-ins in your inventory acquisition strategy. Plus, we’ll share some useful tips for leveraging Kelley Blue Book® Instant Cash Offer effectively to enhance the trade-in process. All this can ultimately lead to an increase in sales and an improved customer experience.

The Significance of Used Inventory for Car Dealers

While new vehicle inventory levels stabilized in 2023, margin compression is still an issue when looking to acquire quality inventory at a good cost. Wholesale auction channels remain a solid choice, but focusing on trade-in acquisitions is a must if you’re looking to improve overall margins.

According to the National Automobile Dealers Association (NADA), the average gross profit for a used car is $2,337. That same data set puts the average gross profit for new cars at $1,959, meaning there’s more profit potential with used vehicles¹. Trade-ins in particular tend to be in better condition, which opens the door for dealers to develop certified pre-owned programs. This can help ensure there are fewer surprises for both you and customers.

Acquiring such vehicles, however, continues to be challenging. Many dealers face hurdles in accurately assessing vehicles for damage and determining their trade-in value remotely. Limited processes for remote appraisals and varied strategies among dealership staff contribute to these challenges. This makes partnering with trusted third-parties like Kelley Blue Book more important than ever.

Changing Consumer Behavior in Trade-In Sales

When it comes to estimating trade-in values, digital channels and data give consumers more pricing tools than ever before. With access to so many online sources for used car value, the average consumer receives multiple cash offers before selling their vehicle. That means they already understand the range of their vehicle’s potential value before they arrive at your dealership. Therefore, the Kelley Blue Book® trade-in value is important in determining used car prices as another third-party assessment.

Armed with that knowledge, consumers are now holding out longer for the best offer. Just three to four years ago, consumers would only wait approximately seven days to trade in their vehicle after receiving an offer. But today, 64% of consumers take more than a month to transact².

Additionally, the COVID-19 pandemic has increased the adoption of remote trade-in appraisals. Consumers now expect dealerships to conduct assessments sight unseen.

All these factors create new challenges when trying to seal the deal with your customers. Leveraging trusted third-party tools like Kelley Blue Book® Instant Cash Offer can help your dealership build consumer trust and increase deal closure rates with 55% of all trade-ins to a dealer receiving a KBB ICO offer³.

Strategies for Car Dealers to Close Trade-In Deals

To effectively close trade-in deals, dealerships must adapt their strategies to meet consumer expectations and address evolving market dynamics:

1. Separate Buying and Selling Experiences: Streamline the trade-in process by focusing first on buying the customer’s vehicle then shifting to selling them a vehicle. This helps minimize friction and limit unmet needs with your shoppers.
2. Competitive Appraisals: Consumers are now better equipped with vehicle trade-in values and are willing to shop around for trade-in offers. It’s important that you provide your best trade-in offer up front to avoid consumer dissatisfaction and potential loss to competitors. Leveraging Kelley Blue Book® Instant Cash Offer Dealer Boost is a great way to do this. It’s a free enhancement that allows you to provide customers with more money on top of their original offer giving them confidence that they’re getting the best offer for their vehicle.
3. Transparent Damage Assessment: Since accurate damage assessment accounts for the majority of customer trade-in frustration, dealers MUST involve customers in the vehicle assessment process. Walk the vehicle with the customer, pointing out both value-add features and potential damage that may affect valuation.
4. Market Data Support: Consumers tend to have two to three simultaneous offers for their vehicle, so you need to justify why your offer differs from your competitors by offering visibility into why you appraised their vehicle at the offered price.

How Kelley Blue Book® Instant Cash Offer Will Help You Win

Utilizing Kelley Blue Book® Instant Cash Offer to boost your trade-in strategy can yield significant benefits for your dealership — from improved trade-in numbers to enhanced customer satisfaction. By prioritizing transparency and implementing actionable strategies, dealers can maximize the potential of Kelley Blue Book® Instant Cash Offer and close more deals successfully. Embracing these strategies will not only drive sales but also foster long-term relationships with customers, positioning dealerships for continued success in the ever-evolving automotive market.

Don’t just take our word for it. See what real dealers say about how Kelley Blue Book® Instant Cash Offer helps them acquire the inventory they need to succeed. Check out our dealer testimonials.

Sources:

1. National Automotive Dealers Association, “2023 NADA Data: Midyear Report,” January 2024.
2. Cox Automotive dealer transactions (Jan 1, 2022- Dec 10, 2022)
3. Total trade-in figures for 2022 based on collective data estimates from Experian, Polk and Cox Automotive industry statistics.