Vehicles have been flying off the carsales.com.au shelves as record shopping activity takes place and savvy consumers look for value-packed purchases.
In fact, strong used car activity has been the norm since mid-March, the height of the Covid-19 pandemic in Australia, as evolving attitudes towards Public Transport and ride-sharing see more Australians enter the car market for the first time or to add additional vehicles for their family or business.
For dealers, a good supply of in-demand used vehicles has never been more important.
Historically in major developed car-markets, car-shoppers shift their preferences to used and near-new vehicles during times of heightened financial and employment uncertainty. During the global recession of 2009, more than 8 in 10 vehicles sold in the US were used.
Trade-ins, auctions (both digital and physical), and purchasing directly from private sellers, are all options to help dealers source profitable used inventory and optimise inventory mix.
However, softer new-car sales in Australia throughout 2019 and 2020 have meant fewer trade-in opportunities, forcing many dealers to source inventory via alternative channels as well as adopt new tools and data-driven processes.
To assist with profitable inventory sourcing, Ren Blanning, Head of carsales Business Consultancy Service outlines the following tips:
Know what you’re valuing
Real-time data and insights can help dealers better understand which used models to purchase.
In particular, Blanning points to LiveMarket actionable market intelligence as a great tool for dealers to use, to make a more accurate assessment of the profit potential of a vehicle.
“Utilising the Stocking Parameters and Market Set intelligence features in LiveMarket can help ensure you don’t miss an opportunity,” says Blanning.
“Real-time sales data will always give you a better feel for the profit potential of a prospective inventory item and if it meets your objectives.”
If you want to get the most from LiveMarket, contact your Digital Account Manager or get in contact here.
Target finance and service customers
Actively engaging past finance and regular service customers can be a great way to secure fresh prospects for new cars and with them also ‘known quantity’ trade-in vehicles.
“Dealers should be mining these two customer segments systematically – month in and month out,” says Blanning.
“These are vehicle owners that you have an existing sales relationship with and may own a car that is now more than three years old. It’s important to ask the question and understand if they would be willing to consider an upgrade to a new car.”
“I encourage dealers to start this process now and reach out to these vehicle owners to prospect potential trade-in opportunities,” Blanning says.
Mine the private market
Mining the private market can be a profitable avenue for inventory.
An effective sourcing tool – LiveTrade Premium – can help with this strategy.
“LiveTrade empowers you to uncover vehicles listed for sale by consumers that are priced under the market,” says Blanning.
“It’s a very powerful tool and is limited to a specific number of dealers per state.”
LiveTrade Premium licenses are available on a first-in best-dressed basis in Victoria, Queensland, New South Wales and Western Australia.
Review your appraising processes
Given current trading conditions, Blanning urges dealers to track and review every appraised inventory opportunity over the past 60 or even 90 days.
For many dealers, it might be time to re-evaluate their stocking parameters. As shopping activity picks up on Australia’s #1 for cars, it’s apparent COVID-19 has influenced vehicles buyers’ choice – particularly young and first-time buyers. For example, based on year-on-year comparisons in April 2020, carsales saw 15% growth in enquiries on used cars under $10,000.
Blanning also points to the role that technology can play in increasing customer acceptance of trade-in evaluations.
“Trackable technology such as a mobile car appraiser is powerful in ensuring that every car that comes into your contact with your dealership is appraised in a consistent, efficient and accountable way,” says Blanning.
A mobile car appraiser also empowers dealers to engage vehicle owners in a transparent and personalised process and deliver them a professional report – facilitating their understanding of how the dealer has arrived at a realistic, market-driven trade-in price and their acceptance of this valuation.
“This technology can also help to reduce potential and costly mistakes in the appraisal process and arrive at a realistic, market-driven trade-in price that the customer is more likely to accept – a win-win outcome,” she adds.
“It also enables dealers to gain a better understanding of trade-in conversion and track this metric for future performance improvement,” Blanning says.
Inventory checklist
1. Know what you’re valuing: real-time data and insights can help dealers better understand which used models to purchase
2. Target finance and service customers: engaging past finance and regular service customers can be a great way to secure fresh prospects and trade-ins
3. Mine the private market: this can be a profitable avenue for inventory
4. Appraise your appraising: track and review every appraised inventory opportunity for consistency and success
