It’s a new year, but seemingly the same story for wholesale used-vehicle prices: Analysts predict that about 240,000 to 400,000 more off-lease vehicles will re-enter the market in 2013 than in 2012, causing wholesale prices to soften, possibly down 1 to 2 percent on a year-over-year basis.
With prices set to drop, dealers this year will need to be more diligent about their inventory. The New Year is fresh on our minds, so here are our resolutions for a more profitable dealership:
- Go where the competition is … nonexistent. There’s a non-traditional “trade-in” channel you may not be tapping into: your service lane. Customers facing a large repair bill, who may have already been considering a new car to begin with, can become a valuable acquisition channel, as well as new-car customers ... Even if they don’t have a large repair bill putting a process in place to target service customers can add tens of thousands to your bottom line.
- Don’t rely on your “gut.” If wholesale prices drop, sales prices will, as well. To maintain high margins, get smart before you acquire inventory. How has that particular make and model fared on your lot, historically? Is it popular in your area? And most importantly, what is the retail potential based on the prices and demand of competing vehicles?
- Price accordingly. Once you’ve stocked the cars that will predictably perform the best, it’s time to price them correctly. Factors that should affect your pricing include local marketplace demand (and supply), the price of similar vehicles in your market and historical success, among others.
A comprehensive inventory management system can help you achieve all of these goals — and your best sales year yet.
Patrick McMullen is the vice president of account development at FirstLook and MAX Systems. The complete blog entry can be found at www.driveyournumbers.com/market-intel/resolutions-for-a-profitable-2013.