COMMENTARY: High pricing — Who’s really to blame?
To a consumer, the dealer is directly responsible for the price of a vehicle being too high: “The dealer is trying to make too much money off of me!”
As a dealer, you can’t afford to get mad at them, after all, they only know what they hear: “Dealers are charging over sticker price! Dealers are making record profits!”
What’s the solution for handling these shoppers? As usual, the answer is simple: it’s all about the way we communicate with consumers. Let’s review the two main pieces of the puzzle:
- FIRST: We know customers have always ranked price low on the scale of what has influenced their purchase decision. They always find more budget for the right car – and the wrong car is never cheap enough. We also learned on Day 1 of sales training that value must exceed cost.
- SECOND: Value isn’t found in a number. It’s found in a buyer’s needs and desires. It’s found in the way a vehicle makes someone feel: “The feel of the wheel makes the deal.” It’s often found in peace of mind but, ultimately, it’s found in you, the dealer, and how comfortable you make the shopper feel during the buying process.
Don’t believe me? Believe this! During the height of Covid, total car-purchase transactions completed on-line only hit 15% of the total. Consumers still prefer to go to dealerships. It’s the second biggest purchase of their life — don’t forget that!
Remember: Spend time where you’re making money.
It’s kind of funny. Dealers will spend hours looking for the right inventory at what they feel is the right price. But once they get the inventory, they rush to get it listed, primarily using only one tool and writing a generic description.
You need to build your price into the listing description and explain why it’s priced the way it is:
- Did you have to pay more based on market conditions? Tell shoppers about that.
- Is it above market based on its history? Tell them that.
- Is it priced high because of low availability? Tell everyone
Whatever went into your price needs to be in the description. How else will anyone know what’s baked in?
If dealers don’t explain their pricing to shoppers, they’ll only calculate the value based on their own limited knowledge of the market – and what they hear from everyone else.
Robert Grill is senior partner development manager at CARFAX.