COMMENTARY: How dealers can determine future cost
Let’s talk about the Fifth Square.
It’s what builds value with today’s car-shopping customer. You won’t find it in a four square.
Today, roughly 70% of the buying public is made up of folks from the Millennial generation. And they’ve changed the definition of information they consider important to making a decision.
You see, price, trade-in value, down payment, and monthly payment are still factors, but what they really want to know Is: “What’s it going to cost me after I buy it?” That’s also known as future cost.
Since there’s no such thing as a crystal ball — and Carnac the magnificent isn’t around anymore — the best predicter of the future is the past.
If you put your car through an inspection process, tell them. If you put new tires on it, tell them that. If it comes with a warranty, new tires, free maintenance at 10K, 30K, or 50K miles, new serpentine belt – anything and everything you did to reduce their future expenses – you got to tell them.
Dealers complain all the time about having to put on new tires on in order to pass their brand’s certified pre-owned (CPO) certification process, so many elect not to certify the vehicle. That’s the wrong move for two reasons:
- One, not making a car CPO doesn’t help with its future cost. The buyer will have to supply those new tires, etc., and they know it.
- Two, it keeps the vehicle out of the CPO filter on listing sites. Roughly 15% of the buying public on listing sites “click” the CPO filter — that means they understand the value and will pay more for it. Those are the folks you want looking at your cars.
This is just another example of how the internet can help you find the right buyer for your vehicle.
At the end of the day, you want “No Excuse” inventory. So do the extra work, and tell your customers what you did. Tell them also why you priced the vehicle the way you did. Don’t forget — the wrong car is never cheap enough!
Turn your service bill that you think is too high into an offensive play. Drive in the right buyers by telling the consumers what you did to the vehicle — it’s EXACTLY what they want to know!
Robert Grill is senior partner development manager at Carfax