In the latest installment of the annual Power 300 issue of Auto Remarketing, we go behind the scenes with some of the leading companies in the used-car space and their top executives with a few Q&A features.
Next up is Shane Marcum, who is vice president of inventory services and solutions at Dominion Dealer Solutions.
Auto Remarketing: At Cross-Sell, you’ve got a unique look into how vehicle sales and market share breaks down in many U.S. markets. On the used-car side, what are some of the unique trends you’re noticing this year in terms of how markets are behaving?
Shane Marcum: For the past couple of years, two of the most significant trends we’ve seen in the industry have been the difficulty dealers have acquiring inventory and the subsequent margin compression associated with when retailing that same inventory.
Obviously, these are directly related in many ways. For instance, the lack of available inventory has forced dealers to stock increasingly more expensive inventory, or in the alternative, later-model vehicles with higher mileage than what is typical.
This has a downstream impact on the type of buyers that a dealer can attract in terms of creditworthiness, capacity to purchase, etc. A dealer that typically would retail very low mileage inventory can find themselves attracting more subprime or lower-end shoppers in the credit spectrum.
AR: What are some of the big projects your team at Dominion is working on this year?
SM: Dealer Specialties is rolling out a full service offering to dealers called CARScore, which is a consumer-facing condition report. It will allow consumers to have a more transparent view of a dealer’s inventory when searching for a vehicle online. CARScore goes beyond mere photographs or videos of vehicles, providing specific metrics collected in person by our team of field service representatives such as tire tread depths, interior odors, specific information about dents, dings and scratches, stains in the interior, etc.
Additionally, Cross-Sell is in the process of adding additional states to our complement of those available to dealers and media outlets.
Cross-Sell has recently added data from the state of New York, complete with selling dealer information, a metric that has traditionally been unavailable in that state. We expect several others to be added as we move through the end of 2019 and into 2020.
AR: You wrote a piece on LinkedIn about vehicle condition reports. Are they becoming — and perhaps “should” they — a requirement in the used-car business?
SM: Absolutely! Just as Carfax and AutoCheck transformed the way that consumers gauge the value of an automobile based on its history, CARScore will provide a level of transparency to shoppers as they decide which dealer’s vehicle they want to see in person. Ultimately, it’s a way of bolstering a dealer’s lead conversion through honesty, transparency and full disclosure.
Consumers have to feel good with their decision to make a purchasing decision. The more trust that a dealer can garner with consumers, the better their chances are of “winning the click” and having the opportunity to talk with that shopper in person. We’re already seeing the industry change in that regard with the introduction of non-traditional retailers such as Carvana who are already transforming the industry by doing this very thing. Any dealer who isn’t considering how they intend to compete with these types of retailers may find themselves behind the curve and scrambling to put together such a strategy in the very near future.
AR: I imagine in your role, you work closely with a lot of dealers. How are some of the top dealers navigating the used-car market?
SM: The automotive market is fickle and ever-evolving. Dealers are constantly searching for new ways to reach consumers, to be the first to communicate with a prospective buyer or to find a niche that may help them attract buyers who otherwise may look elsewhere. Many are enhancing their merchandising effort by using products such as live video walk-arounds, 360 degree photography, interactive hotspots (such as those utilized in CARScore) and photo cataloging.
At the end of the day — despite the technology involved and the changes to how consumers shop — it still all comes down to having the right inventory in stock, properly merchandising the inventory, building trust with consumers and generating gross profit at the time of sale.
The dealers that continue to focus on the age-old fundamentals of selling cars without recreating the wheel, but instead making the wheel turn more smoothly, are consistently the most successful. The consumer experience will always be what drives dealer success, and the dealers that can navigate that process with the most success will consistently outperform those who do not.