The auto industry has dramatically changed in the past decade. Car shoppers have more data and details on vehicles than ever before, putting pressure on retail pricing and profit margins.
Dealers, in turn, must adjust and get smarter about the inventory they acquire.
As used-car margins are tighter, dealers must be confident of the wholesale price they pay.
The good news is dealers now have a tremendous number of digital tools and channels to access a wholesale vehicle marketplace that has seen significant growth in recent years. Dealers can participate in online auctions, use a mobile app to view listings, and buy and sell inventory directly from their lots.
A distinct advantage of the current wholesale vehicle marketplace is the technological advancements, specifically in imaging and comprehensive condition information, that help dealers make smarter buying decisions. Dealers can view 360-degree images of vehicles for an all-encompassing look at a potential purchase. They can even view vehicle damage up close via moveable images to assess dent depth and other blemishes.
Additionally, these new tools highlight vehicle issues at the top of the listing, ensuring potential buyers have quick access to the most important vehicle condition information. These tools make it easier for dealers to make confident buying decisions digitally.
Even so, some dealers are understandably still hesitant to make a bid without literally “kicking the tires.” This mentality can hinder dealerships, forcing them to miss out on attractive vehicles for their customers and added profits for their business.
Fortunately, purchase protection guarantees offer dealers peace-of-mind for digital transactions and deliver multiple benefits. Purchase protection guarantees’ extra assurance gives dealers the necessary confidence to take full advantage of the growing wholesale vehicle marketplace.
More time and options for return
So how do purchase protection guarantees work? Most importantly, they provide dealers with something everyone can use — extra time to decide.
Standard purchase protection guarantees offer dealers up to 21 days after the purchase of a vehicle to decide if they want to keep it. Some guarantees even give dealers a 30-day option, and in certain cases, guarantee timeframes can be extended for transportation time.
These options give dealers a major advantage, as they can use the added time to further inspect the vehicle or see how it performs on their retail lots.
Purchase protections guarantees also expand the options available to dealers should they decide the vehicle isn’t for them. One of the favorite components of purchase protection guarantees is the ability to return vehicles for reasons beyond what is typically covered by arbitration. Vehicles can even be returned if an expected buyer falls through or reconditioning costs are higher than anticipated.
Less hassle, faster turnaround
The best purchase protection guarantees give dealers a hassle-free return experience. There are no questions asked or arbitration process to go through. Dealers can simply return a vehicle to a location within the provider’s network.
The expanded options, and hassle-free returns, will lead to improved profit margins. By being able to easily return problem vehicles, dealers can keep unanticipated costs in check. More importantly, dealers can redeploy capital quickly on inventory that better suits their consumers’ needs.
Confidence to try new vehicles
The final advantage of purchase protection guarantees is a big one—the confidence to try different sales strategies related to vehicles they wouldn’t normally stock. They can explore different segments, price points and vehicle types. They also can reach beyond their local markets to attract new customers. Purchase protection guarantees allow dealers to experiment with a variety of options, with little risk to their bottom lines.
At the end of the day, purchase protection guarantees open a new world of possibilities for dealers. They enable dealers to tap into the fast-evolving wholesale vehicle marketplace without having to second-guess any purchase. If you’re not taking advantage of this powerful option, you’re missing out on attractive vehicle inventory that can help boost dealership sales.
Brett Woods is vice president of assurance for the Cox Automotive Inventory Solutions group.