Market Insights Tools: the advantages and how to use them to optimise your used car profitability
August 27, 2020
We know that used car prices across Australia have been tracking high since April as a direct result of the challenging market conditions. While the availability of used stock has declined, we still see steady demand in a declining market. This begs the question, what is your used car strategy and are you maximising every opportunity when it comes to stocking and pricing?
In July, we saw the lowest number of active used vehicles online in the last two years, whilst also seeing the highest number of delisted/sold. This indicates that demand was steady, and although there was a rise in average pricing, we still recorded substantial enquiry and moved metal.
However, in August, we have seen listed vehicles fall off sharply, as indicated by the numbers moving through the Dealer Solutions aggregation tool.
The conditions caused by COVID-19, especially in Victoria, have seen a sharp drop in the number of new cars sold, which significantly impacts our ability to source trades. Coupled with higher wholesale and auction pricing, this presents a genuine challenge for used car Managers across the industry.
While there is no magic wand (and don’t we wish there was), we can control the destiny of our used car departments by understanding the metrics that drive them and lead our results back into the black.
Dealer Solutions recently launched a used car pricing and valuation tool – AutoRadar, that allows a dealer to make market-and data-led decisions- without the guesswork or the “gut feel” that dealers often rely on. By using data-driven information to manage your used car inventory and reviewing historical trends, you are ensuring that you are maximising gross profit and stocking the cars that consumers want.
So, what are the key questions to ask?
It would help if you started with these:
- What has been happening with that exact vehicle in the last 45+ plus days?
- How long have the cars taken to move off the market?
- How many pricing changes were my competitors making and did those prices fluctuate?
- What stories and photos were applied to those cars that seemed to move quickly?
All this information will help you position your car from day one at a price that the market is going to respect.
The next piece that a tool like AutoRadar can assist with is the demand and supply of vehicles, relevant to your market area and your customers. With the benefit of these insights, you can measure:
- The days’ supply of a vehicle
- How many are within your competitive set
- How many have come off the market
And generally, create yourself a ‘wish list’ of stock that is going to build profit in your used car department.
Creating a retail strategy on a vehicle from the moment you begin a valuation is equally essential. By inputting your profit objectives, reconditioning costs, and lot’s fees, you can utilise data through Kelley Blue Book that will provide you with an accurate trade-in value. By tying your retail strategy in with the valuation piece, you can maximise profits and move each inventory item from your yard in the shortest time possible.
We all know the power of digital, and this pandemic has shown us that consumers are more comfortable with providing their information to online retailers than ever before. It naturally follows that making data-led decisions is the best way for dealers to stay on top of what our customers are looking for and what price they are willing to pay for cars.
Dealer Solutions is at the forefront of data related insights, given that its global parent company Cox Automotive was the first to initiate a product of this sort through VAuto and Kelley Blue Book supports it. AutoRadar is an exciting product that we are thrilled to bring to market.
All our Digital Performance Advisors are ready to learn about your used car pricing strategy, work with you on adopting AutoRadar and enable you to make data-driven decisions that lead to increased profitability. With a 30-day free trial offered on AutoRadar and very competitive prices, Dealer Solutions is making possible for every dealership type, no matter its size, to have access to the latest in used car market insights.
If you would like to know more how AutoRadar can help your dealership email me directly on firstname.lastname@example.org
About the author – Kylie Brewer
With over 20 years experience in the Automotive Industry, Kylie Brewer has a unique understanding of current market trends having worked in various leadership positions within Dealerships, Groups and Automotive classifieds. She has a strong knowledge of Digital Marketing specific to dealership needs as well as a good understanding of the used car market and how to retain and build gross across all dealership departments.