Vehicles are in high demand these days with American consumers looking for both new and used models. Normally, it would be good news for the nation’s dealerships. After all, high demand typically means higher sales. In turn, generating more satisfied customers leads to positive reviews and valuable word of mouth advertising. This brings even more business and generates even higher profits.
Of course, as many of us are painfully aware, we are not living in normal times right now. It seems the post-pandemic world is a little different than the one we lived in before COVID-19 took over. As such, there are simply not enough vehicles available to meet the ever-growing demand.
A closer look at the car shortage
In 2019, vehicle sales would hit record highs and this trend was expected to continue over the next few years. Then, the pandemic took hold and left those predictions null and void. When the world stopped abruptly, vehicle sales plummeted. Carmakers have begun canceling orders for various components, including the microchips that many modern vehicles are now equipped with.
Microchip manufacturers were already experiencing a production slowdown due to widespread closures and protection mandates in place. When all those orders from the auto industry were done, it made things even more complicated. Now that everything is back to work, both microchip makers and auto makers are struggling to make up for lost time.
Used vehicles are also in short supply. Many people are still trying to recover financially from the hardships caused by the pandemic. For this reason, they are holding back the trade in their vehicles with newer models and the resulting payments. Others simply think they will keep their current cars, trucks and SUVs until the supply of new models resumes.
Fighting the shortage to stay profitable
Some reports indicate that some dealerships are making record profits despite the current shortage of vehicles. Many aren’t that lucky right now, though. Those in that category are left looking for ways to overcome problems and bring sales back to acceptable levels. Fortunately, there are several options available to keep customers coming and increase your profits.
Expand your funding opportunities
Car buyers are savvy these days. They spend weeks or even months researching vehicles before deciding which ones meet their needs and expectations. They also know how to look for the most favorable financing conditions. They look for the best interest rates, the lowest down payments, and other factors that will make car buying more affordable.
This means that even if you have the vehicle they want, they may not choose your dealership if you fail to meet their funding goals. Additionally, many people may want to purchase a vehicle from you, but may not be eligible for financing under your current system or network.
Expanding your funding opportunities can solve both of these problems. You will be able to offer the terms and conditions that more potential customers are looking for. You will also have the ability to satisfy more potential buyers. As a result, you will close more deals and bridge the gap you are currently experiencing.
Use technology to your advantage
Another solution would be to take a second look at the technology you are currently using. No doubt, you have some kind of software system in place, but does it really provide the value your dealership needs? For countless dealers, the answer here is no, and it is hurting their profits from numerous perspectives.
If you don’t have a suitable software solution, it’s time to change it. Several options are on the market for dealers. These include reseller relationship management systems, inventory, and customer relationship management systems to name a few. Keep in mind that the most effective solutions are those designed specifically for dealers. They offer more personalized features and support for businesses like yours. In case you have a system in place but it is not working well for you, this would be a good time to upgrade.
Many people may question the wisdom of spending money on new software at a time when revenue is dwindling. As many business people have learned in the past, however, you often have to spend money to make money. Implementing a new dealer software solution can very well generate a significant return on investment.
Keep in mind that these tools are only as effective as you make them. Make sure your staff understand how to use them once they have been distributed. Take some time to explain to your team how the new software system’s capabilities will benefit them, your customers and the dealership as a whole. These additional measures will help encourage your staff to make the most of the tools you have at your disposal.
Offer customers added value for their money
An effective way to increase sales and increase profits is to extend special offers to existing customers and potential buyers. Add a maintenance plan to your repertoire or expand the one you already have in place. Voucher offer for free car washes with the purchase of a new vehicle. Consider giving buyers discounts on routine maintenance or offering free tune-ups for one year.
You can also add a range of parts and accessories to your inventory. In addition to vehicles, offer auto parts, wiper blades, aftermarket wheels, floor mats, and other essentials. Maybe you could sell them to customers at a discount or offer free installation when they buy those items. Any service, part or accessory that people feel they are getting a deal is an incentive to choose your dealership over the competition.
Make yourself more available
Another effective way to attract more prospects and make more conversions is to meet changing audience expectations. This means offering extended opening hours if possible. People often need to be able to look at the vehicles on your lot after normal business hours. Some of them can do the physical shopping of the car only on Saturdays and Sundays.
At the same time, your online services may need to be upgraded. Use the AI capabilities of your dealership software solution to deliver chat services. Some dealerships follow the lead of real estate companies and even offer virtual vehicle tours. You could also offer to take vehicles to the home of qualified leads for more affordable test drives.
Nobody is saying you should push your sales and customer service teams to breaking point. Perhaps you could split them into shifts or involve other staff members to cover the extra hours and effort. Anything you can do to make things easier and more accommodating for potential customers will definitely pay off.
None of these efforts will make a difference in sales if the audience doesn’t know you’re offering them. Don’t be shy about marketing and advertising. Push incentives and funding options. Organize special events, such as barbecues or have a local radio station close at hand, to grab the attention of the public. Advertise on the radio and post banners outside your dealership.
Don’t overlook the importance of your website’s visibility either. You may need to do some keyword research or engage an SEO specialist to give your website a review. From content marketing to paid advertising, there are many ways to make your dealership more visible online and attract more potential customers. It is also advisable to pay more attention to the presence on social media.
Overcoming current barriers to vehicle sales
If your dealership is facing difficulties due to vehicle shortages and other obstacles in the industry, you are certainly not alone. Most are experiencing the same struggles. However, the measures we have listed here can help turn the tide in your favor. If you can’t incorporate all of them into your daily operations, try at least one or two. They are bound to make a positive difference in your profits both now and in the future.
Ready to give your dealership a substantial boost? Contact Vantage Finance and connect with the best F&I partner in the industry today.
This article was published by: Trent Welch by title: How to be profitable in a low-stock environment
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