If you’re struggling to find enough used car inventory to max out your sales potential, you’re not alone — used vehicles are still hard to come by. At the end of May, U.S. dealers had 11% fewer used vehicles on their lots than at the same time last year. Months ago, we offered advice on sharpening your vehicle acquisition strategy. But a lot has happened since then, so we got curious about how dealers like you are finding used car inventory in today’s market. Are you relying on wholesale auctions? Banking on trade-in vehicles? Resorting to street purchasing? We recently conducted a series of polls on social media to find out which vehicle acquisition channels dealers are actually using.
- Trade-in Vehicles for the Win
Most poll respondents said they get at least half of their used vehicle inventory from customers trading in an old car to help purchase a new (or newer used) one. This makes sense because we know that new cars have made a comeback and their sales are up. After months (or years) of holding onto an older car, many consumers seem eager for an upgrade — and dealers like you are just as eager to leverage that purchasing process as a used vehicle acquisition channel.
- Wholesale Auction a Valid Vehicle Sourcing Channel for Some
Of the 280 dealers who responded to this poll question, 20% said they rely on wholesale auctions for half or more of their used car inventory. It’s important to note that 39% of respondents said they only use auctions as a vehicle sourcing channel for 10% or less of their used vehicle inventory.
- Street Purchasing Not a Popular Acquisition Channel
Of the 221 dealers who responded to our last poll question, only 6% said they rely on street purchasing as a vehicle sourcing channel. Most respondents — 50% — said they get less than 10% of their used vehicle inventory from the street.
Sourcing From Service Lanes
Many dealers also rely on their service lane as an acquisition channel. If your service staff pays close attention, they could identify acquisition opportunities nearly every day. The Xtime® service experience platform can help pinpoint repair-weary customers who might want to trade up to a newer car — and a tool like Kelley Blue Book® Instant Cash Offer will help you make them an offer they can’t refuse. ProfitTime® GPS helps you know how much to pay for these service-lane cars and how to price them in order to maximize your margins. It’s a powerful combination for any dealer still struggling with inventory shortages.
Managing Your Acquisition Channels
Chances are, you’re using a combination of acquisition channels — from trade-in vehicles and wholesale auctions to street purchasing — to feed your used vehicle inventory. And just as you use metrics to decide how to price and sell each of your vehicles, metrics can also help you know how to acquire each vehicle the right way, depending on the acquisition channel you use. vAuto’s founder, Dale Pollak, refers to this sourcing strategy as “’bucket’-minded inventory acquisition.” Using a tool such as vAuto’s Stockwave or ProfitTime GPS as a vehicle acquisition software can help you optimize your inventory acquisition process in today’s multi-channel sourcing environment.
Acquisition Channel Metrics
To maximize your profitability, use these metrics within your vehicle acquisition software when acquiring used vehicles across multiple channels:
- Volume of cars acquired from each channel so you can prioritize your sourcing methods
- Model year and odometer so you know which channel offers late-model vehicles that meet the criteria of your certified pre-owned program — as well as the needs of customers on a budget
- Investment value so you can acquire the vehicles that will make you the most money
- Percentage on or off strategy so you know if you’re approaching cars and buyers in the best way in each channel
- Days to sell so you know how long you have to sell the vehicle in order to maximize the return on your investment
With the right metrics guiding your acquisition process, you’ll have the data you need to determine which channels work best for your dealership — and how to buy “right” in each one.
To learn more about how vAuto’s vehicle acquisition software tools can help you optimize your vehicle acquisition channels, request a demo today.