Inventory Acquisition, Management Pointers to Prep for 2022
It’s not too early to begin setting your strategy to close out the year and set the stage for an even more successful 2022 in your used vehicle department.
The recent Cox Automotive Fall Expo featured seven sessions from vAuto. The sessions covered best practices and insights from dealers who found unprecedented used vehicle success despite lower supplies of wholesale vehicles, historically high wholesale prices and strong retail demand that seemed like it wouldn’t quit. We’ve distilled key takeaways from the sessions below to help you set your inventory acquisition and management plans and priorities for 2022.
Three Inventory Acquisition Priorities
1. Arm yourself with the right perspective and tools. If 2021 taught us anything, we learned in no small way that dealers who achieved the greatest success relied on fresh thinking and new tools to improve their ability to acquire vehicles beyond the typical auction and trade-in pipelines. Dealers took time to understand how consumers today shop for used vehicles and the experience they expect when they want to sell or trade-in their vehicle. They used these insights to refine how they appraised cars directly with customers, and how they mined local market data and leads to prioritize the customers they would engage for inventory and sales. They leaned into customer “Buying Signals” technology from Kelley Blue Book Instant Cash Offer and new “Appraise Anywhere” functionality in vAuto Provision. Get more detail in the “The Art and Science of Appraising Vehicles and Acquiring Inventory” session.
2. Know how to spot and buy the right auction cars. With historically high wholesale prices, it’s easy to throw up your hands: “It’s impossible to buy cars.” But that’s not how the most-successful dealers regarded auction-purchased inventory. They refined their strategy—determining a more precise number, and new parameters, to fill inventory holes their other sourcing strategies couldn’t cover. The dealers discovered that, with the right data, gameplan and technology, they could more effectively find and buy the auctions vehicles that made sense in their markets, even if the cars came from somewhere else. Discover how you can sharpen your auction acquisition strategy and make its execution far more efficient and successful through our “Finding Gold in a Hot Wholesale Market” session.
3. Know exactly what other dealers are doing. For the Fall Expo, we brought in three dealers to tell their stories of how they adjusted their acquisition strategy in 2021, and plan to carry forward their lessons learned and successes into 2022. The dealers adopted what could be called a “buy anywhere and everywhere” strategy to keep their incoming inventory pipeline filled. They adopted new ways to appraise auction and customer-purchase vehicles. They shifted from looking for reasons not to buy cars from auctions and customers to finding the right reasons to buy them. They created new processes, levels of accountability and comp plans to execute their new path forward. Hear the dealers share their stories in our “Best Practices: How Dealers Adopt ‘Buy Anywhere’ Acquisition Strategies” session.
Four Inventory Management Priorities
1. Manage vehicles by investment value. Through the pandemic, we saw dealers who diligently managed used vehicles as investments outperform those who didn’t. The performance difference follows the unemotional data science that allows dealers to know a vehicle’s investment value and price to it, irrespective of whether it’s time in inventory. Dealers who manage used vehicles as investments are less likely to try and retail cars long after they’ve lost profit potential they sometimes never had. In addition, investment value-minded dealers learned that the data science that drives investment-based price recommendations often knows the market, and where it’s heading, more than they do. Find out the whole story in the “How Investment Value Management Drives Superior Used Vehicle Outcomes” session.
2. Focus on time-based task management to improve reconditioning speed. Dealers who set the highest used vehicle sales records in 2020 were likely not among the 49 percent of dealers who report it takes an average of eight days or more to move their vehicles through retail reconditioning and detailing. Those with the most-efficient reconditioning processes had the vehicle online and ready for sale faster, and they sold them. Dealers improved their reconditioning speed by using tools that help them manage and measure critical tasks, and completion rates, while avoiding the finger-pointing that plagues many stores. Hear how the reconditioning game changes with the “Time on Task: A Winning Metric for the Reconditioning Game” session.
3. Help buyers make online purchase decisions. Growing numbers of consumers are more willing to purchase vehicles without test drives and they prefer to complete at least part of their vehicle purchase online. Such preferences gained momentum during the COVID-19 pandemic, and many dealers responded by adding more digital technologies to facilitate online purchase decisions and deal-making. As dealers map their online marketing and merchandising strategies for 2022, it’ll be important to recognize how to make their vehicle listings and related content stand out to advance a shopper’s interest in their vehicle. Get more detail in the “Evolving Consumer Behavior: Photos Are No Longer Enough” session.
4. Reshape how you wholesale vehicles. Through much of 2021, historically high values led to profits when dealers opted to wholesale vehicles. In addition, some dealers discovered the ease and efficiency that comes by selling wholesale vehicles through online auction platforms. New technologies and tools now enable dealers to efficiently keep track of their wholesale vehicles and manage their sales without leaving the dealership. To help dealers capitalize on the efficiencies and profit-making opportunities, vAuto has launched Wholesale Hub in Provision. Find out how you can take the hassles and headaches out of wholesaling vehicles in the “Maximizing Returns from Wholesale Vehicles” session.