Ongoing economic challenges mean that consumers are holding onto their vehicles longer, so you might not be getting as many trade-ins as you used to. There might not be as many vehicles coming down the auction lanes either. If you’ve noticed that these traditional methods of acquisition aren’t working as well as they once did, you’ve probably had to tap into other vehicle sources like your service lane and other dealers’ lots just to get inventory. Maybe you’ve even had to train your team on how to buy vehicles directly from customers. And if you’re like most dealers, you’ve just been buying every car you can get your hands on.
This environment means you need to be more careful about how you’re appraising and acquiring vehicles so that you can effectively support your dealership’s sales operations. It’s time to sharpen your vehicle acquisition strategy so appraisers and buyers use the same general parameters when acquiring vehicles but still have leeway to veer off strategy when it makes sense. Ultimately, the strategy will empower your team to buy more cars at the right price and across more vehicle sourcing channels — protecting your profitability. Here’s how to sharpen yours.
Take a Global View
Every channel has its own set of risks and opportunities, and the best way to manage these differences is by considering how they balance each other out to support overall profitability. That’s why vAuto developed the Global Acquisition system dashboard, a feature of ProfitTime® GPS. The dashboard provides a global view of all your vehicle sourcing channels, showing you the number and types of vehicles coming through each channel and how they’re performing for you. By understanding the ROI potential of vehicles in each sourcing channel, you can ensure that your acquisitions support your dealership’s goals.
Find and Fill Inventory Gaps
A global acquisition view also makes it easy to identify gaps in your inventory. Then you can shift your focus to the vehicle acquisition channels that help you fill in what’s missing so you have more of the vehicles that shoppers are looking for. For example, you might realize that your inventory is skewed toward older vehicles because you’ve made a lot of street purchases recently. To increase your number of newer vehicles that might qualify as certified pre-owned (CPO), you might need to focus on a channel that’s less profitable but fills the gap. And when your inventory is optimized for your market, you know your vehicle acquisition strategy is sharp.
Use the Right Metrics
Buying a car “right” might look different for one vehicle acquisition channel than it does for another. In today’s multi-channel sourcing environment, you need different metrics to help you know how well your team is doing with acquisition. Tracking each channel’s vehicle average investment value, volume, model year / odometer and days to sell helps you know which source to pursue when you need to meet specific goals. And tracking your percentage of acquisitions that land on or off your strategy helps you understand whether your team needs some coaching or your strategy simply needs to shift. Keep watching these and other metrics available through your vehicle acquisition software to continually fine-tune your acquisition strategy targets and thresholds — and to make appraisals and valuations more consistent across vehicle sourcing channels.
We don’t know where the market is headed, but a sharp vehicle acquisition strategy will help you navigate under any conditions successfully. Just remember to take a global view of your vehicle sourcing channels, keep your inventory optimized, and use the right metrics to help you know where to focus your efforts and how to adjust your strategy as needed.
To see how our vehicle acquisition software will help you sharpen your acquisition strategy, request a demo today.