A recent forecast from IHS Markit estimates Q3 2021 losses at 3.1 million units and rising, with the outlook for Q4 reflecting heightened risk as challenges to the supply chain – primarily semiconductors – remain ongoing.
Fewer light vehicles being produced due to chip shortages and other influences, along with increased demand as the economy recovers from the pandemic, have driven new and used vehicle prices to new highs.
Dealerships are on the hunt for vehicles, and with auction prices rising, buy-backs and trade-ins have become critical to maintaining a profitable pre-owned inventory.
Service departments provide the perfect opportunity for dealers to acquire in-demand trades, as well as the ability to sell replacement vehicles.
Identify acquisition opportunities in your service departments
Ensure your entire dealership, including your service team, is on the same page regarding your acquisition strategy by setting internal standards for buyback vehicles.
These details will be key when identifying prospective trade opportunities among service customers. However, identifying which customers represent the best opportunities for inventory sourcing is more complex; service customers, who are seeking maintenance, typically don’t plan to buy. Pinpointing which of these customers are preparing to return to the market is key.
Dealers who leverage advanced data mining tools are analyzing their upcoming service-to-sales appointments to engage customers who represent their best prospective trade opportunities, such as those who are out of warranty, over their lease mileage or could benefit from a lower monthly payment.
Some dealers have taken this approach one step further, reconfiguring their BDC to dedicate tech-savvy team members to act as service-to-sales liaisons.
Engage prospects before they start shopping
With an increased demand for pre-owned vehicles, competition to acquire the best is fierce. Dealers need to get ahead of the competition by getting ahead of leads.
Using the previously mentioned data mining tools with predictive marketing capabilities, dealers can see the factors driving a prospect’s purchasing decisions and uncover insights, such as a customer’s CARFAX history report or vehicle maintenance history.
By automatically assessing factors like estimated trade-in values or incentives that may be available to the customer, dealers can send prospects personalized messaging and offers that factor in demographic information like household composition, previous purchase history and more. By taking a tailored approach, dealers can engage prospective leads before they start shopping around.
Generate future sales and service opportunities to promote loyalty
Recent IHS Markit data shows that brand loyalty among U.S. consumers looking for new vehicles dropped to a six-year low in June 2021, following steady declines in April and May. Amid inventory shortages and historically high vehicle prices, nurturing customer loyalty is crucial to dealership success.
Loyal households become more loyal over time, and the growth continues with subsequent purchases. Loyal customers are an invaluable source of high ROI sales, less likely to haggle and more likely to generate service and other fixed-ops revenues, as well as contribute to referral business. These dealership inventory sourcing opportunities provide the highest margin sales on the car going out and the trade coming in.
By using dealership marketing technology that integrates with their CRM and DMS, some dealers are proactively promoting customer loyalty by automatically engaging customers at key relationship-building touchpoints, such as using conveniently timed and personalized service notifications, developing a positive connection with each household until they are ready to re-enter the market.
Dealers who proactively market through inventory challenges and meet customers where they are in the purchase process can capitalize on strong relationships to maintain a rotating inventory despite the chip shortage, surviving in the present and thriving in the future.