Strategies to Maximize Rising Inventory and Boost Your Sales
The automotive industry is at a pivotal moment. After years of focusing on maximizing gross profit per vehicle due to inventory scarcity, the market is now shifting its focus to increasing sales volumes. This transition, driven by significant changes in the industry, requires dealers to adapt their strategies to stay ahead. As C-4 Analytics' Andrew Silva and Nate Seyler discuss in this webinar, the key is to be proactive and make a change before you are forced to.
The First Three Downs: Understanding Market Change
The recent shifts in the industry can be broken down into three key areas:
- Increasing Inventory: After years of supply chain challenges, inventory levels are normalizing. New car inventory is up over 50% year-over-year, and the used market is also seeing an influx of vehicles. This means the era of high gross profit driven by scarcity is coming to an end.
- Rising Incentives: Manufacturers now have more product to sell and are beginning to increase incentives. Dealers can no longer rely on scarcity alone; they need to leverage these OEM incentives to attract buyers.
- Consumer Price-Consciousness: With rising inflation and interest rates, consumers are more sensitive to pricing and affordability. Dealers must position themselves to cater to these price-conscious shoppers with compelling offers.
The combination of these factors is putting downward pressure on profitability, making it essential to pivot from a gross-focused model to a volume-focused one. As one case study showed, a dealer with the highest average new car gross still trailed the market in sales by 35 percentage points because they were unwilling to adjust their pricing.
Halftime Adjustments: Strategies for Success
To succeed in this new environment, you need a new playbook. Here are some key halftime adjustments you can make to your marketing strategy:
- Identify Your Strengths: Move beyond generic phrases like "family-owned and operated." Pinpoint your unique value propositions, whether it's an exceptional reputation, flexible financing, or a special offering like complimentary maintenance or free delivery. Your marketing should highlight these strengths to create value beyond just a lower price.
- Scout the Competition: It's critical to know what your competitors are doing. Use data and reports like Market Master, pump-in/pump-out, and sales by ZIP to analyze their pricing and messaging. This allows you to stand out from the crowd and gain a larger slice of the market.
- Update Your Ad Copy: Your ad copy must be compelling and reflect your value proposition. Use A/B testing to find messaging that resonates, highlighting specific offers like low-money-down leases or low APRs translated into monthly payments. These messages should be consistent across all platforms, from search to social media.
- Monitor and Optimize: You must constantly monitor your performance using a variety of data sources. Rely on analytics platforms and C-4 Analytics' in-house reporting to evaluate campaign effectiveness. Look at a minimum of three months of data to identify true trends and optimize your strategy.
The shift to a volume-driven model requires dealers to be aggressive and adapt. By making these strategic adjustments, you can navigate the changes in the automotive industry and secure a larger market share, which will drive long-term success for your dealership.
Watch the Full Webinar
For a deeper dive into these topics and to hear directly from Andrew Silva, VP of Client Services, and Nate Seyler, Account Director, watch the full webinar below.