Used car profitability has dropped over the past 10 years. According to information from NADA, the average franchised dealership lost money for the first time ever in 2018. If this information isn’t a surprise to you because your store is also struggling to make your used vehicle operation profitable, then Auto Credit Express wants to help.
Change Your Used Car Acquisition Strategy
Over the years, used car pricing has adopted the same kind of strategy as new vehicles, and this situation has not been profitable for dealers. Much of this boils down to the fact that dealerships are targeting the same cars at auction, and prices to acquire and ship these vehicles is at an all time high.
Once these cars are acquired, you then face the task of selling them; since everyone is selling the same models, this often leads to profit-wrecking price cuts in order to attract the prospects you need.
The solution to this profit-killing cycle is refocusing on what you already have: trade-ins.
Focus on Upping Your Trade-In Game
According to a recent WardsAuto article, trade-ins make the average dealer three times more profit than purchased units, and sell in half the time.
If true, why wouldn’t you take advantage of something like this? Trading for just twice as many vehicles as your store does now has the potential to make a big impact on your bottom line.
If you’re looking to make more profit on your used car sales, take advantage of your ability to accept trade-ins. Currently, the average dealership wins less than one-third of all appraisals, which is a profit-killer, since trade-ins aren’t saddled with the additional costs of units bought at auction.
Winning more appraisals leads to bigger grosses for each sale. Plus, when you take in a trade as a down payment, you’re also selling another vehicle and generating additional front-end gross in the process.
Used Car Misconceptions in the Public Eye
Once you’re committed to focusing on winning more trade-ins, you need to move them off your lot. This sometimes poses a problem, since consumers seems to have some outdated thinking when it comes to used cars.
A recent survey by Ally Financial, conducted by The Harris Poll, revealed that consumers in the U.S. have a number of misconceptions about used vehicles, including thinking they’re more affordable and older than most actually are.
According to the poll, Americans think that the average age of a used car is more than six and a half years, and costs just under $10,000. In reality, data from Edmunds shows the average age of a used vehicle to be only four years, with average prices hovering around the $20,000 mark.
Knowing this, you can leverage more used car sales for your store by showing buyers that used vehicles aren’t the clunkers they imagine them to be. By laying out a payment plan that lets prospects see it’s possible to own a newer car with better features than they had previously thought possible, you can increase used vehicle sales.
Bring in More Buyers
When you take in more trades, you then need to turn them around and make a sale. This is where we can help through our relationship with CarsDirect Connect. Using our service, you can list your used cars on a platform that gets them seen on a website that’s easy to use, and optimized for maximum conversion potential.
Listings include dealership maps and links to your website, which can help drive more traffic to your showroom – but that’s just the tip of the iceberg. You can also syndicate your inventory across our over 130 Internet Brands Automotive Group websites.
So, instead of throwing used vehicles online for rock bottom prices to try and attract the prospects you need, let Auto Credit Express help by bringing actual buyers through your doors.
Not only can you take advantage of our partnership for new and used car leads, you can also be sure other dealers aren’t cannibalizing your customers when you use our proprietary leads. We match you with prospects that are best fit to your criteria by originating fresh special finance leads – not by shotgunning the same leads to multiple dealerships.
Auto Credit Express has been a leader in the subprime automotive space for over 20 years, offering leads and a wide variety of other services to help dealerships grow their bottom line!
If you want to see what we can do for your store, simply give us a call at 888-535-2277, or fill out our online contact form and we’ll get in touch with you!