5 EFFECTIVE SOLUTIONS TO THE USED CAR SHORTAGE
[4 Minute Read]┃Author: FZ┃March 28, 2022
With car manufacturers still unable to get their hands on the chips needed to build their vehicles, new car buyers are being pushed towards the used car market where the supply is low, demand is high, and prices are even higher.
Although the world seems to be recovering from the pandemic, used car prices aren’t.
For you as an independent car dealer, on the other hand, it’s harder than ever to keep your inventory filled with the cars everyone is so desperately trying to get their hands on.
So, how do you go around the used car shortage and get your dealership back up and running?
Let’s see what some of our dealers have been doing!
1. Buy from Private Sellers:
This solution is actually more common than you might think.
A lot of our dealers turned to buying from private sellers after auction prices started soaring lately. It began by accepting trade-ins from their buyers. And that’s when some dealers decided to fill up their inventory solely with the cars they get from private sellers.
Doing this, they made sure their car lot never went empty. And they always ensured to buy only the cars they could flip for a very good profit.
Since sellers just wanted to get rid of their cars to buy another one, their asking prices weren’t as high as auction cars. Even though it was the other way around just a little while ago.
Because dealers know a good deal when they see one, their sales skyrocketed in a matter of weeks, not months.
2. Turn Sales Reps Into “Buy” Reps:
Just like you incentivize your sales reps when they make a sale, pay them a little commission every time they bring a good, profitable vehicle to your dealership. Doing this means that every one of your employees will be actively looking for used cars.
It doesn’t have to stop there.
Just like you offer a reward when customers refer their friends to buy from you, offer them the same reward when they refer their friends to sell their used vehicles to you.
Depending on the size of your staff and customer base, this could make your dealership look like it’s completely escaped the shortage that’s been paralyzing the entire used car market.
3. Buy Cars from Past Customers:
Get in touch with your past customers and check if they want to sell the cars they previously purchased from you. Since you’ve already built mutual trust with them, buying from them is going to be a seamless experience.
You can retarget these past buyers with specific ads asking if they’d like to sell the car they currently have.
Your past customers may want to sell their cars as soon as possible to get their hands on new or used ones. Because you’re buying directly from consumers, the prices you’ll buy the cars at are going to be more affordable than those at auctions.
This way you can start reaping profit once again on the same cars you already sold earlier.
Which of these steps are you taking to get back into business?
4. Explore New Auctions:
Obviously, auctions are one of the first sources dealers would go to for used cars. But there are more options than you think!
The pandemic pushed many auction houses to go online during lockdowns, and some of them continued to fully or partially stay online even after restrictions eased.
We take Manheim for example, they are the largest dealer-only car auction in the world. They’re also one of the longest continuously-run auctions in the US, selling over 6 million vehicles every single year.
They only deal with licensed dealers, government agencies, car manufacturers or rental agencies. So, you can expect the competition to be fierce.
CarMax is so big that they have their own used car auction. Every car they get their hands on that isn’t 1 to 6 years old go to their auction.
You can find great cars with tiny dents that they’re willing to let go for half the price. Take a mechanic with you to their auctions, have them quickly inspect the vehicle and buy the ones other dealers are steering away from.
Fixing those small problems usually costs less than $500, leaving you lots of room to make a profit.
Carvana started out as an online used car dealership. They gained nation-wide popularity with their used car vending machines.
Right now, they’re also known for their online used car auction.
Head over to CarvanaAcces.com and register as a car dealer. You’ll receive an email letting you know of the next online auction, and you can start bidding for cars from your office or even living room.
5. Buy from Rental Agencies
All car rental companies have to periodically rotate their inventory to make sure their fleet consists of only new car models.
Now, you may find most cars in somewhat shady conditions, but not all rentals are bad. Take your time to inspect the vehicles and you can find yourself some pretty good deals.
As long as your run your CarFax and have their suspension and engine checked, you pretty much have nothing to worry about.
You can take these cars off their hands for prices lower than you’d expect. Just because they’re rental vehicles, they’ll be ready to let them go for really good prices.
Let’s do a quick recap:
To sell more cars even during the used car shortage, you need to follow these tried-and-true strategies:
- • Buy cars from private sellers
- • Incentivize your staff and customers to bring in more used cars
- • Get in touch with your past buyers
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