Used car stock acquisition is the number one challenge for two in five dealers according to the latest Manheim Insight Survey. Achieving ‘credible margins’, Brexit and demonization of diesel followed right behind. However, to our surprise, reducing the number of days to sell has not made the spotlight of growing concerns.
Philip Nothard, Manheim’s head of external communications, said: “The insight that acquiring stock is the number one commercial challenge for dealers correlates with the rising importance of a used car offer”. Customer demand is changing and dealerships find it more difficult to supply the right stock that will get turned over within the reasonable period.
Buying a car is a need, not a want
The 2018 Car Buyer Journey Study, commissioned by Cox Automotive revealed that car shopping is driven mainly by a need, rather than a want for a new vehicle. 61% of total buyers said they needed a new vehicle; the remainder of 39% simply wanted one. The trend of getting a car as a want is decreasing across both: new and used buyers. However, the number of buyers that need a car is increasing. The industry demand is shifting with used car sales dominating the market. As a result, new car dealers are forced to expand their used car stock capabilities and effectively increase competition within that market space.
Fast preparation of cars for resale is paramount to maintain margins
Market instability, additional competition, economic pressures and difficulties to achieve ‘credible margins’ make it difficult for dealers to supply the right stock for their customer demographics. However, buying used cars is only part of the story, getting them ready for resale is is also major contributor influence. Inefficiencies in prep time increase days in stock, delay advertising and ultimately lower profitability, because as we know the moment stock is purchased it starts to cost.
Neil Smith, Operations Director at Imperial Cars, believes that: “… challenge for used car dealers appears to be preparing cars for resale quickly, efficiently and cost-effectively in order to both increase stock turnover and retain chassis profit”.
60% of buyers visiting multiple dealerships buy from the last dealer visited. The most common reason for that is “Didn’t have the vehicle I wanted”. Having too little or too much stock can be damaging. Dealers should use stocking and acquisition tools to get the right stock for their stores and to avoid keeping hard-earned capital tied up and costing them interest. There is always room for improvement, and internal issues such as speeding up the preparation process is very much both achievable and necessary to smooth out the entire business operation.
Internal improvement helps to overcome an external challenge
Achieving operational efficiency across the board will help to prepare any business for external industry-led challenges. Many dealers still struggle to log and keep a track of each car’s progress, in real time; it’s a challenge that should have made the pool of concerns above.
Lack of simple automation within the preparation process slows it down, causes inconsistencies in data entry and makes it harder to instantly identify bottlenecks that lead to inefficiencies. It’s a hurdle that dealers can overcome with the right set of tools.
Buzz2Get is devoted to help dealerships overcome numerous internal challenges. This includes putting in the right tools and processes that have an immediate positive impact on the way the preparation process is managed and maintained. To learn more or discuss our offering please contact Chris Scoot.
