Preparing for What’s to Come as Prices and Inventory Fluctuates

August 12, 2021

We are entering a brave new world. One where automotive dealers have to be spry and nimble. There is no roadmap or path to follow. As car dealers, you are trailblazers rushing forward into the unknown. True, educated guesses can be made based on the past that informs future decisions. But you must be wary about going back to bad practices. There have been many changes since March of 2020. And while some glimmers of hope exist, many challenges have emerged. As a result, many good habits have gone to the wayside and bad practices have been adopted. This needs to stop today.

You see, we as an industry are in the perfect position to make process improvements that will benefit us down the road. Start by taking training seriously. Over the past months, dealers have had to become extra resourceful and do more with less. As unpredictable events continue to occur, now is the time to pause your team and set the tone for what is coming. Hammer home good habits to sell based on value with transparency. Put in the work to get your team up to speed with current trends and empower them to be true champions for your customers.

Next, spend some time seriously considering how you are pricing. We have seen a lot of shifts with shortages. These have sparked prices to go up. But that won’t last forever. We are already seeing some prices level out. As things go back to normal, we will most likely see a return of the race to the bottom. I’m telling you now, it doesn’t have to be like that. Justify your price with value. If you have a low mileage, certified, loaded vehicle, it doesn’t need to be the lowest price in the market. The old mentality of racing to the bottom needs to end.

How do we do that? By returning to basic business fundamentals. Leverage technology to help justify pricing through your descriptions. Being honest builds trust and delivers value. Your inventory has worth, so establish that by providing consumers with all the information they need on packages and upgrades. Don’t be shy about it, either. Train your BDC staff on all the finer points of your vehicles and let them actually help the customer. In the end, you are justifying costs by comparing apples to apples. Make sure your prices are validated on the web, in your BDC, and in your showroom.

Taking the topic of inventory one step further, now is the time to prepare for lower demand. This shift will naturally cause those high prices to drop. The last thing you want is to get stuck with excess inventory when autumn rolls around. Shed the inventory which value may drop quicker than others. Monitor your inventory at a quicker pace while also coaching your team to sell based on that value. This isn’t a race to unload (again, we are trying to avoid the race to the bottom). Rather this is an opportunity to apply top-tier selling habits to move inventory before another shift hits the market.

There is one common theme that exists throughout this piece and that is training. When it comes to pricing, inventory management, and selling, you need your staff to be at the top of their game. The automotive industry is doing its best to stay ahead of the curve, but every now and then, something new emerges. Do the work now and you’ll be better equipped for the rest of the year.