Published 02 Aug 2019
This article was originally published in the Autofile Magazine - May 2019 issue.
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Don’t just slash prices on aged stock. Take action and see if you can increase interest and hopefully convert it into sales before impacting bottom-line profits.
After asking the question recently of a number of dealers – and observing what seems to be common practice across the industry as the “go to” strategy for dealing with aged stock – the answer was to slash at least $1,000 off the window price to hopefully stimulate some buyer motivation.
In reality, however, this is an assumptive action that directly impacts the bottom line, and is usually done with little or generally no effort into finding other ways to attract some attention on cars that have gone quiet on the interest front.
Old stock can be defined in different ways – whether it be in days, months or a lack of views online.
What really matters is what you do with it when it gets to that point. The majority of dealers seem to take action based on time rather than any hard data that paints a picture.
Before eroding profits, it pays to review the vehicle listing to see if there is any apparent reason it hasn’t sold yet.
Also, review the car itself to see if there’s something wrong with it that will put prospective buyers off once they have test-driven it, and so on.
It’s better still if you can also report on vehicle-activity history and views online because this will provide a greater level of insight as to how the car has performed to date.
Then, if all that checks out, look at what your options are to promote the vehicle on alternative cost-effective mediums if you haven’t done so already.
Spending a little to retain a lot is the best approach to protecting profitability on older stock vehicles. Be proactive and look for ways to generate interest over the next few weeks before addressing any price issues.
If your price is way out of touch with the market, then it will be more difficult. However, if the price is right – as it generally is – then do what you can to retain bottom-line profits.
A good way to do this is by putting in place a policy and process within the dealership around aged stock.
Firstly, it could be defining what aged stock is to your dealership and, secondly, what the process is around being proactive with a vehicle once it reaches that point.
Putting some thought and effort into this area can potentially save your dealership tens of thousands of dollars over the course of the year.
The dealer solutions team at Motorcentral has plenty of ways it can help with this profit-protecting area of your business – from reporting with data insights, through to cost-effective actions you can take to increase the probability of getting vehicles sold.
If you want to have a chat, you can email the team at firstname.lastname@example.org.
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