Based on recent AutoTrader.com vehicle scarcity data, used luxury cars topped all of the site’s CPO scarcity lists for both February and March.
Find out how you can combat this scarcity and fulfill CPO needs.
So, if you are a luxury franchise dealer, how can you combat this scarcity in order to fulfill the inventory needs for your certified pre-owned operation?
We turned to the inventory experts to find out.
Jeff Summers, the chief executive officer of FirstLook Systems, boiled his advice down to three key areas.
The first, he said, is to increase the close rates during the appraisal process.
“And the No. 1 strategy we’re seeing for that, particularly in the luxury market, is what we call ‘value-based pricing,’ ” Summers said, “which is essentially recognizing that this is a high-margin potential car, and not only pricing it that way when they put it on the lot, but also using that same value-based approach when they appraise the car, as well.”
Second, Summers touched on a teamwork approach to inventory management utilized by medium- to large-sized dealership groups.
It’s important for you, then, to recognize if it’s a “hot seller” in your market and then have a process in place to where that trade-in can be transferred to your store as quickly as possible.
Summers pointed out that several groups are implementing a “one team” concept,”“where from an inventory management standpoint, they’re really trying to optimize these opportunities. And in no place is it more important than in these high-margin vehicles, particularly the luxury CPO space.”
Next, Summers pointed to the service lane as a key place for acquiring these vehicles.
“The key thing there — particularly for these high-margin CPO vehicles — is having somebody at either the store level or the group level that really owns overall responsibility for looking out for these kinds of opportunities,” he said.
“For service lane, it’s more important at the store-level; for in-group redistribution, you really need somebody at the group level that’s really monitoring and proactively identifying these opportunities,” Summers continued. “For service lane to really work, you need somebody that this is clearly part of their job description, and it’s something that they literally do on a day-to-day basis.”
Lastly, Summers offered this point of advice: have “good visibility” into which wholesalers and auctions work best for acquiring certain vehicles to meet your inventory needs.