Five Proven Best Practices to Make Sure You Are Prepared as the Used Market Ramps Up in 2010

It has become an automotive cliché to talk about today’s ‘challenging times,’ but for car dealers, it has certainly started to feel that around every corner is a new industry development designed to test a dealer’s metal.

For dealers in both the new and used car market, the post-Cash for Clunkers weeks produced a bumper crop of nasty contradictions: the big upswing in new sales meant depleted new inventory and plunging consumer demand; the ongoing, recession-generated upswing in consumer demand for used vehicles was now coupled with a massively depleted used inventory (thanks again to C4C); and a scarcity of trade-ins put huge pricing pressure on used vehicles at auction (the Manheim Index rose 6.9% in September to a record 118.5). All of which added up to major October headaches for dealers on the new and used fronts.

The good news is that now it’s November and a stronger market is poised to unfold: rising used vehicle prices are set to stimulate trade-ins, replenishing much-needed inventory. And, according to economists, we are officially in recovery, with U.S. new-vehicle sales projected to rise nearly one-fifth to 11.8 million units in 2010.* So, even on the new front the worst is likely over; inventory is starting to flow post-clunkers, and new models are coming into the market.

It’s the used market, however, that’s poised for the biggest gains. The consumer demand, set to lift in the new year, may prompt a reduction in the huge incentives being offered by the OEMs and used vehicles will continue to seem a logical alternative to still-cost-conscious consumers. Used inventory will start flowing in again.

These developing trends mean car dealers should be keenly focusing on their used business and the significant opportunities on the horizon. Here are just a few, proven tips that OneCommand has shared with our dealer customers over the years that remain true for marketing used vehicles in this or any economic climate.

1. Identify market demand, then “build-to-order.”

Understand the supply and demand in your local used market and stock your used lot accordingly. Study the market share reports in your ADI and then analyze your database not only for the best gross opportunities, but also for the fastest turn of dollars. Then, leverage virtual inventories to create a “built-to-order” used vehicle inventory that matches your prospect requirements.

2. Secure desirable inventory.

Target existing customers with a no hassle, trade-in appraisal or host a used vehicle service clinic to make service to sales conversions. In addition to auctions, look to local classifieds and rental companies who are keeping vehicles in their fleets longer than ever before. As rental companies shed inventory to update fleets, that extra year and increased mileage make their vehicles an attractive choice.

3. Mobilize your inventory.



Keep your inventory fresh and updated on your site. Then extend your reach and frequency by posting across multiple channels, including third-party sites, such as AutoTrader.com and Cars.com, and, most importantly, make your entire inventory accessible through a dedicated mobile site using a short code.

4. Certified pre-owned.

Post-recession consumers not only want value when they purchase a vehicle, they want a “safe choice”—a vehicle that they can count on from a dealer they can trust. Moving into 2010, OEM certified programs will be more popular than ever with consumers, so it is critical that your used car strategy includesyour manufacturer’s certification programs.

5. Mine your database to find previous customers who are “in-equity.”

Market to customers in a favorable equity position, focusing on bringing them into the dealership for a vehicle purchase—at, or lower than, their current payment. It is a win/win for you; the trade-in enhances your used inventory, you are able to move a new vehicle off the lot, and you can close the loop by bringing that happy customer back in for service.

*CSM Worldwide as quoted in U.S. News and World Report, 10/26/09

Al Babbington is CEO of OneCommand, the nation’s leader in preference-based, automated, multi-channel marketing. For more information call 866-855-3237 or email info@onecommand.com.

Al Babbington

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