Exposure Over Discounts: A Strategy for Moving Aging Used Car Inventory
Should you lower the price on a vehicle to get more exposure? The short answer, no.
While traditional strategies often lean towards slashing prices in hopes of attracting more buyers, the reality is that the price doesn’t matter if the vehicle isn’t getting enough (or any) exposure.
Rethinking Discounts: A Closer Look
Aging inventory is a problem that all dealers face. And many exit strategies focus on physical processes like quick reconditioning and frontlining the vehicles as they approach the 45 or 60 day mark. Additionally, there is the common practice of discounting based on the number of days in inventory with a plan to wholesale in hopes of at least breaking even, if not turning a slight profit.
Analysis for one of our clients showed that the dealer could reallocate budget from ineffective campaigns to those that perform well - resulting in reductions in cost per visitor, cost per VDP, and cost per sold, and significant improvements in marketing spend efficiency and VINs sold from paid traffic.
A similar analysis for another client showed a number of popular used vehicles lingering over 100 days in inventory with reductions ranging from $700 to a staggering $10,000. The financial impact is non-trivial. With 280 in-stock vehicles, 161 have seen price reductions, costing the dealership an average of $3,380 per vehicle.
These financial concessions do little more than dent the bottom line and it's a high price to pay for minimal visibility.
The Visibility Factor: Engagement Over Price Slashes
What many of these in stock vehicles had in common was a lack of visibility. A majority of the vehicles had less than 10 VDP views. This underexposure highlights a missed opportunity: what if, instead of cutting prices, we amplified visibility?
It's a shift from the misconception that lowering prices inherently leads to increased interest. Without sufficient exposure, vehicles remain hidden gems, overlooked by potential buyers. By reallocating a fraction of the funds used for discounts towards targeted marketing efforts, dealerships could not only save money but potentially increase the vehicles' sale velocity through enhanced visibility.
The Road Ahead: A Strategy Refined
What does this mean for your dealership's aged inventory? It's time to challenge the norm and rethink your approach. A strategic pivot towards increasing exposure offers a more sustainable approach to moving aged inventory. The ultimate goal is more exposure and increased interactions that lead to sales, all while preserving your profit margins. Consider the long-term benefits of investing in exposure and engagement. By doing so, your dealership can uncover a more effective strategy for boosting sales and maintaining profitability.
Here's how to pivot from broad discounts to precision exposure:
Audit Your Current Exposure: Start with a VIN IQ Free Marketing Analysis
Measure, Adjust, Repeat: Use analytics to track the impact of your exposure strategies. Which tactics are driving engagement? What's translating to actual sales? Use these insights to fine-tune your approach continually.
Final Thoughts: The Value of Visibility
Within the multitude of variables that impact moving used car inventory, dropping prices is but one move in a much larger routine. By shifting the spotlight to strategic exposure, your dealership doesn't just sell cars; it creates connections. These connections, forged through targeted visibility, not only reduce the need for discounts but also establish a foundation for long-term sales success. So, as you navigate the road ahead, remember—the key to unlocking your inventory's potential isn't a lower price tag; it's higher visibility.