Whatever the prevailing used car market is the day you read this, one foundational truth always remains true: Buyers seek affordability and reliability, whatever the age of the used vehicle they buy from you.
If you haven’t lately given fresh thought to your inventory strategy, this would be a suitable time as we roll into late spring and early summer. Every new market should prompt new considerations on how to acquire and inventory used cars more smartly.
An inventory strategist Ed French of AutoProfit Group recommends that dealers be more aggressive in intention and volume of activity related to vehicle acquisitions, primarily via appraisals and private party purchases, and buying a broader spectrum of vehicle makes and model years.
For the second quarter, he told me, because three-year-old models are in short supply, those acquisition prices will be up, especially for the spring, with tariff uncertainty stirring inventory concerns. He advised dealers against stocking up now to hedge these factors and instead buying older model vehicles than usual, but that proper reconditioning will still yield attractive margins.
“And be more transparent in the marketing of this inventory than ever before,” he said. “You have to aggressively demonstrate that these vehicles are good cars and a good value.”
You have access to a wide range of data sources to help you achieve the optimal balance of make, model, and age for your dealership and market, including prices, interest trends, and prevailing consumer confidence. This data helps you paint a picture of what these factors look like for your dealership.
Considering these observations, factor also in these disciplines:
Smart ROI: Set aside any margin-first mindset and flip the script: Most dealers don’t lose money because of market conditions. They lose money and margin from making stocking decisions using incomplete or incorrect data. How might inventory decisions improve if you knew precisely what shoppers of your dealership were looking for and buying within the last week, not last month?
“Consumers demand transparency about the used cars they shop on the dealer’s website,” French said. “The dealer must be completely transparent about the car’s DNA – where was it sourced, is it a fair value, comparably, what work was done to get it ready to resale, and how does the dealer stand behind the car once sold.
When this level of transparency is available online through the dealership website, the dealer provides credible evidence to such questions. The standard Vehicle Display Page (VDP) accompanying website inventory displays provide basic vehicle details, but for an increasing number of dealers—and consumers—this level of transparency leaves much to be desired.
For example, online, a Digital Vehicle Portfolio (DVP) offers a comprehensive and detailed vehicle history, including service records, inspection reports, window stickers, warranty information, and accident history.
A well-documented car means no surprises. Customers understand why the vehicle is priced the way it is, whether it’s a three-year-old model or one with 5 to 10 years of mileage.