Wholesale prices are going up while inventory is going down. Dealers are using every strategy they can find to drive consumers to their online or in-store trade-in experience.
High used car prices are not expected to dip for a while. Cox Automotive predicts it could be 2025 or later before used vehicle supply and demand return to normal. Because of the high demand for vehicles, there is an ample opportunity for dealers to take advantage of the market.
Here are the seven winning strategies top dealers are using to get more trade-ins:
- Use new channels for advertising buyback incentives. More than 80% of U.S. households have at least one streaming subscription, and the pandemic has only increased that number, according to Deloitte’s Digital Media Trends Survey. With Amazon streaming ads, dealers can target that growing audience and leverage Amazon’s insights, including consumer shopping trends and geography, to target their ideal audience. This results in a much more targeted ad buy over cable TV or radio. Bettenhausen CDJR, in the Chicago area, uses streaming ads to promote its auto valuations and instant cash offers for vehicles. “We see strong results from the streaming ads since only people interested see the ads,” said John Doolin, Bettenhausen’s marketing director. “It’s super quantifiable.”
- Target with data and conquest the competition. By leveraging their CRM, dealers are targeting consumers with older vehicles, those in need of major service repairs, and people who have indicated online they’re interested in selling their cars. Dealers are using targeted ads to geofence their competitors and promote their trade-in offers. Geofenced advertising campaigns are a great way to target customers on their mobile devices in a specific radius around a particular event, shopping area, and competitors. Muller Honda of Highland Park, near Chicago, earned 150% ROI, 450,000-plus impressions, and more than 30 trade-in requests after launching a geofencing advertising campaign. The dealership wanted to increase brand awareness, reach more consumers, and get more trade-ins during a two-day “Appraisal Palooza” campaign.
- Focus on the service drive. More consumers are returning to dealerships for service and warranty work as the average age of a car on U.S. roads rose to 12.1 years in 2021, according to IHS Markit. Dealers can leverage these customers as a source of inventory acquisition. Some dealers are drafting trade-in offers while the car is in their shop. They are then approaching the customer with the request or leaving the proposal in their vehicle for consideration.
- Promote offers by text message. Only one in five emails is ever opened, but 95% of text messages are read within three minutes. Dealers are taking advantage of this by using text messaging to effectively promote trade-in offers to thousands of previous customers, especially those with the most sought-after vehicles. Sweeten the deal on new vehicle purchases with additional incentives for bringing a trade-in. Consumer text messaging is a highly effective way to reach customers. McClinton Chevrolet in Parkersburg, West Virginia, sent out a bulk text message with an eye-catching graphic to thousands of customers offering trade-in and trade-up incentives. The text messages garnered 30+ trade-in requests and over ten appointments scheduled in the first week. “I knew a text would be the most effective way to get in front of people,” said Ginny Bowden, McClinton’s dealer principal.
- Use social media to show the value of trading up. Seventy-three percent of car buyers say Facebook is the social site they use most, while 75% of car buyers say online video, such as on YouTube, influences their shopping habits. Dealers engage with their social media followers by featuring their inventory in short videos and on their Facebook business page. Dealers are also communicating they are a local leader in partnering with customers to trade up to their next great vehicle. Successful dealers make sure their social media pages are up-to-date and actively post and respond to customers on their social sites.
- Launch an online buying center. To streamline the process and attract more consumers to trade-in or sell their cars, dealers are launching specific buying websites and buying centers. Dealers are giving car buyers the option to do more online than just search inventory. Let followers book a virtual vehicle appraisal without having to come into the showroom. Consumers appreciate getting pre-qualified for credit and instantly getting matched to cars they can afford, all online. Customers love the streamlined buying process — the Amazon Effect — making it easy and convenient online.
- Seek customers on eBay, Craigslist, and Facebook Marketplace. Every day, consumers post thousands of vehicles to sell on eBay, Craigslist, and Facebook Marketplace. Dealers are activating alerts on these platforms to inform them when consumers post vehicles they want to sell. Dealers are also enticing their employees with extra money and encouraging them to find cars for sale as possible new vehicles for the dealership’s lot. Every avenue needs to be explored.
Dealers who build a used inventory strategy can now use it as a backbone of their success moving forward. Inventory challenges amid the worldwide semiconductor shortage are likely not going away this year. But luckily, there are plenty of consumers who want to trade in their vehicles or sell unneeded extra cars.
Christina Wofford brings more than two decades of experience in journalism, marketing, communications, and public relations to Digital Air Strike. As the senior vice president of marketing and communications, she is responsible for all marketing and lead generation efforts, including earned media and event planning.
Originally posted on F&I and Showroom