In this article, Randy Barone, Vice President of Business Development at ACV, and Doug Hadden, ACV Vice President, offer valuable insights into the factors influencing used car prices, the impact of new car production, and their outlook for the used car market in 2023.

CBT News: Retail used-vehicle prices now average $26,510, according to Kelley Blue Book. Do you think used car prices will continue to fall in 2023, or was the month of February an outlier?

Randy Barone and Doug Hadden: Inflated used car prices have started to come down at the wholesale level, suggesting that consumer demand may also have slightly softened. This softening may be due to the current economic environment, impact of higher interest rates and higher average monthly payments, especially for the more price-sensitive consumers. While these are patterns typically seen in the used car market in times of expected or active recession, the wholesale sector remains strong because dealers are more willing to wholesale vehicles as opposed to holding onto that inventory.

It’s also important to consider how prices will be impacted as more brand makes, models and styles become available, particularly on the side of electric vehicles. Broader availability of SUVs, sedans or trucks, coupled with a customer base that’s more open to a new variety of brands, may also impact how vehicles are priced.

NADA data shows that the average retail selling price of a vehicle in a dealer’s inventory is $30,796, which is up from $19,800 in 2016. We are still in a used car shortage and will continue to see prices on the more popular makes and models remain higher. Buying vehicles from consumers and buying from the right sources that conduct more in-depth inspections will keep missed reconditioning lower, which can add to higher costs at market. The reliable “bread and butter vehicles” in the lower price ranges are owned by consumers, and the best approach to lower your average retail selling price is to buy vehicles directly from consumers, trade for more and buy vehicles out of service.

CBT: What factors drive the valuations of used vehicles?

RB and DH: There are several factors that drive the valuation of used vehicles, the most well-known being: age of the vehicle, mileage on the vehicle, vehicle condition, and history. Another factor that many car shoppers likely felt over the past few years is demand. There was a sharp rise in used vehicle prices during the pandemic as the chip shortage caused a delay in the delivery of new vehicles, sending car buyers to the used car lot. New car production is picking up, and we’re experiencing a softening in the economy that is leading to decreased vehicle demand and a downturn in used car prices.

ACV has a suite of tools that increases the transparency behind vehicle valuations, making sure that dealers are able to drive their bottom line by demystifying the connection between condition and value. Through ACV’s Max Digital product, real time retail data was introduced to our growing data moat. Paired with their Vehicle Condition Reports, which has features like AMP® (Audio Motor Profile) and Virtual Lift® using ACV’s proprietary technology, dealers have the most in-depth data for accurate vehicle valuations.

The focus on buying from better sources and making better decisions will continue to be a driving force in vehicle valuations. Buying from sources with poor inspections, like a very subjective score of a 2.9 or 3.1, exposes the dealer to items missed, and they may end up having to spend more in reconditioning. Buying from consumers gives the dealer the ability to inspect a vehicle in greater detail and not pay for transport or fees, plus the consumer remains very close to every vehicle purchased. Buying from sources with robust and transparent inspection services like ACV also gives the dealer an advantage to really nail down what will be their real cost to market right when they make the purchase without all the mystery.

CBT: Prices for certain car brands remain high—why?

RB and DH: On the new car side, due to lingering supply chain issues, OEMs have shifted their production focus to higher-end vehicles that will bring in more profit. On the used car side, certain vehicles have such high demand due to lower new car production that the pricing for the used model has surprised their newer counterparts.

CBT: Which brands stand out as having particularly high used car prices?

RB and DH: We’re seeing lower price vehicles right now in almost all makes and models. Ford, GM and Dodge trucks are bringing a premium. Toyota and Lexus SUVs, especially hybrids, are doing very well.

CBT: What is your 2023 outlook for the used car market as a whole?

RB and DH: The used car market will be strong even as the new car inventory shortage lessens. Current year models and 1-year-old vehicles have the most volatility particularly if the manufacturer continues to produce newer models. To move those 0–1-year-old models, dealers will need to begin providing incentive to move the inventory off the lot and make room for the newer options. We’re already starting to see dealers buried with current and 1-year-old models. The offer of “0% down and a discount” for the newest year models make it incredibly hard to own a later model with a high down payment and high interest rate.

There are, however, unknown factors to consider as we navigate this new normal. Will manufacturers continue to turn out inventory as they have in the past few decades? Will they be filling retail dealers’ lots with excess inventory, necessitating large rebates and moving to commercial fleet sales to keep production up? Will they keep a smaller day’s supply on the ground, which will negate the need for profit taking actions? Only time will tell.

The post The state of used car prices: why are certain car brands so high? appeared first on CBT News.

As consumers hold onto their vehicles for longer periods of time, used car dealers are looking for alternatives to trade-ins and auctions to keep their inventories stocked. One such alternative is Vettx, a platform that aggregates private party listings from a variety of sources, including Facebook, AutoTrader, Craigslist and CarGurus. On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Jennifer Torres, spokesperson for Vettx, to discuss how the company’s software speeds up the acquisition process and helps retailers stay up-to-date on the constantly changing market.

Vettx provides used car dealers with a single, centralized location where they can access and manage listings. By simplifying the process of acquiring vehicles from private sellers, the platform makes tracking third-party sellers easy and greatly increases both efficiency and accountability. “Our focus on private party stems from the fact that these accounts often offer high-quality vehicles at more reasonable prices compared to auctions,” explains Torres.

To ensure that used car dealers get access to the best listings, Vettx collects a variety of data regarding each vehicle. “We gather all the information, contact info, history report, and we use industry-standard tools to book the vehicle out and obtain market-specific evaluations,” Torres comments. The platform also uses artificial intelligence to flag potential issues such as suspicious listings, scams or unrealistic deals, allowing users to make informed decisions. Other AI-powered tools included in Vettx allow used car dealers to track make, model, price, location, season, availability and average churn in real time. Additionally, the platform leverages image recognition software to identify vehicles, further accelerating the acquisition process.

Used car dealers looking to integrate Vettx into their operations can also take advantage of the platform’s training services. “Even if you have never bought private party, our experts can help,” notes Torres. “Our training team assists dealerships in setting up the platform, understanding the various features and best practices for managing and following up on leads in private party buying.” The company also prioritizes data security. Users can expect to see thier information protected by stringent security measures, encryption, secure data handling protocols, and major DMS and email integrations.

With its unique features, Vettx creates a bridge between used car dealers and private sellers. “We believe in empowering our clients with the necessary skills and knowledge to make the most of Vettx,” explains Torres. As technology continues to transform the way used car dealers conduct business, the platform will continue to grow and add new features. “We’re committed to continual improvement and are excited to bring more features and advancements to our customers in the near future,” concludes Torres. “Are you going to be on the cutting edge or left behind?”

The post Used car dealers accelerating acquisitions with private listing platforms — Jennifer Torres | Vettx appeared first on CBT News.

Over the last few years, fluctuating production and an unstable supply chain have made it difficult for car dealers to keep their lots stocked. Now, however, the automotive industry is making vehicles faster than customers can buy them, making it essential for retailers to manage their inventories carefully. On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Dale Pollak, founder of vAuto and the executive vice president of Cox Automotive, to discuss inventory management strategies that prevent overstocking in the dealership.

The automotive industry is changing, which means that traditional best practices may soon become obsolete. This is especially true for inventory management. Although car dealers used to rely on velocity-based management principles, Pollak believes it is time for a new buy-sell paradigm. “For those dealers who are progressive, for those dealers who are astute enough to understand that the future will likely not be as kind to us as the past, I think for those dealers it’s definitely time to consider moving beyond velocity management to variable management,” he states.

Pollak lists three areas of inventory management that car dealers must master if they want their business to succeed: daily price management, acquisition, and appraising. Out of the three, price management is the most important since it heavily influences the dealership’s revenue and volume. While in the past it was impossible to track the impact individual pricing decisions had on the business’s success, through technology and a refined variable management process, managers can now track the process in real time. “It’s a really significant advancement in both the art and the science and the manageability to handle this very critical task,” Pollak remarks.

Appraising is another essential practice that car dealers must seek to master. Pollak notes that it is in a retailer’s best interest to narrow the range of appraisals among its various appraisers. While in the past it was difficult to critique an appraiser’s pricing decisions, managers can use variable management principles to identify when irrational beliefs impact the appraisal process. Going forward, dealers should be sure to measure performance where possible to ensure volume and revenue are not impacted by improper appraising techniques.

The last of the three categories, acquisition, has also changed. Car dealers can simply no longer rely on outdated methods to purchase their inventory. To make sure their variable management strategy succeeds, Pollak urges retailers to consider alternative ways to purchase stock beyond the traditional resources of auctions and trade-ins. This can mean buying vehicles off the street or from service department clients. Pollak recommends keeping track of multiple acquisition channels to measure performance and determine which sources produce the best options.

Although these recommendations can help car dealers, Pollak offers one major caveat. “I want to be very clear on this point,” he states. “You can absolutely perform in a stellar manner in each of these three critical areas…and still have suboptimal outcomes. That said, if you’re able to master superior performance in each one of these three areas, your performance consistently will be significantly improved over your performance otherwise if you have not done that.” Although the industry has grown comfortable with its tried-and-true tactics, car dealers should nevertheless learn as much as possible about variable management strategies so that they can prepare for the shifting environment in automotive retail. “It is definitely time, in my opinion, for dealers to consider this transition,” concludes Pollak.

The post Why dealers should reevaluate their inventory management strategies now — Dale Pollak appeared first on CBT News.

Randy Barone, Vice President of Business Development at ACV, and Doug Hadden, ACV Vice President, discuss key considerations for dealerships during this transformative period in an interview with CBT News.

CBT News: How can car dealerships embrace the acceleration of electric vehicle trends?

Randy Barone and Doug Hadden: It’s important that dealers recognize the acceleration of electric vehicle trends and utilize it as an opportunity to grow their businesses. That being said, this transition goes beyond just updating your service department offerings. Your sales department needs to be prepared to guide buyers through this major change. Dealers need to understand what car buyers want to know, especially those who are purchasing an electric or hybrid vehicle for the first time. For example, what is the maximum range of the vehicle’s battery? How does EV maintenance differ from that of a traditional internal combustion engine (ICE)? With a wider variety of models, brands and sizes, dealers who offer a variety of options will ensure that buyers find an EV that fits their unique needs. Dealers also need to emphasize the lower overall costs associated with EVs, as they have less necessary maintenance costs and higher fuel efficiency. It comes down to three things: 

1. Understand the customer’s needs. A customer with a family of six may want a compact EV to avoid high gas prices but will it ultimately meet their needs? Practicality lives on long after the newness wears off.
2. Sales teams need product knowledge. Most unanswered product questions can be overcome by the excitement of acquiring a new or used vehicle. This may not be the same when it comes to selling EVs. Customers will need to be “trained” and educated on what their new vehicle is capable of and how to take advantage of the new built-in technologies.
3. Follow up! It will be more important than ever for dealers to follow up with customers as they acclimate to their new EVs. Sending an email that offers a survey in exchange for a free tank of gas will no longer make sense. It doesn’t help customers understand the benefits that their new vehicles and new vehicle dealers have to offer.

CBT: What is driving the increase in wholesale buyers looking for used EVs?

RB and DH: The broader industry is seeing the electric vehicle space become more crowded as more brands and models roll onto lots. That being said, they want to keep price competition in a tighter environment, so as more vehicle models become available, prices are more affordable. 

Earlier this year, in January, ACV saw that All-Electric, Hybrid, and Plug-in Hybrid vehicles’ age ranges have increased in sales since the beginning of 2022. 

CBT: Do you think used EV prices will keep falling throughout 2023? Or do you expect them to stabilize at some point?

RB and DH: The broader industry is seeing the EV space becoming more crowded. As more brands expand their portfolios of electric vehicle offerings, consumers will have greater access to vehicles at their preferred price points.

We are seeing that more of these vehicles are hitting the market, and not just the expensive ones. You are seeing more of what we would call regular electric vehicles making a splash, as opposed to the more expensive Teslas, Rivians, and Lucids. The hybrids are still bringing strong money and will continue because of limited supply. Plus, consumers often feel more confident with a hybrid versus electric vehicle because of the fears around charging. These fears include not being able to charge, getting stranded, being at a place of residence that doesn’t support charging or having to wait for long periods of time to charge.

CBT: What are the top three things dealers must keep in mind during the shift to electric vehicles?

RB and DH: Dealers must consider the following factors as the shift toward electric vehicles continues: 

1. Dealers must have a simple process of training and educating potential buyers of EVs on how to set up charging stations and find locations to charge. Quick video clips are a great way to show the ease of owning and maintaining these vehicles.
2. Train, Train, Train: Dealers must also educate and train their own people on why an EV is an easy ownership option for buyers. They need to be able to discuss features versus benefits and the cost of ownership. They need to make the purchase simple and easy, with home delivery, professional explanation of use, and consistent follow-up.
3. We still need to support the EVs and ICE’s vehicle trades. We need to make the process seamless and well-supported for those who are looking to trade in used cars, turn around the vehicle and increase sales.

The post Q&A with ACV: Managing used EV inventory for greater sales success appeared first on CBT News.

Inventory is higher than it has been for dealers, but not by much, and dealers still need to fill their lots. On today’s CBT Now, we’re focusing on odometer fraud, which has plagued the retail automotive industry for decades, and ways dealers can avoid potential problems when in the market for a vehicle. We’re pleased to welcome Kirsten Von Busch, Experian’s Director of Product Marketing for Automotive, and Ron Montoya, Edmund’s Senior Consumer Advice Editor and Content Strategy.

Essentially, odometer fraud is when a person manipulates the odometer to hide a vehicle’s actual mileage and pass it off as lower mileage. According to records, Montoya states, “Over 450,000 cars are sold annually with false odometer readings.” Those false readings could cause Americans to overpay billions of dollars annually. In addition, Kirsten claims, “Today, it’s not as easy to identify a faulty odometer by simply looking at it. It’s not the days of the analog odometers that we could physically see If they were changed.” However, there are ways to identify change through the data: 

• There are title brands for odometer issues,  
• There are auction announcements,  
• And at Experian, they utilize modeling to catch discrepancies.  

Ultimately, Kirsten explains, “You need to look at the data, see how it’s changed over time, and see if anything stands out.” In addition, it’s crucial to remember that “if an odometer has been altered, the value of the vehicle will decrease, and when you have limited inventory like we do today, this could cost dealerships thousands,” says Montoya.

Resources

Kirsten at Experian says, “We recommend consumers to utilize the AutoCheck Vehicle History report, which is a great resource tool to provide background information.” Also, she asserts that Experian reports what gets reported to them. Hence, they recommend anyone purchasing a pre-owned vehicle to get it examined by a licensed mechanic. 

Advice

Both Kirsten and Montoya express how every dealer and consumer alike need to be aware of potential odometer fraud. It’s vital to keep in the front on mind how technological advances limit the ease of identifying faulty odometers. “Do your due diligence of reviewing your vehicle and the data and history,” asserts Kirsten. While Montoya adds, “If you see any red flags, trust your instincts and ask questions.”

The post How to avoid odometer fraud when acquiring used inventory — Kirsten Von Busch & Ron Montoya appeared first on CBT News.

According to the most recent iSeeCars study, used electric vehicle prices have fallen by nearly 30%! On today’s CBT Now, we’re pleased to welcome back Karl Brauer, the Executive Analyst for iSeeCars.com, where Brauer will shed some insight into the numbers and what’s happening with the used car market overall.

The used car industry has faced significant turbulence over the past three years. However, the market is finally starting to see some moderation. Brauer notes that despite being well above pre-pandemic pricing levels, “The market has come off its high, and we are seeing stabilization in the general used car market.” Over the last few months, the industry has experienced slow drops of three to 4%. However, used car prices are in a “free-fall,” meaning they are continuously falling primarily due to Tesla.  

Price Factors

According to Brauer, “Tesla is the biggest portion of used prices. It’s due to the EV maker continuously cutting its new car prices. Ultimately, Tesla has caused the used car market to collapse over the past year.” He further explains, “A year ago, we faced turbulent gas prices, which made EVs more desirable.” But, since then, EVs have stabilized to the general public. Also, a year ago, the industry didn’t have inflation or today’s interest rates. Anytime consumers buy a new or used EV, they pay more for the equivalent EV than the traditional vehicle. “Plus, the economic concerns are raising people’s awareness or hesitation to buy anything, asserts Brauer.

Brauer also believes, “There are three or four factors that are more destructive to the market than a year ago. It’s also important to note that a year ago, EV prices rose faster than the general traditional cars, now they’re reducing considerably faster.”

Tesla

The Austin-based EV maker spent the last ten years with no car, plenty of demand, and no competition. Then suddenly, they are being flushed by competitors such as Lucid and Rivian. Tesla has had to reduce its Model S, 3, and X prices to sell the relatively new Model Y. But because Tesla is lowering costs, it’s impacting the overall market. For example, the more desirable luxury brands that frequently struggle in normal conditions, like the Land Rover, Infinity QX80, and the Seven series BMW, struggle to hold their value. Insinuating those vehicles don’t have the same pulling power as used cars.

The post Examining the ‘turbulent’ used car market — Karl Brauer | iSeeCars appeared first on CBT News.

The Rise of the Used EV Market

The marke­t for used EVs is growing rapidly, driven by the incre­asing availability of pre-owned EVs as early adopte­rs upgrade to newer mode­ls. Car dealerships see­ this trend as a promising opportunity. Used EVs appeal to a wide­ range of consumers, from budget-conscious buye­rs seeking affordable e­ntry into the world of EV ownership to environme­ntally-conscious individuals in search of sustainable transportation options. By offering use­d EVs, dealerships can tap into this diverse­ customer base and expand the­ir market reach.

Challenges in the Used EV Market

The use­d EV market holds great potential, but it also brings forth unique­ challenges, particularly when it come­s to the lifespan of batterie­s. Concerns surrounding battery longevity and pe­rformance often arise among consume­rs considering used EVs. Failure to e­ffectively address the­se concerns can impede­ sales and customer satisfaction.

Overcoming Battery Lifespan Concerns

To ease­ customer concerns regarding batte­ry lifespan, dealerships should adopt a proactive­ approach. This includes transparently providing information about the batte­ry’s condition and its expected life­span. Furthermore, deale­rships can offer warranties or guarantee­s on used EV batteries to provide­ reassurance to customers. Additionally, e­ducating customers about proper battery mainte­nance can enhance the­ir confidence in purchasing a used EV.

Broadening the Customer Base with Used EVs

Deale­rships can expand their customer base­ by offering used EVs. These­ vehicles appeal to e­nvironmentally-conscious consumers due to the­ir low carbon footprint, while budget-conscious buyers appre­ciate the lower upfront costs compare­d to new ones. By positioning themse­lves as providers of sustainable and affordable­ transportation solutions, dealerships have the­ opportunity to improve their brand image­ and foster customer loyalty.

Limited Charging Infrastructure

Concerns re­garding the availability and accessibility of EV charging stations often trouble­ prospective buyers, e­specially in areas where­ this infrastructure is still under deve­lopment. Such perceive­d inconveniences can discourage­ customers from purchasing pre-owned EVs, fe­aring the practicality of charging their vehicle­s during long journeys or in remote locations.

Technological Obsolescence 

EVs, unlike traditional ve­hicles, present a unique­ challenge when it come­s to inspection. Their specialize­d components, such as batteries and e­lectric drive units, require­ specific knowledge for prope­r assessment. Unfortunately, the­ absence of standardized inspe­ction procedures adds to the difficulty face­d by dealerships in accurately de­termining the condition and value of use­d EVs. This lack of certainty can have repe­rcussions on pricing used EVs competitively and assuring custome­rs of their quality.

Overcoming Challenges in the Used EV Market

In order to ove­rcome these challe­nges, dealerships must e­mbrace a proactive and knowledge­able approach. This encompasses the­ provision of transparent information regarding the batte­ry’s condition and expected life­span, the establishment of standardized inspe­ction procedures for pre-owne­d EVs, advocacy for improved charging infrastructure and e­ducating customers about the long-term value­ and benefits of ele­ctric vehicles amidst rapid technological advance­ments.

Potential Benefits of the Used EV Market

• Expanded Customer Base: Used EVs are­ attracting a wide range of consumers, which allows de­alerships to expand their re­ach in the market. 
• Increased Profit Margins: EVs ofte­n yield higher profit margins in comparison to new EVs. This is primarily attribute­d to their lower acquisition costs.
• Enhanced Brand Image: Deale­rships can improve their brand image­ and attract environmentally-conscious consumers by providing sustainable­ transportation solutions.
• Customer Loyalty: Providing exce­ptional service and education to buye­rs of used electric ve­hicles can nurture customer loyalty and promote­ repeat business. 

Conclusion

The use­d electric vehicle­ (EV) market offers a compelling opportunity for car de­alerships to expand their custome­r base and meet the­ growing demand for sustainable transportation. By understanding and e­ffectively addressing the­ unique challenges of this marke­t, particularly regarding battery lifespan conce­rns, dealerships can unlock the full pote­ntial of selling used EVs. As the automotive­ industry continues to evolve towards e­lectrification, dealerships that adapt and innovate­ will position themselves for succe­ss.

The post How to successfully navigate the used EV market appeared first on CBT News.

If you’re thinking of a quick lunch, you may choose to “Live Más” and pick up Tacos and Nacho Fries from Taco Bell®. Let’s be clear, there’s no logical nutritional reason to do it, and one could argue that regularly eating that kind of food is harmful. But there’s something else behind the choice, and that’s emotion. 

Taco Bell’s former Chief Digital Officer, now at Strava, Zipp Allen, says, “Being able to meet [customers] where they are [is] about ensuring that the customer feels appreciated, understood, and known by the brand, no matter where they interact.”

When customers feel appreciated, understood, and “known” by the brand, they will be emotionally invested, even if it involves how your dealership sells used cars online.

Without a doubt, emotions are still the driver behind purchasing a vehicle. For example, it’s why a person struggles between having to buy an SUV and giving up their sports sedan. Or it’s why a person would NEVER be seen in a (put any brand here). Ask a person why they have their vehicle, and you’ll get a range of comments based on emotion —otherwise, we would all be driving a Mitsubishi Mirage, also known as “Everything You Need to Get Around.”

So, how do you attract emotional buying? Storytelling. Storytelling will help you build a foundation to tell moving stories, and, as Zipp said, it’s essential to tailor it to an individual user and make it personal.

Tips on creating a story

Video: A picture may be worth a thousand words, but videos are more emotional. One consistent customer request is for dealers to show or provide a link to a video walk-around. These videos create a better experience by letting you romance the product and give a story of the vehicle’s history.

When creating a video tour of your car, there are a few things to keep in mind:

1. Focus on the exterior of the vehicle. Be sure to show off any unique features or design elements.
2. Give viewers a quick walk-around of the interior, pointing out any especially notable features.
3. Spend some time talking about the engine and performance specs.

Photos: Use compelling and eye-catching images. You can have words about the features and benefits of your latest model. However, people don’t just buy cars; they buy status, success, and image symbols. For example, a photo of an AWD pickup parked in a target customer’s outdoor setting is more enticing than one surrounded by sedans in a used car lot. So, the next time you’re planning photoshoots for your incoming used inventory, make sure to include some interesting and eye-catching images. They might be the key to driving sales.

Sell the Benefits: Write a brief but enticing description of the vehicle.

For example: “This car is a sleek and powerful machine that turns heads wherever it goes. It’s got a sleek design that screams speed and power and the performance to match. Plus, the built-in GPS ensures that I never get lost, even in the most unfamiliar territory. This car is the perfect way to get around town (or even out of town!) in style and comfort.”

Be Mobile Friendly: With more and more people reading content on their phones, ensuring your website is optimized for small screens is essential. In addition, fewer people search online, so a responsive website (one optimized for mobile and desktop) ensures customers won’t miss information or have issues reading through the used car listing. 

With 2x as many automotive consumers starting their research online versus at a dealer, it’s crucial to provide emotional reasons for your listings rather than only facts. By following these tips, you can give potential buyers a better sense of what your car offers. So, whether you’re selling a classic muscle car or a low mileage SUV, these could be just the thing that helps you seal the deal.

The post Every car has a story: How to jazz up your used inventory website listings appeared first on CBT News.

Randy Barone, Vice President of Business Development at ACV, discusses this further in an interview with CBT News:

CBT News: Over the last 2-3 years, the wholesale market has had highs and lows. How did you see dealers adapt to historically high used car prices and fluctuating inventory in a largely digital environment?

Randy Barone: Dealers will have to get back to real inventory management and focus on buying the right vehicles from the right sources. The days of putting anything out on the lot with a weak description or a mismatched price without regard to the market or inventory are over.

It’s important to be buying vehicles based on the most up-to-date data. Dealers need to know that to stand apart from the competition they need to have the right inventory and the right amount of inventory, along with better descriptions and tools to sell a vehicle’s features, benefits and build packages to customers.

CBT: What are the pain points that used car retailers face today?

RB: The major pain points dealers are facing today revolve around inventory, value and transportation. For example, dealers often struggle to determine the real value of their vehicle. Trust and transparency have never been more important. Our inspection technology and vehicle condition reports carry a lot of weight with our network of dealers, as it helps to increase peace of mind for vehicle buyers and lower rates of arbitration on sold vehicles. 

Inventory is certainly improving but remains a major challenge for dealers as competition for consumer vehicles heats up. It’s important to keep the consumer in mind. We’re working to transform the process of consumer inventory acquisition with the pairing of a brandable website widget that delivers data-backed, real-time price offers based on vehicle information provided by the consumer, plus a standardized dealer walk-around inspection process that vets the preliminary offer. This combination adds transparency to the dealer and consumer relationship because both parties have access to objective vehicle data points.

In the past year, we’ve found dealers within our network using the consumer-sourcing widget experienced over 60% show rate for appointments and lead form conversion. Additional benefits address dealer walk-arounds by standardizing the process and ensuring the vehicle offer is based on consistent and objective vehicle condition data. A walk-around inspection process can create uniformity throughout the dealership as multiple dealers take on this process.

Looking more closely at inventory, we’ve identified that dealers are going to be less willing to hang on to all their trades moving forward. New car supply is still not back to where it was pre-pandemic. Last year and for most of 2021, new car dealers kept almost everything because of the high consumer demand. However, they kept inventory that they shouldn’t have, leading to the industry coining a new saying: “make a car out of this.” The saying referred to dealers taking used cars with high mileage and investing time and money in reconditioning the older car. With the current new car and used car total sales, and the trade-ins that come as part of those sales, dealers are going to be a bit more cautious. Dealers aren’t going to keep all of the inventory like they were before. They’re going to be more conscientious that the macro environment has changed.

With longer transportation times to the dealership, there can be increased burdens on reconditioning time and expenses. At a time when inventory sourcing is difficult, dealers are now searching a wider radius to replenish their lot, which can add up on the transport side. For example, the average distance buyers acquired cars from in 2022 on ACV’s platform was 524 miles.

CBT: There are many different methods for managing aging inventory among dealers and used vehicle managers. What are three best practices you recommend?

RB: Our approach to managing aging inventory is to simply not have it in the first place. We’re doing that by stocking the right vehicles, doing great research, displaying them correctly, and utilizing the best descriptions and listing tools in the market that use build data to help the vehicle stand out from the competition.

1. You should also pay close attention to which vehicles need to have a shorter leash based on how fast they drop in value. When you are not getting hits, not showing the vehicle and not writing up the vehicle, it is time to change it up or wholesale it. If you are a dealership group, move the right vehicle to the right location based on data before wholesaling.
2. All vehicles should be clean and located correctly, but aged units should be extra clean and parked together so that every customer gets an opportunity to see them. People with credit issues are often shown these vehicles first, and we work hard to help get approvals.
3. We need to get back to inventory walks with salespeople and have them tell us why a vehicle has not been shown or written up. Salespeople can give you the real story of why a unit is not selling. You can correct it before it becomes aged, or wholesale it and bring in the right vehicles that salespeople have confidence in to sell.  

CBT: Dealers have invested more into vehicle acquisitions directly from consumers than ever before. How do you see this trend continuing, and how can dealers maximize those relationships?

RB: We are seeing dealerships continue to invest in vehicle acquisitions from consumers. Our in-person inspection process, whether it takes place at the dealership or a person’s home, allows for the consumer to see first-hand what goes into those inspections.

We’ve heard from our major dealer partners that they want us to help them buy more vehicles from consumers with transparency. We have the right products, data services and AI to deliver both the trust and transparency they need.

CBT: What are consumers looking for during the trade-in or selling process?

RB: Consumers are looking for a trustworthy and transparent experience with the dealer, fully understanding what data and insights are required to accurately inspect and value a car. 

CBT: What should used car dealers be prioritizing in order to remain competitive in an ever-changing environment? 

RB: It’s important to recognize the changing sentiment among dealers as they are increasingly becoming more willing to buy wholesale vehicles digitally. Dealers who embrace digital are finding success in driving their bottom line. Diversifying their acquisition strategy through multiple purchasing channels like wholesale digital marketplaces and utilizing data-driven management tools are benefitting dealers greatly.

Digital offerings are also helping dealers source vehicles from consumers directly. Digital offerings like Drivably and the integration of Monk AI allow our network of dealers to produce data-backed, real-time price offers based on vehicle information provided by the consumer. Plus, there’s the added confidence of the standardized dealer walk-around inspection process that vets the preliminary offer.

CBT: From your perspective, what is the outlook for the used car market in 2023?

RB: Regardless of what people say, we are still in a used car shortage. The economy is hurting demand, and the rising interest rates along with higher prices in inventory are presenting big challenges for consumers.

The wrong inventory priced right will sell slowly or not at all. If dealerships focus on the areas they need to improve on, then sales for 2023 will be very strong. Most dealers are missing a comprehensive suite of tools and products when it comes to used cars in these areas, which is hurting their sales. Dealers should focus on:

• Buying vehicles from consumers
• Buying vehicles out of service
• Trading over 50% of the trades they appraise
• Having a strong used car goal
• Having a wholesale profit center
• Having the right number of vehicles throughout the month
• Having the right vehicles
• Having vehicles described using build data
• A strong digital presence with sales tools
• The right number of salespeople
• The right number of opportunities 

If dealers worked on these areas, they would have a record 2023.

The post Q&A with ACV’s Randy Barone: How to perfect your dealership’s wholesale strategy appeared first on CBT News.

The number of consumers with negative equity has grown in the post-pandemic era, making trade-ins more difficult for all parties. On this episode of Inside Automotive, CBT News anchor Jim Fitzpatrick sits down with Sean Gardner, trainer and sales consultant at the Joe Verde Group, to discuss how dealers can approach the topic of negative equity and solve customer pain points during the trade-in process.

Although trade-in values remained inflated throughout the pandemic, many customers who purchased their vehicle over MSRP during this period now owe more than the vehicle is worth due to falling car prices. “The brakes are on hard right now,” states Gardner. “The car business is normalizing, so we’re going to start seeing negative equity.” Not only is the situation disadvantageous for consumers, but many new salespeople working in the automotive industry may also feel challenged due to their lack of experience pre-2020. To help their employees and clients through the new trade-in environment, Gardner recommends following these three tips.

Relax and breathe

First, when confronted by a customer with negative equity, relax and breathe. “Don’t panic…” he cautions. “Except [for] that interruption between COVID and the [vehicle] shortages, negative equity has been a part of our industry forever.” Rather than focusing on a customer’s equity throughout the trade-in process, Gardner suggests that dealership employees instead prioritize earning a client’s business. This emphasis also opens the door for managers to help their teams close more sales.

“Sell on your feet. Price in your seat.”

Next, salespeople must avoid getting into a trade-value discussion on the lot. “That right there is going to make it tougher when it comes to negotiations later on,” explains Gardner. Dealership employees should avoid this conversation before sitting down with their clients to avoid making promises they cannot keep. By guessing whether a customer has or does not have negative equity, they risk setting themselves up for failure. Instead, Gardner recommends sales professionals take this principle to heart: “Sell on your feet. Price in your seat.” Doing this will allow trade-in negotiations to start with a mutual understanding of the customer’s position and allow F&I managers or sales managers to be more involved in the process.

Focus on solutions

Finally, when reaching the topic of negative equity, always emphasize the customer’s options for paying the trade-off in full rather than the consequences of their unfavorable value-to-debt ratio. “Look, I was in F&I five years, we have never not paid off a customer’s trade-off in full…” remarks Gardner. By acknowledging and assisting their clients through the process of resolving their equity challenges, sales professionals can keep the conversation positive and close in on the deal.

The post 3 tips for helping trade-in customers with negative equity — Sean Gardner | Joe Verde Group appeared first on CBT News.