Over the last several months, used car prices have gone through the roof: between May and June, the average price of a used vehicle increased by 10.5% — that’s the fastest increase on record (which the Bureau of Labor Statistics began documenting in 1953). Several factors play into the dramatic increase that’s making selling used cars at your dealership difficult:
- The global semiconductor shortage has put a massive strain on new car manufacturing, causing consumers to opt for used cars instead.
- Personal vehicles have become more appealing throughout the pandemic.
- Rental car companies sold off much of their fleet last year, and are now repurchasing in droves.
Inflation, worker and material shortages, and other factors have caused goods and services across many industries to rise in price: In just the last year, the price of lumber has increased by 377%, gas prices have risen considerably this year, and furniture orders have been met with months and months of delays and backorders. So while the retail automotive industry isn’t the only one suffering supply disparities, it’s no less frustrating for your dealership.
But there are ways to continue to drive revenue at your dealership, and a lot of it boils down to who you have on staff. Your employees are your biggest asset — who and how you hire can determine everything from customer experience to internal culture (which affects your ability to attract new hires).
So while you’re waiting for prices to regulate, here are a few things you can do to keep revenue up.
Build your employer brand
Your employer brand is how you’re perceived by both customers and employees, so it’s crucial to put in effort to improve it. If you don’t have great staff working at your dealership, you can’t attract new talent, and you likely have problems with customer loyalty due to poor customer experience. It’s a vicious cycle that you can put an end to with some work.
To improve your employer brand, you have to focus on both your employee experience and your customer service. Focus on your marketing in all aspects, including your social media and career site. Showcase what it’s like to work at your dealership through employee testimonials, staff events, etc., as well as what the customer experience is like. Advertise the speed and accuracy of your technicians, the cordiality and wisdom of your sales team, and the consistency of your dealership as a whole. This will help bring in new customers — and new staff members — even with high inventory prices.
Focus on hiring the right people
And speaking of employer brand, having a direct focus on hiring great staff members is essential to keep revenue flowing. Think about it: your avenues to drive revenue are your technicians fixing as many cars as quickly as possible, your sales people moving vehicles off your lot, and your F&I department.
Hiring the right people into these roles can escalate your service offerings, drive repeat business, sell more inventory despite higher prices. Not to mention, for customers who aren’t wanting to bite the bullet and pay the inflation-level prices, having knowledgeable and approachable staff who provide an outstanding customer experience will encourage your patrons to come back to you when they’re ready.
In order to make the best hires possible, you should make sure your hiring process is up to par. Speed, referral programs, sourcing, and your selection process should all be ironed out to make sure you’re attracting great people and moving them through the hiring process quickly.
Sell new cars & buy back used cars
While the chip shortage has caused new car prices to increase, the 2% rise from May to June didn’t come close to that of used cars, and in fact, some new car models are selling for less than a used model. It’s a good time to encourage customers to get a new car, even if they planned on purchasing used, because they’ll likely save money. There’s also room in new cars to customize, of course, so you have the possibility of upselling as well.
Additionally, many customers may be unaware of the worth of their aging vehicle, so enlighten them and grow your fleet by offering a buy back plan. The average used car price in June was $26,500, and cars with over 100,000 miles have risen in value by 31% over the past year — an unheard of jump. And those customers will be searching for a new car, so while you’ve got them on your lot, show them your new car inventory.
The past year or so has brought a lot of stress — to businesses and employers especially. This recent development has likely put you on the verge of panic, but economists do predict car prices will even out. June saw a dip. The urge to spend that many Americans are experiencing will die down, but car purchasing will always be a necessity. The bottlenecks caused by COVID-19 will soon come to an end and supply and demand issues will equalize. So focus on what you can control in the meantime: your employer brand, your staff, and the profits you’re still able to turn.