Amid countless external factors driving ongoing automotive chip shortages, which the shortages forecasted to impact new vehicle supply into 2022, dealers are forced to adapt to evolving inventory challenges to secure both their immediate and future success.

Fortunately, despite these external factors, there are numerous inventory opportunities well within auto dealers’ grasps – if they know where to look. 

In this blog post, we’ll outline 3 emerging opportunities for auto dealers amid chip shortages including: 

• - Historic demand for new vehicles

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• - High pre-owned vehicle prices

- Better overall margins

High Customer Demand For New Vehicles

As chip shortages drive down new vehicle inventories, the U.S. economy is entering a state of recovery, with customers returning to market and ready to buy. According to IHS Markit, U.S. new retail light vehicle registrations reached a 10-year high of 1.64 million in March 2021.    

This increase in demand has been further intensified by mounting concerns over vehicle availability, ultimately driving high new vehicle prices even higher. According to industry reports, new vehicle prices in April 2021 increased by 2.2% year-over-year, or $864, bringing the estimated average transaction price to more than $40,000. For dealers facing tight new vehicle inventories or otherwise unable to stock in-demand or desirable units, capitalizing on customer demand requires a strategic approach. 

For example, if you can stock some new vehicles, but not necessarily popular units, you may need to be more aggressive with trade-in values or pricing on less desirable models. Look for inventory opportunities to upgrade previous pre-owned buyers into new models, starting with customers driving in-demand pre-owned models. By acquiring these in-demand trades for a future pre-owned sale, dealers are better positioned to price their new vehicle inventory to sell. 

Higher Pre-Owned Prices

Chip shortages haven’t solely impacted new vehicle prices. Scarce new vehicle availability has prompted some previous new buyers to consider pre-owned options, pushing already high pre-owned prices even higher. 

Auction prices have followed suit. By mid-May, a 4.5% month-over-month increase of wholesale used vehicle prices translated to a 48% year-over-year increase in used vehicle values according to Manheim. This pre-owned inventory trend has spurred some dealers to hold and merchandise older trade-ins instead of sending them to auction, as well as to take a proactive approach to acquiring in-demand trades. 

For many dealers, the service drive serves as a critical role in the dealership inventory acquisition process, serving as a sustainable source of potential pre-owned acquisitions driven by customers you already know. Leveraging dealership marketing tools that integrate with a dealership’s CRM, DMS and service data, some dealers are taking a proactive approach to mining their upcoming service appointments for profitable pre-owned vehicle acquisitions. 

When identifying prospective trade opportunities, look for key indicators such as customers who are out of warranty, over their lease mileage or could benefit from a new product design or a payment decrease to engage prospects before they re-enter the market – and start shopping around. 

Higher Profit Margins

Despite both new and pre-owned vehicle prices climbing, equally high customer demand means fewer shoppers haggling inside the showroom. A recent industry study found 40% of buyers would be willing to pay up to $5,000 above sticker price for a new vehicle. 

For dealers who can meet these customer demands, profitability is soaring. Of course, the first step to engaging these buyers is ensuring you have the vehicle on-hand they’re interested in. Instead of struggling to find the right match for a customer on the lot, proactive dealers are taking the opposite approach, mapping their available inventory to prospective buyers predicted to be interested in them. 

This not only empowers dealers to maximize their available inventory, quicken their turn and maximize their ROI through hypertargeting marketing efforts. Dealers who have taken a similar approach using Market EyeQ report a cost-per-sale of $115 on average – significantly lower than the industry average of $624. 

While 2021 chip shortages have challenged dealers to adapt to ongoing changes driven by forces outside of their control, numerous opportunities are still available – and well within a dealer’s grasp. But to turn these inventory challenges into opportunities, dealers need to stay a step ahead, starting with taking a data-driven approach. 

Faced with tightening margins, low vehicle inventories and a narrowing opportunity to rebound in 2020, auto dealers are looking for additional ways to maximize dealership profitability at every step.

This begs the questions: How many times can you make a profit off a single vehicle in its lifecycle? With excellent dealer inventory management strategies and strong coordination between new and used sales, service, finance and marketing, the same car can generate profits for your dealership repeatedly.

In this post, we share how to maximize dealership profitability by focusing on cultivating your dealership’s homegrown inventory and best practices for generating additional profits at every rase, including:  

• – Original new vehicle sale

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• – Vehicle service

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• Acquire the vehicle as trade-in to enable the next new sale

• – Certified pre-owned (CPO) sales and service

Homegrown Profits Start at the First Sale

Dealership profitability through homegrown dealership inventory starts with maximizing ROI on the initial new vehicle sale. With little flexibility to raise prices, this means minimizing costs, with many dealers looking to improve both the efficiency and efficacy of their marketing to make an impact.  Mastermind’s dealer partners set the bar for this, achieving the lowest cost-per-sale in the industry at $115, versus the $624 industry average.

They do this in part by maximizing lead quality through our Behavior Prediction Score®, which empowers dealers to identify prospective buyers before they enter the buying process. From here, our dealer partners are empowered to engage prospects with effective predictive marketing solutions that build off each other to convert high-potential new and pre-owned car buyers faster. The result is 15x ROI over traditional models. 

Service: Maximize Customer Experience, Loyalty and Profitability

The sales cycle doesn’t end after a buyer converts, and neither do opportunities to maximize your dealership’s profitability, especially with your dealership’s inventory strategy. The service drive is a key component of the customer relationship – and excellent service interactions benefit your bottom line beyond solely service revenue. Industry research finds 74% of buyers who have their car serviced by the dealership of purchase are likely to return for their next purchase, versus only 35% of those who have their cars serviced elsewhere.

Delivering an exceptional customer experience in the service drive is critical to defending against competitor’s conquest efforts, as well. Gartner research found truly helpful customer service interactions create an 82% chance a customer will stay with a company when a competitor attempts to conquest them.  

Even if you didn’t sell the car to your service customers, service-not-sold conquest is also an important contributor to homegrown dealership inventory management. For this reason, service notifications are critical, as is informing service customers of changes to their vehicle’s trade-in value and updating them on any attractive trade offers available at their time of service.  

Market EyeQ’s Service Conquest capabilities help automate this process by identifying high-value sales prospects in your service drive and mapping them to relevant offers and available vehicles in your inventory, tailored to their unique wants and needs. As a result, our dealer partners report converting service customers to new car buyers at a 4x higher activation rate than our competitors due to Market EyeQ’s 99.8% VIN match rate.

Acquire as Trade-in and Sell New (or Pre-Owned) Vehicle

More than leads are acquired in the service drive. According to NADA, roughly two-thirds of car dealership inventory on the used vehicle lot comes from trade-ins, with 43% from new car purchases and 22% used. That’s a very clear reminder of the importance of trade-ins to supply a dealer’s pre-owned car inventory, but also their critical role in powering new car sales.

To make the most of both opportunities, your fixed ops and variable sales teams need to work in tandem, working toward collective goals and allowing for a more seamless customer handoff. For this reason, many dealers are unifying their new and used sales teams on a single sales platform as a best practice, improving visibility, coordination and dealership inventory management. 

This approach allows auto dealers to ensure their service drive successfully acquires in-demand trade-in makes, models and trim packages to make your car dealership inventory more profitable. Dealers who leverage Market EyeQ can take this approach even further by automating the process and prioritizing prospects with in-demand and potentially highly profitable trade-ins.

Don’t Sink Your Auto Reconditioning Profits

According to NADA, the average dealer’s reconditioning costs more than doubled between 2009 and 2017, from $288,479 to $635,453. How much of that was a good investment in dealership inventory, and how much of it was chasing sunk costs?

Auto reconditioning decisions in a dealership are critical to profitability. By utilizing the same data-driven tools and processes used to identify profitable service-to-sales leads to analyze insights like a customer’s maintenance and overall vehicle history, dealers can more effectively predict reconditioning costs and prioritize their more valuable opportunities. 

Keep Dealership Profitability High With CPO ROI

Once reconditioned, dealers are tasked with flipping that pre-owned vehicle before it spends too many days on the lot. This is where predictive marketing tools, such as Market EyeQ with its pre-owned functionality, empower dealers to maximize the profitability of their used vehicle sales by identifying the best pre-owned prospects and automatically mapping them to vehicles on your lot. 

This make-model-trim level approach revolutionizes dealership inventory management and allows you to optimize car dealership inventory turnover ratio.

How many sales teams does your dealership have? If your answer is more than one, you may be missing valuable opportunities related to uniting your used and new car sales teams into a cohesive dealership team.

Auto industry sales trends illustrate shocks to customer finances and reduced new vehicle inventory has many would-be new car shoppers opting for pre-owned car options. As a result, a recent used car sales study found used vehicle sales grew by 105.5% from April to May 2020.

By uniting your dealership’s new and pre-owned sales teams, you empower them to take advantage of every opportunity by matching prospects to the vehicle they’re most likely to purchase (whether pre-owned or new) and delivering a consistently excellent dealership customer experience. 

In this blog post, we’ll share how dealership leaders can bring together their new and used car sales teams by:

• – Setting clear expectations

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– Rewarding the right behaviors

– Working from the same information

Set Expectations and Inspire Action

The road to a united car sales team starts with clear expectations and direction from dealer leadership. Your people need to understand that working together as a united sales team will benefit the dealership and one another by improving the customer experience and ultimately the bottom line.

This needs to be part of your efforts to create a dealership culture built on delivering great customer experience, as your sales team is a critical component of that effort. Research finds salespeople are the largest driver of car buyer satisfaction, ranking more than twice as important to customers than the time a purchase takes or even the vehicle sales price.

Find opportunities, such as during your daily Save-a-Deal meetings, to inspire your team while setting collective expectations and promoting collaboration by giving your teams a collective goal to work toward.  

Recognize and Reward Teamwork

When your team meets these car sales goals – reward them. Make sure your compensation and employee recognition tools can identify and track both individual and group efforts. Reward teamwork that closes a sale and gives the customer a great experience.

For example, one key dealer solution Market EyeQ includes in the performance insights reporting is a user-by-user view of how each of your salespeople is using the dealership platform tools, including total activity, activity by deal type (lease, cash or finance) and activity by Behavior Prediction Score®. 

This practice is valuable beyond just your sales teams, of course. BDC, F&I, fixed ops – if there were ever a time to identify and recognize employees who are making an extra effort to help deliver a great customer experience and contribute to the dealership’s bottom line, it’s now.

Work From the Same Information and Insights

It’s difficult to overstate the importance of having your entire car sales team working from the same set of customer and inventory insights. Collecting and analyzing data from your dealership’s CMS, DMS and inventory from a single sales platform allows your sales team to create a consistent sales experience while maximizing customer engagement by efficiently matching customers with the right offer and vehicle.

For example, Market EyeQ provides sales teams with unified customer insights to allow them to identify which prospects in your marketplace are most likely to purchase, whether that’s new or used. It also interfaces with personalized marketing campaigns to engage your best prospects with high-ROI marketing touchpoints selected by predictive analytics tools that deliver actionable offers at the right time, in the right form and through the right channel to maximize customer engagement.

Beyond solely improving your used and certified pre-owned (CPO) lead generation, marketing ROI and closure rates, putting everyone on a single platform also sends the message that your dealership places equal importance on both new and used car sales teams. It makes it easier for employees in different roles to work together to meet customer needs and expectations and reduces the potential for friction between teammates.

It’s clear that used vehicle sales are going to make or break 2020 for many auto dealerships. Even before COVID-19 disruptions, auto industry sales trends reflected a growing opportunity for dealers in pre-owned vehicles. In a recent study, 64% of car buyers said they would consider pre-owned options while shopping for a vehicle. 

In late 2019, Kerrigan Advisors research found that dealers of all kinds were already approaching an average 1:1 new to used vehicle sales ratio; an increase of almost 10% since just 2018. For new car dealerships specifically, NADA reported a total of 14.9 pre-owned vehicles sold by new-vehicle dealerships in 2019, compared to 17.1 new light-duty vehicles. 

Now, considering new vehicle production disruptions, household financial shocks to car shoppers and a glut of pre-owned vehicles hitting the market, 2020 will likely see pre-owned vehicles handily outsell new cars. Dealers that embrace the reality of auto industry sales trends and adjust to take advantage of the pre-owned sales opportunities in this marketplace will be far ahead of competitors who revert to business as usual.

In this post, we suggest three ways your dealership can sell more used cars in 2020, including:

• – Identifying pre-owned buyers early in their car buying journey

• – Improving your profitability through smarter acquisition

• – Boosting net profit by improving cost-of-acquisition ROI

Identify & Engage Pre-Owned Prospects Early 

With fewer trips to the physical dealership comes less opportunities to engage would-be buyers early in their purchase journey. Even before the COVID-19 pandemic, the window of opportunity for dealers to engage potential buyers was narrowing. According to one study, from 2017 to 2019, the average time consumers spent shopping and researching for used vehicles fell from 15:07 to 14:12 – a decrease of almost an entire hour in just two years.

In today’s fiercely competitive market, dealers need to identify prospects early in their purchasing journey and earn their business by delivering an exceptional dealership customer experience from the start. 

This means understanding and addressing each prospect’s individual wants and needs. Knowing used conquest auto sales are heavily product driven, leverage your dealership’s DMS, CRM and dealership sales platform to identify prospects likely to be in the market for vehicles in your available inventory. 

With pre-owned buyers typically more nomadic, price sensitive and credit challenged, understanding the various factors influencing their purchasing decisions can be difficult. Comprehensive predictive analytics and sophisticated outreach programs are critical to simplifying these complicated buyer journeys, empowering dealers to match pre-owned customers with relevant offers and simplifying complex sales cycles with automated, data-driven marketing.

Keep Pre-Owned Car Inventory Working For You

NADA’s annual dealership survey found that of the 14.9 million pre-owned cars sold at new-car dealerships last year, 40% were acquired by trade-in on a new car purchase, 27% were from auctions and 23% were from trade-ins on used vehicle sales.

That mix will likely change dramatically in 2020 thanks to the year’s unique market forces, including shrinking new car inventories thanks to OEM production disruptions, defleeted vehicles clogging auction lots and an increase in used trade-ins. 

This presents challenges and opportunities for dealers looking to build a profitable used car inventory mix. Make sure your dealership’s used car buying isn’t just operating on a “business as usual” model, but is instead ready to identify opportunities in a glutted market for high-value acquisitions on one end while ensuring you have the capacity to take more trade-ins on used vehicle sales than in the past.

This is a great time to look at what pre-owned cars are in demand in your market. Once you know what’s hot and hard to find, use predictive marketing tools to identify owners of those vehicles in your marketplace and engage them with personalized messaging and actionable trade-in offers that factor the potential resale value of their current cars into the equation.

Increase Dealership Profit Through Efficiency

In 2019, the average new-car dealership in America made a $2,374 gross profit on every used car sale, but only $14 in net profit. Those figures are even worse for import dealers, which averaged a $50 net loss per used vehicle sale, and for luxury dealers, which posted $1,708 net losses on each pre-owned transaction despite comparable gross profits.

Improving those figures requires cutting the costs that go into the difference between gross and net profit, which largely means cost of acquisition. While NADA doesn’t track used vehicle marketing costs specifically, its dealer surveys did find that the average dealer in 2019 spent $640 in advertising per new vehicle sale. That was almost 32% of the gross per-sale profit and more than the $631 net loss dealers averaged on new car sales last year, highlighting what dealers have always known: Improving marketing ROI is critical to net profitability. 

With predictive marketing campaigns, dealers can convert qualified auto leads into buyers more efficiently by using the channels and messaging most likely to engage each individual prospect. 

This is why we’ve built pre-owned functionality into Market EyeQ, using strategic information from IHS Markit. Just as with new vehicle sales, dealers can use Market EyeQ’s Behavior Prediction DriversTM to identify the best used vehicle sales prospects, communicate with Mastermind’s predictive marketing campaigns and close more deals with actionable customer insights. The results speak for themselves, with dealers who market with Mastermind generating up to 15x ROI.

Summer car sales are always important for auto dealerships’ annual results, and dealers have long depended on traditional summer car sales events, including always-popular Labor Day tentpole end of summer car sales events. 

However, there’s never been a summer quite like 2020 promises to be thanks to COVID-19 disruptions. Dealers need to combine tried-and-true with brand-new to capture as much auto market share as possible in an unprecedented summer car sales environment.

A big piece of that is pent-up demand. Americans have always shopped heavily for cars in the summer, but even with the expected decline in year-over-year car sales figures, this summer will see an unusual amount of pent-up vehicle demand hitting the market. Millions of consumers who had to postpone planned purchases thanks to family financial disruptions, closed dealerships and paused OEM production will be re-entering the market this summer.

In this blog post, we share a summer car sales guide of best practices for 2020, broken down into some topical themes:

– Capturing the bargain-hunting car shopper

– Prioritizing pre-owned

– Adapting to the “new normal”

Being Ready For Bargain Hunters

Car shoppers are coming back. We’ve noted recently that an AutoTrader study found 9 in 10 new vehicle shoppers believe this is the best time to get a good deal on a new car. Now, the benchmark University of Michigan consumer confidence survey finds that consumers are continuing to become more optimistic, with their view of current economic conditions improving 6.7% between May and June and their expectations for the economy increasing by 10.9% in the same short period. While both figures are still down notably from 2019, this rapid improvement in consumer sentiment suggests that car shoppers won’t be the missing factor in 2020’s summer car sales figures.

All the same, we should anticipate many shoppers will be deeply price-sensitive and searching for summer clearance car sales. Widespread job losses played a significant role in this: According to Pew Research, the U.S. unemployment rate skyrocketed from one of the lowest on record in February to the highest unemployment the nation has seen since the end of World War II just two months later in April. 

All told, more than 38 million Americans filed for unemployment as a result of COVID-19.  Auto dealers’ F&I teams need to be sensitive to this reality and make sure they’re up-to-date on lenders’ programs designed to work with consumers who had short-term job losses or other income limitations.

Bargain-hunting shoppers are also going to be sensitive to OEM programs, even as many of them begin to sunset or decrease in scope. Ensure that your sales and F&I teams are on top of what’s happening with your OEM(s) in terms of production, changing product mixes, captive finance options and other relevant news.

Prepare to Profit From Pre-Owned

One of the biggest auto industry themes in the wake of COVID-19 is the massive changes affecting the pre-owned vehicle market. For many dealers, the end-of-year bottom line for 2020 will depend on how well they can effectively leverage the changing used car marketplace to drive pre-owned summer car sales profits. 

In today’s environment, pre-owned profitability depends on centralizing customer and inventory data, simplifying marketing and sales processes and focusing on improving net profits through ROI gains. For more insights on these topics that you can use to improve your summer car sales profitability, see Mastermind’s whitepaper on the subject.

Adapting Your Dealership for the “2020 Normal”

You may have strategies that have served your auto dealership well in the past, such as summer clearance car sales or Labor Day sales events. In this most unusual of years, it’s critical that you re-evaluate what you’ve done in the past to ensure you’re connecting with shoppers how, when and where it will make the most difference in this new environment.

For instance, many dealers traditionally schedule marketing and sales pushes around tax time in April to connect with shoppers who have IRS refund checks in hand. But for 2020, Tax Day has been pushed back to July 15. While many taxpayers who expected refunds have already filed their taxes and received their refund checks, many others will procrastinate to the last minute out of habit and will be good targets for personalized marketing outreach. This year, Tax Day can be a summer car sales event.

Additionally, as many Americans begin to resume daily driving in the summer, business will begin to pick up on your service drive. Have you made sure your dealership’s service drive experience has been fine-tuned to provide an excellent customer experience in the wake of COVID-19 and that you’ve given it the structure and tools to play a critical role in loyalty sales and service-not-sold conquest?

Finally, it’s not just your customers who require some new thinking – your employees are dealing with the “new normal” as well. Is your team comfortable and ready to go? Do they feel safe in your auto dealership? Are they successfully executing a comprehensive reopening plan?

The state of the automotive finance market, like the rest of the automotive industry, is one of upheaval and complexity. The good news is the automotive industry is beginning to rebound, and car shoppers are returning to auto dealerships.

While a shifting marketplace adds complications for dealers who are trying to get their doors all the way open and their people back to work, it also creates opportunities to make up lost ground elsewhere by making gains in F&I in the new environment.

In this blog post, we’ll explore these opportunities and assess the state of the automotive finance market in 2020, including:

• – How consumers are re-entering the automotive finance market

• – What the shifting balance between new and pre-owned sales means for the automotive finance industry

• – What changing consumer shopping behavior means for online automotive financing

The Car Buyer Come Back

Predictions that consumers had largely only paused their car shopping, rather than cancelled their purchase plans, appear to be holding true as shoppers began returning to auto dealerships in May. According to Google, consumer search interest for “is it a good time to buy a car?” was nine times higher in March and April of 2020 than it had been in January and February.

Rising consumer interest appears to be driven by generous manufacturer incentives, including zero-percent financing. In fact, a recent study by AutoTrader found 9 out of 10 new vehicle shoppers believe right now is the best time to get a good deal on a new car. 

However, many of the most generous OEM programs are expected to sunset soon, as the lack of new-vehicle inventory limits their usefulness. That will put the onus of delivering attractive automotive financing back on dealerships, highlighting the importance of having an F&I team connected directly to your new and used sales teams and making a firm financing offer part of the car sales process.

Before the pandemic, affordability was consumers’ greatest concern. Widespread layoffs, furloughs, salary cuts and other household economic shocks have made that an even more immediate issue for many shoppers. Prioritize proactive F&I involvement in the early stages of the car sales process, starting with your first marketing touchpoints.

Using Used Cars to Grow F&I Profits

The pre-owned market will increase in importance for the rest of 2020 thanks to a combination of OEM production disruptions, increased used-vehicle supply from massive rental car defleeting and consumers being more cautious with their spending. That means dealers must ensure they’re taking pre-owned automotive financing more seriously than ever before.

According to NADA’s annual surveys, dealers have been making steady progress at capturing pre-owned automotive finance business, growing their used F&I market penetration share from 54.5% in 2010 to 77.8% today. That’s approaching the 80-90% average figure for new vehicle F&I that has been the benchmark for the past decade and beyond, and it’s a reason why F&I gross as a percentage of all pre-owned sales is up industry-wide almost 25% from 2010.

To capitalize on current automotive finance trends, focus on marketing F&I products such as extended warranties and wrap coverage to offer price-conscious consumers longer term peace of mind. 

Putting Automotive Financing Online

While three-quarters of pre-owned sales were financed through dealer F&I in 2019, that doesn’t mean 2020 will follow suit. That trend was already being challenged by the growth of online shopping. A 2019 FICO study found that 28% of consumers plan to apply for automotive financing online for their next car purchase, while 32% plan to visit a financial institution and 40% plan to use the dealership. 

Since then, the COVID-19 pandemic has pushed many consumers into new comfort zones of handling more and larger transactions online, as well as limiting the appeal of physically going to a bank or credit union to take out an auto loan. 

This highlights the importance of making sure your “digital dealership” prominently includes automotive financing options. Ensure your dealership’s BDC is prepared with the tools and information needed to seamlessly connect customers to your F&I team. Consider ways to simplify and improve the digital F&I experience, such as offering options like e-signing or video chats for customer interviews. 

Getting your car dealership’s digital retailing process up-to-speed may require investing in new dealership solutions, but in today’s highly competitive market, the potential benefits can’t be ignored. A study by NADA found F&I profits rose 58% on new vehicles in April compared to February among respondents with a digital retailing process, versus 35% at dealerships that didn’t offer digital retailing. 

Fact: conquest auto sales help dealers hit sales targets at the end of the month. That’s never been truer than right now, as the unprecedented disruptions to new and used vehicle supply and to consumer demand have dealers scrambling to identify and connect with every possible quality prospect they can find.

However, conquest auto sales are a double-edged sword. Just as you’re trying to conquest your competitors’ customers, they’re doing the same to you. There are a lot of nuances to consider, but with the right conquest marketing strategy, there is tremendous opportunity for conquest sales – beyond hitting end-of-month numbers.

In this blog post, we discuss:

• – Identifying and attracting “nomadic” car shoppers

• – What the changing used car marketplace means for conquest opportunities

• – Connecting the dealership service drive to the showroom floor

• – Turning conquest customers into loyal customers

Creating a Home for the Nomadic Shopper

“Nomadic” consumers are car shoppers who have no meaningful brand or dealer loyalty and jump from brand to brand when buying a car. Even with brand loyalty at an all-time high, these nomadic consumers are still a powerful force in the marketplace. According to data from IHS Markit, 9 million nomadic households will be in-market for a new car in 2020 – more than brand loyalist and “super-loyalist” households combined. 

This is why knowing the unique car buying factors that drive nomadic buyers’ car buying  decisions is critical. In general, nomadic shoppers are heavily price-sensitive, which means they are a critical audience for leveraging your OEM incentives. This is where analytics-driven predictive conquest marketing is an incredibly powerful tool, thanks to its ability to factor in the specific offers your dealership has available and identify the consumers most likely to respond to what you have to offer at any given time. 

Using the Used Car Marketplace for Conquest

The massive changes in the used car marketplace have an impact on both new and used conquest auto sales. Even before Hertz filed for bankruptcy and increased the likelihood it would sell off more of its fleet, auto rental companies and other major fleets were going through an unprecedented defleeting that flooded the used car marketplace. As a result, J.D. Power predicts that used vehicle prices could drop by 7% before recovering this summer, depending on what happens with the broader economy.

But with an increase in supply comes a potential increase in demand. Tens of millions of American households have experienced unemployment during the COVID-19 crisis, with almost 41 million unemployment claims filed across the country. While almost all these job losses are expected to be temporary, the combination of economic uncertainty and the supply disruptions to OEM new vehicle manufacturing will push many would-be new vehicle shoppers to consider pre-owned options in their next purchase cycle.

This is where having your predictive conquest marketing tools connected not only to your new vehicle sales operations but also to your pre-owned inventory and DMS will pay dividends. 

Used conquest auto sales are even more heavily product-driven than new, as they’re powered by the specific inventory you have on the lot and your ability to quickly identify high-quality prospects and touch them with an actionable offer for a specific vehicle. Leverage your DMS, CRM and dealership sales platform to identify prospects likely to be in the market for a used vehicle, and structure an offer that takes advantage of OEM CPO programs, financing terms and your dealership’s available inventory. 

Driving Conquest Leads Through the Dealership Service Drive

Service-not-sold conquest auto sales leads have always been valuable to dealerships, but there are a few broad trends that suggest dealership service conquest will only continue to grow in importance. One is that the average age of vehicles on the road continues to increase, meaning consumers are even more likely to have the service drive, not the showroom door, be their entry point to a dealership. 

We find the most effective service conquest operations typically dedicate a salesperson to prospecting their upcoming service appointments for sales leads, engaging them with personalized offers to trade-in their vehicle or similar offers. 

Turning Conquest Customers into Loyalty Customers

Conquest marketing will be integral to maintaining market share and accelerating recovery throughout the remainder of the pandemic and beyond. However, as you focus on capturing consumers returning to the market, you must also protect your current customer base against competitors trying to do the same. 

The evidence is clear that a dealership customer experience (CX) strategy is your most powerful tool for building customer loyalty and protecting against conquest losses. Simply put, when you know your customers’ needs and deliver great CX, they are much more likely to stay loyal even in the face of aggressive competitive conquest efforts.