As we know, consumers are constantly being barraged by marketing messages. Most of those messages are either via traditional (television or radio) ads. For most retail establishments, in-store retail displays are vital to not only attracting a customer’s attention but also assisting in purchasing decisions. The psychology behind this is that people buy what they can see, tough and feel… something every car dealership understands. The problem, however, is that typically the “see, touch and feel” piece for a car dealership doesn’t occur until the test drive which is why test drives increase closing ratios. That being said, we must look at the reality that successful retailers merchandise their products in such a way that is strategically designed to attract attention.

An article shared some tips and tricks on how retailers (which is ultimately what a car dealership is) can attract customers and immediately influence their buying decisions. Those tips included: colors, grouping, promotional materials, display and signage.

Colors – Scientific research has shown that different colors effect people in different ways. Whether those emotional responses include excitement, attention or calming, showcasing vehicles in such a way that it elicits the proper emotional response for each individual can increase desire immediately. For example, for customers interested in safety, a dealership may want to group models that are targeted toward safety with blue and green vehicles as these colors introduce a calming effect.

Grouping – The article makes an interesting point that positioning vehicles in odd numbered groupings (i.e. 3 cars together versus 4 cars) attracts attention for consumers. Most dealerships would position multiple models together but space out colors to showcase diversity and show customers choices whereas the color factor would suggest that a combination of colors that produce the desired emotions in combination with an odd numbered grouping would be more ideal.

Promotional materials and display – Strategic promotional materials and displays can both attract attention and educate customers. These materials are designed to do exactly that but many dealers hide vehicle brochures in a display rack and don’t necessarily want to highlight vehicle specials from the manufacturer when those are exactly the ones that are designed to attract customers. Manufacturers do tons of research and spend a ton of money on national specials, yet many dealerships will hide those vehicles or have few in stock. Dealers shouldn’t be afraid of these vehicles since the majority of vehicle shoppers don’t buy the vehicle they were initially interested in. In addition, dealers really should embrace these specials since the chances are great that a customer already knows about them before they ever walk onto the lot. The combination of a customer knowing about them and the fact that the majority won’t purchase those vehicles anyways brings credibility, transparency and, ultimately, trust to the consumer.

Signage – Get rid of the water colored windshields and invest in your merchandising. Have you ever seen any sale at any retail store drawn onto the display? Proper branded signage is important in not only attracting attention and providing information but also in influencing the buying decision. It’s no different when we talk about cars on a dealer’s lot. Make sure that pricing and individualized features are prominently displayed in a branded manner and customers will feel that the offer and product (in this case vehicles) are more legitimate.

All of these can easily influence a dealership’s choices in what to try to acquire and what to keep in inventory. By analyzing these trends in not only your market but in your previous sales, you can learn not only what vehicles you should be targeting but also how to get consumers to notice.

In the end, having a “lot party” and simply moving vehicles around isn’t enough. Using some of these tips and tricks to do so more effectively and showcasing vehicles in a way that not only elicits the emotional response you desire but also attracts the appropriate buyer’s attention will increase vehicle turn and gets more buyers on your lot interested while making their vehicle selection easier.

All dealers are suffering from the lack of used vehicle inventory. Consumers are being forced to gravitate to used vehicles for multiple reasons – They are less expensive plus the manufacturers aren’t pumping out nearly as many new vehicles as they are normally depleting available selection. To add insult to injury, even if the manufacturers WERE continuing to produce in quantity as they were pre-pandemic, margins are so low that dealers actually PREFER to sell pre-owned vehicles as they are more profitable. Stairstep revenue from new vehicle sales have largely gone by the wayside so all dealerships are competing with large companies to acquire pre-owned vehicles. Even Carvana is being uber-aggressive at bidding for used cars at auction that they are literally bidding AGAINST THEMSELVES.

Why not just facilitate used inventory acquisition by bypassing the auctions that dealers have been relying on for decades? By doing so, you pay actual market value for the vehicle rather than get involved in a bidding war just to see that final price (which may be what the vehicle is worth) inflated through auction fees, etc?

Let’s look at a company that perfected a process and business model that has exploded – eBay. An entrepreneur, Pierre Omidyar, started an auction platform called AuctionWeb. The first sale that was made was for $14.83 for a broken laser pointer. Astonished, Pierre called the buyer and asked if he realized that the laser pointer was broken in which the buyer replied that he was aware but collected broken laser pointers and that led to the first auction site that allowed person-to-person transactions. Of course, while this started as a hobby for Pierre, we all know the powerhouse that (renamed) eBay has become.

The largest point is that one man’s garbage could easily be another man’s treasure. You could also equate this analogy to the individuals that buy abandoned storage units. Dealers who are on mass-auction sites are bidding on units that other dealers think that they can get top dollar for. The problem is that profitability decreases with every bid when considering all of the fees. In addition, there are many vehicles out there that another dealer would want – like that broken laser pointer – that the selling dealer doesn’t even know about.

Therein lies the beauty of person-to-person sales. The buying dealer gets to decide what is valuable for THEM. What if there is a person that went into a Ford dealership actually wanting a Ford Pinto (yeah, I know, low odds) but, if there were, a dealer would be hard pressed to find one of them at Manheim. However, the dealership with a customer for that vehicle may be interested in buying it.

Nobody knows what the market is out there except for the vehicles that either move quickly on their lots, are in condition to become a front-line ready CPO unit or simply need used inventory on both the high end or low end side.

Remember the days when dealers used to comb through the classified ads and contacting private parties with offers for their vehicles? THERE IS NOTHING DIFFERENT! Rather than fighting other dealerships and overpaying for vehicles which may easily end up with low front end potential profits in order to simply have cars on the lot, investigate easier ways in which to acquire that inventory without this big “I have more money than you so I will win no matter what” scenarios that happen frequently.

The whole point of sales (especially in the auto industry) is to buy low and sell high. The trend nowadays seems to be the opposite for the simple reason that dealers don’t want empty lots and rely on back-end profits.

In these times, ALL businesses have had to change their business models to adapt to the state of the industry (and the world.) My guess is that any dealer who could acquire inventory faster, at a lower cost and retail it with higher front-end profits while still having the opportunity for back-end profits would jump on that. It’s only logical and, at the end of the day, creates more revenue in sales which is what every dealership wants.

Due to the current pandemic, customers are increasingly doing more shopping online. The current transformation to a digital retailing manner of car buying saw dealers scrambling to adapt to their current state’s requirements. Some dealers were shut down completely, others were able to sell online and some didn’t close at all. Regardless, dealers were still at the mercy of COVID-19 and most had to change processes to a more digital nature in order to continue to sell vehicles. A smooth customer experience in the buying process assisted dealers in both attracting customers and earning their business.

What most people don’t talk about, however, are the back-end of those transactions and operations. Information sources such as vehicle values went digital a while ago as did many auctions. Dealers have to acquire inventory to maintain or keep up with sales demands. And dealers are more desperate than ever to do so, according to an article in Automotive News. Vehicle turn rates are incredible with one dealer in the article saying that he sells them as fast as he can get them. The problem is that some major players have joined in making that inventory harder to acquire and vehicle prices increasing at wholesale and auctions exponentially because there are more bidders than there have ever been in the past driving up prices.

Let’s take a look at reality. Most Used Car Managers – both pre and post-COVID19 – could easily be in their office with four computer monitors monitoring different auctions in order to gain much needed front-line inventory. Even pre-COVID, Used Car Managers were battling other dealers but it wasn’t “as” competitive as it is now. Add to that, every time a Used Car Manager is the winning bidder, the dealership is paying exorbitant rates for the auction service as well as transportation costs to get the vehicle to their dealership. This, of course, drives up the cost of the vehicle and that’s not including PDI, recon and detail. Now, however, major players are entering the wholesale market, winning bids are increasing due to demand and dealers are ending up paying more for vehicles thus decreasing their gross (front and back end) profits. And, depending on where the vehicle is, could have to wait a good period of time to have it on their lot when they need it quickly.

People can only pay attention in a deep analytical way to only a couple of things at a time. A Used Car Manager who is in contention for a prime unit and in the running to acquire it could easily miss out on another one simply because they are focused on the first one. Of course, having your Used Car Manager in his office staring at four screens in order to acquire inventory could easily take away a sale. A customer who is trying to buy a vehicle – whether that be in person or online – could easily get a lowball offer for their trade-in that makes the whole deal self-destruct whereas if the Used Car Manager had been available while the deal was being desked, he may have been able to identify and place a higher value on the customer’s trade-in based on his experience.

Productivity is based on the fact that a single person can help the dealership at maximum efficiency. Just as all of the other digital retailing tools have made the purchase process more efficient for customers and the dealership, having tools at the dealership that make inventory acquisition easier, faster, less expensive and less competitive only makes the dealership not only more efficient but also more profitable. And that is the whole point.