Electric mobility is changing the nature of the auto industry and will affect virtually every aspect of business. EVs have a big environmental advantage over their gas-guzzling counterparts, emitting far fewer carbon emissions over their lifespan. The US Department of Energy notes that EVs release about 3,932 pounds of carbon equivalent annually, whereas traditional gas vehicles produce approximately 11,435 each year.
Clearly, EVs are electrifying the market. Recent trends by Kelley Blue Book indicate that the average used EV price has dropped to $28,767, showing a 42% decline from the previous year. Despite slow growth in 2024, electric car sales in 2023 were 3.5 million higher than in 2022, marking a 35% jump from last year. To put that in perspective, that’s over six times more than what we saw in 2018—just six years ago!
This surge is a golden opportunity for auto dealers to draw in new customers who want to step into the world of electric driving. With heavyweights like Tesla and traditional automakers like Ford and Chevrolet now getting into the EV game, the competition is definitely heating up. The 2024 Tesla Model 3 ranked #2 in best luxury electric cars, the 2024 Ford F-150 Lightning ranked #1 in best electric pickup trucks, and the 2023 Chevrolet Bolt ranked #1 as the overall best electric vehicle.
Dealers can use strategic markdowns and effective EV pricing tactics to set themselves apart as frontrunners in the EV market and tap into the growing demand for these eco-friendly vehicles. Scroll on to learn more.
How Markdowns Help the EV Market
Shifting market dynamics and the consistent growth of EV sales mean that dealerships should act quickly to address all aspects of the EV purchasing journey. Through strategic EV dealership markdown strategies and competitive EV pricing tactics, dealerships can capture new opportunities.
Attracting Price-Sensitive EV Customers
Lowering EV prices through markdowns can attract budget-conscious buyers to your dealership. Given that the initial cost of EVs can be higher than traditional vehicles, electric vehicle price reductions can heighten their appeal. By aligning prices with customer expectations, dealerships have a unique opportunity to draw in a broader range of customers, especially those new to the EV market.
Clearing Outdated Inventory
The growing trend of adopting electric vehicles (EVs) in recent years shows just how important it is for dealerships to manage their inventory the right way. Currently, the average price of a new EV is approximately $56,648, which is about 15% lower than it was two years ago.
This decline in price is a positive sign, making EVs more accessible to a wider range of consumers than ever before. As prices drop, dealerships need their inventory to reflect these changes and meet the demand of eager, aspiring EV drivers.
Markdowns provide a strategic way to clear outdated or slower-moving EV and non-EV inventory. This is important as it frees up valuable lot space and capital, allowing dealerships to introduce the latest EV models without delay. Keeping inventory fresh means meeting the latest technological advancements and consumer preferences, an essential tactic in the exploding EV sector, particularly as many current models are often oversized or not practical enough to replace traditional gasoline cars.
Increasing Overall Sales Volume
Employing markdowns helps dealerships boost their sales volume and enhance their market position. Increased sales figures strengthen a dealership’s negotiating power with manufacturers, which causes better in-demand EV allocation. Establishing a reputation for high turnover rates also positions the dealership as a reliable and dynamic player in the EV market.
Generating Excitement and Awareness
Well-planned markdown events can spark some buzz and increase dealership foot traffic. These events serve as an opportunity to present EV offerings and educate potential buyers on the benefits of electric vehicles. The resulting community engagement can transform awareness into sales, solidifying the dealership’s reputation as a go-to destination for EVs.
Encouraging Transition with Trade-In Incentives
Dealerships can further incentivize transitions to EVs by offering trade-in incentives or special discounts for customers swapping from gasoline-powered vehicles. These incentives promote cleaner transportation and build customer loyalty and trust, aligning with the growing sentiment among nearly half of current EV owners who are reconsidering their options due to infrastructure challenges.
Balancing Profitability and Competitiveness
A successful markdown strategy requires careful planning and balance. Overly aggressive markdowns can erode profit margins, while strategic price reductions can attract new customers and boost sales. The key is to strike a balance by setting competitive prices that maintain the dealership’s financial health and using marketing and inventory management to maximize profits in a market projected to see more EV chargers than gas stations by 2032.
AI Electrifies A Competitive Edge For Auto Dealers
Artificial intelligence (AI) holds transformative potential for aspiring EV auto dealerships. During a recent Lotlinx webinar, CEO Jason Knight unpacked how AI can bust pricing myths and optimize sales strategies. As EV market competition intensifies, staying ahead requires a tactical approach.
Though AI isn’t a magic bullet for driving immediate visibility or sales through markdowns alone, it’s a master at streamlining overall inventory management. By leveraging machine learning, dealerships can predict which vehicles are at risk of languishing on the lot and take proactive measures. This predictive capability allows for early price adjustments and optimized promotional efforts, ensuring that vehicles are appropriately priced and advertised from the outset. AI-driven insights can help dealers maximize profitability and remain competitive, especially as the EV market continues to expand. Contact Lotlinx for a complimentary demo of our automotive inventory management platform and unlock new dealership discount methods.