Over the past twenty years, selling new cars has become less profitable for many reasons. Stock market ups and downs, intense competition among manufacturers, and shifting consumer tastes have all joined the mix— even cyberattacks on major software providers; this month’s CDK Global attacks have caused widespread outages felt across the American auto retail sales sector.
Plus, with the internet giving customers more information and tech advancements changing the game, dealerships face stiffer competition than ever.
While selling new cars might seem exciting, there’s a lot of profit to be made from used car sales and after-sales services. So, how can you boost your dealership’s bottom line?
Focusing on both new and used car sales, presenting the unique benefits of used vehicles, and managing your inventory wisely can increase sales and profitability. Follow Lotlinx’s tips below on how to sell more cars and maintain dealership profitability this summer.
Optimize Your Inventory Management
Proactive inventory management starts with selecting the right mix of vehicles. Use data and analytics tools to understand market trends and customer preferences, adjusting your inventory to avoid overstocking slow sellers.
Many dealerships leverage AI software like Lotlinx Sentinel to streamline operations with greater accuracy. This approach increases inventory turnover and profitability by aligning with market demand.
However, the COVID-19 pandemic has disrupted many dealers’ inventory management practices, causing inefficiencies and missed opportunities. Get back on track by reinstilling inventory management practices to ensure your stock aligns with market needs and boosts profitability. For more information on common inventory management challenges and solutions, read our blog here.
Speed Up Turnover
Another key factor for maximum return on investment (ROI) is optimizing your inventory’s turnover rate. Vehicles should spend as little time as possible on your lot. Aim to sell at least 55% of your inventory within the first 30 days and liquidate any vehicle in stock for over 90 days.
Rapid turnover lowers holding costs and raises cash flow, allowing dealerships to reinvest in new inventory that better matches current demand. Ideally, Lotlinx suggests dealerships strive for an inventory turnover ratio of 12, which means selling their entire inventory every 30 days or achieving 12 complete turnovers annually.
Utilizing tools like Lotlinx Sentinel can help maintain an up-to-date turn ratio through a rolling 30-day calculation, reflect the most current data, and ensure your strategies align with real-time sales trends.
Use Data-Driven Pricing Strategies
Pricing each car intelligently in your inventory enables you to increase car sales and profit margins. Data-driven pricing tools can help you determine optimal price points by analyzing market trends, demand fluctuations, and competitor pricing. These tools offer recommendations that allow you to remain competitive while maximizing profit margins.
Knowing the nuances of data and pricing helps dealerships adjust their strategies intuitively so that each vehicle is priced to sell quickly without sacrificing profitability. Employ tools like Lotlinx’s Sentinel platform to harness data insights, giving you a competitive edge in a crowded marketplace. Reasonable pricing aligns with consumer expectations and market realities to determine the car’s true value, letting you know how to sell more cars and achieve a balance between turnover speed and revenue goals.
Beyond pricing, good dealership sales teams know how to increase dealership sales virtually. Read Lotlinx’s blog on Mastering the Art of Virtual Selling to learn how.
Amplify Inventory Visibility and Attractiveness
In the digital age, the first interaction most customers will have with your dealership is online. Therefore, your online showroom must showcase your inventory in the best possible light. High-quality photos and detailed descriptions are essential. Invest in professional photography and creative copywriting to make each listing stand out. Interactive imagery like animations or virtual tours of the car’s interiors and exteriors help customers feel confident and excited about visiting your dealership to see the car in person.
Implement Reconditioning Processes
Properly reconditioning used cars can make a big difference in customer perception and allow you to sell cars at higher prices. Develop a streamlined reconditioning process that brings each vehicle up to showroom standards. The goal is to balance spending enough to make the cars appealing without inflating your preparation costs too much.
Launch the Lotlinx Sentinel Platform to gain intuitive VIN insights that make your dealership thrive and keep customers coming back. Request a demo today.