Dealers commonly voice concerns about relying on pricing tools, fearing they might trigger a downward spiral in prices. However, data-driven decision-making has never been more crucial in today’s industry landscape. A data-driven approach can, in fact, propel dealerships towards a “race to the top” in terms of front-end gross profit.
Market pricing tools have long wielded considerable influence over a dealership’s pricing strategies, primarily revolving around the market price of vehicles and how to set a price relative to local competitors. Another critical factor influencing pricing is time: if a car isn’t moving within a specified timeframe, a price markdown is triggered. This tactic often proves successful, as the unit eventually sells once it reaches the right price point.
However, the question remains: did the adjusted price entice new online buyers, or did the in-store sales process clinch the deal (such as sales commissions)? What’s the proof that markdown was the smartest move?
The eBook explores the complexities of vehicle markdowns in dealership pricing strategies, challenging common beliefs about their effectiveness in boosting sales. It emphasizes the escalating costs of holding inventory, including media, maintenance, and depreciation, which motivate dealerships to minimize inventory time on lot through proactive pricing and promotion strategies centered around inventory risk.