Take action with ageing stock

This article was originally published in the Autofile Magazine - May 2019 issue. 

Take action before cutting profits

Don’t just slash prices on aged stock. Take action and see if you can increase interest and hopefully convert it into sales before impacting bottom-line profits.

After asking the question recently of a number of dealers – and observing what seems to be common practice across the industry as the “go to” strategy for dealing with aged stock – the answer was to slash at least $1,000 off the window price to hopefully stimulate some buyer motivation.

In reality, however, this is an assumptive action that directly impacts the bottom line, and is usually done with little or generally no effort into finding other ways to attract some attention on cars that have gone quiet on the interest front.

Old stock can be defined in different ways – whether it be in days, months or a lack of views online.

What really matters is what you do with it when it gets to that point. The majority of dealers seem to take action based on time rather than any hard data that paints a picture.

First, review and improve!

Before eroding profits, it pays to review the vehicle listing to see if there is any apparent reason it hasn’t sold yet.

Also, review the car itself to see if there’s something wrong with it that will put prospective buyers off once they have test-driven it, and so on.

It’s better still if you can also report on vehicle-activity history and views online because this will provide a greater level of insight as to how the car has performed to date.

Then, if all that checks out, look at what your options are to promote the vehicle on alternative cost-effective mediums if you haven’t done so already.

There are a range of options open to dealers:

1. Promote the car on your Facebook page or set a budget for pay-per-click advertising through industry solutions, such as AdConnect. This covers Facebook and Google Advertising across your most likely customers.
2. It may mean investing in raising the visibility of the listing on websites such as Trade Me or Need A Car, or other platforms with options that increase the profile of the listing and potential audience – for example, super featuring or highlighting. It could mean actively looking across the past customer opportunities that the car may suit, whereby you send people texts with the vehicle link from your website.
3. Another idea is placing an incentive on the car within the sales team.
4. The vehicle could be positioned better when it is on display at your dealership. Whatever it is that you choose to do, it will likely be significantly cheaper than ripping thousands off the sticker price as your first go-to.

Spending a little to retain a lot is the best approach to protecting profitability on older stock vehicles. Be proactive and look for ways to generate interest over the next few weeks before addressing any price issues.

If your price is way out of touch with the market, then it will be more difficult. However, if the price is right – as it generally is – then do what you can to retain bottom-line profits.

Implement an 'Aged Stock' policy and process

A good way to do this is by putting in place a policy and process within the dealership around aged stock.

Firstly, it could be defining what aged stock is to your dealership and, secondly, what the process is around being proactive with a vehicle once it reaches that point.

Putting some thought and effort into this area can potentially save your dealership tens of thousands of dollars over the course of the year.

The dealer solutions team at Motorcentral has plenty of ways it can help with this profit-protecting area of your business – from reporting with data insights, through to cost-effective actions you can take to increase the probability of getting vehicles sold.

If you want to have a chat, you can email the team at dealersolutions@motorcentral.co.nz.

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