How Can Your Dealership Respond to the Used Car Value Crash?
An excellent Forbes article describes the surge in used automobile values as well as their anticipated decline. It’s interesting that the headline of the piece used the words “crash” and “brace for impact.” Without a doubt, the used automobile market might explode as the real estate bubble did not so long ago. Customers are turning toward used cars in order to prevent depreciation and a lack of new vehicles; dealers are buying at high prices (often over MSRP), and lenders are buying aggressively in order to continue funding loans.
The paper claims that this bubble is about to pop. As a result, as automakers increase output and used car values decline, both dealers (who are in too deep of a financial hole with automobiles) and buyers (who paid too much for them) will suffer losses in depreciation. No matter if you are the vendor or the buyer, the automotive retail industry does not want this.
I’m worried that because these secondhand automobiles are being traded in so quickly, the dealers won’t have the chance to correct any safety recalls before selling them. Just as quickly as customers are buying up the product, dealers are rushing to get their hands on it. But eventually, dealers can find themselves upside down on a ton of unsold secondhand inventory, and buyers might find themselves much worse off.
It’s likely that many people will wind up with automobiles that have open safety recalls, regardless of when it happens. and franchise dealers’ service departments will be significantly busier than they already are with service requests. Also excluded from this is the availability of parts. Not familiar with this scenario? All of the Takata airbags have not yet been replaced.
The moment is PERFECT to search DMV registration databases for details on new customers in your PMA who have active safety recalls. Your dealership may be the first to contact these customers and let them know that their vehicle has one, even if they are not aware of it. That effort might result in a long-term client for your services. Additionally, you will receive a “heads-up” on any local safety recalls that require attention, giving your dealership an advantage over rivals by allowing it to purchase components first.
Your competitors will inevitably get in touch with these clients in an effort to win their business. However, you may win that business if your dealership is equipped with the necessary parts and repair space. Think about being the dealership that can say to the customer, “Yes, we have the parts, and we can fix it,” as opposed to the rival who says, “We can fix it, but we have to order the parts.” In terms of sales, that is equivalent to a dealership saying, “Yes, we have the car,” as opposed to “No, we don’t.”
The future? Some of those recalls can present opportunities for service-to-sales relationships. In either case, getting a head start on the competition benefits your dealership. You might easily earn a service customer this way, and you could even generate revenue this way by converting a customer from service to sales or through recommendations.
Being the first to play and having all the necessary tools will give you an advantage that might result in a lot of money.
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