Proactive approach to new car floor plans pays dividends
Historically, pre-owned vehicles have offered higher gross margins and faster turnover than their new counterparts, causing dealerships to lean heavily on used car sales as their primary profit center and floor plan. However, this has become more difficult to sustain. As tariffs drive costs higher, consumers are holding onto their cars longer. The result is dwindling used-car inventory, which has become a cog in the profit wheel.
Forward-thinking dealerships are taking a more proactive approach to these challenges by seizing innovative opportunities to elevate new-car sales as part of their long-term growth strategy. The following are four such opportunities.
Lean into Advertising
While it may be tempting to pull back on advertising in tough times, dealers should reconsider this approach carefully. Increasing direct-to-consumer advertising lets consumers know there are still deals to be made. Advertisements should share how the dealership is working with manufacturers to help reduce the effect of tariffs so consumers can afford the car they want now. This type of transparency can help offset purchase hesitancy and strengthen dealer trust.
Negotiate with OEMs
While automakers have been less than forthcoming about their tariff-related strategies, they know their success, especially now, is highly dependent on their dealerships. They know they can’t afford to abandon those relationships. This is the perfect time for dealers to brush up on their negotiation skills. They need to come to the table with a clear picture and a precise ask for what they need from the OEM to succeed, whether that’s better incentives, extended warranties, more co-op marketing dollars, or updated performance targets. Each of these can help boost new car sales for a win-win approach.
Offer Value-Add Incentives
One way to offset the impact of increased prices is to bundle value-added features such as free maintenance packages, home delivery, and loyalty rewards. This can help create perceived value and reduce the sting of higher prices. Value-add incentives also go a long way in developing long-term relationships and ensuring future sales.
Streamline New Car Location and Acquisition Efforts
Consumer buying preferences and industry trends vary significantly from community to community. To avoid a floor plan filled with new cars no one wants, dealers must be able to identify and locate cars that match the needs of consumers in their area. The most effective way to do this is through data analytics technology that leverages nationwide inventory datasets.
Benefits of Data Analytics
- Identifies dealer inventory trends at the market level
- Helps dealers locate the cars they need at dealerships across the country
- Matches dealers needing to reduce inventory with dealers needing to increase inventory
- Reduces time spent on the phone chasing down specific vehicles
- Increases time for direct sales and building customer relationships
- Helps dealers build more strategic partnerships with other dealers
Leveraging data analytics is an innovative strategy that gives dealerships the insight they need to sustain financial viability in difficult times.
Next Steps
While used cars will always be an essential revenue stream, the current margin pressures from new tariffs demand a reevaluation of strategy. By emphasizing new car sales through the above mentioned strategies, dealerships can better weather market shifts and create a more resilient business model.
About Dealer Trade Network
For over 20 years, Dealer Trade Network has established trusted relationships with essential industry partners while building and growing its nationwide inventory data set. With detailed industry insight, Dealer Trade Network delivers strategic trade recommendations informed by comprehensive and relevant sales data collected daily from dealerships across the US. In addition, Dealer Trade Network can coordinate payments between dealers, handle all of the paperwork, and manage the entire freight and delivery process.
Learn more about how Dealer Trade Network can help dealers navigate today’s uncertainties and build a more profitable, strategic framework for the future.
