| Give USED Car Advertising the Respect it Deserves!
VOL-XI-1
by Jim
Boldebook
11/23/05 Copyright © Creative Broadcast Concepts, Inc. (for January 2006 Issue of DEALER Magazine)
For many new car dealers, used car sales made the difference between profit or loss in the 4th quarter of 2005. Not only have more dealers come to the realization that used car sales will be a major factor in their future success…even survival, but those dealers have moved used car advertising from the desk of the used car manager and a handful of newsprint classifieds, to the mainstream of their dealership’s marketing efforts. More importantly, more and more dealers are discovering the significant advantages of merchandising lower priced used vehicles. There IS gold in them thar hills! Many dealers have cut wholesale volume by as much as 50% in the past year, while increasing retail unit sales, net profit and finance income. Even more importantly, these dealerships have enhanced their perception as transportation specialists to the masses by reaching out to as much as 50% of the market they were missing! Approximately 43 million used vehicles changed hands in the United States last year. That’s more than DOUBLE the number of new vehicles retailed. Unfortunately for most new vehicle dealers, the majority of those used vehicles were sold privately or by independent used car dealers. Even while study after study says most people would prefer purchasing a used vehicle from a new vehicle dealer! There are a number of reasons why new car dealers don’t sell more used cars. Many dealers don’t want to be in the used car business. They don’t like the ‘stigma’. “It’s too much like being a car dealer!” one third generation dealer told me. If his dad and granddad had thought the same way this youngster (and many like him) would not be where they are today. Some dealers simply don’t understand the used car business and refuse to hire management professionals with proven used car track records. Still some dealers are afraid of hurting their reputation or C.S.I. especially with lower priced vehicles. For those dealers who are switching their marketing strategies to buy, sell and promote more used vehicles, they are being pleasantly rewarded. For starters, today’s used car with 80,000 miles is on a quality par with the used vehicles of 10 years ago with 40,000 miles. More people are buying higher mileage cars with greater levels of confidence. Many dealers who have had success with the bargain/value priced ‘under $10,000’ segment have come to the realization that the customer seeking this vehicle is not as demanding on appearance, but is simply looking for a mechanically solid vehicle. New vehicle dealerships offering lower priced vehicles are focusing on safety and mechanical equipment rather than appearance items. Some are offering warranties, or at least making sure the customer realizes warranties are available on some higher mileage units. Many dealers who have experimented with value-priced vehicles are pleasantly surprised that overall customer satisfaction with the dealership has not suffered. Here are few ways to make sure your used car advertising is getting the respect it deserves.
Sell the concept. Make sure your marketplace knows you are in the used car business. Rather than putting all of your used car ad dollars in the classified section, move some of that money into broadcast. Talk about the wide range of vehicles you have in various price ranges. Often, state laws allow you to refer to price ranges as long as you have an adequate supply of those vehicles. For example, you might say you have 40 vehicles priced under 14,999, 25 vehicles priced under 12,999, even 10 vehicles priced under 9999. State that warranties are available in most cases. Sell the idea that you can’t afford to harm your reputation as a new vehicle dealer by selling anything you wouldn’t be comfortable putting your name on. Use broadcast to reach the masses. Newsprint circulation continues it’s downward spiral. In some markets you are lucky to reach even 10% of the A.D.I. with actual circulation. Strategic placement of broadcast ads, using dealership research, can help you reach the highest number of shoppers. Have at least four major used car events this year! Devote your entire budget over a weekend to a special used vehicle promotion. An inventory selldown. A ‘luxury vehicle’ sale. A sub-vented interest rate program arranged with a lender. An import sale (if you’re a domestic dealer) or a domestic model sale if your lead franchise is an import. Promote used on your website. Many successful dealers have historically front-lined the lot with attractive used vehicle bargains. Why not devote a portion of your newest ‘showroom’… your website…to used car specials! Consider posting a new special every week (or every day) with a link to a list of used vehicle specials. Have your website designed (or re-designed) to allow self-administration areas that someone in the dealership can change with minimal effort. With a password protected self-administration page, a used car manager or secretary can change vehicle information at the drop of a hat. A description of the vehicle is typed into a text box and a picture (taken with a digital camera at the dealership) can be uploaded. Your website can be designed to rotate several leader vehicles each time the page is opened. Broadcast and print advertising can effectively direct customers to your site 24 hours a day. Once on the website, customers can also fill out a credit application and contact information. Spend an appropriate amount of money on used car advertising. A good rule of thumb is 16-20% of your total gross, both new and used. Last year many manufacturers made it clear that future factory promotions will control retail pricing (and dealership grosses.) By increasing used car sales in all price segments, you will not only gain greater control over your profit potential, but you will grow your market penetration at the cost of smaller independents fed by your wholesale losses. The resulting traffic you create through better overall marketing visibility will result in more new vehicle sales as well as service opportunities. Rather than segregating used car advertising expenditures, fold those dollars into your overall marketing scheme and professional management. Give your used car advertising budget the respect it deserves. You’ll be amazed and pleased with the return.
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