Know When to Hold ’Em, Know When
to Fold ’Em
Minimize Aged Inventory and Maximize Gross by Using Market Intelligence From Your Internet Advertising

Some dealers intuitively know which used cars will sell at their stores in the least amount of time and for the highest gross. Other dealers rely instead on guesswork or the homework they've done scouting nearby stores. Which approach do you take? Here’s a look at how business intelligence from advertising online provides the market-based data you need to gain a competitive advantage.

Internet advertising gives you unprecedented access to information about your market that you can leverage to capitalize on current trends and learn from past performance. Armed with this knowledge, you can identify, for example, the cars:

• To buy
• To avoid at auction
• To promote in your inventory
• To pay more/less for from customer trades

This data can similarly help you determine whether you're likely to maintain gross by holding on to an aging vehicle or if you need to cut your losses and wholesale it.

Match your supply with market demand
Having the right cars at the right time at the right price drives the quickest, most profitable sales. Your online advertising providers should be able to tell you how many times a particular car is listed on their sites and the number of car buyers searching for it.

Cars.com provides this information through the CarsStars report that compares the availability of a vehicle on Cars.com with the demand for it among Cars.com shoppers. Each car in the top 50 summary receives a star ranking, with a five-star car having more demand than supply and a one-star car having more supply than demand.

Understanding the inventory supply-demand relationship for your market allows you to determine cars that might:

• Fetch a higher-than-average sales price because of their scarcity
• Command a higher acquisition cost at auction or from a customer trade because of car-shopper interest
• Require a lower-than-average sales price because of their abundance

Whatever the case, you can use this information to your advantage. By avoiding cars with low demand and high supply, you reduce the risk of “lot rot” at your store. By stocking your inventory with cars that have high demand and low supply, you can price the car higher than average to make more gross. In addition, you could give such cars a lower-than-average price to turn more sales in less time and make gross profit on a volume basis.

Review past experience to drive future performance
While the sales history for a particular vehicle may not guarantee it will sell well, it gives you the benefit of hindsight to avoid obvious mistakes going forward. Particularly when used in combination with a report similar to Cars.com’s CarsStars, this information sheds light on how to best price and merchandise a car for the fastest, highest gross sale – while identifying the cars that should be avoided.

At Cars.com, this information is available through the Sold Inventory Report. This report lists how long a particular vehicle remained in inventory before it was removed, and its final asking price. Knowing these variables, you can determine the:

• Time frame during which a listing is likely to maintain gross
• Time to lower the price on an aging listing or move it at auction

In today’s market, it is essential to minimize aged inventory for your store’s success. While, in an ideal world, no vehicle would be on the lot for more than 30 days, the real world often presents you with different conditions. How many of your current listings have reached the 45-day point? Sixty days? Ninety days? More?

Like most dealers, you probably find yourself growing concerned about moving these cars when you’d rather focus on the “sure things” that sell quickly and turn a healthy profit. Armed with the information available only in tools such as Cars.com CarsStars and Sold Inventory Report, you can get back on track in the short term – and stay there for the long haul.

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