ATLANTA -

To say that 2021 has been a wild year for the automotive industry so far would be an understatement.

Record-low inventories and record-high listing prices have created challenging circumstances for both car buyers and manufacturers. Yet at the same time, these circumstances also have presented a wealth of opportunity for dealerships with available inventory that can capitalize on the surging consumer demand in recent months.

In more normal times, dealerships would traditionally be preparing for a summer slowdown. Peak demand in the auto industry historically occurs during the spring and fall seasons — but today, it’s anyone’s guess as to what the coming months will hold.

According to the most recent Cox Automotive Dealer Sentiment Index, more than 60% of retailers expect the market for vehicles in their area to look strong three months from now, indicating optimism that current trends will continue. In the spirit of the old saying, “hope for the best, prepare for the worst,” here are some key acquisition and audience strategies for dealerships to consider in preparation for the summer sales season and to remain successful long term.

Acquisition Strategy

If anything is clear about the automotive industry today, it’s the persistence of historically low inventory levels; 64% of dealerships cite the issue as the top factor holding back business in Q2. With no end in sight for tight inventories, wise dealerships should zero in on their acquisition strategies. Given the chip challenges facing manufacturers, acquisitions should focus on certified pre-owned (CPO) and used vehicles. Case in point: more than 268,000 CPO units sold in May 2021, a 13% year-over-year increase.

To that end, dealerships must advertise their willingness to buy cars privately. One easy step is to merchandize on their websites and other third-party marketplace sites that they will buy cars from consumers — even if they’re not a current customer or prospect.

Further, online car-finder solutions expand the reach of acquisition outreach, with products like Kelley Blue Book’s Instant Cash Offer allowing dealerships to immediately put forth a value on a used car to potential sellers.

Not only can a private acquisition strategy yield valuable deals, but also dealers can get a better feel for the car by turning the key, driving the lot and more.

Audience Strategy

As dealerships fine-tune their acquisition strategies, they should also strengthen their approach to targeting customer audiences, as now certainly is not the time to stop marketing. When it comes to consumer audiences, efficiency is key. That starts with dealers managing and maintaining customer data in their own CRM to ensure it is quality and up to date. From there, retailers can find ways to build and activate and audiences.

From that quality data, retailers can shift their marketing focus on specific areas and audiences. For example, current lease customers have positive equity in their cars — begin sales outreach now if their lease is up soon, along with advertising on Facebook and other platforms to encourage trading in the lease early. Similarly, ensure that an outbound strategy is in place for a dealership’s current customers to encourage trade-ins, generate leads and push shoppers farther down the sales funnel.

The efficiencies ultimately come full circle when retailers can leverage data into real-time behavioral insights. These capabilities allow dealers to accurately identify in-market shoppers, that are 15 times more likely to buy in the next 30 days versus your average shopper.

In addition, the insights can accurately predict the make the consumer buys over 92% of the time. Coupled with the powerful algorithms developed by Autotrader and Cox Automotive, retailers will have a better understanding of what cars to buy, and subsequently find a buyer for that car, based on market activity they can see online.

Strategy really opens when you can identify in market shoppers relative to DMA. Think of this like a “fish finder,” where you can quickly identify if there is enough opportunity in your back yard, or if it’s time to look at expanding your market. There is an amazing potential in automotive digital marketing around matching inventory to audience.

As for whether dealerships can expect the traditional summer slowdown, only time will tell. But with the right acquisition and audience strategies in place, they will be poised for success regardless of the market conditions.

 

Kevin LeSage is director of digital marketing at Cox Automotive.