Used cars hold a special place for myself and our company. Showroom Logic started in 2008, during the recession. When new car sales plummeted, used cars became more crucial for dealerships. It was then that we launched the first inventory-driven used paid search engine.
Over the last few years, dealers have been enjoying the ride. 17.5M cars sold last year, up 5.7% from the year before. A good economy and cheap gas are being credited for the lift.
Experts have started to notice some interesting trends with used cars. For dealers that take the data seriously, it could be a great year for used sales. To fully take advantage of this new information, dealers first need to understand what’s going on, and then use new tools to help capitalize on the biggest opportunities.
Used Vehicles are Getting Newer
The data supports that the used vehicles on dealership lots are getting newer, in large part because of the aggressive leases that are now being returned.
With the rising supply of these newer vehicles, it could potentially put pressure on the new vehicle market. NADA predicts that prices of used vehicles will drop 4.5% this year. Tom Kontos, Chief Economist of Adesa said:
“People do need to consider the softening of used-car values as a factor that may dampen new-car sales in 2016 from what they otherwise might have been… There’s definitely a threat…to new car sales from used car values going down.”
Each Used Vehicle Acts Differently in the Wild
Within our dealer ecosystem, we seen that they have on average 18 makes of used vehicles in stock outside of their core make. When we looked at turn for these vehicles, we found the average turn varied tremendously across makes. Here is data from a dealer over a 6-month period:
Even though “Ford” was the franchise, the other makes on their used lot were selling very fast. This report would not look the same across all Ford dealers. The point is that each vehicle behaves differently and is less predictable. When it comes to digital marketing, it’s no different. The more data we can use to influence decision making, the better.
Used Registration Data is an Opportunity Finder
We’ve spent a lot of time discussing market share for new vehicles. When it comes to used cars, however, dealerships shouldn’t worry about their market share. Rather, they should be looking for the biggest areas of opportunity. We’ll define opportunity as the zip codes where the sales for those specific vehicles are happening.
ZipDriven displays this data in its new Used Car reports. Here is what it looks like for this particular dealership:
The first thing we did was make the focus of the report the vehicles that the dealer actually has in stock. We added columns to show amount in stock, the age of those vehicles on your lot, and the price to give more context. The large number is then used to quickly show in which zip code groups the vehicles are selling the best in.
The point is to make the report flexible and clear enough so you can quickly narrow down where the focus should be. Do you focus on your off-brand used vehicles that have been in stock the longest? Do you focus on your used vehicles that are the newest in an effort to front-load the exposure? The strategies of each dealership are going to be different, but the data is there to support all.
Zip Codes Go Deepest
With most digital marketing networks, the zip code is the deepest level of geographical targeting. At the very least, dealerships should ensure that they are focusing budget on the zip codes that have the most opportunity for vehicle purchases. Our zip code sales report makes it easy to find the exact zip codes that have driven the most purchases. And this report is specific to each model you have in stock.
From this report, you can find the top 10-15 zip codes where most of the sales of a particular make have been happening. Apply that targeting to your digital marketing campaigns and don’t hold back on budget. You will be focusing your spend where the buyers are. Remember to leave enough budget so you can also focus on areas where you are already selling, to ensure you have coverage there as well.
Every Used Vehicle Needs its Own Battle Plan
Since every used vehicle is unique (in terms of price, mileage, age, make, etc.), each one requires its own strategy. Sure, it might take more time than the traditional shotgun approach, but that’s the way it should be done if you truly want to get ROI out of your digital marketing. Tools like ZIpDriven make it easier to extract the largest opportunities. Make this your goal: Create a digital battle plan for your most important used vehicles in the zip codes with the greatest opportunity.
2016 Is The Year of Data
Dealerships are starting to realize that the data they already have, when coupled with 3rd party data, is the way to drive decision-making. The savvy dealers are the ones that are going to take control of understanding their data. These dealers will feed this detailed information to vendors to ensure their business goals are aligned with their marketing strategies.
As for us, we’ll continue to create tools that make this data more accessible to dealers, so they can act faster with more precision than ever before. As you use ZipDriven used, please send us feedback on how we can make it even better.
Click here to to take ZipDriven for a test drive.