More car buyers are purchasing vehicles out of state – how should car dealers react?

Reduced inventories are now the norm for dealerships, both for new and used vehicles. A recent study by Cars.com identified that almost 10% of mid-May car buyers bought their vehicle out of state in a bid to find the right model or features in stock. Of those traveling away from their home city or neighborhood to buy a car, 52% are driving more than 25 miles and 13% are trekking beyond 250 miles of home.

Assistant managing editor of news at Cars.com, Kelsey Mays, said in a press release, “With the current auto inventory challenges, recent car buyers are going to great lengths to find the car they want. I don’t anticipate this trend slowing down, either. Of consumers currently in the market and shopping for a car, 65% said they would consider purchasing in another state.”

Examples of why shoppers are traveling long distances to buy their car are all around. Varsity Ford in Ann Arbor, Michigan normally stocks 1,300 to 1,500 vehicles on the lot and in a storage facility, but their general manager Max Stanford said to Car and Driver, “We have maybe 25 or 30 vehicles in inventory, and I’m probably overestimating.” It’s far from an unfamiliar story.

As it goes with any supply-and-demand industry, shoppers will explore their options and consider purchasing from further away – even more than 250 miles away – if the right vehicle is available without feeling like they’ve been gouged on price.

Manufacturing is due to increase, albeit incrementally and slowly, but how can dealerships react to local car buyers venturing out of the area and even out of state to buy a vehicle they would otherwise buy at your store?

Be understanding

It might sound pedestrian, but put yourself in the shopper’s shoes. If they’ve concluded a new vehicle is necessary, waiting until your lot is flush with units may not be an option they’re able to consider. Rather than showing frustration or cutting lines of communication with consumers who purchase elsewhere, congratulate them on their purchase. Ask if you can keep in touch with them for future needs and establish a timeline when it would be alright to reach out again.

Make deals on incoming units and factory orders

For Varsity Ford’s Stanford, a solution has been to convert in-stock buyers to factory-order placers. He says that Ford’s manufacturing lines are placing priority on pre-orders, helping to ensure that car buyers who place a factory order will get their vehicle before the general inventory rolls in.

For anyone willing to wait for an incoming unit, make it worthwhile. Maybe a small discount on the sale price or waiving dealer fees is appropriate, or add a complementary accessory package for their wait. These vehicles will sell quickly upon arrival so there’s no need to give away the farm, but an incentive to wait to demonstrate your appreciation.

Work toward future loyalty

If someone local purchases elsewhere, that doesn’t end your relationship with the customer. In fact, it could be the start of a very profitable one that results in loyalty. After congratulating them on their purchase, extend the same after-sales benefits you’d offer someone who bought at your store, treating them as a loyal customer.

What does that look like? If you have a purchase incentive such as every other oil change free or complimentary rim and tire road hazard coverage, make a provision for that customer. For the small cost, you’ll essentially be locking them up as a loyal service customer, where the real profit is made on a sale.

It’s important to have grace with car buyers who purchase elsewhere during the shortage. Often, they will be reluctant to buy in another city. There are still opportunities to engage with that buyer in service or with referrals to turn them from a lost sale into a valuable customer.

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