Seasonality plays a crucial role for both dealers and car buyers, and understanding its impact is vital in the automotive industry. Historically, certain seasons experience higher demand for vehicles, such as the spring and fall, while winter months see a slowdown. However, the pandemic disrupted these patterns, causing inventory shortages and a decline in end-of-year sales. Now, as inventory levels gradually stabilize, dealers are once again embracing the significance of seasonality by reintroducing incentives and other seasonal sales to stay competitive.
Randy Barone, Vice President of Business Development at ACV, and Doug Hadden, ACV Vice President, further discuss leveraging seasonal trends and utilizing data-driven insights to optimize sales and inventory practices in an interview with CBT News.
CBT News: How important are seasonal trends in the automotive landscape?
Randy Barone and Doug Hadden: Timing is critical to both dealers and car buyers and seasonal sales are once again playing a big role. Traditionally, the automotive industry has definitive seasonal trends, with peak demand in the spring and fall in comparison to the winter months. Many dealers offered aggressive discounts at the end of the year in an effort to move inventory off their lots to make room for new vehicles ahead of the new year. However, the pandemic and consequential inventory shortages meant that dealers no longer offered incentives and end-of-year sales like before as inventory levels were already at an all-time low. However, with inventory improving overall, incentives and other seasonal sales are starting to return. Plus, dealers have more reason than they did throughout the pandemic to negotiate with buyers because they don’t want cars sitting on their lots.
Given the current landscape and residual pandemic-related impacts, dealers should consider not only what time of year is best to offer incentives, but on which vehicles. Generally, most vehicle shortages are easing, but looking ahead, the story will change based on factors like manufacturing challenges and will ultimately lead to certain automakers gaining market share over others. Dealers need to be dialed in on this and offer incentives for OEMs that are taking more overall market share and adjust incentives accordingly.
CBT: Why should dealers refocus on seasonality?
RB and DH: With inventory levels starting to stabilize, it’s important for dealers to reintroduce seasonal incentives in order to stay competitive in the current landscape. Pay attention to inventory turn rate, especially during peak buying periods. Have a thirty-day supply plan and understand what that supply will look like based on what is selling. Fill your lot with the right cars based on the data.
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Every dealership is different even if they are right across the street from each other. They all have their own DNA of vehicles that do well for their particular business. Many stores aren’t utilizing this valuable information outside of the simple and obvious observations, like convertibles selling the best during winter. If you leave this up to gut decisions, you could miss real opportunities.
We have shown dealers in certain hot-weather markets that convertibles sell well in the winter because the temperatures aren’t nearly as extreme as they are in cold-weather markets. Or even the fact that minivan sales peak a few months before school starts. Many trends can be found by simply looking at the data captured by the dealers’ DMS, and they can provide incredible insights regarding which vehicles to stock based on seasonality.
CBT: How can car dealerships capitalize on tax return season sales?
RB and DH: Tax season presents dealers an opportunity to take advantage of a time of year when potential car buyers are receiving a tax refund and are therefore more receptive and able to make major purchases. It is an opportunity to increase overall sales, which means filling your lot accordingly. With more people looking to buy vehicles during this time, you want to make sure you’ve adjusted your inventory levels to accommodate.
CBT: How should dealerships manage seasonal ebbs and flows?
RB and DH: It is critical for dealers to be aware of which cars are moving quickly off their lots versus those which may take a bit longer to move. Traditionally, when a vehicle isn’t selling, dealers will lower the price to entice customers to purchase and often rely on gut instinct when making inventory decisions. As the automotive landscape evolves, so should the dealer’s approach to managing inventory and sales.
Dealers have tech-driven inventory management tools at their disposal to support navigating these ebbs and flows, like ACV’s Private Marketplace MAX Digital Inventory Management. This does the leg work upfront to analyze what makes and models sell best, which are left on the lots, and how to maximize inventory efficiencies for faster turnover.
