Facing fluctuating supply chains, shifts in consumer preferences and normalizing trends, used car dealers have implemented new strategies to source inventory and keep sales high in the post-pandemic economy. Here to shed more light on how retailers have adapted to a changing market landscape is Josh Callahan, senior director of SmartAuction at Ally.
Key takeaways
1. As one of the largest finance companies in North America, Ally has numerous avenues for remarketing vehicles, including 42 physical auction lanes throughout the U.S. and its online platform SmartAuction. Ally’s digital tools also enable dealers to search for used cars 24/7, ensuring they have access to the best deals possible. Ally holds auctions twice a day Monday through Friday, with an additional auction on Saturday.
2. During the COVID outbreak, dealers adapted to the changing market landscape by identifying new channels for sourcing inventory as vehicle supplies began to run out. Callahan predicts this new era of multi-channel sourcing will continue even as the automotive industry slowly adjusts back to pre-pandemic norms.
3. Callahan expects to see vehicle leasing remain subdued for the next several years, limiting dealers’ access to a traditionally helpful inventory source. This is because consumer demand for leases dropped significantly during the COVID pandemic as automakers scaled back incentives and has yet to show meaningful signs of recovery. Nevertheless, Callahan notes that the retail automotive sector has proven its ability to adapt to inventory shortages and expects dealers will maneuver through their supply headwinds with ease.
4. With pre-pandemic trends slowly making a comeback across the automotive industry, dealers are already switching back to the basics to keep profits high and buyers happy. Even if car prices fall substantially, experienced retailers can implement aggressive strategies that boost customer retention, acquire leads and close more deals.
Inventory management will also be key in the post-COVID economy. For vehicles that struggle to sell, Callahan recommends that dealers remarket quickly and efficiently to maximize the utility of their used car supply.
5. As new and used car prices have crept up so have buyer term lengths, as consumers continue to prioritize affordable monthly payments over the duration of their loan. While Callahan believes the rate at which term lengths increase may slowdown in the coming months, the emphasis on lower, budget-friendly payments is likely here to stay.
