With Tesla’s success and plans and comments from OEMs like Ford CEO Jim Farley, there’s no question that digital retailing from automakers may soon be on the rise in the industry. As a result, more car buyers trained by the convenience of Amazon may willingly accept to purchase their vehicles.
And while many dealerships have been quick to embrace this shift by investing in digital marketing and eCommerce platforms, some are still struggling to keep up.
But the used car market is one area where many dealerships have yet to fully capitalize on the power of digital retailing. Selling used cars has always been a challenge for dealerships, as margins are often slim, and fierce competition exists. However, as the industry moves to online purchasing, small and large dealership groups are looking at different branding for their used cars. Fortunately, it’s unlikely that OEMs will enter that area any time soon.
What can dealerships do about OEM retailing?
This may seem challenging, but with the right approach, selling used cars online can be a highly profitable endeavor. In fact, some experts like Brian Pasch believe that creating a separate digital retailing brand for used autos could be a game-changer for dealerships. Dealerships are being pushed around by OEMs and the efforts of large dealership groups like Lithia, who formed Driveway, show that it’s possible to fight back.
Pasch recommends that dealers use Asbury Automotive Group and Sonic Automotive as examples of what can be done. Although there’s hope for legal protection against direct manufacturer sales, a different used car sales brand and platform may soon be the more profitable option.
|Related: Dealer Andy Wright weighs in on OEM direct-to-consumer selling models|
Does creating an online used car dealership brand make sense?
There are several reasons why this strategy makes sense. First, dealers can better focus their digital marketing efforts on local used car shoppers. And, if new car sales distribution is going to change, dealerships will need to resize and rescale operations to keep their customers.
By creating a separate website or online portal specifically for used cars, like Van Horn Automotive’s Shop CloudLot, dealers can ensure that their message reaches the right audience. And with the right tools and resources in place, they can also make the shopping and buying experience much smoother and more efficient for customers.
Second, a dedicated digital retailing brand gives dealers more control over pricing and profits. In today’s highly competitive market, used car prices are often all over the place. By creating a separate brand, dealers can set their pricing strategy and ensure they make a healthy profit on every sale.
Finally, a separate digital retailing brand can help dealers build a more loyal customer base. Customers who have a positive experience with a used car purchase are more likely to return in the future and recommend the dealership to friends and family.
Is creating an online used car dealership worth it?
Creating a separate digital retailing brand is not without its challenges. But perhaps the biggest challenge is simply getting started.
Developing a new website or online portal, establishing a pricing strategy, and building a customer base all take time, effort, and money. But, with new car prices increasing beyond many consumers’ budgets, the investment in a used car dealership brand is well worth it for dealerships serious about capitalizing on the power of digital retailing.
So, what do you think? Should car dealerships create a separate digital retailing brand for their used car business? We’d love to hear your thoughts in the comments below.
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