Price Is Not Everything!

Dealers across the country are slashing prices, especially on used cars in an attempt to keep up with the nosedive in the market.

I have heard the analogy that it is like trying to catch a falling knife. Several years ago, I met with a dealer who managed their inventory like any other commodities market. In fact, the used car director for the group was a former commodities broker with a large investment bank. His view on the used vehicle market was more than simply price. There were three facets that he looked at when determining the potential for any vehicle in his inventory — something I have coined the POP approach to retailing:

Frankly, some dealer photos are just plain ole terrible. Fuzzy images, a fingertip covering half an iPhone camera lens, upside down photos, and inconsistent viewpoints are just a few of the presentation errors you can find on many dealers’ websites on any given day. Buying a car is emotional. Between wondering if that out of focus interior shot is showing leather or cloth, or if the photo is intentionally blurry to hide a rip in the seat — the passion of that first impression starts to wane. As a first step in assessing a car that has been sitting on the lot longer than expected, check out all of the photos. It might be as simple as your May 15th Camry photos have February snow in the background.

Some options are assets, and some are liabilities. Purple Camry with a 5-speed? Probably a negative factor. Toyota Tacoma 4×4 with stick shift? Well, now that is a vehicle for which a certain buyer is going to hunt and jump on when they get the chance. The Tacoma is a matter of time in most cases — not a matter of price. Options are also a factor you cannot change, so it is important to understand whether you should be playing to those strengths or sending it to the auction. In the case of the Tacoma, listing on an off-roading forum or marketplace might drive additional interest. In the example of the Camry, or any other vehicle with mismatched accessories/options, you are likely sitting on a car that will underwhelm when it eventually sells after several price reductions. Four months later you will remember that your first loss is your best loss — wholesale and move along.

No two used vehicles are the same. That is partially what makes selling used vehicles so fun. One will have a little scratch on the door, another has a faint whiff of interior smoke in the headliner, while another is absolutely pristine in every way — the Sunday driver. But when you are repricing vehicles, you’re using vAuto that views a Camry as a Camry. Or you are applying the same haircut to each vehicle of a certain age. Hold the line in the places where you should. If a customer wants to negotiate, you can always move on price when you are working that deal to move the unit. You can never bump the price up.