'Crazy Ivan' strategy gets shoppers' attention

What does a 2014 Jeep Compass Sport have in common with a Soviet submarine? At M.K. Smith Chevrolet in Chino, Calif., they both could be labeled "Crazy Ivans," courtesy of the dealership's Timothy Vondran and, ultimately, thanks to the Tom Clancy thriller The Hunt for Red October.

The novel, adapted into a film starring Sean Connery and Alec Baldwin, follows a Soviet navy captain who is defecting to the United States in a state-of-the-art nuclear sub. The term Crazy Ivan in Clancy's tale describes a Soviet submarine's maneuver to see if it's being followed.

"The submarine guys do a 360 to check if anyone's behind them, and, periodically, they'll just do that out of nowhere," said Vondran, the dealership's director of acquisitions and marketing.

It's an apt description for Vondran's treatment of the 2014 Compass and some other vehicles at the dealership: He increases prices to see how closely they're being followed by online shoppers. He's dubbed it the Crazy Ivan strategy.

In the case of the Jeep, it had been at M.K. Smith Chevrolet for 44 days, but the average market-day supply for that model was 28 days, according to inventory management tool vAuto. Like most dealership inventory managers, Vondran monitors pricing at nearby competitors. The Jeep seemed to be priced competitively. Web traffic showed some interest, but the crossover hadn't sold.

Maybe potential buyers were seeking discounts and trying to make a deal, he speculated, or maybe no one yet had a successful credit application.

"Who knows?" Vondran said. "It wasn't selling."

So he raised the price by $1,000.

"This is now officially a Crazy Ivan," he said of the Jeep.

Vondran launched this price-raising practice several years ago for vehicles in similar situations — they seemed to be generating interest online but for whatever reason weren't selling.

He came up with the idea after noticing that lowering a vehicle's price often resulted in an increased number of phone queries about the car or truck. On certain slow-moving vehicles, some shoppers could be waiting for the price to go down.

"So I said, instead of doing that, what if we did it the other way?" Vondran said. "What if we raised it $1,000?"

Sure enough, customers who had been watching the vehicles online began to call and essentially ask, "What's the deal?" — or lack thereof. "It's had surprisingly good success," Vondran said.

For a $12,000 vehicle, Vondran may raise the price $500 or $1,000. A $40,000 Chevrolet Suburban may get a $2,000 bump. He labels the vehicles "Crazy Ivans" in vAuto so that sales staffers know how to proceed.

If customers wonder why a vehicle they have been watching has had a sudden increase in price, the sales rep tells them that the dealership will honor the former price if they come in that day. "The reality is I would honor that price no matter what," Vondran said. "But it gets them to jump."

Vondran said he designates at least two or three Crazy Ivans a week. "It's a lot of gut feel," he said.

M.K. Smith Chevrolet sold 1,044 new vehicles and 804 used cars and trucks last year.

The Crazy Ivan strategy has become increasingly important as price transparency has resulted in downward competitive pricing within 30 miles of his store, where 95 percent of his business originates.

As for the Compass, it remained unsold at least 25 days after it got the Crazy Ivan treatment. While not every designated Crazy Ivan sells immediately, enough do for the dealership to deem the strategy a success.

"Ultimately, it never hurts to raise the price," Vondran said. "It never hurts the car."