How to acquire profitable inventory in uncertain times

It's a simple concept: You can't sell cars you don't have. Inventory is essential for success. And, as we've always said at vAuto, you make money when you buy a car, not when you sell it. So buying cars right is the key to used-car profitability. Yet inventory shortages plague dealers nationwide. Given the unprecedented and prolonged volatility in the pre-owned vehicle market, dealerships continue to struggle to fuel their inventory pipelines.

This new normal has made the traditional methods for replenishing used-vehicle inventory insufficient to meet demand in the market. As the landscape evolves, it can be difficult to keep up with the changes.

We talk with hundreds of dealers across the country every month, and the following recommendations are what we see as common best practices to help dealership management teams weather supply constraints with confidence while building an inventory pipeline poised for profitability and significant growth.

Many of our best dealers are going directly to the source — consumer owners. More than 15 million trades or direct sales every year are owned by a consumer.

To proactively acquire vehicles directly from consumers, get creative in ways to connect with them, including hosting buying events and sourcing vehicles from the service lane. Engage with consumers everywhere and anywhere — from online to on the lot, so you never miss a chance to acquire inventory.

By optimizing everyday tools such as your dealership website, you'll create a consumer-centric experience that will appeal to repeat and new customers alike. Shoppers rely on these tools to both research and shop for their next new car, and to obtain valuation data for their trade-in.

A study from Cox Automotive found the No. 1 digital retailing activity customers want to complete online is finding the value of their vehicles. Ensure the process is smooth and easy on your site, and provide trusted, timely data from a reliable source.

The appraisal process can make or break a deal, as evidenced by the fact that one of the first activities consumers complete in their car-shopping journey is to find out the value of their vehicles. Establish consistency by using a tool that allows any dealership employee to easily complete appraisals with customers. The right solution should create transparency by educating shoppers on how their vehicle valuation was determined.

Giving consumers a detailed look at their appraisal not only empowers them with information but also reinforces trust.

Offer appraisals online, in-store and in the service lane so you'll never miss an opportunity for potential vehicle acquisition. Develop and stick to a consistent follow-up strategy for appraisals and offers across your dealership, to help keep your business top of mind with consumers and prevent leads from going cold.

Continuing a long-term follow-up strategy within your business development center for 90 days has proved to be successful in helping dealers acquire inventory sooner.

Target the right shoppers at the right time with the right message. Leverage data and insights to maximize inventory opportunities, and prioritize leads based on who may be ready to buy. Use an informed approach to reach potential customers and follow up with personalized messages or targeted offers to help you close the deal before your competition does.

Not every source of used-car inventory is going to perform the same for your dealership. We all know the differences between the cost to market for an auction vehicle vs. one that walks in for a trade-in. But do you know how you're performing for other channels? It's important to integrate acquisition tools with your inventory management software to stock, appraise, price and syndicate your inventory more accurately using real-time data that drives profits. Developing channel-specific strategies and aligning workflows and processes will help give customers a better end-to-end experience. When these tools work together, every step of the process should be as seamless for your dealership as it is for the customer.

Having the right tools and technology in place and working efficiently will help your dealership grow profitably. When you consider aligning workflows to create a better digital retailing experience, you increase your chances to connect with transaction-ready shoppers and acquire more profitable inventory.

To ensure success, dealerships need to work smarter by rethinking their channel-specific strategy, processes and technology, and then evolve based on the expected outcome for each used-car source for your store.