Used-vehicle buyers are visiting fewer dealer lots and relying less on newspaper classified advertising to help them in their purchase.
Instead, they are turning to the Internet. How can car dealers capture these buyers while increasing profitability.
Already, 24% of used-car buyers say the Internet is the method they use to buy a vehicle, according to J.D. Power and Associates.
Another 45% say they use the Internet although it did not directly lead to a vehicle purchase. Still, 69% of buyers are using the Internet as part of their shopping process.
Meanwhile, 8% of buyers say they rely on newspaper-classified listings to find a vehicle.
With these numbers, the temptation for car dealers may be to start investing more in their online initiatives to drive used-vehicle sales. But dealers who have been down that road warn: “Be careful and be smart about it.”
Brad Burlingham, director-online sales and marketing for the Sullivan Automotive Group in Southern California, says the used-car Internet business can be more difficult because there are “only a finite number of leads for used cars.”
The Sullivan Group sold 2,540 vehicles online in 2005, 495 of which were used units.
“I've spent the last six months trying to focus on that part of our business,” he says. “You have to be careful, though, because you're never going to compete with the big (third-party) corporate sites such as Edmunds.com.”
Burlingham is willing to spend the money as long as there is a return on the investment.
“I'll buy every used-car lead I can,” Burlingham says. “If you think about it, the closing ratios for those cars should be close to 20%, because, unlike new cars, the used car is not a commodity.”
Most dealers do not list their specific new-car inventory, because if a buyer wants a certain color or trim level, the dealer likely will be able to get one.
There is no upside in letting customers know the vehicle they want is not on the lot. It is better to start the conversation with customers to find out what they want, experts say.
Used cars are a different market. Some dealers are hedging their bets by listing their used inventory not only on their own sites but also third-party sites, such as Cars.com, AutoTrader.com and others.
Customers search such sites to find a specific vehicle to suit their needs. Much of the trick to capturing of such customers has to do with presentation. It is important not to go at it half-speed, experts say.
Cory Mosley, founder and CEO of the Mosley Automotive Group, suggests dealers increase the number of media outlets where they list their used vehicles.
“Dealers may want to diversify their inventory display,” he says. “Instead of creating one layout for their inventory and then distributing it to all of their channels, they might want to experiment with different displays on various outlets.”
By not diversifying, a dealership may limit its ability to track the success of its merchandising.
But do not sacrifice quantity for quality, says Mosley. While many experts talk about how displaying several pictures online increases the likelihood a vehicle will sell, there is more to the story.
“It's true having multiple photos does increase the visibility and probability of selling the used vehicle,” he says. “But multiple photos of the same area do not help. Provide pictures of different angles and make sure you include exterior and interior shots.”
Writing ad copy that supports the pictures also is critical.
“Write copy that tells a story,” Mosley advises. “After reading about the vehicle, a prospect should connect with the vehicle and be excited about taking the next step with the dealership.”
As an added touch, Mosley suggests dealers increase the background imagery in the photos.
“Make sure your landscape and background reflect an image of professionalism,” he says. “A professional-looking background and landscape can increase consumer confidence and create the perception that your vehicles are also professionally conditioned.”
Many dealers do a good job in capturing the attention of potential customers but lose them in the follow-up process.
“Once a person clicks on that used-car ad, it ceases to be an ad and it becomes your dealership,” says Dennis Galbraith, senior director for J.D. Power.
Burlingham says think of leads as nearly buyers. His follow-up process is to contact them four times in two days, instead of four times over four days because “that customer is probably ready to buy.”