Local Car Dealers Urged to Sell Long-Distance
In a WardsAuto Q&A, Cox Automotive’s Jade Terreberry tells why dealers should use digital retailing to extend their reach beyond traditional geographic markets.
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Now is the time for local car dealers to begin extending their reach to become regional – even national auto retailers.
So says Jade Terreberry, Cox Automotive’s director-dealer sales analytics, who adds that many “progressive” dealers already have done so using digital tools.
Because of the current auto retailing circumstances of high demand and low inventory, it’s sometimes a hard sell to convince dealers to sell long-distance.
To some of them, that’s akin to watering the lawn when it’s raining.
Terreberry says some dealers tell her: “‘We can’t keep inventory on the lot. We’re making more profit per unit than ever before.’
“I remind them stimulus checks aren’t going to keep flowing. Tax refund checks aren’t going to come year-round. This rare combination of circumstances (high demand and lean inventories) will change. It is going to be volatile in some quarters.”
In a WardsAuto Q&A, she tells how and why dealers should sell to more than just locals. Here is an edited version of the interview.
Wards: What type of dealers are going after non-local customers?
Terreberry: Market share of total sales is a different mentality for some dealers. Most of the publicly traded dealer groups and the progressive ones are data-driven and focus on that. They are doubling down on what’s working. They realize if they increase their market share, market by market, that put them in a good position when (the current supply and demand issue) normalizes.
Wards: Why exactly is market share of total sales so important?
Terreberry: Many dealers still view market share as pertaining to their own backyard. “What percentage of the inventory do I have and what percentage of the sales activity am I getting?” For instance, if I have 2% of market sales, do I have 2% of market inventory. That was a simple equation.
Now, as a result of COVID and changing consumer behavior, you should look at this bigger view beyond your backyard. What is your total addressable market? Your (potential) reach has grown exponentially. So, looking at a market share equation locally doesn’t answer that market-to-sales question anymore. Nor does it set you up for long-term success.
Wards: How many dealers are doing business outside their market like that?
Jade Terreberry
Terreberry: In some cases, we’ve seen over half of that consumer activity being outside some markets. That’s really eye opening. The dynamics are so different now. You don’t stay the same: You’re either shrinking or growing. It’s a critical time to make decisions.Wards: How far can local dealers reasonably go outside their markets?
Terreberry: It completely depends on the dealer. Some small, even single-point operations have become comfortable shipping nationwide.
Dealer clients in the Midwest have created an incredible marketing opportunity shipping to Alaska or Maine. That’s not for everyone. Every business isn’t going to go that far because there are, of course, expenses and risks.
And not all consumers desire that experience. But what we’ve found is the shortage has led to consumers going outside their comfort zone for a vehicle they want that meets their needs but isn’t in their backyard.
It doesn’t mean you as a dealer ship nationwide on day one. It means you extend your market area a little farther and a little farther because consumers are telling us that meets their needs.
I don’t know any dealer who now is shipping 700 miles away (1,126 km) who didn’t start out by shipping 70 miles (112.6 km) away.
Wards: To do that, what digital tools are needed?
Terreberry: To begin with, you need exposure to consumers outside of market. So much great data today assists in that. If something is not selling quickly or for top dollar in my own market, data can tell you where and how that vehicle will perform in every other market across the country.
Or use tools to determine the right price for a vehicle that can encourage a consumer to drive 100 miles (160.9 km) to your store. Another one is a digital retailing tool that allows consumers to go far through that buying process online.
Wards: There isn’t an inventory situation where a dealer in one city stocks everything everyone wants and in another city it’s the opposite case. Aren’t dealers all in the same boat?
Terreberry: That’s a great point. There is no magic to it. But it is knowing what’s in demand, what you have and what you don’t. Those national players are being more aggressive and creative. They are willing to pay a bit more (for wholesale vehicles). They are looking at private-seller inventory. They are using every inventory-acquisition strategy they have more than ever before. They are being strategic in how they buy and where they place. That’s a key.
When there’s an inventory shortage for everybody, that is where that opportunity to gain market share comes in. Figure out how to use the data in acquiring vehicles. There are still plenty of (used) vehicles to acquire, whether they are coming off lease, being traded in or wholesold (at auctions).
Wards: If dealers expand outside their market, they must let people outside their market know. How do they go about doing that? With search-engine optimization and search-engine marketing?
Terreberry: It’s incredibly costly to do SEO and SEM nationwide. It’s not a good use, dollar-for-dollar.
It always comes back to the data. First, I’d be strategic in the type of inventory I have, what I want to move. Use the data to determine what outside markets and parts of the country I’d want my listings to appear.
You want your listings in front of the most qualified consumers who are in market. (Third-party lead aggregators such as Autotrader, Kelley Blue Book and Cars.com) help there by allowing users to expand their search, which is what we see consumers doing.
They are also looking at what the experience will be, whether it is ship-to-home, ship to a distribution center or the customer flies in get the car. But first, you’ve got to get that vehicle listing in front of them.
There are many ways to do it right. But the traditional way of someone buying strictly in their own market is no longer enough to sustain a healthy business.
Steve Finlay is a retired WardsAuto senior editor. He can be reached at [email protected].
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