Year-end Strategies for DealersYear-end Strategies for Dealers

Consumers are edging toward spending more for new vehicles.

Cox Automotive chief economist Jonathan Smoke attributes some renewed consumer confidence to the resolution of the recent U.S. elections. That factor, combined with end-of-the-year increases in luxury sales – a common event – is among the reasons November’s average transaction price (ATP) for a new vehicle was $48,724, according to data from Kelley Blue Book. That’s an increase of $699 or 1.5% compared to November 2023. The November ATP was also higher by $720 compared to the downwardly revised ATP in October of $48,004.   

“As we see consumers who had been sitting on the fence awaiting the election entering the purchase market rapidly, it’s time for dealers to do the same - get aggressive, get intentional and find the deal in every deal,” Erin Keating, executive analyst at Cox, tells WardsAuto. “Consumers aren’t just shopping in today’s market. They are buying.

“For decades, many consumers have heard the last couple of weeks of the year are the best time to buy a car due to manufacturer and dealer motivation to move units. Remind buyers of this and create urgency.”

That’s especially important when you consider that more than 20% of consumers with auto loans are upside down in what they currently owe vs. what their vehicle is worth, says Keating. Dealers should use today’s strong new-car pricing and available incentives to help those consumers get into their next vehicle.

Dealers may balk at some of those incentives because they drive profits down. But the strategy helps clear inventory and allows dealers to form consumer relationships. And even those who don’t buy give dealers chances to forge relationships.

“Fixed Operations should be a focus for every dealership,” says Keating. “Maintenance, repair, recall, warranty, parts and accessories are strong and steady revenue streams that will set a dealership up for success in 2025." 

"And don't forget that peace of mind products like maintenance packages, extended service contracts, wheel and tire protection, dent shield, fabric/leather coverage and accessories like wheel locks, wiper blades, floormats, cargo nets, new tires and Brand swag (think caps and t-shirts) make great Christmas presents,” she says. “Reprice and promote those sellable products with a ‘Holiday Special’ or bundled discount to every past and present customer you have.”

Offer incentives and pay plans to sales reps and other employees who sell such products, says Keating.

Other points from the Kelley Blue Book data include:

“The end of the year typically sees an increase in transaction prices, as luxury sales pick up as the year winds down,” says Keating. “If sales volumes in November are any indication, we think 2024 will end on a positive note for the auto business. Yes, prices are trending higher year over year, but higher incentives and discounts are bringing in buyers.”