Labor Day Strategies for Dealers to Move More Inventory

As Labor Day approaches, many franchised dealers hope the traditional car-buying holiday does not disappoint, Kevin Roberts, CarGuru’s director of industry insights and analytics, tells WardsAuto.

New cars were on the market an average of 84.9 days in July, up 28.9% compared to the same month in 2023, according to CarGurus' July 2024 Intelligence Report.  Higher-priced vehicles, those with manufacturers’ prices over $50,000, have impacted the lot time numbers, reports CarGurus.

What’s causing this? The CarGurus’ report surmises that manufacturers seem to have abandoned earlier pledges to balance supply and demand. Consider that in July 2024, the average Market Days’ Supply hit 81.1%, up 68% compared to the same month last year.

To be sure, Market Days’ Supply varied widely among manufacturers in July.

Toyota had the lowest days’ supply at 28.8 while Stellantis nameplates had the highest, including the Jeep Wagoneer at 218.5 and Ram trucks at 294.3, reports CarGurus.

With inventory comeback outpacing demand, Roberts has suggestions for dealers.

Promote Cost Savings

“They should take advantage of interest rate deals if there are any out there,” he says, adding, “There could be some incentives to get people into new vehicles. I am seeing some zero percent financing or low interest rates.”

Indeed, overall incentives are rising. The average July incentive rose to 7.0% of the overall transaction price, or $3,383, up from 6.4% in June and “the most generous level seen in 2024,” reports Cox Automotive.

“All of those things on the new side — cash on the hood, subvention leasing, low APR and zero percent financing — can help move the new side,” Roberts says. “But it depends on the particular automaker.”

Leasing is another option that Roberts recommends dealers explore.

Spotlight Used EVs

On the used side of the business, acquiring the proper inventory mix is key for dealers, Roberts says.

Consumers are focusing on more affordable vehicles, and those priced under $30,000 and even under $20,000 are moving much faster than higher-priced models.

“If you are looking to move more metal over the Labor Day weekend, having those cars on the lot can help,” Roberts says.

Used inventory, in general, is declining for franchised dealers, the CarGurus report says. Hit by lower production levels in 2020 and 2021, the used inventory level fell 2.8% in July compared to the same month last year.

However, the inventory drop did provide support for used prices in July. While the average price dropped 6.5% to $28,300 compared to July 2023, it remained basically stable compared to June. Used prices in July were still up nearly 37% compared to pre-COVID prices.

“If you are looking for attractively priced used vehicles, used EVs could be a real opportunity,” says Roberts.

The average price for a used EV in July dropped 10.6% compared to a year ago to $37,700, the report says. Meanwhile, the used EV inventory rose by 19%.

While used EVs are easy to sell in some states, such as California, dealers in states where they are less popular may hesitate to snap up used EVs at auction.

Roberts suggests even dealers with traditionally low EV sales try to stock some used EVs. Shoppers may consider them because many of those used models are less expensive and have fewer miles than hybrid or internal-combustion-engine models, he says.