Real Retail Data Supports Every Aspect Of Buying & Selling Used Vehicles
Real Retail supplies data from approximately 3 million transactions, from almost 50% of the dealers in the US. It takes you behind the scenes, revealing what retail prices are really being achieved after deals have been negotiated with customers
This information is invaluable throughout the entire process of buying and selling used vehicles. At the time of acquisition dealers use it to understand the true retail price ceiling so that they can accurately predict their margin. This prevents them from getting caught out by inflated retail asking prices and suffering poor margins as a result.
An accurate and intelligently executed pricing strategy can be what makes and breaks your turn; getting it right produces quick and profitable sales but getting it wrong results in units ageing beyond the market average, costing your dealership money and opportunity. As has been mentioned in a previous blog post, a dealer needs to properly understand their local market when pricing for retail, instead of relying merely on guide book values.
How do you know that the players in your local market are making the right choices and pricing their inventory correctly though? A single dealer intentionally adopting an aggressive pricing strategy or pricing incorrectly out of ignorance can be all it takes to throw your entire market off; suddenly everyone else is following suit. If you happen to be one of the dealers that determines a pricing strategy purely by following your market, you could easily be led astray which can rob you of profit. Instead of letting other dealers, whose skills and expertise are likely unproven, inform your strategy, you should look to Real Retail data instead.
A pricing strategy can be tricky; a dealer needs to be competitive to attract would-be buyers but doesn't want to be too aggressive so as to limit their profit margin and room for negotiation. Real Retail data gives the dealer a target price to aim for so that they know what price and profit they should be achieving for each of their transactions. They use this when discounting as vehicles age and also when negotiating with customers so they can be certain that they are maximizing their profit without losing sales.
Navigating the competition in your local market can be complicated. Ideally we'd all like to steal every deal away from each of our competitors; the trick is to do it without sacrificing your profits. How do you know how much of a deal to give a customer though? It's not like you can trust the customer to tell you the truth. How many times has a customer told you that they can buy the same car with the same miles down the road for $500 or $1000 less? Consulting Real Retail data will show you what the average selling price is for a given vehicle so that you can make appropriate concessions when negotiating instead of giving vehicles away because you're afraid of losing a sale. It will also help you quickly determine how realistic your customer's chances are of getting the deal that they are asking you to match.
Being competitive while remaining profitable is only one half of the equation though. It's also imperative to understand who you should be competing with. CarGurus® has really changed the used car market. Customers are now incredibly well informed, armed with data that was once reserved for professionals only. As a dealer you must adopt a similar data driven approach to your pricing to entice the new CarGurus® shoppers. Again though, you don't want to do so at the expense of all your profit.
CarGurus® displays the best deals more prominently on its site. This has prompted a lot of dealers to engage in price wars to achieve the best optics on CarGurus® but in many instances that is nothing more than a race to the bottom. Real Retail shows you what the average selling price is as well as the distribution of the bulk of the sales prices. So, if you are trying to optimize your pricing to be competitive on CarGurus® you can make sure that you avoid competing with the dealers that are racing to the bottom and subsequently won't be in business long.
Real Retail data is extremely helpful in every facet of the business and a far superior approach than guessing or going with one's gut feeling. Make sure that you don't overlook it when using Carbly.