How to Sell More Cars When You Don’t Have Enough Cars To Sell

Talk about disruption!

5 years ago I wrote an article here in Dealer Marketing proclaiming that the car business as we had known it was long dead, showing that the business had changed more in the last decade than it had in the previous centuries, and predicting that the next 10 years would make the last look like smooth sailing.

Turns out it only took a few years for the car business to get turned upside down again.

In 2017, the average new car dealer had between a 60 and 90-day supply of new vehicles out on the lot getting suntans

A volume dealer in a big metro dealer might have hundreds and hundreds of new cars in inventory on any given sales day. Cars that customers could come to the store and see, touch, feel and drive.

Last month, Honda World of Louisville had six new Hondas in stock. Not six hundred. Six. Period.

Dave Clayton at Pawley’s Island Ford says he gets asked every day whether or not the dealership is going out of business because of the empty sales lot.

Car dealers aren’t going out of business, though. They’re selling cars. A lot of cars. The question is how?

“We had to pivot from the standpoint of we used to carry about 600 to almost 700 cars in new car inventory, and that's no longer the case,” said Chuck Morelli from Honda World. 

“I have no more inventory than my competitors now so we have to make sure that that experience is there. Like I told my team, the customer has no reason to come here anymore because I don't have the inventory that they're going to drive off in so how are we going to make the customer’s experience better and make it different than our competitors?” 

Providing a better customer experience, a friendlier, faster, fairer, more fun buying experience, has been the secret sauce all along, and it still works

The 6 new Hondas Morelli has in stock works out to about a 1-day supply because his team is still selling hundreds of new Hondas a month and delivering a world-class buying experience. They were just named DealerRater’s Honda Kentucky Honda Dealer of the Year for the 7th year in a row because treating your customers well never goes out of style.

What successful dealers are doing now is helping customers and salespeople look past the immediate gratification of driving a shiny new car or truck off the lot today. Some dealers are devoting entire new websites that allow customers to pre-order their car their way.

But making custom ordering a vehicle so easy even a caveman could do it is only half the battle.

The simple fact that customers aren’t going to get their cars today is practically forcing dealers and salespeople to stay in touch with their customers for longer periods of time before the deal is done, forcing them to have difficult and disappointing conversations, forcing them to build a better relationship and most importantly, earn the customers trust.

They sell more cars by looking past the easy money of today’s sale and playing the long game for lifetime customer value.

“We're not putting market adjustments on our cars.  Where we're focusing daily and talking about with our associates daily is the guest experience,” says Morelli.

“We want the guest experience. We want them back. We want their friends back. We're very transparent. I don't go a day without talking to a guest about a car. And I'll just be honest with them, and I'll apologize to them, and say I know I'm giving you bad news, but I want to know what's going on. And on these deposits -  if they back out, we don't say anything. I had two customers back out today, and I immediately had them filled so I don't fight it.”

Building and maintaining that level of trust and those deeper relationships comes with an added benefit - more used car inventory.

“Probably 90% of our business overall is from repeats. We've been in business for 42 years so we've got that repeat business. They've always come to us,” says Clinton Bramlett from a GM store in Texas.

 “We're getting our used cars from our repeat business. We do their service. We do their maintenance. We do all of that. We know all the history of their cars without a CarFax. And that's where we're getting all of our stuff from.”

By incentivizing the sales teams and a little technological help, dealers have boots on the ground to mine relationships and their database, helping to keep used car inventories respectable when auctions have been unable to fill the demand. 

Meanwhile, almost every dealer has aggressively turned to buying used cars “off the street,” building websites, producing radio and TV spots, and in some cases, even building separate car buying facilities.

The only thing in this whole world that’s ever been certain is that things are going to change. 

Disruption is inevitable. And in the car business lately, it’s par for the course. By concentrating on the customer, by finding a way to give the customer the vehicle they need and the experience they want, by building the trust that brings about an avalanche of lifetime customer value, dealers can continue to thrive and be the pillars of their community no matter how many cars are on the lot soaking up rays.