Low inventory? Maybe it’s your own fault!
We all know the struggle, inventory. Lately, I have spoken to many dealers and car companies who all have the same problem: too few used cars on their lots. The market has never been better in terms of sales but buying the used cars that you want can be difficult. Right now, you can sell many more cars than you have on hand, and you cannot sell used cars if you do not have them. Due to the economy right now, the availability of vehicles at auctions is less than usual. Lease contracts are also being extended, and what will happen now is that 15 competitors instead of 5 are bidding against you. Yet, it is all your own fault.
In the past 10 years, platforms such as: “ikwilvanmijnautoaf”, “anwbautokoopservice” and others have come into the market and they have made it easy for the customer to sell their own car. These companies bid on everything: low prices on misfit inventory and higher prices for vehicles in demand.
“Too little stock may well be your own fault!”
When I was at SsangYong Apeldoorn, my neighbor was Erthjo Buitenhuis, a truly brilliant man who set up the Autokoopservice together with the ANWB to counterbalance “ikwilvanmijnautoaf”. It met a very simple need: not everyone wants to sell their car privately through Marktplaats or trade in their car at a dealership. Sometimes, they are just in a hurry to sell. Entrepreneurs know that if you can solve a frequent problem for the consumer, there is business to be gained.
Ten years later we have learned nothing about inventory
In 2021, we now have a problem. There is no process, no working method, no marketing, and there is no plan to purchase the right cars (inventory) for the right prices in a structured way. Indicata has shown that in today’s market we may be asking for too little money from the buying consumer and also may be paying too much for the initial vehicle purchase. The world is actually turned upside down!
Most car companies and dealers are not equipped to purchase cars from private individuals (the so-called FSBOs – For Sale By Owner). A dealer does not typically shop daily at Marktplaats, where private individuals sell their cars par excellence. By using filters, the buyer can find exactly the vehicles they are searching for. Purchasing from private individuals is also lacking in the marketing communications. Nowhere is it stated that you like to buy cars. Of course, there are a handful of companies that do such as Wijnne in Dieren, but these are exceptions. Export traders who cannot buy cars through normal trade are very active on Marktplaats because they can contact FSBOs directly there to see if they can negotiate to buy their cars.
“Nowhere is it stated that you would like to buy cars.”
Are there any examples of how to effectively buy used cars from private sellers?
Of course, there are examples. Just go online and search: “I want to sell my car” and “neighborhood open cars” and then select a car to view. This will result in multiple responses you may or may not want. You are called, you are e-mailed and you are clearly on a potential buyer list. The application for the consumer is without obligation, but the application for companies is certainly not. As a result, the private individuals buy cars that could have been sold directly to the car company.
The most successful used car company in America is not Carvana, but Carmax. Even though it is an ordinary used car company with physical locations, it also boasts a killer website and is one of the most profitable auto companies for years. Why? They offer a constant flow of the used cars that are highly desirable for a price that represents value for the consumer. How do they do that? They do this by using the right marketing to sell cars, but also they market to buy the right cars. They are both different campaigns, different goals and with that they also have a different ROI. At Carmax, the purchasing of the cars is just as important or perhaps even more important than the sale. During this conversation, as with many car companies, you are not asked what vehicle you may want to purchase, but the purchase deal is sold.
Because there are too few cars, it is difficult to do anything about it in the coming weeks. But a good way of purchasing cars, for example from private individuals who fit into your stock mix, is simply a piece of marketing, process and commitment!