Research seems to show that there is a key difference between new car and used car shoppers.
New car buyers start looking for the best deal for a car they already know they want. While used car buyers are often initially more cautious about the car itself. Two of the biggest concerns are about the used car condition and mileage. These factors that often aren’t relevant to new car shoppers.
In recent years, car dealers have done a much better job of meeting the needs of used car shoppers. This seems to be slightly less true for new car customers. Some car dealers, for example, believe that pricing the car below manufacturer’s suggested retail price for a new car will reduce their profit. It is quite interesting to see how similar these concerns are as they try to “fight” the digitalization of the car buying journey (digital retailing), as well as the transparency that inevitably follows. I believe there are three used car advertising and pricing best practices that would also work quite well in a new car department.
Always price to market.
A study from our American friends at AutoTrader.com, shows that car dealers who display prices for their new cars at below recommended retail price receive more enquiries and close more deals. Thinking about it, it seems quite logical: most customers know by now that hardly anyone pays retail price, so why even display retail prices it on your website?
Advertising tells a story.
In the used car department, dealers have learned that car-specific advertising is a must. Why would new cars be any different? Avoid standard photos and generic descriptions, but rather focus on the details that make the car different. Make new car selling an emotional rather than a logical purchasing decision.
Use third party data in your sales process.
Pricing vehicles to market, in particular using live market data from providers such as AutoFuzion, makes the transaction easier, but it also builds trust. Live market data is also a better leading indicator than histrocial transactional pricing (which is a lagging indicator of demand and supply). Car dealers that use leading indicators such as:
- Market supply
- Days in stock
- Views per car
- Rate of sale
- Average asking price
will be way ahead of the traditional dealers who use histrocial pricing data to make decision. The reason is simple: you will see the change coming by using leading indicators, instead of being behind the sales curve.
Third party data helps hugely when validating the price, aids transparency, removes the customer’s fear you’re trying to rip him off, and generally makes the experience less stressful for the customer.