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Put used inventory to work to avoid auction & maintain cash flow

Don't send used inventory to auction too soon! Rather than risking a loss at auction, we think used vehicles can generate revenue as part of your fleet.


The auto industry is recovering from the massive sales drop experienced in the Spring and Summer, and trends point to the inventory issues of 2020 being resolved and demand remaining high, particularly for used vehicles. 

Dealerships with a sizable used inventory may be wondering how they can hang onto some of those vehicles a bit longer before holding costs make an auction sale the best option. The Dealerware team has been thinking about this problem, too; the following ideas might help dealers put used inventory to work generating incremental revenue while they wait for the right buyer.

Flexible Loaner Programs

As we’ve shared before, service department customers view loaner vehicles as test drive opportunities, and that test drive experience doesn’t need to be limited to new models.

We think dealers have an opportunity to market used vehicles to prospective buyers through tiered loaner programs. Connecting the entire used inventory to a dealers’ fleet management system would allow the service department to offer used inventory as loaner vehicles, depending on the age and condition of the vehicle and any regulations around a dealership’s courtesy vehicle program.

Deploying the used inventory in this way would allow dealerships to increase their available fleet, increasing the service department’s capacity to take on repair orders. The fleet could be further monetized by organizing loaner vehicles according to size or brand tier. For example, dealers might give customers a choice between a basic sedan as a free loaner vehicle, or a late-model, used SUV as a paid loaner vehicle, charging perhaps $25/day for the larger vehicle. 

This idea and others like it are captured in our recent Guide to Tiered Loaner Programs. While we understand that different dealerships must meet different requirements for their loaner vehicle programs, there are several other ways that tiered loaner fleets can support profitability. Download the e-book here to learn more about reorganizing and monetizing your fleets in new ways.

Extended Test Drives

The used car market is likely to remain hot as demand for personal vehicles stays high, but consumers remain wary of financial risk after a challenging year. 

We know that 98% of car shoppers are more likely to make a purchase after taking an extended test drive that allows them to experience a vehicle in their day-to-day routine. Rather than sending a vehicle to auction, dealerships could offer potential buyers paid, multi-day extended test drives as a way to encourage a sale and recoup daily holding costs.

Customers are willing to pay between $50 and $100 for an extended test drive. If a dealership has four customers interested in a used vehicle and can give each of them a two- or three-day test drive, they’ve not only covered the month’s holding costs but actually generated a small surplus on the vehicle, when sending it to auction may have resulted in a loss.

Info about what customers are willing to pay for loaners, test drives and other modernized experiences can be found in the Dealerware whitepaper based on JD Power research, Meeting Modern Customer Expectations for Service Department Experiences. Download the whitepaper here.

Basic Rentals

Finally, we know that demand is growing for mobility options that don’t require personal car ownership. Early attempts at monetizing shared mobility options – like subscriptions – haven’t proven successful yet, but we know that access to transportation is more important than ownership of the mode for a subset of drivers. 

Experimenting with basic, weekend-only vehicle rentals could provide a path to understanding this subset of customers better while providing incremental revenue. And basic rentals meet a broader demand than just the commuter-without-a-car segment. Families who want to go camping for a weekend may prefer to rent an SUV than cram supplies into their midsize sedan; basic rental can help dealerships meet unique customer needs and monetize their own inventory in new ways.

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