Most dealers are aware of the many market based pricing tools that are readily available to help them price their pre-owned cars competitively in their specific markets. However, many dealers still fall into the same pricing patterns and stubbornly cling to the old school mentality of gross profit in their pricing strategy as opposed to things like market value, scarcity, and days on hand.
A blanket approach to your pre-owned pricing strategy is a recipe for disaster. Each vehicle needs to be analyzed for its market value and scarcity before determining the price that will generate the most interest online. Too many times we see dealers fall in love with a car they purchased at the auction, or a truck they traded for below market value. They end up pricing the car at 105% or higher than retail market value and then get frustrated when the car or truck is still on their lot 45 days later. If you trade a car light, yes, you can hold more gross initially with your online price. However, make sure you are aware of the scarcity of the vehicle as well. If there is an abundance of that type of car or truck in your market then you may want to keep a close eye on your pricing strategy on a daily or at a minimum, weekly basis. Too many dealers use the “set it and forget approach.” Then, they wonder why they have so many aged units on their lot.
If you stretch on a trade to make a sale, don’t make the mistake of pricing your trade at a price that is not competitive online. The goal should always be to turn your inventory as quickly as possible. Using a strategic online pricing strategy for each vehicle is a key component for long term success.