Dealer Insight Dispatch: 2021 Portfolio Management Strategy
Developing a competitive portfolio management strategy has never been more important for dealerships. New inventory for many makes and models has hit stunning lows. KBB reports that at the end of April 2021, “the total supply of new vehicles available to sell nationwide fell 43% below last year’s level at the same time, and 54% below similar numbers from 2019.”
According to JPMorgan analysts, “inventory on dealer lots stood at just 23 days’ supply at the end of May, down from 33 days a month earlier. The industry norm is around 60 days.”
Strategic portfolio management in such conditions hinges on your dealership’s two most important information assets:
- Service database
- Sales database
Keeping your dealership at the forefront of customers’ mind will drive inventory, acquisition, and customer loyalty at the same time. Data mine within both your existing Sales and Service customer databases to maintain current and future inventory pipeline — while also staying highly visible with your most loyal customers!
Inventory on dealer lots stood at just 23 days’ supply at the end of May, down from 33 days a month earlier. The industry norm is around 60 days.
Service appointments present an opportunity to connect with your clientele and boost low stock.
Use service history data for customer outreach by alerting customers to the trade in value for their current vehicle; this could stimulate interest in upgrading to new in-stock models.
An email or text could simply read something like: “In reviewing our used car inventory, we find that we are in need of a <Make> <Model>, which you recently brought in to <Your Dealership> for a service appointment. Are you interested in trading it in and driving a newer <Make> <Model> for nearly the same monthly payment?”
Portfolio management in 2021 means understanding supply shortages that you can’t control, and leveraging what you can control to optimize competitive positioning. Get creative with inventory acquisition by using your existing sales database to launch:
- Early lease-buyback campaigns, and
- Late model “We Want Your Trade” campaigns
Late models can be traded in and resold as CPO. Multiple-vehicle household members are great targets for additional vehicle trade-in campaigns, or sell-back offers on existing vehicles.
When it comes to portfolio management, as always, you should stay up to date on OEM communications to ensure you’re current on new inventory timelines, custom ordering options, and offers on rebates and incentives that you can provide to customers. But in these days of tight supply, don’t neglect those customers as potential sources of inventory as well.
To aid in that effort, AutoFi has developed a handy Inventory Service Conquest Template you can use to automate trade-in outreach with service customers, and update them on what your dealership has to offer. Just contact your AutoFi Dealer Success Manager and they’ll provide it for you.