By Andy Frawley, CEO of V12
This article originally appeared on Adweek
Dealerships must innovate as shortage of new vehicles pushes up demand for used cars
It’s been a tough year for automotive brands. Although sales are on the rise, they are nowhere near where they should be due to the ongoing semiconductor chip shortage. As automakers struggle to meet consumer demand for inventory, the global auto industry could see a loss of over $100 billion this year.
With production at a standstill, there are fewer cars on the lot to sell. Constrained inventory means that automotive companies need to make up revenue in other ways.
Often overlooked, new movers are a critical marketing opportunity for automotive brands to drive new revenue.
Focus marketing efforts on the Service Department
The majority of a dealership’s profit comes from its service and parts department, which accounts for 49.6% of gross profits, according to online automotive resource Edmunds. An effective means to finding more service customers is by targeting new arrivals to the neighborhood.
According to Welcome Wagon, 57% of new homeowners own or lease two automobiles, and 54% will need auto repair services within the first six months of moving. As consumers move into a new area, they must find a different network of providers, and automotive repair and service are no exception.
Following a move, consumers are particularly open to offers, making it an ideal time to establish a relationship with this audience. Our Town America found that offers such as a free oil change rank among the top 10 best-performing new mover offers. Auto dealers and repair shops also rank among the top five most sought-after gift certificates included with new mover marketing programs.
Target movers for vehicle trade-ins
The shortage of new vehicles is driving demand for used cars, which means dealerships must find new trade-in sources. In this instance, a strategic mover marketing opportunity is to reach out to movers with communications that encourage trade-ins.
According to a Zillow survey, the average new mover is 90% more likely than a settled resident to purchase a car within the first six months of their move. Furthermore, over half (53%) of consumers who are in the market for a car are also looking to trade in their current vehicle. Because new movers may not have established relationships with dealerships in the area, the brands that reach them first with a compelling offer have a better opportunity to convert them into a sale and/or drive a trade-in.
Dealerships can use mover data and insights more effectively to bolster used car inventory. For example, suppose dealers can identify movers who are leaving a suburban setting and moving to an urban location where they’ll no longer need their own transportation. In that case, they can engage them with a message that encourages them to trade in their vehicle (“Trade in your car and furnish your entire new home!”), thereby increasing used car inventory.