How dealers can increase profits from their used car operations

Taking a more scientific approach to pricing used car stock

Dealers must use the data at their disposal to make sure they are matching the right used stock to their market region and must stop using Auto Trader adverts to price their cars, said Trader Media Group strategy director Tim Peake.

Peake said 40% of cars on Auto Trader were advertised at 10% below or 10% above the current market price and that 23,000 vehicles on Auto Trader had not had a price move in the past 100 days. Therefore, if dealers based their pricing strategy on looking at Auto Trader adverts, the result would be incorrect.

“Dealers must combine their experience with a more scientific approach using data to help them price cars correctly, targeted at the right buyers,” said Peake. “If you buy the right car and you price it correctly, it well sell quickly. If you’re looking at other cars on Auto Trader, you won’t know how long they have been in stock.

“Dealers need to optimise the price position of their stock using data to help the speed of sale.”

Peake said dealers must use information at their disposal to match the desirability of their used cars online to the consumer demand in their area. He believes this approach will help the speed of sale, increase stock turn and improve profits.

Data from Deltapoint’s i-Control (an Auto Trader-owned analytics company) shows 28% of vehicles in stock on the UK largest used car classified website are targeted at the wrong areas, with 100,000 vehicles that are more desirable in other areas.

i-Control uses a desirability rating of 1 to 5 and Peake said that when the desirability rating is high (4 or 5), the time it takes to sell goes from 62 days to 35 days.

Next page: Boost used car supply via fleet and dealer synergy