In the midst of the covid crisis there are some significant trends that are going to change automotive retail for ever, one such area is used car inventory sourcing.
Here are some quick highlights from the 3rd quarter result from Carvana.
- Total gross profit per unit (GPU) was $4,056, an increase of $1,093
- In Q3, for the first time in Carvana history, they bought more cars from their customers than what they sold.
- In Q3, Carvana sourced 56% of their retail units sold from customers, up from 31% a year ago
- In Q3, Carvana opened its 10th inspection and reconditioning center.
What does the Carvana playbook teach the dealers?
We have analyzed thousands of digital transactions and find that dealers are not giving importance to a critical piece that comes in as part of the digital retailing process. The sales associates are trained to follow the traditional philosophy of “bird in the hand is worth more than two in the bush”. Landing the customer on a vehicle is important than negotiating the trade-in and getting it added to the deal. Most sales people balk at the notion of losing the sale rather than getting the trade from the customer.
Traditionally the trade-in’s go through an inspection process and the used car manager need to whet it before it can be considered into the deal. With more customers opting to do the process remotely this scenario is getting a complete make over. Customers are accepting a remote inspection and accepting trade offers if they believe they are being treated fairly.
One of the areas where digital retailing is making a difference is the increased transparency in the trade-in process.
At Tagrail, we integrate with multiple trade in providers and provide the following functionalities during the Trade-in process
- VIN based search or model based search of trade vehicle.
- Upload multiple pictures of the vehicles from a desktop or mobile interface.
- Give comments on specific areas that need attention.
- A real time market valuation of the trade-in based on different factors.
- A detailed report to the customer on how the valuation was reached.
A savvy used car manager can send customer campaigns to source these vehicles even if the customer drops out of the funnel. It is important that dealers look at Trade-ins as important opportunities in the process given the current situation of limited supply and there by sourcing more of their vehicles the Carvana way.