Often times dealers and managers are baffled when a certain used car just can’t seem to find a retail buyer. In the "Life Cycle Management Section" of my workshop I go into great detail as to why some vehicles have not sold and the correct strategy to get them sold without loss of income and brain damage.
The easiest thing to get your head around should be the fact that there’s something about certain vehicles that just isn’t right. It wasn’t right on day one, now it’s day 70 and it’s still not right. There’s a whole list of items that are factors in it not being right. Four of the simplest are color, miles, equipment and most importantly, price point, which leads me into today’s discussion involving a recent email conversation.
A dealer had a 2011 Kia Sorrento with 25,000 miles on it ranked number 4 in the market on price and could not understand why it had not sold. According to the dealer it is a really nice vehicle, great color, etc. (Has 25,000 miles on it, hmmm.) All the data lined up really well including the positioning on Auto Trader.
For whatever reason the dealer actually raised the price on the vehicle to an even $20,000 around day 70. Which put him 4 of 20 in his immediate market. The dealer further stated that since he had raised the price he wanted to wait a bit longer before reducing it and moving it to the number 1 position.
I’m trying to rationalize the strategy of raising the price in the first place. I’m guessing the dealer felt that if the vehicle had not sold at a lower price that it would sell faster if he raised the price? Really?
Like many of you reading this I’m pretty strong on my opinions, especially on certain things. I have a really strong opinion on this one. Let me add as a disclaimer that I don’t really know all the details of this particular unit. I would really love to know if it was a trade or purchase, but given the facts on the surface here’s my take:
There isn’t much of a market for a 2011 used vehicle with 25,000 on it. Pure and simple, there just isn’t. As always the law of supply and demand comes into play. There may not be that many used 2011 Kia Sorrentos in the marketplace to compete against in terms of pricing, however, there are lots and lots of new 2011s, 2012s of many brands and makes, which really clouds the issue.
I just pulled up on Edmonds.com incentives for new 2011 Kia Sorrentos and it shows up to $1000 rebate and as low as 0.9 % APR. If I can pull that information up, the average consumer is doing it.
Clearly understand that any consumer with half a brain knows they can get better terms on a new car than a used. If they don’t know that piece of information the first sales person they run into is going to tell them.
It’s a given that over 80% of people who buy a used car shop the Internet, so what in the world would attract someone to buy this 25,000 mile, 2011 Kia Sorrento for $20,000? Nothing, absolutely nothing!
It’s doesn’t matter if your price rank on this vehicle is number 1 or number 10 they ain’t showing up. Price rank has nothing to do with this vehicle getting sold today. (Ok, the higher your rank the worse your odds do get.) If this vehicle was a trade in, it should have been aggressively priced on day one. If it was a purchased vehicle someone needs to re-examine their purchasing policy.
The only way this unit will get sold with its current pricing is if Lady Luck shows up. The reality is that this unit is going to get sold when the price is so attractive that someone can look past the miles and go, "WOW, I’m all in."
I have a bad habit of repeating myself. But this bears repeating. This unit will only get sold when one of two things happens:
1. Lady Luck shows up.
2. It’s priced so darn low that someone falls in love with the price.
Lady Luck or price. It’s your choice. That’s all I’m gonna say. Tommy Gibbs