Our customers hold the key.

The key to a treasure chest of profits if you help them get what they want first.

Our customers are sitting on the most valuable inventory available today. But unfortunately, we’re not considering that inventory seriously enough. I base that off the numbers I see in many “look to book” ratios month after month. Most of us would say inventory acquisition is our number one initiative and that we are going after it with a fierce resolve. Maybe that is the intention but not always what I see as reality.

I’ve been to countless meetings where the number of appraisals booked versus what’s seen is still at an industry low. I have also spoken to many leaders who say they are trying to get more strategic in the service lanes to acquire used inventory, but roadblocks keep them from doing it efficiently. The frustration is real and widespread.

In addition, we still seem scared to give substantial spiffs or commissions for our employees to actively find those used cars in their neighborhoods, from family and friends, and in random parking lots. It takes effort on their part after hours to do this and is worth every dollar we pay them, considering the current Manheim market index.

We all know direct-from-consumer campaigns are your winning edge if done effectively. However, we still seem hesitant to invest the proper amount of money in technology, marketing, or processes to be best in class. The most significant missing piece I see is in training and accountability that renders the well-intentioned initiative ineffective.

Morgan Stanley estimates 2021 new car production at 76.4 million and 2022 at 84.5 million. Both estimates are less than the years 2017/2018/2019. Add to that the vehicle scrap rate is growing every year, from 4.6% to 5.2% to 5.4% in 2020, and you have fewer registered vehicles in the market each year. That is not expected to change in the next few years. That’s more evidence that used inventory valuations will not go back to pre-pandemic levels anytime soon, and competing in the wholesale channel will become increasingly more challenging.

The message is clear. Direct-from-consumer acquisition will be an even bigger game-changer in 2022. Done effectively, it can set you apart from others as a best-in-class retailer and open up opportunities to grow by taking market share. However, it will require a strict commitment in time, money, human resources, and accountability.

Finally, training and paying your employees to buy vehicles the same way we train and pay them to sell vehicles is the paradigm shift needed to build a successful direct from consumer acquisition program. If done effectively, it will yield exponential dividends way beyond the cost.