As light begins to appear at the end of the tunnel, we are starting to see and hear dealers planning to open their doors and prepare for life post lockdown. There’s still a long way to go, but people seem to be shifting from reactive to more proactive mindsets.
It goes without saying that at CarGurus, our biggest focus over the past couple of months has been to provide empathy and support during these difficult times. This includes the price reduction of our Listings packages by 50% in April, May, and June and the launch of our Driving Difference resources. However, what we’ve heard in recent weeks from our partners are questions such as, “What can CarGurus do to help us come out of lockdown positively?”
A post-lockdown pricing strategy is crucial
One of the main challenges dealers are struggling with is how they should price their vehicles post lockdown. While some suggest that dealers drop their prices, others say they should hold their pricing and make the most of the expected increase in demand. There are many factors out of our control that may affect pricing, such as ‘days on market’, yet the general consensus from dealers is that stock turn should start as soon as the lockdown is lifted.
Data from Cazana highlights that there has actually been a small uplift in values for sub-£10k vehicles, around 3.1%. These changes, despite being small, show that demand for these types of vehicles has increased likely due to people avoiding public transport. Pricing will be important here to avoid faster stock-turn whilst the supplying of vehicles remains a challenge. You can read more information regarding these statistics in this AM Online article.
Still, there is likely a mismatch between public perception (this crisis will require prices to be dropped) and the data we are seeing (supply shortage but a steady demand/interest). We know from our UK COVID-19 Sentiment Study that nearly two-thirds of consumers planning to buy this year cited their purchase as a necessity. And while 87% of respondents expect to purchase later than they initially planned, those needs aren’t going away.
Understanding CarGurus Instant Market Value (IMV)
CarGurus Instant Market Value (IMV) will be crucial in helping dealers determine competitive pricing for their vehicles. It estimates the fair retail price for a vehicle based on a detailed analysis of comparable listings in a local market. It’s computed and updated daily using a complex algorithm based on thousands of data points, including make, model, year, trim, engine, mileage, history, location, and more. IMV is factored into all deal ratings, which make it easy for consumers to find great deals from top-rated dealers.
Additionally, IMV allows dealers to price their vehicles to maximise exposure and optimise profits while keeping the search relevant to the consumers’ needs. That’s because we sort listings by Great Deal first, which doesn’t necessarily mean the cheapest vehicle first. The third-party validation that CarGurus deal ratings provide enables dealers to price their vehicles to the current market and makes it easy for buyers to find great deals from top-rated dealers.
Putting your pricing strategy into action
There are many traditional tools out there to aid dealership pricing, but there are also third-party tools, such as CarGurus Pricing Tool, which dealers can use to validate and support their pricing strategies.
Use the CarGurus Pricing Tool to find the pricing sweet spot for your stock. The tool shows exactly what it would take to make a listing a Great, Good, or Fair Deal, and makes it easy to find opportunities to increase prices without knocking a vehicle down to a lower deal rating. We’ve even made recent updates to the Pricing Tool to support dealers further. All dealers with Dashboard access can use the tool to easily sort, find, and edit their vehicles. Watch the video below for more information:
Building trust using Deal Rating Badges
Dealers can also use third-party validation to increase trust and transparency on their own website using our Deal Rating Badges. Deal Rating Badges are FREE to all dealers with stock on CarGurus and are configurable to fit your website’s look and feel. This type of third-party validation will enhance trust with consumers while confirming to the customer that they are getting a great deal. Head to the Deal Rating Badges tab on your dashboard for further information.
CarGurus is here to help. Reach out to your dedicated account manager or point of contact at CarGurus so we can assist you during these challenging times, or call this number: 0808 169 2483.