Keeping An Eye Out for Opportunity and Showing Compassion

If you haven’t read former dealer Todd Caputo’s post on how the confluence of Hurricane Helene, the longshoreman strike (which, thankfully has been tentatively resolved), the escalating conflict in the Middle East and the upcoming presidential election may affect the car business, I’d encourage you to do so.

Caputo offers a thoughtful, prescriptive take on how the combination of these headline-making events may shape consumer interest in purchasing vehicles and how dealers might move forward. The piece underscores why I have long considered Caputo one of the most savvy and smart operators I’ve met in all my years in the car business.

Here, I thought I’d take a moment to drill a bit deeper into a couple points Caputo makes in his piece:

Exercise caution at auction. Caputo rightly says that the extensive loss of vehicles due to Hurricane Helene will further tighten the supply of vehicles in the wholesale market and spur inflated prices at auctions. As Caputo notes, the best way to avoid the risk is to do everything you can to acquire the inventory you need in non-auction channels. That means now’s the time to put an even greater emphasis on making sure you aren’t losing trade-in or other customer vehicle acquisition opportunities due to a sub-optimal experience for the customer or a less-than-fair offer.

Expect higher demand for lower-cost used vehicles. Cox Automotive data shows that the mix of inventory dealers carry has shifted a bit to older, higher-mileage vehicles. The average age of vehicles in dealer inventories is approaching six years, and the share of 10-year-old-and-older vehicles is up to 16 percent. The shift owes to dealers’ need to retail vehicles today’s budget-minded buyers can afford. In the weeks and months ahead, however, demand for these vehicles is likely to increase, putting pressure on your ability to buy them as cost effectively as you have in the past. The key here is knowing that when you must step up to acquire the unit for retail, you treat it with the understanding that you stepped up, which means you’ll likely see less ROI than you’d prefer when you retail it.

Mind the live market data. Caputo advises that dealers should be conservative with large expenditures as the remainder of the year unfolds. But, he also notes that, despite the uncertainty and volatility in the market, it might still present an opportunity. He’s right. I’d also add that such opportunities will arrive and pass unnoticed for dealers who aren’t paying attention to consumer interest in their vehicles and shifts in the Market Days Supply and Price to Market positions of individual vehicles and their inventories.

Caputo closes his piece with a profound bit of advice and wisdom that’s worth repeating here:

“Keep in mind that many customers affected by Hurricane Helene have lost everything. These are people who aren’t coming to your dealership because they want to, but because they have to. As dealers, it’s our responsibility to treat these individuals with care and compassion, helping them navigate one of the most challenging times of their lives. Let’s ensure we’re providing the best possible service, not just making a sale.”