By: Danielle Longenecker, Product Marketing Manager
“Why Every Dealer Should Track Competitors’ Prices” is a new, weekly blog series throughout the month of September that will highlight the many reasons why auto dealers should evaluate their local competition daily. To start off the series, we look at recent automotive industry trends causing price adjustments.
Reason #1: Fluctuating Trends
According to a recent study conducted by Borrell, the number of new vehicles sold in 2017 is expected to decline by 4% from last year, and continue a downward trend into 2018.
One attribute to this is what Borrell calls “Competition from ‘almost-new’ cars”. This is when a dealership has an influx of vehicles coming off of lease contracts with only a few thousand miles on them. Due to a near-record high in leasing contracts in 2013/2014, these contracts are now coming to an end. This gives buyers an opportunity to purchase top-quality vehicles with newer features at a lower price than a new vehicle. It’s a huge win for the buyer, but as a car dealers look at competitive local market pricing, be aware of factors causing the lower price. Don’t drop new vehicle prices to compete with an “almost-new” vehicle.
Additionally, there has been a drop in used car prices. Used car prices could decline by 6% in 2017 and by 3% to 5% in 2018, according to LMC Automotive, a marketing data and forecasting firm. With such a large supply of cars returning to these dealerships, prices of pre-owned cars are declining, and analysts at Morgan Stanley expect them to drop by 20 percent over the next four years.
Staying up to date on vehicle sales and pricing trends helps new and used car dealers to better prepare for the future and stay ahead of the competition. Price for profit, rather than pricing to win every (bad) deal.
Wherever the trends take the auto industry, keep in mind… the best price doesn’t always mean the lowest price. Know the market, understand the trends, and price accordingly.
Next week we’ll share a few more reasons to keep track of competitive pricing, and how your car dealership can stay ahead of the curve.
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