Adapting to 2021 Inventory Challenges

December 11, 2020 John Kehm

While aggressive OEM incentives largely offset COVID-19’s impact on vehicle sales, the impact on automotive production and dealership’s inventories hasn’t seen the same relief. In a recent report, IHS Markit forecasted current vehicle inventory shortages to continue through the second quarter of 2021 before starting to more closely align with demand. 

This comes at the same time IHS Markit reports more than 50% of OEMs and dealerships expect an increase in new car sales for private use, creating a challenging environment for dealerships and customers alike. 

In a recent industry survey, nearly 60% of dealers cited limited inventory as a factor holding back business. Proactive dealerships are turning these low dealership inventory concerns into new opportunities by reinventing the way they approach maintaining a profitable and plentiful inventory. 

In this blog post, we explore three ways creative dealerships can adapt to 2021 inventory challenges, including:

  • Making the most of their pre-owned inventory 
  • Leveraging data to personalize offers and buying experiences 
  • Taking a proactive approach to acquiring profitable trade-ins

Maximizing Used Vehicle Inventory 

With wholesale pre-owned prices performing consistently strong on a year-over-year basis, many dealers are sending more cars to auction now than they ever had in the past. However, with wholesale sales slowing since August and new vehicle inventory deliveries still depreciated, some dealers are keeping and retailing vehicles they would normally auction to supplement their available inventory, such as 2015 models and beyond with low mileage.

With retail typically generating less overhead than auction, this approach poses a valuable opportunity for dealers with access to the right insights. Before sending older models to auction, consider holding on to in-demand trade-in makes, models and trim packages. Analyze factors such as the vehicle’s maintenance history report to better predict reconditioning costs and how quickly similar vehicles have sold in the past to help determine your next steps. 

When acquiring trade-ins to supplement inventory, dealers need to ensure these vehicles aren’t spending too many days on the lot. Fierce competition to capture used vehicle buyers, coupled with the fact that pre-owned conquest sales are typically heavily product driven, means dealers need to take a data-driven approach to proactively identify and engage prospective buyers before they begin their buying journey – especially those who are likely to be interested in vehicles currently in available inventory.   

Leverage Data-Driven Offers & Experiences 

A lasting and impactful change ushered in by the pandemic was the rapid adoption of digital retailing as an increasing number of customers began shopping online. The phrase “a new normal” has popped up all over, and despite the cheesiness of the wording, the sentiment is true – the pandemic has resulted in lasting changes on nearly every aspect of our lives, including our buying behaviors.  

As a result, online car shopping went from a nice option for some customers to a necessity in just a few months. Research from IHS Markit finds 65% of dealers now expect accelerated development of online vehicle sales and booking platforms. In that same study, IHS Markit found 62% of buyers who purchased during the peak of the pandemic now expect simplified processes at the dealership – and 46% expect to be able to complete their entire transaction online.

To deliver the buying experience today’s buyers want, proactive dealerships must adopt a robust digital retailing strategy that reflects the processes of successful in-person strategies. This strategy has become increasingly valuable – especially for dealers experiencing vehicle inventory challenges, as it allows dealers to increase the relevancy of their messaging and offers. 

By offering buyers convenient online options such as pre-approvals for financing or trade-in valuation tools, dealers can personalize their omnichannel sales experience from the very first customer touchpoint while collecting critical customer information that helps map prospects to available vehicles in their inventory – regardless if that’s new or used. 

Acquire the Best Trade-Ins 

Not only can predictive marketing tools be leveraged to identify the best pre-owned vehicle prospects, but this data is also critical to dealers in the development of a healthy used car inventory when acquiring vehicles through trade.

By utilizing behavior prediction technology that integrates with a dealership’s CRM, DMS and inventory data, dealerships can automatically identify owners of in-demand vehicles and prioritize contacting prospects with highly profitable trade-ins. This allows dealers to largely automate the process of identifying in-demand makes, models and trim packages to make your car dealership inventory more profitable, while subsequently improving the entire buying experience. 

This entire process starts with the initial customer touchpoint, and for this approach to be effective, fixed ops and variable sales teams need to work together. To ensure each department is working toward their collective goal and to improve customer hand-off, many dealers are unifying their new and used sales teams on a single sales platform to improve visibility, coordination and dealership inventory management.


Want to learn more about how Mastermind can help you maximize your dealership’s available inventory through data-driven sales and acquisitions? Contact us for a free demo


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