A race to the bottom?
Some dealers have expressed their concerns to AM that the new price labels will create a “race to the bottom”, with competitors looking to undercut each other and erode already thin used car margins.
Neil Smith, operations director at Imperial Car Supermarket, uses CarGurus and Auto Trader to upload used car stock. He said some price pressure as a result of greater transparency was inevitable.
However, he added: “If you’re pricing your stock at a good or fair level, there is still room for margin. If your pricing is fair or good, it doesn’t necessarily mean it will be the cheapest.
“Our pricing team will look at what the market is doing and there is competition to get on that first page and get to the top of results.”
Matt Thorpe, a consultant at independent internet marketing and e-commerce consultant Grasshopper, said aiming to provide the cheapest price online was not a sustainable strategy.
Thorpe said: “Due to the sheer volume of choice online, customers are now becoming less price-sensitive and more focused on areas like customer service, speed of delivery, quality of information, ease of communication, website usability and most importantly, how confident they feel.
He advised dealers to differentiate themselves if they are to succeed in the online marketplace in the long term.
“Price may be key at the lower end of the market but, at the middle or upper end, it it’s all about service and convenience,” said Thorpe.
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