Dealerships could be leaving revenue on the table by mispricing as much as of three-fifths of their stock.
According to digitalisation specialist Real Time Communications (RTC), in collaboration with Auto Trader, the average retailer misprices approximately 60% of their vehicle stock, compared against national figures.
This stock tended to be under-priced by £300-£350 per vehicle. For a retailer with 120 under-priced vehicles, this equates to £39,000 of lost revenue.
RTC’s Director of Insights, John Law, said: “The proportion of mispriced vehicles initially seems very high, but what’s also true is that navigating real-time price changes is harder than ever. With well-documented new car supply issues driving huge demand for used vehicles, the market is fluctuating almost hour by hour, and conventional methods simply can’t keep up.
“These kinds of fluctuations should continue well into 2022 before new cars start to come back into the market at pre-pandemic levels. In this environment, retailers are looking for new ways to price their stock smartly and maximise their profit margins.
“We believe that the correct tools will be crucial to solving this issue. In particular, deploying the right digital solutions can enable a data-led and flexible approach to pricing, ensuring potential revenue isn’t missed.”
RTC’s insights team also interviewed retailers on why stock pricing was so difficult to get right. The main reason they cited was time pressure: with the speed at which the market changes, they found it impossible to check all their stock and make adjustments before the prices once again became out of date.
Auto Trader’s Client Development Director, Paul Keatley, said: “While a retailer’s experience will always be invaluable, we consistently see that the very best performing businesses are those that complement their expertise with data. Today we’re recording significant changes to price, supply and demand on an almost daily basis, so it’s never been more important to use the most up-to-date insights to inform your pricing and forecourt strategy.”