A look at the raw sales numbers for the first half of the year might be enough to discourage almost anyone in the business of selling cars and trucks, but there are signs things are changing for the better and that means opportunity. That opportunity is knocking on the used car side of the business, but it will only pay off if managed correctly.

In a typical year, U.S. consumers buy about 17 million new vehicles and around 20 million used vehicles from dealerships. But, we’re on a roller coaster ride that has taken us from steep sales declines early in the pandemic to soaring levels of used car sales at the start of summer. One Cox Automotive analyst forecasts 14 million vehicles sold in the U.S. in 2020, down from 17 million in 2019. Sales in the second half of 2020 were significantly higher than the first, though no one expects sales to get back to normal anytime soon.

We know that used vehicles commanded higher prices early this summer. One of the reasons consumers are finding sparse choices at new vehicle lots is because automakers laid on generous incentives in April, sparking a temporary spike in sales, leaving little inventory and limiting options.

When you run low on new cars, the focus turns to used cars. Late model used vehicles — especially popular pickup trucks, SUVs and crossovers — are in high demand, but in short supply, driving up wholesale prices. Right now, wholesale prices are approaching retail prices.

What’s important now is for dealers to move into the next few months very carefully in the face of rapidly changing market conditions. That starts with smart inventory management.

Right-size inventory

Here are some ways to help manage inventory effectively:

• Use discipline when purchasing vehicles to avoid being stuck with a significant supply of aging inventory when the market slows
• Consider strategies, to help promote the sale of the vehicle in the first 30 days to address aging before it occurs, such as shaving time off the vehicle reconditioning process
• Keep a close eye on market trends to make sure inventory levels are in line with where the market is headed as opposed to where it has been

Look beyond auctions

Looking beyond auctions for inventory is a smart way to help maximize resources.

• Perfect your ability to buy off the streets, from the service lane and from trades
• Consider keeping and retail selling some of the older, higher mileage units that you previously wholesaled for great low price-tag options