With the federal government set to finalize “Cash for Clunkers” rules within the next few days, is your store ready to win more new-car sales? To help you set the stage for these deals, Cars.com focused its July DealerADvantage Live webinar on the CARS voucher program. Ralph Ebersole, Cars.com’s manager of automotive consulting and dealer training, was joined in the discussion by: Cliff Banks, editorial director for Ward’s Dealer Group; and Joe Oliveri, director of dealer products at Cars.com. Key topics included how to connect with prospects and implement effective online advertising and internet sales processes.

The Car Allowance Rebate System

Also known as “Cash for Clunkers,” CARS is a voluntary program enacted by Congress to stimulate new-car sales and encourage Americans to drive more fuel-efficient vehicles. The National Highway Traffic and Safety Administration (NHTSA) will oversee implementation of the initiative, which gives consumers vouchers good for $3,500 or $4,500 toward the purchase of a new car. (The amount they receive depends on the fuel economy improvement between the vehicle being traded and its new-car replacement.) CARS, funded at $1 billion, is expected to generate 250,000 new-vehicle sales before it expires on Nov. 1.

The Demand for CARS

Dealers must register with NHTSA to participate in CARS, a step Ebersole recommended they take as soon as possible to capitalize on consumer interest. Current pent-up demand for new cars is estimated at 4 to 5 million vehicles[1], he said, and the CARS.gov website reported 400,000 visits in the first week after Cash for Clunkers was signed into law. Similar programs in Europe increased June new-car sales by 7.1 percent in France and 40 percent in Germany[2], suggesting American dealers can expect a boost in their business.

“It’s bringing into the market a lot of people that wouldn’t have been there,” Ebersole said.

Resist the temptation to assume that consumers interested in CARS have credit problems, the panelists said. While some people may need special financing, many customers will qualify for traditional loans. If you’re concerned about losing deals because of subprime borrowers, Banks suggested meeting with your lenders to see if you can negotiate special arrangements for Cash for Clunkers buyers.

Where to Look for Clunkers

Rather than wait for customers with clunkers to come to you, Ebersole recommended reaching out to them to gauge their interest in a new vehicle. He suggested getting the word out through your online marketing that you’re a Cash for Clunkers dealer and mining your body shop, service department and CRM system for prospects.

“Every dealership,” he said, “has a bank of service customers that have these types of vehicles that we can contact and bring into market.”

To identify other potential buyers, Ebersole advised dealers to comb private-party ads on automotive shopping sites and in their local newspaper’s classified section. Owners of vehicles selling for $4,500 or less may be interested in receiving a CARS voucher they can apply toward a new-car purchase.

Marketing Matters

With 92 percent of Americans using the internet as part of their shopping process when buying a car[3], Oliveri said dealers should leverage their online initiatives to drive incremental Cash for Clunkers sales. Among the channels he advised dealers to explore were:

  • Third-party leads. To jumpstart your new-car sales effort, work with your provider to acquire more leads. Tactics to consider include buying leads for: popular, high mpg cars; nearby areas served by competitors who did not register for CARS; and communities outside your typical purchase radius. This approach helps you to move vehicles you have in good supply and quickly begin cashing in on the clunkers campaign.
  • Display advertising. If your dealership uses banner or new-car specials advertising, Oliveri suggested incorporating Cash for Clunkers language into the placements and featuring your high mpg vehicles. These call-outs provide a strong call to action and encourage shoppers to contact you about their clunker and the replacement car they’re considering.
  • Third-party sites. The sell copy in your automotive shopping site listings should alert shoppers to your status as a registered CARS dealer. Because many car buyers cross shop between new and used, include this message with your full inventory.
  • Manufacturer websites. Most automakers already have updated their sites to include details about the CARS program. These pages outline which of their vehicles qualify for the vouchers and include available manufacturer incentives. Lead forms allow in-market shoppers to submit their name and contact information.
  • Search. To direct shoppers interested in CARS to your website, optimize your site with search engine friendly pages that provide clunkers-related content (e.g., a dealership blog of lead form). Also look at purchasing relevant keywords to support a search engine marketing campaign.
  • Dealer websites. When shoppers have questions about the CARS program, they may turn to your store’s site for answers. Including a Cash for Clunkers link on your homepage allows you to direct them to a landing page complete with program information and a lead form.

“Get the word out about your vehicles in as many avenues as possible,” Oliveri said. “There’s a lot of opportunity.”

Process Matters

As an automotive retail professional, you’ll be called upon by car buyers to offer guidance on the Cash for Clunkers program. To help you earn their confidence – and their business – put in place processes that allow you to deliver accurate information and the required assistance. Among the tips the panelists shared:

  • Train your team. Look beyond the floor and internet sales teams to identify all of the people at your store who should be fluent in the CARS program. Ebersole and Banks recommended including your receptionist, as well as your service, parts and body shop employees, in your training program. These people interact with your customers and may be their first point of contact. They similarly may also be able to refer prospects your sales staff.

“I would predict that the dealers who are successful with this program are going to be the ones that have created an environment throughout the entire story where every employee is familiar with this program and is able to answer questions about it,” Banks said. “The point is, you don’t want to turn customers away, and you want to be known as the Cash for Clunkers expert in your market.”

He continued: “It’s very likely your competitors down the street may not be participating. I’d take an aggressive stance on this. This is a great opportunity to steal some market share from them.”

  • Work with shoppers. Regardless of how car buyers contact you, you should be prepared to promote the CARS program and offer reasons to purchase from you. Ebersole said you should tailor your processes while communicating with shoppers:
    • On the phone. Write word tracks to help you introduce CARS, discuss the customer’s trade and offer advice on new-car options.
    • In email. Create CARS-specific templates that outline the clunkers program and ask prospects to provide information about the vehicle they plan to trade.
    • With chat. Let shoppers know you’re a CARS dealer and offer to answer any questions they may have. Direct them to the NHTSA site or online resources your store has developed to provide additional detail.
    • At the store. Introduce CARS and offer to demonstrate new-car options based on the customer’s trade.

Even if your store opts against participating in CARS or is an independent dealership that can’t participate, Ebersole and Banks advised against ignoring it. As a primary point of contact with consumers, you can still capitalize on customer inquiries to win business. If the prospect’s current vehicle doesn’t qualify for a voucher, for example, you can suggest a new-, used- or certified-used-car option from your inventory.

“You don’t want to be the one saying no,” Banks said.

Leverage Other Incentives

To sweeten the deal for car buyers, be sure to let them know about other dollars that can lower their purchase price. Ebersole cited rebates and special financing options from the manufacturer, dealership promotions and federal income tax deductions for sales tax paid on new-car purchases.

Act Quickly

Although CARS was enacted with an anticipated closing date of Nov. 1, Ebersole and the panelists advised dealers to begin developing and implementing their plan of action as soon as possible. Waiting to see how current interest in the program translates into actual sales will cost you deals in the short term and could give your competitors an unbeatable lead over Cash for Clunkers’ run.

“Get on board,” Banks said. “It’s a great marketing opportunity and a phenomenal way to get traffic into your store. It’s the hottest topic right now.”

[1] DailyFinance.com, May 2009

[2] Forbes.com, July 2009

[3] Capgemini Cars Online 08/09