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The strategy behind car trade ins

Car trade on lot

The physical auction is a classic and trusted inventory source for independent auto dealers, but it’s far from the only option available. Your customers—and the wider public—can also be a key way that a dealer adds inventory to a lot. Here’s why car trades will always be an inventory source worth pursuing, and how to make sure you aren’t missing out on the trade-in vehicles that your dealership needs.

Benefits to customer car trade-ins

Acquiring inventory directly from customers offers a few benefits other inventory sources might not. Let’s take a look at a few of them.

Lack of competition

An auto auction, whether it’s in-person or online, can involve hundreds of dealers. That means that for some vehicles in the lane, there can be a real battle to see who gets the highest bid. That’s great for sellers, who can get a better price for their vehicle. But for buyers, it can be a hassle—or it could price you out of a vehicle you really wanted or needed. Some vehicle owners may shop their potential trade-in vehicle around to a few different dealers, but the chances are pretty good you won’t have nearly as many competitors as you would at an auction.

Easier sale to close

Some sales are simple, but many factors can complicate the deal. The ability to trade in a vehicle as a part of an existing deal can make it easier to close. A customer might not have the cash on hand to make a significant down payment, but when the value of a trade-in car is added in, it can make a deal more affordable.


For your customer, it may be easier for them to simply trade in their old vehicle than it would be to locate a potential buyer and close a deal on their own. And for you, the dealer, inventory sourcing doesn’t get much easier than someone driving a vehicle onto your lot themselves.

Finding car trades and sales

There are a number of things that a dealership can do to attract more trade-in vehicles. Two of the most effective are to make sure your market knows you’re actively seeking trades, and to demonstrate to the market that your dealership is genuinely positive to work with.

Advertising and promotions

The chances are good that your dealership is already doing some version of marketing within the territory you serve. Whatever form that marketing takes, it’s a good idea to invest a portion of your attention in attracting trade-in vehicles. Online advertising can be a powerful tool, and while some (if not most) independent dealers are relying on Google Ads, your dealership could also benefit from video marketing like YouTube pre-roll, as well as lead generating ads on Facebook*. Traditional advertising is an option as well—anything from a billboard to the local newspaper could catch the eye of a person looking to trade up.

Leverage your reputation

Let’s consider some statistics gathered by Digital Air Strike* in their 9th Annual Automotive Customer Experience Trends Study:

  • 93% of vehicle buyers say they used online reviews to help choose a dealer
  • 60% of buyers make their dealership decision based solely on online reviews
  • 58% of buyers say that they were never asked by the dealership to provide a review
  • On the sales side, 81% of reviews were positive

Reviews matter, and if a customer had a good experience, whether it was buying or getting their vehicle serviced, they’re likely willing to share it—if they’re asked. This obviously has wider-reaching effects than simply attracting more car trade-ins, but a robust presence in reviews from forums to Google Business can obviously go a long way towards convincing a person looking to trade in a vehicle to come to you rather than your competition.

Why put trade-in cars on a floorplan?

As with any other non-auction purchase, lienholder payoff can become a sticking point for vehicle trade-ins. If a lender still holds the title to the trade-in car, that lender has to be compensated when it’s sold or traded. Some floorplan financing companies offer assistance to help smooth the process out, though. For example, at AFC we offer a Lienholder Payoff Service as a part of non-auction purchase funding, which verifies payoff, assists in remitting funds, and follows up on titles on the behalf of dealers**.

Find the right trade-in vehicle

Vehicle trade-ins can be a rich vein of inventory for any dealership, and when handled appropriately they can even make it a bit easier for your dealership to close a sale. Make it known within your territory that you’re seeking out trades. Make it easier for your customers to trade—and, with floorplan financing, make it easier to take trade-in vehicles. Your customers and your dealership alike could benefit!

Disclaimer: Descriptions of AFC floorplans are for illustrative purposes only. Terms of AFC floorplan financing are subject to a final written agreement acceptable with AFC. AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing.

AFC is not affiliated with any of the companies mentioned in this article.