Solving the Used Car Shortage: Proven Ways Dealers Can Source More Trade-Ins

If there’s one word that defines the automotive market for dealers, it’s “shortage.” Used car inventory remains scarce, wholesale prices are unpredictable, and dealers are feeling the pinch, both in sales volume and gross profit. Even as new car availability slowly improves, the need for quality used vehicles remains at an all-time high.

According to Cox Automotive’s 2024 Used Car Market Insights, the total supply of used vehicles at U.S. franchised and independent dealerships remains well below pre-pandemic levels, with inventory constrained by high demand and limited wholesale availability. The Manheim Used Vehicle Value Index shows that wholesale prices have remained elevated compared to historical norms, putting additional cost pressure on dealers sourcing inventory at auction.

Dealership financial profiles from NADA confirm that gross profit per used vehicle is consistently higher for units acquired via customer trade-ins compared to those purchased at auction. This margin advantage is a major reason why dealers are focusing more effort on sourcing trade-ins directly from their own digital channels. Industry surveys, including NADA’s 2023 Dealership Workforce Study, also report dealer frustrations with rising auction fees, transportation costs, and the increased time and expense needed to recondition auction purchases to retail standards.

So what’s the solution?

The answer lies in your own backyard: sourcing more trade-ins directly from your customers.

Dealerships that master the art of generating, converting, and closing trade-in leads are controlling their own destiny, even in the toughest market conditions. Trade-ins are typically higher margin, lower risk, and bring in customers who are motivated to upgrade and buy. Instead of fighting other dealers for auction leftovers, you can build your used inventory pipeline with vehicles sourced directly from your website and showroom floor.

The key to winning more trade-ins isn’t passive waiting or expensive advertising blitzes. Today’s most successful dealers use digital tools and proven workflows to turn every website visitor into a trade-in opportunity—often before the customer ever sets foot in the store.

In this guide, you’ll discover:

• The real impact of the used car shortage and why trade-ins are your best answer
• Proven, step-by-step strategies to generate more high-quality trade-in leads
• Digital best practices, from online appraisal tools to CRM re-engagement
• Real dealer case studies and results you can trust

If you’re ready to take control of your inventory and maximize every trade-in opportunity, read on.

Understanding the Inventory Crisis

The used car shortage is affecting dealerships across North America. As new car supply chain issues linger and consumer demand stays high, dealers have found themselves scrambling to keep lots full and customers satisfied.

Industry Data: A Persistent Shortage

• According to Cox Automotive, the average days’ supply of used vehicles at franchised dealerships in early 2024 remains 20–30% lower than historical norms.
• NADA reports that many dealers are stocking far fewer used cars than before 2020, leading to lost sales opportunities and reduced F&I profits.
• Wholesale prices at auction have soared, with competition from national retailers and digital wholesalers driving up costs and cutting into dealer margins.

Why Auctions Aren’t the Answer

Many dealers have responded by relying more heavily on auctions and wholesale channels, but this comes with significant downsides:

• Higher acquisition costs: With added transportation, auction fees, and reconditioning, some dealers report spending $1,500–$2,500 more per unit than just a few years ago.
• Quality and fit: Auction vehicles may not match your local market’s needs and often require more time and money to get frontline-ready.
• Zero customer loyalty: Sourcing from auction does nothing to build your service drive or create future sales opportunities.

Dealer Reality: Every Car Counts

Dealership leaders across the country agree:
“We simply can’t rely on auction lanes and hope for the best. To survive, and thrive, we have to control our own inventory sourcing.”

This is why so many forward-thinking stores are turning to their own customer base, website, and digital channels to build a self-sustaining pipeline of high-quality used vehicles through trade-ins and buy-backs.

Dealers that develop their own direct trade-in sourcing strategies will consistently outperform those who remain dependent on auctions and third-party sources.

Why Trade-Ins Are the Best Inventory

With the cost and uncertainty of wholesale sourcing on the rise, trade-ins have become the gold standard for dealership used inventory. Dealers who prioritize capturing trade-ins gain a clear edge in both profitability and customer loyalty.

1. Higher Gross Profit and Lower Acquisition Cost

Trade-in vehicles are typically acquired well below auction prices.

• There are no auction fees, fewer transportation costs, and much less reconditioning required, since many trade-ins come from existing customers who have serviced their vehicles at your dealership.
• According to NADA, gross profit per used unit is consistently highest for vehicles acquired via trade-in compared to those purchased at auction.

2. Built-In Customer Relationship

Every trade-in comes with a motivated buyer who’s ready to replace their old vehicle.

• These customers are often easier to close, more likely to finance with your dealership, and more likely to use your service department after the sale.
• Trade-in customers are significantly more likely to become repeat buyers, helping build long-term dealership success (Cox Automotive).

3. Lower Risk, Faster Turn

Because you’re able to inspect, appraise, and recondition trade-ins yourself, you control the process from start to finish.

• There’s less risk of undisclosed problems, title issues, or “surprises” after the sale.
• Trade-ins typically turn faster than auction purchases, helping you keep inventory fresh and minimize holding costs.

4. Real Dealer Results

Dealerships like Heritage Cadillac have proven this in practice, consistently ranking trade-in leads among their top sources of inventory and gross profit.

• By building their own pipeline of trade-ins, they close more sales, reduce costs, and strengthen customer loyalty.

Trade-ins are your best source of retail-ready used inventory, delivering higher profit, lower risk, and a direct connection to your next sale.

Digital-First Sourcing: Turning Website Visitors into Trade-Ins

Today’s car shoppers start their journey online, and the most successful dealerships meet them there, using digital tools to turn passive website visitors into real trade-in opportunities. If you’re not capturing trade-in leads from your website, you’re leaving high-margin inventory (and sales) on the table.

Why Digital Trade-In Tools Work

• Meet Customers Where They Are: More than 80% of buyers begin the process online (Cox Automotive car buyer study). Shoppers want instant answers about their car’s value, not just generic forms or calls.
• Highest-Intent Leads: Website visitors who use a “Value Your Trade” tool are usually motivated, local, and ready to take the next step. They’re further down the funnel and much more likely to convert.
• Always On: Digital trade-in tools collect leads 24/7—capturing opportunities even when your dealership is closed.

Best Practices for Maximizing Website Trade-In Leads

1. Prominent Placement:
   Feature your trade-in appraisal tool in key spots: homepage, vehicle detail pages (VDPs), finance landing pages, and chat pop-ups.
2. Clear Calls to Action:
   Use language that emphasizes speed, accuracy, and no obligation (“Get Your Instant Trade Value,” “Find Out What Your Car Is Worth Today”).
3. Mobile-First Design:
   Ensure your tool is fast, simple, and easy to use on any device—since the majority of shoppers are browsing on smartphones.
4. Trust-Building:
   Add dealership branding, privacy statements, and reviews or awards near the tool to build credibility.

Dealer Case Study: Heritage Cadillac

By focusing on digital-first trade-in lead capture and rapid follow-up, Heritage Cadillac consistently ranks their website trade-in tool as a top source of both inventory and gross profit. Their team routinely closes 12% of trade-in leads and adds 10–12 extra vehicles each month sourced directly from their online appraisal tool.

A modern, digital trade-in tool is your dealership’s best pipeline for used inventory—delivering qualified leads, higher gross, and a competitive edge in today’s market.

How to Maximize Trade-In Appraisal Form Conversion

Getting website visitors to start a trade-in appraisal is just the first step—the real win comes from getting them to complete and submit the form. The highest-performing dealerships use proven tactics to increase conversion rates and capture more high-quality leads.

1. Keep Forms Simple and Short

• Ask Only for Essentials: Limit required fields to key vehicle details (year, make, model, mileage), basic contact info, and photos (optional).
  • Dealers have seen completion rates jump by up to 30% when cutting down unnecessary questions.
• Mobile-Optimized: Make sure the entire process works seamlessly on smartphones and tablets, with large buttons and autofill features.

2. Build Trust and Set Clear Expectations

• Privacy Assurances: Clearly state how customer data will be used (“We never sell your info. Your privacy is our priority.”)
• Dealership Branding: Use your logo, colors, and customer testimonials or Google review ratings near the form to build credibility.
• Progress Indicators: If multi-step, show shoppers where they are in the process (e.g., “Step 1 of 2”).

3. Use Strong, Relevant CTAs

• Phrases like “Get Your Trade Value Now,” “See What Your Car Is Worth,” or “Unlock Your Instant Offer” drive more engagement than generic “Submit” buttons.
• Position your CTA button above the fold, so it’s always visible.

4. Add Trust-Building Elements

• Show Badges or Awards: “Voted #1 Dealer in Town” or “Over 1,000 5-Star Reviews”
• Explain the Process: A quick note (“We’ll send your estimated value instantly, then our team will reach out to answer any questions”) increases confidence and form completions.

Real Dealer Success: TradePending Tool

Dealers using TradePending’s digital trade-in tool report higher conversion rates due to the form’s simplicity, transparency, and strong mobile experience.

• Heritage Cadillac credits their form design for capturing more leads and producing some of their most profitable sales each month.

A simple, trustworthy, and mobile-first appraisal form is your secret weapon for turning more website visitors into valuable trade-in leads.

Fast, Transparent Follow-Up that Wins the Car

Capturing the trade-in lead is just the beginning. The dealerships that consistently win the car (and the sale) are those who follow up immediately, with transparency and a personal touch. In today’s market, speed and authenticity are your biggest differentiators.

Why Speed Matters

• Shoppers submitting a trade-in form are often doing so at multiple stores. The dealer who responds first, especially with a real offer, stands the best chance of getting the car.
• According to Harvard Business Review, responding within five minutes can make you up to 21 times more likely to convert that lead into an appointment.

Transparency Builds Trust

• Provide a realistic value range up front, and explain how the estimate was calculated.
• Share what the next steps look like (“Bring your car in for a quick inspection and final offer, no obligation!”).
• Let customers know who they’ll meet and how easy the process is.

The Power of Personalized Video

• Many leading dealers use quick, personalized video replies to thank the customer, walk around their submitted vehicle, and explain the process. This approach increases appointment rates and makes your store stand out in a crowded inbox.
• Longo Toyota of Prosper credits personalized video for helping their team close more trade-in opportunities, with more buyers responding and showing up ready to do business.
  Read the case study

Actionable Steps for Dealers

1. Follow Up Within Minutes: Speed shows professionalism and sets you apart.
2. Be Clear and Transparent: Don’t overpromise—be honest about the valuation process and what affects the final offer.
3. Personalize Your Response: Use the customer’s name, mention their car, and if possible, include a short video.
4. Make It Easy: Provide appointment links, directions, and contact info.

Fast, transparent, and personalized follow-up isn’t just best practice, it’s what wins trade-ins and builds lasting relationships with today’s car shoppers.

Mining Your CRM: Reviving Old Appraisals and Cold Leads

Your dealership’s CRM is far more valuable than a simple log of lost opportunities. With the right tools and workflows, dealers are turning these “dead” leads into fresh inventory and new sales.

Why Old Trade Leads Are So Valuable

• Many past customers didn’t buy simply because the timing wasn’t right, not because they weren’t serious.
• Market conditions, inventory needs, and customer motivations change, making a once-cold lead suddenly hot.
• These are local vehicle owners who already know your dealership and have shown interest in trading in.

Digital Re-Engagement Best Practices

1. Automated Alerts:
   Tools like TradePending’s Hot Lead Reports notify your team the moment a previous lead revisits their trade valuation or re-engages with your site.
2. Personalized Follow-Up:
   Send a quick, friendly video or email referencing their previous appraisal. Acknowledge the time that’s passed and ask if their needs have changed.
3. Updated Offers:
   If market conditions have improved (e.g., used car values are higher), let them know their vehicle might be worth more now.
4. Easy Call to Action:
   Include a direct link to update their appraisal or schedule a visit—making it frictionless to reconnect.

Real Dealer Tactics

• Successful dealers run monthly campaigns to all unsold appraisal leads, using email and text plus Hot Leads alerts to reach out when customers are most engaged.
• Service departments also re-engage past customers when vehicles come in for maintenance, offering updated valuations and making the trade conversation easy.

Your CRM is a living inventory pipeline. With modern tools and consistent follow-up, you can revive old trade-in leads and turn yesterday’s “maybe” into today’s sale.

Measuring Your Sourcing Success

To ensure your trade-in sourcing strategy is delivering real results, you need to track the right metrics. Measuring performance allows you to refine your process, justify your investments, and show your team the impact of focusing on trade-in leads over auction sourcing.

Key Performance Indicators (KPIs) for Trade-In Sourcing

1. Trade-In Lead Volume

• Track how many unique trade-in leads your digital tools and campaigns generate each month.
• Benchmark: Dealers using digital-first trade-in tools often see a significant lift in lead volume versus traditional forms.

2. Lead-to-Appointment Rate

• What percentage of trade-in leads actually schedule an in-store appraisal or sales appointment?
• Faster, more transparent follow-up directly boosts this rate.

3. Lead-to-Sale Conversion Rate

• How many trade-in leads result in a completed sale?
• Example: Heritage Cadillac routinely closes 12% of trade-in leads, outperforming standard internet lead sources.

4. Average Gross Per Trade-In Unit

• Compare gross profit on trade-in units vs. auction purchases—trade-ins nearly always outperform due to lower acquisition cost.

5. Inventory Sourced from Trades

• How many used vehicles on your lot were acquired through website/appraisal leads vs. auctions or third parties?
• The higher this number, the less you’re exposed to auction volatility.

6. CRM Re-Engagement ROI

• Monitor how many “dead” or cold leads are revived each month and what percentage convert to sales.

How to Calculate Your ROI

• Direct ROI:
  (Total Gross Profit from Trade-In Sourced Sales – Cost of Trade-In Tool and Marketing) ÷ Cost = ROI%
• Intangible Benefits:
  Don’t forget improved customer loyalty, higher CSI scores, and reduced risk as part of the overall value.

Continuous Improvement

• Review KPIs monthly.
• Adjust form fields, follow-up processes, and re-engagement strategies as you identify new opportunities.

What gets measured gets improved. Dealers who focus on the right KPIs can turn their trade-in workflow into a reliable, high-profit inventory engine.

Conclusion & Next Steps

The used car shortage isn’t going away soon, but dealerships that take control of their own inventory sourcing will thrive in any market. By making trade-ins the centerpiece of your acquisition strategy, you’ll unlock a pipeline of high-margin, retail-ready vehicles and build deeper relationships with your best customers.

The most successful dealers don’t rely on luck or auctions; they use digital-first tools, fast follow-up, and proven workflows to turn every website visitor and CRM lead into a trade-in opportunity.

• Heritage Cadillac consistently closes 12% of trade-in leads and ranks digital trade-ins among its top sources for both inventory and gross profit.
• Dealers using mobile-friendly, transparent trade-in forms report higher conversion rates, happier customers, and faster inventory turn.

Ready to take control of your inventory?

• Download our Trade-In Sourcing Checklist (link to gated resource or PDF)
• Book a live demo of TradePending’s Trade & Hot Lead solutions: Request a Demo
• Explore more dealer case studies and best practices: Read case studies

Don’t let the inventory shortage dictate your results. Build your own pipeline of trade-ins and set your dealership up for long-term success.