3 Keys To Improve Dealer Success Buying Cars At Auctions


By Dale Pollak

Deal­ers across the coun­try com­plain about the dif­fi­cul­ty find­ing enough of the “right” cars at auc­tions.

The com­plaint is com­plete­ly under­stand­able: The reces­sion slowed the pace of new vehi­cle sales/leasing and trade-ins, which has dimin­ished used vehi­cle sup­plies at auc­tions. In addi­tion, vehi­cle own­ers are hold­ing onto their cars longer (indus­try stats say the aver­age age of vehi­cles on the road is 11 years), anoth­er crimp on the auc­tion vehi­cle pipeline.

The fol­low­ing are three best prac­tices gleaned from inde­pen­dent and fran­chised deal­ers who have met today’s used vehi­cle sourc­ing chal­lenge with an effec­tive and fresh per­spec­tive.

•  Go beyond “tried and true” auc­tions. Deal­ers say rely­ing on one or two local auc­tions isn’t enough in today’s era of tighter used vehi­cle sup­plies. These deal­ers have dou­bled or tripled the num­ber of whole­sale auc­tions they now use to acquire used vehi­cles. Their new sourc­ing foot­print often extends across sev­er­al state lines. This shift can be a dif­fi­cult change for some dealers/buyers—it means trav­el­ing far­ther and going beyond the famil­iar. It also puts greater pres­sure to acquire the cars for the “right” mon­ey because of the addi­tion­al costs for trans­porta­tion and relat­ed fees.

The good news: Every deal­er faces the same chal­lenge, which means those who are able to expand their sourc­ing efforts in the most time- and cost-effi­cient man­ner have an edge over their com­peti­tors.

• Get online. A grow­ing num­ber of deal­ers are sourc­ing a por­tion of their auc­tion vehi­cles using the online plat­forms from auc­tion providers. This move allows them to expand their access to a larg­er num­ber of vehi­cles in a more time-effi­cient man­ner. Still, there are many deal­ers who pre­fer phys­i­cal auc­tions, and some who refuse to buy online at all.

This resis­tance owes to a belief that deal­ers need to “see, touch and smell” the cars they might pur­chase. Sim­i­lar­ly, many of these deal­ers are con­cerned that a vehi­cle pur­chased online will show up at the deal­er­ship with a “sur­prise” that wasn’t iden­ti­fied in a con­di­tion report or oth­er dis­clo­sure.

A relat­ed tip: To help us mit­i­gate the risk of “sur­pris­es,” we would lim­it our live and proxy bids to vehi­cles with auc­tion- or deal­er-gen­er­at­ed con­di­tion reports (with a score of 3 or bet­ter) to bet­ter size up each car’s poten­tial risks.

• Speed up your vehi­cle research and reviews. At my deal­er­ship, it took five to six hours, twice a week, to review auc­tion run lists and research the cars that fit our inven­to­ry acqui­si­tion para­me­ters. On a per car basis, we aver­aged 10 min­utes to access con­di­tion reports and eval­u­a­tion guides and deter­mine our bid­ding strat­e­gy.

Over time, we were able to reduce this to about one minute per vehi­cle, thanks to tech­nol­o­gy and tools that helped us stream­line our research process to deter­mine if a car was wor­thy of our atten­tion. Like­wise, the tools helped us become more fast and effi­cient when we acquired vehi­cles through online auc­tions.

The key here, of course, is to find ways to increase your effi­cien­cy with­out short-cut­ting the amount of research you con­duct to avoid the “sur­pris­es” when auc­tion-pur­chased cars arrive at your deal­er­ship.

Tak­en togeth­er, these three best prac­tices will go a long way to help­ing you acquire all the cars you need from auc­tions and do so in a more effi­cient, less frus­trat­ing man­ner.

Dale Pol­lak, Founder, vAu­to and SVP, Auto­Trad­er Group can be reached at [email protected].


1 Comment

  • Ralph Crawford says:

    Mr. Pol­lack is total­ly right- the inter­net increas­es your buy­ing abil­i­ties by a huge fac­tor. BUT it increas­es every­one else’s as well. I logged on to a sale the oth­er day and it said “Wel­come- there are 47 oth­ers logged on”. I used to go to a sale and, being a spe­cial­ty car deal­er, fre­quent­ly was asked to start the bid­ding and no one else would bid. I would raise myself as much as pos­si­ble and hope­ful­ly pur­chase the unit. Now no mat­ter what kind of car I bid on- and I am try­ing to sell any­thing and every­thing- there is always some­one who wants to go one more bid, espe­cial­ly if it is a sale that shows the name of the bid­ders as a lot of oth­er deal­ers who are diver­si­fy­ing respect my abil­i­ties. Plus cer­tain “Big-Box used car stores” think they can just be the last bid­der- you can’t be more than $100 wrong at a whole­sale auc­tion- HA!. They don’t under­stand sharp auc­tion­eers with ghost bid­ding or oth­er deal­ers who will stroke them. But these chains are the 500 lb. goril­la and they are out to buy every­thing semi-desir­able and are unavoid­able. Plus the gov­ern­ment buy­out empow­ered Chrysler and GM to can­cel deal­ers that they could not before because of fran­chise laws. So we have a lot of ex-new car deal­ers going into the used (and often import­ed) busi­ness. Plus a lot of minori­ties going into the low end car sales and reestab­lish­ing the old bad rep­u­ta­tion of used car deal­ers.
    So using the inter­net I am buy­ing one-third of the vol­ume I bought before because I try to buy smart. (As an old deal­er friend told me once, always think like you’re broke.) There are vir­tu­al­ly no good buys any­more, only low gross live­able pur­chas­es. And with the inter­net the retail buy­er is empow­ered to make offers much less than whole­sale since it is so anony­mous. So you are left with cred­it impaired buy­ers who don’t care about price since they aren’t going to pay any­way. All the dif­fer­ent dot.com com­pa­nies each say they have the answer- for a fee and they may or may not work. I am spend­ing $5000 a month on on-line stuff that didn’t even exist 10 years ago. I miss the good old days but they won’t return. Maybe it’s time to quit after so many years but I can’t admit defeat. Sor­ry I’m not giv­ing the warm and fuzzy ver­sion but this is real­i­ty out in the trench­es. Thanks.

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