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].