Auto industry guru, Dale Pollack, recently wrote an article in AutoRemarketing on "four ways to turn auctions cars into advantage" at used-car dealerships. Pollack suggests the following recommendations for dealers to instrumentally source auction cars:
- Know exactly what to buy
- Know where to buy
- Buy at the right price
- Do it all faster
Any professional in the pre-owned industry knows that acquiring profitable, quickly-sold inventory requires a lot of skill and a little bit of luck. Unfortunately, predetermining the exact make, model, year, mileage, etc. of car that the next customer who walks onto your lot is going to want is not technically an equation that one can figure out easily beforehand. Honing down on particular skills and taking advantage of certain technologies that provide various inventory sourcing solutions will help dealers learn how to acquire top selling cars from auctions.
The first strategic alteration to devising a profitable vehicle acquisition strategy is knowing exactly what to buy. Although some dealers may argue that part of the fun of auctions is relying on professional knowledge and taking a bit of a gamble to win a bidding war, why not combine those two thrills with a touch of car-specific precision? As technology continues to connect consumers to a greater selection of vehicles, dealers should also leverage their own technological resources to acquire a varied selection of vehicles to fill their lot.
In a congruent AutoRemarketing article, DealerSocket's, Michael Waterman, mentions that, “As the “traditional” customer continues to evolve and has significantly more choice, it’s critical that managers leverage a fully integrated inventory management platform to ensure that science, rather than anecdotes and gut feeling, is driving their vehicle-acquisition strategy.” There are a plethora of inventory management tools available for dealers, as well as unique inventory providers, such as MyDealerOnline. MyDealerOnline eliminates the guess work for dealers at auctions and allows them to bid on vehicles that customers already intend to buy. With the ability to display thousands of auction vehicles on a dealer's website using MyDealerOnline's platform, customers can actually request to order a car that is not even on the dealer's lot. With customers already requesting particular vehicles at auctions, it is simply the dealers job to go retrieve those vehicles. Dealers know exactly what to buy with MyDealerOnline's technology.
Knowing where to buy is another key factor to sourcing inventory from auctions. As more and more competition enters the pre-owned sector, particularly with the influx of franchise dealers, independent dealers must acclimate by increasing their sources for inventory. "With increased competition to acquire auction cars, many dealers recognize they need to expand their sourcing efforts beyond the local auction," states Pollack.
Closed auctions make it increasingly difficult for independent dealers to compete with their franchised counterparts. A proactive alternative is resorting to online auctions, where independent
dealers can attend multiple auction lanes remotely. MyDealerOnline provides access to remote auctions straight from the dealer's website. Not only do dealers have access to thousands of offsite auction vehicles, but their customers can also choose from pre-owned vehicles at these remote auction locations.
Source: NIADA Independent Dealership Action Report Fall 2015
Another recommendation is using bidding precision and discipline in the lanes to ensure buying at the right price. Even the most competitive bidders need to stick to their maximum bid in order to guarantee a worthwhile profit. "Careful examination of a vehicle's daily profitability is a dealer's secret weapon," claims Waterman. Dealers now have access to tools that calculate each vehicle's profit potential before even making a bid. Imagine collecting a down payment on a vehicle and having a customer decide the maximum price they want you to bid on an auction vehicle?! Make that scenario a reality with MyDealerOnline, where dealers put the buying decision in the consumers' hands. Dealers are able to preset their profit margins and let the customer determine how much they are willing to pay before the vehicle is even purchased.
The last key to profitable inventory acquisition is doing it all faster. The longer a car collects dust on a dealer's lot, the less potential for a profitable return that car provides. Rather than gathering aging inventory, have a customer lined up on the retail side straight from the wholesale line. MyDealerOnline serves to bridge the gap between wholesale and retail, connecting retail shoppers to wholesale vehicle suppliers. Shortened sale cycles allow more time for selling and less time bidding on the wrong cars. With a few strategy tweaks to inventory acquisition, along with the help of technologies like MyDealerOnline, independent dealers can maximize profits and improve inventory purchases for their dealership's advantage.