It’s no mystery why many dealerships can’t effectively move the sales needle in their used vehicle departments. The fact is, it’s harder than ever to find used units that are “right” for a store’s market area and profit goals, let alone find enough of them to efficiently boost inventory turn and sales rates.

The reasons for the used vehicle sourcing and stocking challenge should be familiar:

  • Sluggish new vehicle sales volumes mean fewer customers with trade-ins, a “crusher” for used vehicle managers who historically rely on trade-ins to feed their used vehicle inventories.
  • Fewer “cherry vehicles” among the trade-ins that do appear. The economic downturn has spurred more customers to keep their vehicles until they absolutely need an upgrade or alternative, which means used vehicle managers are picking through trade-ins with higher miles and less-than-mint condition for those they can retail in good faith.
  • Factory production has generally slowed, which means fewer off-lease and fleet vehicles in wholesale auction lanes.
  • Many used vehicle managers still rely on physical auctions as their principal, non-trade-in resource for wholesale units. The problem: The “auction action” these days is virtual, as lenders and other wholesalers recognize they can more efficiently turn their inventories using online auctions. This means the good deals are likely long gone by the time a used vehicle manager shows up to see what’s hitting the physical auction lanes on a given day

Of these factors, the last one is probably the most critical for used vehicle managers to address because a) it’s under your control and b) the tools and technology to access and “play” in online auctions are getting better all the time.

The following are best practice approaches used vehicle managers should take to become more effective contenders in the online auction marketplace and do a better job at efficiently finding the wholesale used vehicles that are winners for your store:

  1. Go beyond “factory”-specific auctions. Of course, factory auctions remain a key wholesale pipeline for franchised stores, but they should be only one of a multiple of online auctions used vehicle managers track to find wholesale units. These days, the most successful used vehicle departments sell at least a 50/50 mix of franchised brand and off-brand used vehicles. The real winners stock even higher ratios of off-brand units because they recognize today’s buyers care less about where they buy a specific brand of used vehicle, as long as the vehicle fits their needs and the selling store effectively addresses any warranty and ongoing maintenance concerns.
  2. Look for dashboard- or platform-style access to online auctions. I recommend this because technology now enables integration of online auctions on a single system or platform. In other words, gone are the days when a used vehicle manager needed three or more separate computers to participate in online auctions. The key here is to find vendor partners who offer the widest array of auctions on a single platform and provide the most intuitive means to view run lists, submit bids, purchase and arrange “one-click” delivery and uploads of photos/descriptions on units that match your inventory and profit goals.
  3. Adopt a “provisioning” mindset for your inventory decision-making. I say this because successful used vehicle inventory management requires a wider array of considerations than it did in the past. Today, successful used vehicle managers must plan for, gather and deploy a variety of resources and market intelligence to make fast, effective and smart wholesale acquisitions. More and more, I view the role of used vehicle manager as similar to a military squad leader whose chief responsibility is deploying the right amount of munitions, technology and well-trained personnel to ensure a successful mission — not to mention crafting a well-thought back-up plan if any one of the variables falls out of balance. In this way, “stocking vehicles” seems an outmoded term, whereas “provisioning” captures the broader nuances and challenges that today’s volatile used vehicle marketplace puts before us.
  4. Embrace and trust technology. This will be a challenge for used vehicle managers who say, “I know more than a black box,” or “I need to see the vehicles before I buy them.” These used vehicle managers will continue to lose ground to those who have found a way to combine their knowledge and technology-driven data and insights to be masters of an increasingly faster-paced and more efficient used vehicle marketplace — including finding and buying more wholesale vehicles from online auctions. In addition, online auction providers are getting better and better at quickly resolving issues with vehicles purchased sight unseen.

So, to sum up, today’s used vehicle sourcing challenge is real. But, in many cases, the severity of the challenge is directly proportional to the degree to which used vehicle managers embrace the benefits that a more technology-enabled wholesale marketplace offers.

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