|It’s a Saturday afternoon and a couple comes in looking for a 4WD Ford Expedition with leather, 2001 or newer, with less than 40,000 miles. You don’t have one, but you’ve got a Durango and know a Tahoe is coming in. Nope, they’re not interested. You lose the sale because they’re ready to buy and you don’t have what they want.|
Instead, it would be nice to say, “Let me see what we’ve got in the pipeline.” You then type in their specifications and ask, “Would you like that in black, beige or silver?”
That’s where the Internet is taking used car wholesaling. “Using the Internet in this way has really begun to take off,” says Bruce Thompson, founder of American Auto Exchange. The primary reason is greater availability of Internet access at the dealership level, as well as advances in digital photography that allow dealers to receive detailed images of the vehicles that are up for sale.
“At any of the cyberlots, you’ll get three to five perspectives,” says Thompson. “It’s the next best thing to being there. In particular, the auction-supported sites require that sellers have close-ups to disclose damage. Those are technological advances that cause the audience to be more comfortable with it. Buying on the Internet is a cost-saving, efficient way to buy cars that have guarantees, arbitration, pictures and well-described condition reports.”
In many ways, the business-to-business used vehicle market is a tremendous opportunity for savvy dealers who want to leverage technology. Today, dealers are faced with the challenge of listing the inventory in the most optimal sales channel. These channels range from “liner” ads in newspapers to Internet sites and straight lot inventory. There are now software applications that allow subscribers to determine which inventory will produce the greatest profit if offered for bids online. Such packages allow dealers to determine the amount of profit that they can expect, based on real-time sales data. These systems also can suggest a listing price to post on the auction site and dealers can easily manage their listings throughout the auction process. Tracking sales and profits are simplified as well. Overall, these tools boost reduction of wholesale loss, thereby increasing gross profit and producing faster inventory turns, enabling the dealer to gain more customers.
A dealer also can research how much the dealership would have derived from selling a vehicle versus how much the vehicle would have sold for at a local auction. Dealers are now armed with data that helps them know which vehicles make the most money, so they can keep them in stock. The same data alerts the used car manager of vehicles that historically have not performed well in his inventory.
The system especially works for dealers who want to sell their used vehicle inventory online. Cars often can sit for weeks before the next auction, losing money for the dealer. On the Web, cars generally can be sold in seven to 10 days – more quickly than the traditional auction process.
“The way to maximize the channel,” Thompson says, “is for a dealer to put a couple of computers in the used car department and give associates the access and training required to supply the dealership with optimal inventory every day. Tools now are available that assist dealers in driving intelligent inventory decisions, resulting in optimum profits across the dealership sales operations.”
Thompson encourages dealers to search auction Internet sites when traffic is slow. The knowledge that a manager gains by researching his market is demonstrated through increased turns and better inventory mix at the prices his customers demand. Some dealers will bid on cars while doing a walk-around with a customer. With proxy bidding, a buyer can indicate what he is willing to pay and the system will automatically make his bids. This enables a buyer to get the best possible price without exceeding his price ceiling on a vehicle. You can’t do that on a lane.
Vol 2, Issue 7
Used-vehicle values fell by an average of 1.9% in October, the largest decline since January but on course with seasonal patterns, according to the latest report from Black Book.