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Car Auction Dealer Software Wholesale Lot

Wholesalers back in My Dealership? Dealer Auction Software

Wholesales in my dealership

Dealer Auction Software that helps save auction fees & avoid the major pitfalls of wholesaling.

Just because at times retail customers are disruptive and even bounce checks, would you shut down your dealership? Of course not, instead you would put controls in place to prevent future issues.

We kicked out wholesalersBut for some reason, dealer principles were advised at their 20 groups and at conferences to kick wholesalers out of their dealerships. Dealers were told that wholesalers were disruptive and were bribing our used car managers. That their checks bounced and that the only way to prevent all of this was to kick them out, once and for all.

While these issues did happen at times, it was the exception. Unfortunately we tend to remember the extremes. In my experience, the wholesalers and independents I have meant over they years, while sometimes rough around the edges, are solid hard working business people. They are the core behind what makes our industry tick.

It seems crazy to me that we have excluded them from our dealership, sort of like the proverbial, throwing the baby out with the bath water.

Think about it. If you found a way to control the check issue, the back room deals and the disruption. Your dealership could save hundreds of dollars per car in auction fees and transport fees. The best part is your manager isn’t away from your dealership, missing TO’s and coaching opportunities with your sales consultants.

Is a Dealer Held Auction the Answer?

In this article you will learn many of the basics of running your own dealer auction and welcoming profitable, fee free wholesale transactions back into your dealer group. You will learn how to prevent most of the pitfalls and above all how to stay organized using dealer auction software, so you can focus on profit.

The Dealer Auction Study

My partners and I conducted a one year study of dealer run auctions and private dealer bid sales. We visited dealer auctions that have achieved 95%+ sell rates on a weekly basis, even in the dead of winter. We have seen it all from complete “Red Light AS IS” auctions to dealers that recondition every car that goes through their lane. We learned quickly the advantages of using dealer auction software and running online versus physical and picked up some of the best practices along the way. The following is a small portion of that study.

Magic 10 steps? No such thing.

I am not trying to say that it as easy as just 10 steps, just like magic you can run your own dealer auction. Not at all, this is just a 10 step primer to help you understand what will be expected. I recommend that you speak with other dealers who are running their own auction or call companies like ours, who specialize in helping dealers run an accountable profitable and successful auction.

So what are the steps to starting your own dealer wholesale auction?

Retail lot or wholesale row sign1. Merchandise your wholesale cars as vigorously as your retail. For many dealerships there are two kinds of trades: Cars we’re going to keep and cars we are going to sell at auction. Traditionally we process them differently. What if you merchandise wholesale cars as expertly as you do your retail cars, then offer them to your local and national wholesalers and independent dealers online. Do you think you could sell a bunch of those cars before you have to take them to auction? Of course, and because you don’t pay fees or transportation you avoid expenses and above all make more on profit.


2. Process your wholesale car using the same tools your inventory team are already using.
No need to reinvent the wheel here, just have your IM’s (inventory managers) use the same tool they use to process retail trades. This way they are not overwhelmed with too much change. Companies such as vAuto, Red Bumper, DealerTrack and Vin-solutions already have a special category for wholesale where you can add photos and descriptions. Then you can feed the inventory to your wholesale website or to a wholesale marketplace like Auction Simplified

Wholesale Photos focus on flaws3. Focus on the flaws not the cheese. Wholesalers are very different from retail buyers. All they want is the basics of the car and photos of the flaws and a well thought out condition report. So merchandising for wholesale can be quite a bit easier. You don’t have to take 40-60 photos or write a Shakespearean level description, instead keep it to the basics.
My partner Dave Kaiser, explains it like this:

“Take 10-15 ‘Get to know me’ photos then take photos of the rust spots or missing items. If there is a special feature such as AWD or Navigation that is not normally on that vehicle, go ahead and photo it as well.”

In most cases 15-20 photos and a condition report will get the job done. Some dealers write out a condition report and scan it as a photo of the car or use the free condition report built into Auction Simplified. It only takes 5-7 minutes per car to complete. As Dave says over and over again. “Point out the issues on the car so the bidder can make a serious bidding decision.”

4. Put your wholesale cars ONLINE the as soon as possible.

Cars have 48 hours to be onlineApplying the Dale Pollak, Velocity retail approach to wholesale, makes the most sense. If you can get a list of your wholesale cars in front of hundreds of buyers the day they arrive. Then list them on your wholesale marketplace for hundreds of used car dealers to see. And get all of this accomplished On Day One or within 48 hours at the latest, you should turn your inventory faster than if you wait for the next auction especially if you are waiting for decent lane numbers. Again this is just one more tool in your digital marketing plan. Not every car will sell this way. That is why I still think off site auctions are useful as a secondary strategy to your successful dealer run auction.

One extra benefit of having your cars on an auction platform, is your dealer auction will be listed by other wholesale tools such as Autoniq .

5. Hold an inspection period. SOLUTION TO AUCTION PITFALL #1

To avoid wholesalers showing up at random times, hold a regularly scheduled inspection time. This will allow buyers to visit in a controlled area at a specific time. Have a mature lot attendant there with keys and to offer help and allow them to drive the cars if they like (on their dealer plate of course.) This builds value and improves wholesaler relationships over time. You will find that the wholesalers will pay more when they can trust the dealer and will sometimes buy from start to finish online. Not every wholesaler will buy online. Some feel they still need to touch and feel the car, that is why I recommend a viewing or inspection period.

Auction Inspection Day

Hold your inspection period at a time that is convenient to the buyers in your area, for example, don’t have it at the same time as other auctions in your market. This way more buyers will be available to view your cars.

6. Certified Checks or Floor Plan only. SOLUTION TO AUCTION PITFALL #2

certified-used-carsAt first, it is critical to establish your auction rules. We recommend that you only accept certified checks unless you have an established relationship with the wholesaler. At minimum hold the title paperwork until their check clears.

You might think that buyers would be upset with this but in my experience they are usually so glad to be back in the dealership and avoiding huge auction fees that they understand the reasoning and will work with you at first.

As your auction takes off, you will be able to invite in floor plan companies as well. This way the money is EFT directly into your wholesale account with reduced risk. CFO’s love EFT from floor plan companies.

7. No one should know your bidders until the end, including the manager. SOLUTION TO AUCTION PITFALL #3

Use software that hides the bidders until the end. True accountability and tracking is a key security measure to prevent bribes and backroom deals. Software like Auction Simplified are great for this because they allow buyers to bid completely online. It has one truly unique feature, no one knows who the bidder is until they win. All bids are truly anonymous. This way there is no risk of those back room kick backs, because know one knows who bid. I admit it, that was a shameless plug for the company I co-founded, but it solves the biggest issue with wholesaling direct; accountability.

back room deals with wholesalers

TIP: If you are aware of a trouble buyer or you don’t want a buyer at your auction, you can block them from seeing your cars online.

This works especially well with competitors. Lets face it you don’t want them seeing your trades. Again not something easily done if you take the car to off site auctions.

8. Merchandise to your wholesalers.

bdcIf you spend a little effort on making your wholesalers feel welcome, by providing donuts and coffee or pizza and wraps at lunch time, they will come back each week and make your viewing day part of their schedule.

I recommend that your BDC includes 25-50 calls per week in their action plan to invite wholesalers to your weekly events.

Sending form letter invitations and post cards periodically to remind independents and wholesalers about your online marketplace is also recommended.. Many successful dealers run specialty sales when they have a glut of similar trades, like trucks. The call would sound like this:

“You’re invited to our wholesale lot for a very unique truck auction this Thursday at 9am-3pm, final bids by 4pm online. Lunch is noon, we hope you can join us.”

9. Staff Appropriately

It is not terribly expensive to staff your auction appropriately and it is money well spent. Be organized on your inspection day, have an extra lot attendant managing the car keys so you can focus on the important things. When your auction ends have appropriate billing staff and cashiers ready to bill the transactions. Try to have everything billed for pickup the next day and be ready for a rush billing for non local dealers.

1Titles to trades0. Priority Cashiering.

Pick a location for the wholesalers to cash out, it can be a managers desk but it works better if it is a cashiers window. With a little training and rule setting, cashiers become terrific gatekeepers for auction transactions. As your auction takes off consider having a special cashier just for wholesale transactions, sort of a priority window, so the wholesalers feel important. Because in my view they are.

In conclusion. If you gain trust, show concern and respect and make wholesalers and indy’s feel welcome they will pay more for your wholesale cars. If you don’t have to ship your car, pay auction fees or have to send a manager off site for the day, you’ll make more money wholesaling cars.

If you can turn a $500 car into a $700 car that’s a 40% profit. It is next to impossible to make 40% on most of your retail used cars.

Digital marketing for wholesale cars is long over due.

Resources

If you are ready to start your own dealer auction and wholesale marketplace, call our team or myself directly at 877-877-4511 or visit dealersimplified.com for more information and strategy guides.

Categories
Car Auction Retail Car Lot Wholesale Lot

10 Sites You Shouldn’t Ignore when Sourcing Used Cars

Used Car DealerIf you have been in the car business for any length of time you have faced the dilemma of how to buy used cars. Do I go to auctions? Do I visit private dealers? At Auction Simplified we think you need to be always looking for cars and visiting every venue.

 

hemmings

10. Hemmings

This site is often overlooked by car dealers because they cater mostly to Collectors. But sometimes there are gems hidden in the listings from people that consider their cars to be collectable. Used Mustangs for example or even that oddity you need to fill a customer order. Additionally, if you need old parts, Hemmings is the place to start. To buy used cars from Hemmings, go to www.hemmings.com

bring a trailer

9. Bring a Trailer

If you’re looking for something cool and old, from a rusty Pinto project cars to perfectly restored Camaro, Bring a Trailer is where you want to go. To quote their site; “There is no need to keep sifting through hundreds of hopeless projects or overpriced dealer inventories to find that one car you’ve been looking for. We pick the winners and save you the trouble… the best bargains, the best dream cars, and the best rarities.” To buy used cars from Bring a Trailer, go to bringatrailer.com

autotrader logo8 AutoTrader.com

One thing that is great about AutoTrader is that you can search the nation in a second. So if you are looking for that hard to find specific car, AT is your best bet. Links to Carfax and Kelly Blue Book straight from the site are all plusses. Not everyone likes AutoTrader because of its heavy advertising and because their listings tend to attract people who severely overvalue their cars. However, AutoTrader does have an excellent search function, letting you make searches for things like “manual transmission + two wheel drive + four cylinder engine” and gives you a variety of similar cars across different years and makes.  To buy used cars from AutoTrader go to www.autotrader.com

auto tempest7. AutoTempest

It’s great because it allows you to shop all the major used car sites at once. It’s like those cross-shopping flight search sites, but for cars. To buy used cars from AutoTempest go to AutoTempest.com

carfax logo6. Carfax

Most buyers don’t realize that Carfax has a rather robust used car listing filled with great inventory, much of it wholesale. This is because many dealers have opted to pay flat rate for Carfax and they allow the cars to show up as an additional service. You get the added bonus of a free Carfax report, cool huh? To buy used cars from Carfax, go to www.carfax.com/cars-for-sale

kijiji5. (Canada Only) kijiji.ca

Even if you live in the US there are ways to get cars across the border, so I threw this one in for our US dealers. Canadian dealers have been using Kijiji.ca for years. Great cars for sale and a good user interface makes it like Craigslist but better. It’s also owned by eBay. By the way Kijiji means “village” in Swahili. To buy used cars from KiJiJi go to www.kijiji.ca

4. Auction Simplified

I also recommend our own wholesale marketplace, Auction Simplified (shameless plug) because it is free for sellers to use and the buy fee is so small. It offers a turnkey “Make and Offer” style buy center that feeds from their existing inventory software. More and more dealers are using the platform to buy and sell used cars.  Go to AuctionSimplified.com and register.

Cars.com-Logo3. Cars.com

Similar to Autotrader but with less of the commercialism, cars.com is great especially on their mobile app. Cars.com has a clear user interface and  a great search function. Because of their lower cost as compared to AT they attract more independent car dealers and small used car lots, so they will often have almost all the cars in a particular town listed. They also allow for national search which is really helpful when looking for a bargain if you are not afraid to travel. To buy used cars from Cars go to www.cars.com

eBay-Motors-Logo-no-border2. Ebay motors

It harder to find a great deal yourself because of the national exposure, but eBay Motors is generally more reliable and easier to deal with than Craigslist. It’s also good when you already know what you want, and if you’re looking for something very specific. To buy used cars from eBay, go to www.eBaymotors.com

Use a robot bidding tool like bidnapper.com as it can really make a difference in winning the bid because it bids hyper fast on your behalf at the end.
Kevin Leigh, Dealer Simplified
Kevin Leigh

craigslist-logo-transparent1. CraigsList

You get some weird crap thrown in, so be careful not to surf craigslist while kids are around, but nothing can beat Craigslist when it comes to local listings. The search function is not the most specific, alright it actually stinks, but their are mobile apps that make things a lot easier. To buy used cars from Craigs List, go to www.craigslist.com

The trick with CL is to looks a lot further down the page, because you may not realize that it is actually a chronological list and sometimes the honey is at the bottom of the pot.
Kevin Leigh, Dealer Simplified
Kevin Leigh

UPDATE 8.12.14:

Dealer Auction SoftwareNow that Auction Simplified has launched, we also recommend our software (shameless plug) for Dealers to find, buy or sell wholesale cars. Go to AuctionSimplified.com and register.

Categories
Car Auction Retail Car Lot Wholesale Lot

Where Can Dealers Find Cars for under $10,000

Find the Best Cars at $10,000 or less

Buying cars under 10000One of the hardest tasks for car dealers is the stock quality used cars for under $10,000. If you have ever been given this assignment by your owner or GM you understand the pain this can cause you. I wish I had any easy solution for this but I guess if it was easy everyone would do it. The good news is that cars under $10,000 are often searched 100 times more than any other priced car. That means if you can nail this you will open the floodgates to new leads.

So where do you start looking for cars under $10,000. The most common answer is “head to the auction”. Although going to the auction to stock your used car lot is a necessary evil it can’t be your only go to move. This is where we separate the people that make things happen from the ones that watch things happen and even more from the ones that say “what just happened”.

Finding new avenues like your service drive can pay big dividends when you are sourcing for cars under $10,000. The best way to work the service department is to add a sales team right in the service lane. However if you don’t have the right staff for that or if you’re just not ready to make that commitment you need to get some help from your service department. Once you get service on board that having a customer trade their car over repairing it makes more sense, since they will most likely do the repairs anyway everyone wins.

Another way to obtain less expensive used cars for your retail lot is from private sellers. What is interesting about this approach is it can be used for both obtaining inventory and generating new leads, if someone is selling their car they may be looking to replace it. Similar to using your service drive this works best if you have staff dedicated to contacting these customers.

This process can be very time consuming, you may have to comb through lot’s of cars before you find one that fits your used car stocking profile. Even with all the work that needs to go into buying from a private seller, getting two or three of these cars a week could be a big win for some dealers.

If you don’t think you will have the time or staffing to consistently source for these cars, you may want to enlist the help of some local wholesalers buying and selling cars in your market. Most of them will have a steady stream of less expensive cars they buy from new car dealers. It only takes a few good car buyers (wholesalers) to help you get your lots full of those hard to find under $10,000 cars.

 

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Retail Car Lot

What’s Your Strategy for Pricing Used Cars?

Pricing Used Cars

Pricing Used Cars for Your Retail Used Car Lot

Having the right pricing strategy is key to selling used cars in todays markets. Pricing used cars and re-pricing should be strongly based on your market and the online metrics SRP (search results page) and VDP (vehicle detail page) you are getting on your website or other search sites you are advertising with.  It has become a best practice to have every vehicle you select for retail advertised for sale starting at day one with a competitive “go-to market” price. This means competitively pricing your vehicles to the market to achieve quick turn at a fair profit.

VDP conversions

0% – 2%       underperforming vehicles
2.1%- 3.5%  avg. performing vehicles
3.6% +         high performing vehicles

How to pick the right pricing strategy for your store. Different dealers are looking for different results from their used car department. Some dealers are looking to increase market share, while other dealers are all about the money. Whether you are going for volume or gross, having a pricing strategy and using it consistently will help you achieve the results you are going for. Here are two examples;

To achieve a MAX TURN set your targets at:

Days                  Min %         Max %
0-10                 0%                    95%
11-20               0%                    90%
21-30               0%                    85%
31+                  0%                    80%

To achieve the MAX GROSS set your targets at:

Days                         Min%               Max%
0-30                 110%               150%
31-60               100%               125%
61-90                 90%                 100%

Once you have determined if going for max turn (high volume) or max gross (all the money), which will cause you to pass on the occasional deal, it is time to build your pricing strategy. Most strategies are based on the age of the car. As a vehicle ages we move the price down in an attempt to build interest in it. While having pricing targets tied to the age, can and does work you still have to watch the market when it comes to making pricing moves. It’s not just age that causes values of vehicles to drop, although it is a big factor things like MDS (market day supply) and seasonal change will affect the value of your cars.

Market day supply (MDS)

0-40      days, fast moving

41-80    days, average

81-100  days, slow moving

101+     days, very slow moving

 

The most important part of having a pricing strategy or implementing any procedure is laying out your expectations and then holding people accountable to the task. Setting a strategy for a used car manager to follow can be tricky, from time to time they may have to veer off the strategy if the data they are looking at tells them to price a car different from the targets. You may have set your targets to price all fresh cars at 110% to market, but if the market day supply is 150 you will never sell that car for 10% over the market average price. You may not even sell it at 100%. Or maybe you have a 30 day old car and your target is set at 85% to market (15% discount) but you are getting an avalanche of internet traffic (4.5% VDP) you may want to holdout on moving the price down to 85%. Try moving it a few hundred dollars and watch the traffic. Don’t give up gross if you don’t have to.

 

So you have picked your pricing strategy and set your targets now its time to outline your plan. If you need a little jump start here is a 70 day and out pricing plan.

Vehicles are looked at for re-pricing as they age. No vehicle should go longer than 7 days without a price change and should be changed by the Used Car Manager. It’s always a good idea to have the GM, as well as the other managers in your store participate in the pricing conversation. Set up a bullpen so you and your employees can look over fresh inventory before putting cars out on the lot. Have the go to market price at the bullpen so you can discuss it with the team.

0-15 day

The re-pricing of cars 0-15 day old should be done at 7 and 14 days. You will need to monitor the vehicle’s online performance with SRP and VDP metrics. Vehicles with a low conversion percentage or with low SRP counts will typically need a larger price adjustment to help them get some interest.

16-30 day

Vehicles are re-priced at 21 and 28 days. Under performing vehicles (0%-2% VDP) or vehicles with a higher days’ supply (over 81) are marked down in price more than vehicles performing at a high level (2.1% VDP or lower day supply). Try to position vehicles in the top 5 price point base on vehicle condition and miles to increase online traffic. Make sure all vehicles have marketable photos and a well written description that differentiates your vehicle from the competitions. Promote any maintenance or  recondition you have performed in that description.

31-45 day

Vehicles are re-priced at 35 and 42 days. These cars should be re-bull penned with sales consultants.  Used vehicle managers, inventory managers and sales managers need to review SRP and VDP counts as well as MDS – looking for underperforming and slow moving vehicles. Price changes at 42 days should be moved at or below 90% of the market and should be set in the top 3 price position. (Based on market size)

46-59 day

Vehicles are re-priced at 49 and 56 days. At this point, you should have an exit strategy depending on market days’ supply (MDS) and stocking levels of vehicle class. You may want to keep a vehicle with low VDP conversions if it is of like brand to your franchise, but make strong consideration to be price ranked #1 in your market. Use MMR (Manheim Market Report) to re-price your vehicle based on what this unit will draw at the auction.

60-69 days

Set the retail price at or close to what the car will draw at the auction. Its time to make this car go away and retail at any price usually makes more sense than taking a wholesale loss.

70 days and out

Time to rip the band-aid off and send it to the auction.

 

Hopefully you have been re-pricing and making good stocking decisions so you never have to send another car off to the slaughter.

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