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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

Title Attached – Why it costs you money.

Profit loss missing titlesQuick Answer:

We Think You Should AVOID  Selling a Vehicle “Title Attached”.

A third less buyers and the remaining buyers pay less.

Lets use an example of a $8000 car. If you sell it at auction “Title Attached” 33% less buyers will consider the car, and the average bid will be $250 to $700 less. So net proceeds will be approximately $7300-$7750.

If you waited the 10 days until the lien release or title showed up, you would pay 10 days of extra floor plan.

Lets say your floor plan rate is 10% or .000273785 per $ per day. So in other words $8000 time .000273785 or $2.19 per day in floor plan

Which would you prefer?

$250-700 in loss at auction. OR $21.90 in floor plan and pick up the true value of the car.

 

Detailed Answer:

Title Attached/Missing/Lien Definition

What is the difference between “Title attached”, “Title Missing”, “Lien Release Missing”

 

Title Attached. New dealers/wholesalers are often confused about what “Title Attached” means.  It actually means that the title is NOT present at the time of the sale. This means the selling dealer has the title but it is not on hand at the time of the auction, usually at another dealership billing location.

 

Title missing. The dealer does not have a title in their possession. Usually they are still waiting for the customer to bring it in or they ordered a duplicate title from the DMV and are waiting for the title.

Lien Release Missing. The dealer has paid off the lien and is waiting for the bank to send the release.

Do I Get Less Bidders If The Title is Missing?

Yes. According to a study we conducted in August of 2014, dealers and wholesaler said that about 33% of dealers will avoid bidding on title attached cars because “It is a pain to deal with”.

Some dealers said they are working on fast turn around of inventory, because of this, title attached is not allowed by their owners. “We follow the vAuto philosophy of more turns per year (roughly 13-14 per annum), so title attached is a pain because you never know how long its going to take to get your title.”

One dealer told us that the “Big boys never buy title attached, because they have unlimited funds so they wait for the right cars.” Another said, “When we started only sending cars to auction with full title, we saw a 20% decrease in No Sales and a  higher average wholesale profit.”

Will I lose Profit if Title is not ready at Time of Auction?

Yes. Most bidders will pay less for a vehicle if the title is attached. One large dealer buyer told us that he pays between $250 to $700 less for “Title Attached” vehicles depending on the price. “The more money I am floating because of missing titles the more it costs. So I adjust my bid accordingly.” The only exception to this rule is for junk cars under $500.

The second reason you profit less on title attached units is because you have less bidders as mentioned above. Less shots on goal = less chance of a winning high bidder.

Can I Sell My Car if The Title is Missing.

We are not attorney’s, so we called our local NYS DMV and the person on the other end laughed when we asked the question. Her response was an  emphatic “NO.”

“You must have complete legal ownership of the vehicle before you have the right to sell it. The only exception is vehicles older than 1972 where titles did not exist for the most part. We know dealers sell vehicles with missing paperwork all the time but they shouldn’t because they technically don’t own the vehicle until they have a clear signed title with no liens on it and a signed mileage statement. ”

Is the Seller still Liable if The Title is Not in their possession?

There are many vicarious liability cases that have been won against selling dealers who did not complete their paperwork correctly or did not secure full ownership of the vehicle before they sold it. Again check with your attorney and or DMV before you consider selling a car without full ownership.

Recap:

The original intent of “Title Attached” at traditional auctions was to allow dealers to still sell cars at auction if they forgot to bring the titles with them. In most cases they needed to have the title the next day or the deal would be cancelled. It should not be used as a way to float money if you don’t have legal possession of the vehicle.