Why Dealerships Should Use Online Auto Auctions
Now, more than ever, efficiency is critical for the success of your dealership. The COVID-19 epidemic and its impact on the car dealer industry has revealed a deep-seeded need for faster and more flexible ways of doing things. Nowhere is that more apparent than in the inventory sourcing process. As a dealer, your goal is to obtain the right vehicles for your dealership and give confidence to your in-house buyers. By making dealer online auto auctions a big part of your strategy, you have the opportunity to quickly determine if you won an auction or not, without leaving your showroom. And this ability helps you grow your used-car operation by leaps and bounds. Now is a critical time to make the changes you need and incorporate digital auctions into your operations.
Why Dealers Should Pivot to Online Auto Auctions for Wholesaling
1. Faster turnaround
In 20 minutes, you can accomplish at an online auction what might have taken you a few hours at a physical auction lot. Online auctions go faster, and dealers can participate in multiple auctions at once. Faster liquidity of inventory means faster inventory turn rate, leading to lower carrying costs, better margins, and cash in your hand earlier in the process. In turn, you can acquire cars you know will sell on your lot in less time, so you can get them into your customer’s hands faster.
Online auctions provide real-time inputs from thousands of buyers and sellers bidding on vehicles so you can quickly optimize your wholesaling strategy to market demand. Filters allow you to narrow your search to exactly the type of inventory you’re looking for and you’ll be notified when it hits the auction block. You could source vehicles by mileage, location, year, make, model, and more. Compared to the traditional price book, up-to-the-minute pricing data is more effective.
2. More Flexibility
Global firm PricewaterhouseCoopers (PwC) says that right now, automakers should try to stay as agile as possible in light of the uncertain near-term outlook. Careful scenario planning is crucial, and dealerships should not only consider the pandemic’s likely impact across a range of critical areas detailed here, but they also should take into account the volatile economic, policy and financial market terrain.
Staying nimble in these times requires an ability to multitask while staying in one place. Picture a duck gliding through the water while its webbed feet paddle furiously underneath -- you might identify with that feeling of working as hard as you can right now to get ahead of this crisis. Those webbed feet know how to alter direction to avoid debris and danger without anyone seeing the gears underneath.
While you keep one eye on the dealership and work on redeploying your staff to keep your business going steadily, use the flexible nature of online auctions to stay on site and optimize your time. These auctions are open 24 hours a day from any connected device. For instance: TJ Stipanovich, formerly of South Hills Honda in Pennsylvania (now at Pecheles Honda in North Carolina), was in Jamaica getting married in 2018, and he harnessed the convenience of online auctions to set up transactions in minutes via his mobile phone while on the island. Selling vehicles via online auctions frees you up from having to go to an auction and allows you to be at the dealership as much as you need to.
Finally, the online auction process works for just about any inventory type. Once upon a time, dealer-only auto auctions were mostly focused on offloading low-value trade-ins, but that doesn’t hold water anymore. Now, you can find everything from compact value cars to those in the luxury category.
3. Mitigate your risk factors
Historically, buying and selling wholesale vehicles is a more time-consuming process. With a good online auction, a car leaves your lot only after it is sold, reducing the risk of a vehicle sustaining damage during transport to the auction site.
In the economic times affected by the COVID-19, contactless transactions have never been more important, and that includes your buyers and sellers from in house. A quality online auto auction platform can accomplish the selling of your vehicles without any personal contact, so long as staff take the right safety measures.
Taking in trade-ins is often a gamble, one that dealers often have to take to make a sale happen. However, it doesn’t have to be that way, especially if you use an online auction platform to help you find a buyer for your trade-ins before you bring them to your lot. For example, customers at ACV Auctions can use our live appraisal feature to find a buyer (and a price) for a vehicle as part of the trade-in process, so you don’t have to get stuck with inventory you can’t sell or overpay for a trade-in.
Concerns with Online Auctions (That You Actually Shouldn’t Sweat Over)
• Worry #1: Not being able to see the inventory in person
A great dealer auction platform provides visuals and video on everything you would need and want to check on a car. When you have the opportunity to view over 60 images per vehicle, view a video of the undercarriage of a car, and hear the sound of the engine yourself, the buyers can see exactly what they’re getting and there is very little, if any, ambiguity. As the buyer, you can get under the hood without getting dirty altogether.
Look for high-quality vehicle condition reports that not only let you buy with confidence but also help you sell to your end customer with confidence.
• Worry #2: Spending more time at an online auction
Inventory management is already an immense task for dealers aside from also having to prepare them for auctions. Great platforms do the work for you; you should be able to hand your keys to a car inspector and they do the rest. In 20 minutes, you’ll know if you won the bid. There is no need to wait all day to see what you have and what you don’t. Plus, with customized filters and alerts, you only see the inventory you need and want on your lot – no need to scroll endlessly through a sea of sedans you won’t bid on
• Worry #3: Lower margins for my vehicles sold at auction
Are lower reserve prices on vehicles a gateway to lost margins? In short, no. Starting the pricing at a lower level exposes your inventory to a larger audience on the platform and inspires them to bid. As the buzz builds, the expanding audience will generate more bids at expected margins.
The Final Word:
Online auctions provide a path for your dealership to ramp up or divest inventory quickly, safely, and smartly. You could be spending less time for more transactions with more success by buying and selling in a wholesale environment through auctions online instead of in person.
ACV Auctions is the leading dealer to dealer digital wholesale marketplace; every month, dealers nationwide buy and sell tens of thousands of vehicles on ACV. Sign up for a free ACV Auctions account to try our full-service marketplace for dealers.
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