Dealer Shares Three Keys To Auction-Sourcing Success

By Majd G. Saboura
Director of Wholesale Business Development

I had a fascinating discussion last week with an independent dealer in Florida.

His used vehicle sales are up about 40 percent compared to a year ago, with a commiserate rise in his store's profits. 
He relies almost exclusively on auctions to feed his retail sales. I asked him what he's doing differently to drive his success and he offered three things:
  1. A primary focus on his Market Days Supply. The dealer previously relied on wholesale valuations and retail price points as primary guides to determine the best auction vehicles to acquire, and how much to pay. Those factors still matter, the dealer says, but Market Days Supply is a primary driver. “If I know up front that I can sell a car quickly, I'm on it,” he says. “Our sales are more consistent because we're buying the right inventory and we no longer have lulls.” 
  2. A “total gross” perspective. “I used to walk away from cars that didn't show me the money when I appraised them,” he says. “Now, even if the car doesn't have the front-end gross I'd like, I'll still acquire it and make it up in the back. Plus, I'll have another opportunity to sell another car.” 
  3. A wider acquisition net. The dealer says he's moved nearly all of his auction-buying online to ensure he sees enough vehicles, in enough different markets, to net the cars he needs. “I've sold cars all over the country,” he says. “I figured I can buy them from anywhere, too.”
The dealer's perspective is especially relevant as we this year is showing more signs of used vehicle volatility than we've seen in recent years. It's been an environment where margins continue to compress, and dealers will need to sell more vehicles in less time to achieve the level of sales volumes and profitability they've enjoyed in recent years.

It'll be a process of reinvention that starts with more consistently acquiring the right cars from auctions to meet your retail objectives. 

Majd Saboura, a ten-year veteran of the automotive industry, specializes in the wholesale market where he has worked nationally and internationally. He will be a featured presenter at the TIADA Annual Conference & Expo, July 23 - 25, 2017. Register for your spot today!


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