By Mark Gibson, Co-Founder, 1 Click Auto Auction
Due to the current pandemic, customers are increasingly completing more purchases and tasks online. That accelerated shift towards a digital retail buying model has left many dealers having to scramble to adapt to their current state’s requirements. Some dealers were shut down completely, others were able to sell online, and some didn’t close at all. Regardless, dealers were still at the mercy of COVID-19, having to digitalize their processes so that they could continue selling vehicles. A seamless buying process and smooth customer experience assisted dealers in both attracting customers and earning their business.
What most people don’t talk about, however, is the backend of those transactions and operations. Information sources such as vehicle values went digital a while ago as did many auctions. Dealers have to acquire inventory to maintain or keep up with sales demands. And dealers are more desperate than ever to do so, according to an article in Automotive News. Vehicle turn rates are incredible with one dealer in the article saying that he sells them as fast as he can get them.
The problem is, some major players have joined in, making inventory harder to acquire, and vehicle prices are increasing at wholesale and auctions exponentially because there are more bidders than there have ever been in the past, driving up prices.
Many used car managers could easily be in their office with four computer screens monitoring different auctions to gain much needed front-line inventory. Even pre-COVID, used car managers were battling other dealers, but it wasn’t as competitive as it is now.
Add to that, every time a used car manager is the winning bidder, the dealership pays exorbitant rates for the auction service, as well as in transportation to get the vehicle to their dealership. This, of course, drives up the cost of the vehicle, and that’s not including PDI, recon, and detail.
Now, with major players entering the wholesale market, winning bids are increasing due to demand, and dealers are having to pay more for vehicles, thus decreasing their gross (front-and back-end) profits. And, depending on where the vehicle is, they could have to wait a good amount of time to have it on their lot when they need it quickly.
People can only focus their attention (in a deep analytical way) on a few things at a time. A used car manager who is in contention for a prime unit, and in the running to acquire it, could easily miss out on another one simply because they are focused on the first. Of course, having your used car manager in his or her office, staring at four screens to acquire inventory, could easily take away a sale.
A customer looking to buy a vehicle, whether that is in person or online, can get a lowball offer for their trade-in that makes the deal self-destruct. However, if the used car manager was available while the deal was being desked, he or she may have been able to identify and place a higher value on the customer’s trade-in based on his/her experience.
Productivity is based on the fact that a single person can help the dealership at maximum efficiency.
Just as all of the other digital retailing tools have made the purchase process more efficient for customers and the dealership, having tools that make inventory acquisition easier, faster, less expensive, and less competitive makes the dealership not only more efficient but also more profitable.
About the Author
Mark Gibson has been in the car business for over 30 years with the last 19 being in the digital space. He was one of three directors in the nation for the GM Advisory Board. He spent five years as part of FCA’s National Internet 20 group. Since 2016, he has worked with multiple automotive technology solution providers. He started 1 Click Auto Auction in 2017, which launched in June 2020.