Car dealers are in a race against time.
The mission: Find the best used car inventory, at the best prices, before the competition does.
The challenge: Demand for used vehicles has never been higher in the COVID-19 automotive environment. Plus, there is not enough time in the day to source inventory.
For some dealers, finding quality pre-owned inventory has become a major challenge and almost unsustainable. Lower margins and longer turn rates are putting dealerships at risk.
That’s why many dealers are turning to online auto auctions, even before the pandemic.
Online auctions give dealers a larger variety of inventory, making it easier to find the right vehicles at the right prices. Plus, dealers can bid, buy, and sell vehicles from the comfort of their home or office. There’s no more time wasted attending physical auctions.
Some dealers, even experienced ones, are understandably concerned about using online auctions. How can you buy a vehicle without being there to physically see it, touch it, and inspect it?
While that’s a fair concern, there are thousands of vehicles sold online every day, with shockingly low arbitration rates. Modern online auction platforms give you the tools to properly evaluate vehicles before purchasing. Dealers can finally trust what they find online.
Online auctions can be intimidating to first-timers and old-school buyers alike, but with a little guidance, anyone can tap into this powerful market. Follow these three steps to start using online auctions today.
1. Audit Your Inventory
Online auctions are not much different from physical auctions. In both cases, the first step is to take a look at your own used car inventory.
Your first job is to evaluate the strengths and weaknesses of your current inventory strategy. What are the characteristics of your best customers, and which vehicles do they purchase most often? Which vehicles are the hardest to sell and the least profitable? Where is the opportunity in your local market to win new business?
With hundreds of thousands of wholesale vehicles available online, it’s critical to narrow down your possible options. By auditing your current inventory, you’ll have a better idea of what vehicles to target.
2. Make a Buying Plan
The next step is to make a detailed buying plan. Your buying plan should be an active document that you update before every visit to the auction, whether physical or online.
Your buying plan should include pre-owned inventory levels in each vehicle category, as well as your purchasing goals for that day or week. It’s also wise to create buying criteria for evaluating each purchase. For example, if you don’t want to buy vehicles with over 50,000 miles, make that a non-negotiable point on your buying plan.
Online auctions, like physical auctions, can be fun and exciting. Without a plan, it’s easy to get caught up in the moment and make poor buying choices.
3. Choose an Online Auction Platform
Online auctions have been around for over a decade, but today, dealers have more high-quality options than ever. Here are just a few of the top online auction platforms:
ACV Auctions is the fastest-growing independent online auction platform in the United States. They tripled the number of vehicles sold in 2019 to over 240,000. It has over 7,000 dealerships on the platform, 4,000 of which are independent dealers.
Known for trust and transparency, ACV Auctions has been the leader in innovative features. For example, ACV pioneered the Audio Motor Profile, a high-quality audio recording of a vehicle’s engine. They also take high-definition photos of each vehicle’s undercarriage with a tool called Virtual Lift.
ACV Auction Highlights:
- 100% online wholesale auctions
- Innovative feature for evaluating vehicles
- Fast-growing marketplace
As another fast-growing dealer auction startup, BackLot Cars only sells inventory from new car stores. A certified mechanic inspects every vehicle before auction, and BackLot Cars offers a 5-day return policy for unreported vehicle damage.
The platform also has flexible financing options. Dealers can apply for an interest-free float loan that can be dispersed in just days, instead of the weeks it usually takes traditional floor plans. The float program also has a loyalty program for regular customers.
BackLot Cars Highlights
- Buy used inventory from new car stores
- Each vehicle inspected by certified mechanic
- Get flexible float financing through platform
This is one you’re likely familiar with already. Manheim’s mobile-first wholesale marketplace app adds modern features to the world’s largest auto auction business. Like ACV Auctions, Manheim Express lets dealers see and hear under the hood with high-quality audio and images. Buyers also get personalized listing recommendations based on their buying history.
Manheim has the largest inventory of vehicles on the market, including an influx of listings from commercial sellers. If you’re familiar with Manheim Auctions in person, you’ll be right at home with Manheim Express.
Manheim Express Highlights
- Largest wholesale auction in the U.S.
- Personalized recommendations based on buying history
- Lots of inventory from commercial sellers
TradeRev is a dealer-to-dealer marketplace, which means they have some of the freshest listings of any online auction. When a dealer receives a trade-in offer, they can list the vehicle on TradeRev and get real offers within minutes. TradeRev is the fastest way to buy and sell wholesale vehicles.
Sellers on TradeRev are responsible for self-reporting on vehicle conditions. Instead of professional inspections, the platform uses a peer-to-peer rating system to build trust between dealers. However, TradeRev has a dedicated arbitration team to help you handle any disputes.
- Dealer-to-dealer marketplace with no middle-man
- List vehicles and get offers in minutes
- Peer rating system and dedicated arbitration team
Not sure which platform to use? Try them all. These platforms offer free sign-ups, which allows you to explore each one without any risk.
Still can’t decide? Good news—you don’t have to. Many dealers use multiple online auction sites because they serve different needs. Keep open accounts on each platform and use them interchangeably.
Grow Your Business with Online Auctions
Online auctions open up a whole new world of possibilities for new and used car dealers alike. No longer are you limited to the inventory in your geographic area. Today, the entire country is your auction house. Thanks to online dealer auctions, it’s easy to transact and transport vehicles across hundreds, even thousands of miles.
You may be hesitant to trust the inventory you see online, and that’s a legitimate concern. However, the leading online auction platforms have features and safeguards to protect your investment. You can be confident that the goods will be delivered as promised, and if not, the platform will step in to help.
Did you enjoy this article from Zach Klempf? Read other articles from him here.
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