Many car dealership used car businesses are resorting to “buy anywhere” sourcing strategies in the face of high wholesale costs and a nationwide shortage of vehicles.
These go beyond auctions and exchange channels to acquire inventory.
“Acquiring inventory is the No. 1 challenge facing dealerships today, and will be for some time to come,” Dale Pollak, founder of vAuto and executive vice president of Cox Automotive, told Wards.
But moving beyond traditional acquisition channels, such as auctions and exchanges, places appraisers and dealership buyers in uncharted territory.
“The opportunities and the risks are different, at a time when the market does not forgive buying the wrong car or paying too much,” says Pollak. (photo below left).
In response, vAuto has added an enhancement to its ProfitTime inventory management platform called Global Acquisition. It is presented as the first multi-channel used vehicle acquisition system. Its software uses multi-source market data to guide appraisers and buyers when obtaining stocks from various channels. These include dealer-to-dealer, service lane, off-lease and off-street networks.
The system strategically helps dealers determine how much they need particular vehicles for their inventory and how much the market “likes” the vehicles, Pollak tells Wards.
In terms of accountability, Global Acquisition offers a computer-screen dashboard that helps dealers and managers know how well their appraisers and buying practices are meeting inventory acquisition and valuation strategy. from a dealer.
The dashboard shows vehicles from each channel, whether they were purchased on or off strategy and why, and how they ultimately perform as retail units.
As a result, dealers can see what is and is not working in each channel and act accordingly.
Mindsets vary in the realm of used car acquisition, Pollak says, citing the difference between buyers and appraisers as an example.
“Buyers are at auctions, which are competitive environments where there are other bidders,” he says. “The trade-in evaluator is at the dealership with a one-person audience.
“If you don’t have an acquisition strategy, the appraiser may offer $17,000 for a trade-in, the customer says ‘I want $19,000’, the appraiser passes, but the next day the buyer from the dealer spends $19,000 on essentially the same car at auction.
“Who is right, the buyer or the expert? Global Acquisition helps understand this through investment scoring. »
Pollak points out that the system is not intended to set firm prices for dealers. “If the software says the wholesale value of a vehicle is $18,400, that doesn’t mean the dealership can’t pay $19,000. Appraisers do not want to be told a firm price. But they want a common point of reference.
According to Randy Kobat, Vice President of Inventory Management Solutions at Cox Automotive, “You make money when you buy a car, not when you sell it. This has never been truer than in today’s volatile used vehicle market.
According to Pollak, Global Acquisition “brings retail and wholesale together” by predicting the likelihood that a vehicle will sell for a particular price within seven days, based largely on market purchase data. .
But Pollak notes that dealerships may differ in characteristic ways. “Some dealerships sell vehicles faster without offering cheaper prices.” And some don’t.
vAuto launched Global Acquisition at the recent National Automobile Dealers Assn. convention and exhibition in Las Vegas.
Dealers who had participated in a pilot program seem to like the system.
“Global Acquisition is telling us what our endgame will be as we evaluate the car,” said Tim Nelson, general manager of Beaverton (OR) Honda. “It helps us focus on how to acquire a vehicle, not what we are going to do with a vehicle if we acquire it. You can’t do anything about a car if you don’t buy it first and buy it right.
Kelly Summers, general manager of Bill Knight Ford in Tulsa, OK, says, “We know we have to be aggressive if we’re buying on the street.
Steve Finlay is a retired editor of Wards. He can be reached at [email protected].