Better to be light, lean and right than long, heavy and wrong

February 23, 2009

I guess it’s only occurred to me lately how ill equipped most dealerships are to buy used cars at the auction.  For a long time most dealerships sourced the majority of their used car inventory from trade-ins, using the auctions only to round out obvious holes or deficiencies.  This occasional use of the auctions breeded a semi-skilled buyer.  In contrast, there have always been some dealerships that work the auctions religiously and produced highly-skilled wholesale buyers.

Today, with few trade-ins, almost every dealership has sent their used car managers to the auction with the order to “buy cars.”  Only lately I’ve come to understand that most of these guys are more retail than wholesale oriented.  Since they bear the title of “used car manager,” they are the ones that are sent to buy.  Unfortunately however, these semi-skilled buyers comprise the “herd” that is there just to buy for the purpose of buying rather than to buy for the purpose of supporting profitable operations.  Never before have I seen so much desire to buy with so little understanding of the market.  This phenomenon makes it extremely difficult for prudent buyers.  For this purpose I continue to advocate that it’s better to be light, lean and right than long, heavy and wrong.