Dale’s first time experience
I have to come clean with an admission. Until yesterday, I had never personally purchased a vehicle on-line.
I found myself on the telephone with Dave Everett of Everett Chevrolet and a couple of his very smart managers. We were talking about stocking strategies to help relieve some of the pressure of buying vehicles for dollars that make sense. I explained that waiting for them to get traded in or simply visiting the local auction just wouldn’t get the job done. Together, we went on-line through their stocking tool and identified that he was a little light in intermediate SUVs. We then drilled into his market and found a list of SUVs that had extraordinarily high demand and low supply. I demonstrated the strategy of identifying and targeting the vehicles that were surprising. In other words, vehicles like Chevy Trailblazers and Ford Explorers probably wouldn’t be the best ones to buy because they’re obviously hot, and everyone knows it. There were a few vehicles however, like a ’08 Kia Sorento that surprised us all. The market day’s supply was in the 50 day range. I suggested that this is the type of vehicle that could probably be bought right because it wasn’t well understood by every other used car operator in the market.
Next, we went to his appraisal tool and booked the car out using conventional means, like Black Book and Manheim. We found that conventional wholesale money for this particular one was around $13,000. Using a more enlightened method, however, we started by looking at the current ’08 Sorento’s in the market for sale and asked ourselves where this one would need to be priced in order to sell in 40 days or less. After examining the current competition, we decided that it could be sold at a price that represented $16,157. Backing out his $800 expected reconditioning and $1,500 minimum front end gross profit expectation, they could afford to pay up to $13,857.
Then, through Everett’s stocking tool, we found several of them for sale at Openlane. We clicked into the Openlane tool and found a silver one with 36,000 miles that had a reserve of $13,300, but could be bought now $13,700. The auction was due to expire in a little over 3 hours.
Everett and his managers asked me if I would go ahead and place the bid of $13,300 on their behalf. I initially resisted, and suggested they do it themselves after we conclude the webinar. They said, “No…let’s do it now.” Reluctantly, I went through the various steps and ultimately clicked confirm. There it was…my first ever online purchase bid. It was pretty cool, definitely easy and exciting. I had actually done for myself what I have been teaching others to do for quite some time.
Feeling responsible for the recommendation and purchase, I asked the Everett guys how long it would take to get the Sorento online. They responded by estimating shipping and reconditioning time. I said, “No, no, no, no, if my name is attached to this vehicle, I want you to get it online right now.” They responded that they wouldn’t yet have a picture, and I said to grab the picture off of the Openlane site and paste it into AutoTrader until the vehicle arrived and better photos could be taken. In other words, if I’m going to share responsibility for the success of this vehicle, I don’t want to tolerate any delay whatsoever in getting it marketed.
A few hours later, I got an email from Everett informing me that we were the only bidders, and we own the car for $13,300. Assuming $400 for fees and transportation, there is a $2,457 profit opportunity. So much for the perception that hot cars can’t be bought for the right money. They certainly can, it just requires the ability to have knowledge about the market that’s not commonly shared by your competitors, and the ability to act on it. Act we did, the vehicle is on its way. Now we’re in the final phase, the critical one, the vehicle needs to be sold in the next 40 days.