3 Troubling Auction Sourcing Inefficiencies

February 27, 2017

I’ve recently gained a deeper appreciation for the tireless efforts of used vehicle managers and buyers charged with acquiring inventory from auctions.

Many spend half their time at work, plus uncounted hours at home, away from their families, to find and vet auction vehicles for an upcoming sale.

This reality has given to a belief that such all-out efforts to acquire auction inventory is what it takes to succeed. Up until the past year or so, I would have agreed, 100 percent.

My view has changed as I’ve seen how dealers have changed this auction-sourcing paradigm, with the help of technology and tools. These dealers are spending less time to find and acquire the auction inventory they need and, in doing so, they’re eliminating the inefficiencies that, often unintentionally, have been sapping their used vehicle performance and profitability.

Here’s a closer look at these inefficiencies and their unintended consequences:

Missed cars. I spoke with a general sales manager who previously spent 20-plus hours a week, researching and purchasing auction vehicles. He did this work in between working deals, answering questions from his sales team, and appraising trade-ins. He wouldn’t even hazard a guess at how many auction vehicles he researched, and then missed the opportunity to buy online, because he got pulled in another direction. “You’d get ticked off, and shut down the computer,” he says. “Or, you just start buying cars because you had no choice.” Now, he’s using a sourcing tool that reduces his research time to minutes, allowing a greater focus on buying the right auction vehicles.

Missed deals. Some used vehicle managers designate specific days and afternoons when they’re buying cars, either online or outside the dealership at physical auctions. I’m aware of at least one dealership where a “Do Not Disturb” tag hangs on the manager’s door during buying time. The approach ensures fewer distractions but it also means missed opportunities to take care of customers in the moment. After all, buyers today only visit your store once. If you’re not available to serve them, they’ll find another dealer who is.

Missed management. With all the time spent trying to find and buy auction vehicles, managers often miss, or put off, other important inventory management tasks, such as setting vehicle prices and keeping vehicles moving through the service department. It’s like a never-ending case of one step forward, two steps back, which is never a good thing in today’s margin-compressed, time-is-money retail environment.

Some might argue that these inefficiencies are simply the nature of the beast. Some might also suggest that dealers and used vehicle managers do pretty well, in spite of these inefficiencies.

But I would ask you to imagine what your used vehicle performance and profitability might look if you were able to reinvent how you source auction vehicles and do away with the inefficiencies altogether. As more and more dealers are coming to understand, there is a better way forward.