Dealers compete for used vehicle inventory with digital tools
Paul Lips, ADESA’s chief commercial officer, said digital purchasing is often linked to how some dealership groups structure their buying operations.
“What we’ve seen are the dealership groups that have moved more to a centralized model and using either internal or external analytical tools to tell them which vehicles to buy; they tend to be adopting the digital channels faster for acquisition,” Lips said.
Of course, with the Internet, inventory from all corners of the country ends up in front of dealers’ eyeballs and across multiple channels. One way ADESA has adapted to this is by centralizing its own inventory consulting group, which previously was focused on the company’s individual digital channels or even its auctions.
Nick Johnson, used-vehicle director at Luther Automotive Group in Minneapolis, told attendees at Used Car Week that digitization of the wholesale market has evened the playing field between small and large dealers for access to nationwide inventory.
But, just as it does for consumers, remote inventory acquisition for dealers requires a measure of confidence in the seller, Johnson said, “because you only have so much margin of error.”
“One or two $500 misses eats up your whole margin,” he added.
Cavender Toyota, in San Antonio, is taking another approach to vehicle acquisition. It uses technology to help consolidate its choices, said Ray Sanabia, the store’s general sales manager. Over the Internet, the store will locate vehicles quicker and sift through condition reports.
“But as far as actually buying, I prefer to just send our guys to market, have their hands on it, feel it, touch it and figure out what the right one is and bring it home with them,” Sanabia said.
Part of his reasoning is the gut intuition that longtime used-car buyers can possess. “The way a car hits you is the way it’s going to hit a customer,” he said.
For Boening, it helps that about 85 percent of the used vehicles his store acquires are newer and lightly used certified pre-owned cars and trucks.
Because shipping costs from California have increased lately, Boening’s store is more careful about how much inventory it buys from out West. But otherwise, Boening said, “We don’t put any limitation on how we find inventory. I never want to do that.”
He added, “So if it’s a small auction that is online and we’re able to get to it somehow, and it’s in Idaho, I’m all about it.”