WHY CURRENT MARKET CONDITIONS ARE PROVIDING GREATER OPPORTUNITIES IN VEHICLE REMARKETING
There’s no question that today, used car prices in general, seem to be on the high side. Many industry observers also forecast that they’re likely to remain so for the foreseeable future, which for dealers presents an interesting set of circumstances. With a general shortage in lease returns, dealers are placing more emphasis on older and higher mileage vehicles, either keeping them for retail instead of wholesale, or buying/selling more of them at auctions.
And it’s a scenario that’s not likely to change anytime soon. Don Wallace, general manager at Manheim Toronto, says that both the industry and consumers are “going to have to get used to transacting on older pre-owned vehicles for some time to come.”
Don Wallace, general manager, Manheim Toronto
ANYTIME, ANYWHERE
Yet, given the current situation of the market — more older cars and higher prices — there’s arguably greater value for dealers than ever before in the auction process. Growth in accessibility and transparency have changed the way business is done, making it easier and more convenient. Don Wallace, says the introduction of features such as Manheim’s mobile app that facilitates live bidding and the ability to scan VIN data from a mobile device have resulted in dealers being able to do business “anytime, anywhere.”
And it’s a trend that’s set to continue. Wallace says that as we move into an era where Multiple-Platform Selling becomes more commonplace, with sellers listing vehicles in more locations simultaneously “we’ll keep expanding our available reach of vehicles and in turn expand the mobile buyer base.”
So there’s the convenience factor. And then there’s access to more vehicles in the marketplace. In spite of this, however, and given that used vehicle prices are currently high, there is still a consensus that many dealers aren’t really taking advantage of the auction process as much as they could.
Bruce Jewer,
independent wholesaler
STRATEGIC APPROACH
Bruce Jewer, who’s been involved with buying and selling cars for three decades, both as a dealer and independent wholesaler, says that many dealers look at auctions as “a last resort to clear inventory.”
He says that by taking a more strategic approach and placing different types of vehicles at different auctions at different times, dealers stand a better chance of getting more money for the vehicles they sell and buying the ones they need at lower prices. “Everybody tends to be hot for trucks in the spring,” he says. “So I would buy trucks in January/February when nobody wants them and then keep them until May and sell them.”
He says that training can be a big factor in how effectively dealers are able to use the auction. “Many used car managers are promoted from within the organization,” he says, “so they are not often trained to use the auction as a major remarketing tool.” He says that with greater accessibility and the growing integration between online and physical auctions, dealers can make more money on cars at auction than if they retail them, particularly if a buyer is seeking out a specific vehicle that’s hot in their market.
With prices high and access to more buyers, auctions offer major advantages for both buyers and sellers
“Somebody in Quebec might want a car from Toronto,” he says. “The vehicle probably won’t cost as much in reconditioning due to the milder climate and it might be something that is tough to find in their area, so they’re more likely to pay a premium.”
Michel Joanisse, of Hawkesbury Mazda in Hawkesbury, Ont., which straddles the Ontario/Quebec border, says he has found broadening his reach to encompass the Toronto area highly beneficial. “We’ve been coming here for five years,” he says during one of ADESA Toronto’s Wednesday auctions. “I already have two cars sold from those that I am running today. It is a good, strong market here.”
Fred Tcharmtchi, pre-owned sales manager at Performance Ford in Windsor, says coming to Toronto has also proved great for business, especially in the current environment where good used cars are in demand. “We get a lot of trade-ins,” he says. “We are consistently making money bringing cars here. Even with transportation, sellers’ fees and clean up costs we still make a profit.”
Roy Meech, director of dealer sales, ADESA Canada
QUICKER DECISIONS
Today, thanks to a range of tools such as vehicle history reports like CarProof, condition reports such as Manheim’s AutoGrade and pricing data, Canadian Black Book and other sources, buyers are armed with more information than ever before, expediting the buying process and enabling dealers to quicken their inventory turn times.
Nevertheless research remains a key factor, whether buying or selling vehicles at auction. Roy Meech, director of dealer sales for ADESA Canada, says that dealers need to understand that when selling at auction, “the larger the buyer base, the more accurate the market value for an individual unit (vehicle) will be.”
He also says that brand reputation is hugely important to ensure dealers get higher gross on the units they sell and to ensure good, solid repeat business.
Sam Hirani, vice-president,
Robinson Buick GMC, Guelph, Ont.
It’s something Jewer concurs. “You’ve got to have a regular presence — people have got to get to know you,” he says. “Buyers need to be able to ask questions and you have to be able to respond. You have to be able to do some selling even when you’re on the block.”
It’s also important to stay active and involved. Sam Hirani, vice-president at Robinson Buick GMC in Guelph, Ont. says that with a much broader buyer base, dealers need to have their finger on the pulse when it comes to prices and that it also pays to have a presence at physical auctions as well as online, since it can sometimes yield desirable vehicles dealers might otherwise not be aware of.
“At the physical auction, you may see a car you want that hasn’t been posted online yet,” he says. “If the list came out yesterday and more cars were dropped off at the auction this morning, you might not see them unless you are physically here. Being here means you stand a much better chance of getting that car you want.”
