A Profit Focused Game plan for Better Auction Purchases
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Majd Saboura discusses how dealers can beco more efficient, profitable and successful auction buyers and better retailers during a FREE webinar presented on Monday, October 10. How dealers turn auction sourcing into advantage by applying real-time market insights to redefine how they evaluate and research vehicles, guide their bidding and purchase strategies and ensure every auction purchase meets their goals.
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A Profit Focused Game plan for Better Auction Purchases
- 1. Majd G. Saboura Director of Wholesale Business Development, vAuto A Profit-Focused Game plan For Better Auction Purchases
- 2. Poll #1 How has your auction sourcing process changed in the last 12- 18 months? (please select one) A. We’re going to more auctions than we used to. B. We’re buying a few more cars online than we used to. C. We don’t go to physical auctions; we only buy online. D. Our process really hasn’t changed.
- 6. The wholesale landscape is becoming increasingly complex
- 7. Wholesale Market Trends Increasing supply 0 2 4 6 8 10 12 1999 2001 2003 2005 2007 2009 2011 2013 2015 MillionsofUnits NAAA Member Auction Volumes
- 8. Monthly Lease Penetration Rates Source: Edmunds.com 30.1% 32.0% 33.2% 31.9% 31.8% 30.9% 30.5% 27.8% 29.7% Dec '15 Jan '16 Feb '16 Mar '16 Apr '16 May '16 Jun '16 Jul '16 Aug '16
- 9. Wholesale Market Volumes Off-Lease Units Driving Supply Increase (units in millions) 2.55 3.1 3.6 4.0 2015 2016 2017 2018
- 10. Wholesale Market Trends Price Volatility Or A New Normal? “Almost everyone is expecting that prices will decline. To get to what we’ve expected for 2016, we’re going to have to have a steeper fall off.” - Thomas Webb, Chief Economist, Manheim
- 11. Retail Market Trend Strong Market—Record-Setting CPO Sales Quarter Total Sales Franchise Used CPO Q2 2011 9,344,540 2,391,053 449,116 Q2 2012 9,320,918 2,570,044 462,299 Q2 2013 8,952,753 2,756,076 548,821 Q2 2014 9,099,375 2,839,086 581,633 Q2 2015 9,635,560 2,885,997 660,766 Q2 2016 9,804,421 3,001,857 678,169 Used Vehicles Sales Summary
- 12. Retail Market Trend More “near-new” used vehicle inventory
- 13. Retail Market Trend Margin Compression Continues
- 14. Two Take-Aways From Trends NEED TO “BUY RIGHT” TO MAXIMIZE FRONT-END GROSS INCREASEDINCREASED COMPETITION FOR THE AUCTION VEHICLES “RIGHT”
- 15. Two Common Auction Complaints 1. Tough To Find Right Cars 2. Tough To Buy Right Cars On The Money
- 16. 15 With more wholesale supply why is it so hard to get the right auction vehicles at the right prices?
- 17. Two Responses To Auction Sourcing Challenge Look Harder Look Smarter
- 18. Experience/Instinct Driven o Not using tools and technology o Not using market/scarcity reports Preference For In-Lane Purchases o Visiting 1 or 2 auctions – maybe? Look Harder, Dealers
- 19. More effort/time with less reward o On average review 100 to buy 1 o 40+ hours a week researching/prepare More frustration/greater risk o Need to replace sold inventory with something o Greater risk of aged inventory (e.g., buying wrong car/over-paying) Look Harder, Dealers
- 20. Look Smarter, Dealers Less time researching, more time buying 85% discipline / 15% instinct Increased focus on right vehicle for their market—not cars they’ll never buy
- 22. Look Smarter, Dealers Online emphasis for efficiency Expand Auction sources – on average 7-10 auctions More online vs. in-lane – 60/40? 70/30?
- 23. Look Smarter, Dealers Data-driven, disciplined Assess profit up-front then condition/history Stick to data/metrics to guide profit-focused purchase
- 25. Look Smarter, Dealers Total Gross Mindset Complete view of all data points Sell more, faster, to combat margin compression Give up front end gross to gain total gross (F&I, etc…)
- 26. 25 Biggest complaint today is overpaying for vehicles at auctions! Look smarter dealers redefine overpayment… Look smarter dealers redefine overpayment… Biggest complaint today is overpaying for vehicles at auctions!
- 27. Crystal Ball • More technology used in lanes and online • Shift toward online purchasing than in-lane • Ongoing margin compression • Continued pressure to increase auction effectiveness and efficiency
- 29. Poll #2 How has your front-end gross profit changed on auction-purchased vehicles in the past year?(Please select one) A. It’s the same. B. It’s worse than it used to be. C. It’s better than ever. D. I’m not sure.
- 30. Q & A Majd Saboura Director of Wholesale Business Development, vAuto majd.saboura@vAuto.com
- 31. Poll #3 How can vAuto help you develop your auction game plan? (Choose all that apply) A. Send me an auction sourcing best practice e-book. B. Demo vAuto’s latest auction sourcing tool. C. Contact me for a consultation. D. I appreciate the offer. I’m good for now.
Editor's Notes
- How has your auction sourcing process changed in the last 12- 18 months? (please select one) We’re going to more auctions than we used to. We’re buying a few more cars online than we used to. We don’t go to physical auctions; we only buy online. Our process really hasn’t changed.
- How has your front-end gross profit changed on auction-purchased vehicles in the past year?(Please select one) It’s the same. It’s worse than it used to be. It’s better than ever. I’m not sure.
- How can I tell what my front-end gross will be if I haven’t even acquired the car? Answer: You can never tell for certain. But real-time market data gives you the best available guidance to know how a vehicle will fare at your store, given competing cars, retail prices and average days to sale/Market Days Supply data. How can I compete in the lanes with buyers who always are willing to over-pay? Answer: I think the better question to ask is, why are these buyers able to over-pay again and again? The answer is that, to them, they’re probably not over-paying. Maybe they plan to spend less on reconditioning. Maybe the buyers represent another market where what you consider to be over-paying is really a great price. Maybe the buyers represent a dealer who focuses more on fast inventory turns and back-end/reconditioning gross than front-end gross. It’s also possible that the buyers are really making bad decisions. Whatever the case, the point is that you might consider a purchase price of $XXX to be over-paying, but to someone else, the car pencils out. How can I hold my buyers accountable to acquiring vehicles that meet my retail gross objective? Answer: It’s all in your game plan. Do you have specific Cost to Market or other parameters in place for your buyers to follow? Do you have an inventory tool that tells you, on an individual appraiser or buyer basis, how well they acquire auction vehicles that fit your parameters. Overall, the key is you have to inspect what you expect, and today, it’s fair to say many dealers don’t hold buyers as accountable to retail objectives as they should. What market segments do you think offer the greatest opportunity in the months ahead? Answer: If I were a dealer looking to expand my sales volumes, I might look beyond the near-new/CPO-friendly model years, to older, harder-to-find units. Traditionally, these vehicles have been ripe pickings for independent dealers, but a growing number of franchise dealers are playing in these segments to help customers with credit challenges and budget issues that make a $10,000 or less vehicle a primary option. Before we sign off we’d like to thank each of you for joining us and trust that you found today to be of value, Special thanks, to Majd Saboura as well as to the sponsor for today, vAuto. You’ll be receiving a short survey at the end of this webinar, and we’d sure appreciate your filling it out as we value your time and feedback. A copy of today’s webcast will be available for download and you’ll all be receiving a link from us in an email early next week. And most importantly THANKS FOR JOINING US, this is Lori Dearman saying have a great rest of the week!
- ? How can vAuto help you develop your auction game plan? Send me an auction sourcing best practice e-book Demo vAuto’s latest auction sourcing tool Contact me for a consultation I appreciate the offer. I’m good for now.