Dealers often share two complaints about buying auction cars: it’s tough to find the right cars, and even tougher to buy them on the money. The problem’s getting worse as more wholesale supplies come on the market. Find out how dealers can turn wholesale challenges into competitive advantage. See how market intelligence and new technologies help dealers easily find the “right” cars, guide the “right” bids and buys, and drive faster, more profitable retail sales. Take home best practices to help you increase your wholesale sourcing effectiveness and efficiency. Review this slide deck to: - Develop a technology-aided sourcing plan to save time and buy the right cars on the money - Identify current auction vehicle sourcing inefficiencies - Create buyer parameters to ensure the right acquisitions at the right price

1. Majd G. Saboura
Director of Wholesale Business Development, vAuto
Turning Wholesale Buying
into Competitive Advantage

5. 4
Interactive Poll Question 1 (insert after slide 3):
How has your auction sourcing game plan changed in the last
12-18 months?
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.

6. 5
The wholesale landscape is
becoming increasingly complex

7. 6
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. 7
Monthly Lease Penetration Rates
Source: Edmunds.com
30.1%
32.0%
33.2%
31.9% 31.8%
30.9%
Dec '15 Jan '16 Feb '16 Mar '16 Apr '16 May '16

9. 8
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
Increased Wholesale Price Volatility
“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. 10
Retail Market Trend
Strong Market—Record-Setting CPO Sales

12. 11
Retail Trend
Increased Need For Auction Vehicles

13. 12
Retail Market Trend
More “near-new” used vehicle
inventory

14. 13
Retail Market Trend
Margin Compression
Continues

15. 14
Two Take-Aways From Trends
NEED TO “BUY RIGHT”
TO MAXIMIZE
FRONT-END GROSS
INCREASEDINCREASED
COMPETITION
FOR
THE
AUCTION VEHICLES
“RIGHT”

16. Two Common Auction Complaints
1. Tough To Find Right Cars
2. Tough To Buy Right Cars
On The Money

17. 16
With more wholesale supply why is it
so hard to get the right auction
vehicles at the right prices?

18. 17
Interactive Poll Question 2 (after slide 15):
What’s the “right” amount to pay for an auction vehicle?
At/below average auction prices for the unit (e.g., MMR).
A % above average auction prices, if the car meets certain
conditions.
A set % below the retail asking price, factoring in acquisition,
pack, other costs.
Not sure

19. Two Responses To Auction Sourcing Challenge
 Look Harder
 Look Smarter

20. 19
 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?
o Need to replace sold inventory with
something
Look Harder, Dealers

21. 20
 More effort/time with less reward
o On average review 100 to buy 1
o 40+ hours a week researching/prepare
 More risk of paying too much, aged
units
o Aged units over 60 days sourced at auction
o Out of sync from market
Look Harder, Dealers

22. 21
Look Smarter, Dealers
 Data-driven, disciplined
 Assess profit up-front then condition/history
 Stick to data/metrics to guide profit-focused purchase
 Total Gross Mindset
 Complete view of all data points
 Sacrifice front end gross for total gross (F&I, etc…)

23. 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?
 Less time researching, more time buying
 85% discipline / 15% instinct
 Focus on right vehicle for the right price

24. 23
Biggest complaint today is overpaying for vehicles at
auctions
 Look smarter dealer redefines overpayment

25. 24
Interactive Poll Question 3 (after slide 21)
Which of the following best describes you?
A Look Harder Dealer
A Look Smarter Dealer
Not applicable

26. Crystal Ball
• Rise of buyer-driven recommendations (e.g., Amazon, Netflix,)
• Outsourcing/redeployment of acquisition resources (Sonic/Manheim)
• Ongoing margin compression
• Need for increased effectiveness and efficiency

28. Q & A

29. 28
Thank You!
Majd G. Saboura
Director of Wholesale
Business Development, vAuto
majd.saboura@vAuto.com