One of the most pressing and ongoing issues I continue to see when working with dealers is the acquisition of used inventory. Whether it is the source, profitability, or simply how many can be acquired, it is the largest source of stress in dealerships.
The one area that all dealers know about but continue to struggle with is private party acquisition. Many or all have attempted, but only a few have succeeded at the level that they would like. The reason? One word. Commitment. A very high percentage of dealers simply do not put the required resources toward this to get to the level that can replace going to the auction or other similar sources.
Private party acquisition is a full-time position or positions. It will not succeed if we treat it as if it is just a part of the strategy. This is also not EASY. It takes time, patience, and A LOT of engagements, appraisals, and work. If you are not fully committed to the investment in time and resources, it WILL FAIL. This can be scary in a time of shrinking grosses on used cars. To commit employees to a new strategy without major immediate returns can turn dealers off to this idea. This area falls into the category of spending- a little to make A LOT.
There are a few different ways to structure the department, but each way is scalable to achieve whatever goal you may set for it. Whether you have an employee that can handle a transaction from cradle to grave (Customer engagement to paperwork completion) or build the department with buying agents that are more engagement focused and have appraisers that handle vehicle valuations.
The reasons for creating this department should be clear and obvious, but in the event that you need a little more convincing, here are a few reasons to do this NOW:
-Lower Cost To Market
-Typically better vehicle history reports (Accident, owner history, etc)
-More unique than most vehicles sitting at auction
-Less competition from other dealers trying to buy than auction
-No shortage of vehicles for sale
-Likely locally owned
Used vehicle acquisition is not going to get easier in the coming years. It just isn’t. You can keep trying to buy cars and auctions and continue to see your gross per copy shrink, or will you finally decide to make a change? What are you waiting for?
For more information or a free analysis using your data, visit www.lotwalk.com.
-Jeremy Zarfos
Performance Engineer
Lotpop Inc.
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