Auction Sourcing: Preparing for the Recovery

Auction sourcing and preparing for the recovery the right way, has never been more important than right now.  In the wake of the Covid-19 pandemic, dealers are unsure what their current inventory is worth and what an accurate appraisal value is on a trade in.  Manheim MMR, the industry benchmark for wholesale values, has been wildly volatile in the past weeks with the Manheim Index dropping an unprecedented 11% in the 3rd week of April, 2020. 

Franchise dealers, as well as independents, aged inventory is stacking up like seasoned cord wood,  and that spells disaster for the profitability of any used car operation.  So what actions should a dealer take to survive dropping used car wholesale values on their current inventory,  and how do they know what the correct wholesale price is when sourcing new inventory at auctions. 

Liquidation of Current Inventory is Crucial

auction sourcing preparing for the recovery

In a volatile market like today, cash is King.  The absolute correct thing for dealers to due today is liquidate there current inventory. I’m not saying you need to take all your cars to the auction and cut them loose, lowering your prices by 1-3 percent will peak customer interest enough to move the needle and enable you to see a significant spike in sales.  In fact, that’s exactly what vAuto founder, and Cox Automotive Executive VP, Dale Pollak encourages.  Listen to Dale’s latest podcast, Why Inventory Liquidation is right, for right now.

Many dealers will refuse to take this action because of the fear of the massive losses they will incur.  The fact is, you have already taken the loss you just don’t want to realize it.  Liquidation your current inventory will allow you to right the ship, and invest that capital in used car inventory that is valued at the current market price.  The dealers that recognize this the quickest we reap great rewards and will see profits that exceed their current losses. 

3 Keys to Auction Sourcing and Vehicle Aquisition

auction sourcing preparing for the recovery

In the podcast above, my good friend Patrick Janes, discusses the three keys to auction sourcing and vehicle aquisition. 

  1. Maximize Your Trade Appraisal Process
  2. Determine a Stocking Strategy Based on Current Market Opportunity
  3. Find Cars in the New Marketplace

Enjoy the podcast and please leave your comments below, so we can discuss and help you develop your strategy.  

If you would like to learn more on how about building a Profitable Pre-Owned Business Strategy, check out this post


I'm a business strategist specializing in pre-owned cars, with a passion for music, food, and wine. Remember, staying ahead of the curve is crucial for success!

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