The author believes auctions and dealers risk fading into irrelevance if they fail to inject more transparency in the wholesaling process.  - Photo by Mr. Blue Mau Mau via Flickr

The author believes auctions and dealers risk fading into irrelevance if they fail to inject more transparency in the wholesaling process.

Photo by Mr. Blue Mau Mau via Flickr

Transparency is a word that back in the day, made dealers uncomfortable, particularly when retailing used vehicles. We hesitated to show our full hand. But like the retail customer who pushes for more information and transparency, dealers looking to stock their used cars are demanding the same. Wholesale auctions have to change or go the way of Blockbuster.

If you’ve ever bought inventory at a physical auction or some of the online auctions, you know that the accuracy of the condition reports can be a bit fuzzy. When the vehicle arrives and its actual condition isn’t what you expected, you either have to step up and pay to get it front-line ready or enter the dreaded “arb” zone.

At the very least, you’ll spend more money, time, and effort moving the vehicle through recon. The worst case scenario is days or weeks of arbitration conversation, which usually ends up in lost money, lost time, and a whole lot of frustration.

Read: Ky. Dealer Charged With Leading $4M Repurchase Fraud

Transparency and Where to Find It

In a perfect world, we could physically walk every vehicle ourselves before we bid or buy. But that’s just not realistic.

The next best thing is third-party CRs that cover every option, ding, dent, and scratch, every inch of the undercarriage, every one-tenth of an inch of tire depth, and plenty of high-resolution photos to back it all up. Some even use high-tech custom-built microphones to record the engine so you can hear those telltale sounds of trouble.

When you have that kind of transparency into every vehicle you’re buying, there’s no more guessing on margins, recon, or time. You are confident you have a steady supply of vehicles your customers want to buy.

It’s always a battle to prove to your customer the car is worth what it’s worth.

Transparency also means the ability to show your retail customer how things really work — you know, all the stuff we used to hide to increase gross (which is why they don’t trust us in the first place). It’s always a battle to prove to your customer the car is worth what it’s worth.

Proof of Value

Last week I was talking to Dave, a used car manager at a large franchised dealership who has been in the business for 22 years. He was working a deal on a trade, and surprise: The customer thought he was trying to steal his trade and wanted proof of value. 

So Dave called in his third-party inspection partner, who completed a detailed CR and, within a half hour, had the vehicle in a live online auction. Dave pulled up the live feed on his phone and showed the customer that, in the last five minutes, he had 59 sets of eyeballs and 21 active bidders.

Not only did Dave make a sale that day, he earned his customer’s trust — plus all the referrals and repeat business he’ll probably send Dave’s way. Not to mention the trade was wholesaled the same day Dave took it in. That’s all priceless in our business.

With the evolution of online wholesale comes transparency, trust, efficiencies, and profitability to what was once a gray, fuzzy, clumsy, time-consuming process, leaving you with time to focus on your real job.

Don’t change everything you do, but if you don’t start looking at other more transparent avenues, you’ll risk ending up like Blockbuster too.

Doug Hadden is vice president of field operations for ACV Auctions, a popular speaker at conventions, and a 40-year veteran of the industry.

Read: Report: Used Vehicle Prices Up 2% From 2018

Originally posted on Auto Dealer Today

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