What follows is a question that I received from an AutoTrader field rep concerning the difficulty of sourcing used vehicle inventory. My response follows.
As you know, Dealers are having a tough time acquiring used car inventory. Many are saying they don’t have enough inventory for the traffic they are getting from advertising. When digging a bit deeper, some are out at Auctions trying to buy cars, some are calling Craigslist Private sellers, many are using online auctions.
The Question: How would you address this concern with a dealer?
The Answer: Thanks for the question. Generally, dealers have sourced cars from trade-ins and from what happens to be available at their local auctions. For obvious reasons, these traditional sources do not support the current need. As a result, dealers need to use alternative means and modify certain common assumptions.
First, with respect to alternative means, dealers can relieve some pressure by going further geographically then they are normally accustomed. For most dealers, this will require expanded use of on-line tools and transportation logistics. I’ve come to understand that general lack of familiarity and comfort with on-line buying tools and logistics are common obstacles that prevent dealers from looking beyond their backyard for vehicles. Also, common obstacles to buying cars include a perception that available cars are going for too much money. Implicit in this assumption are traditional full retail reconditioning costs and large packs. The inclusion of such costs and fees to the high unit acquisition price make it more difficult to justify purchases than otherwise needs to be the case. It is an extremely difficult and sometimes dangerous conversation to have with a dealer, but there should be no doubt that retail reconditioning and packs exacerbate the problems associated with short supply and high prices.
Some dealers, such as Cary Donovan of the Sam Swope Automotive Group in Louisville, Kentucky have developed personnel, processes and modified operating assumptions so as to greatly reduce the acquisition burden. Unfortunately, dedicated personnel, efficient processes, advanced tools and modified assumptions are attributes that do not exist at most dealerships. Without a willingness to do things differently, and spend more time and effort doing it, I do not know of any easy solutions. Hope this helps.
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