The Real Car Business

By this time next week, we will have exchanged the 10,000th vehicle as a company! When we started off my only thought was to make it through that daunting 1st year and then to work my business plan through 3 years. Now in our 8th year, we are planning for expansion and continued growth. Recently, I presented to a NAAA group of independent auction owners who wanted to know how to make their customers better auction buyers and sellers. My response to them was simple and to the point: you must be highly organized. There are so many machinations and processes I see deployed in the lanes and I wonder how they keep it straight... which reinforces my theory and practice. The most effective auction users are those that are organized and keep it simple. Perhaps this is why we will fly by that 10,000th vehicle and continue to motor on ahead. If your dealership struggles at auction, fell free to call Sudden Services LLC.

This morning, I spent 4-hours updating my email, cell phone, computer, the house phone accounts, cable TV and the kids accounts. It is a miracle that any of us can remember that much user name password information! So I asked myself, how often do my customers update thier wholesale account? Think about that. Are you using the same proccess you did last year... or have been using for years? Recently, I have seen some very large multi-franchise new car dealers send everything to auction... and they are still running! They made drastic changes to the operation of thier entire organization by changing the direction of wholesale! It did'nt get advertised to the public, they did'nt sell it to a customer and deliver it, and they each had an internal fight about instituting it I gaurentee. And- thy're still running. So, are you up to making this year the year at your dealership? Go ahead- change your wholesale pattern, then call Sudden Services LLC. W/

... There has been chatter lately in the lanes about the competition from above. No, not the devine, but from the screen above the auctioneers head. The online bidder. It's become obvious that there is an increasing presence of online bidders and depending on how the auction displays its online bidders, chances are you recognize the dealership. The difference is that that bidder was a traditional "auction guy" and now, has moved toward staying in the store and buying from there. So what is triggering this migration? The cars online are not pre-selected, better quality cars... infact yesterday at Southern Auto Auction (CT) a 1990 Mercedes SL500 had on line activity (the antithesis to only the newest, lowest mileage cars sell online). There is a growing comfort level and the understanding that if an on line purchase arrives at your store not as described, the seller/auction will take it back. This combined with the tremendous travel time savings has put the on line b...

Amidst the change in values and demand, perhaps never before has it been as difficult to forecast what lies ahead. It seems to be the overhwhelming majority of used car dealers sales are down... way off.. as far as 70% YTD. People have just plain old stopped coming in! New car stores report decreased sales YTD as well... Bill Ryan (Boch Toyota, MA) suggested that they may be "... off as much as 25% right now...". So... what do you do with your current inventory? How do you forecast what to stock for the next market? The next market is actually available right now. It's in the auction lanes tomorrow. With little scientific research, limited market analysis, and even less planning than goes into what to pack for lunch... the auction buyer is signaling what lies ahead. Of course each individual plans on what to buy and sell, but when the variable of competitive auction bidding is added the dynamic changes. But patterns reveal themselves and a path ahead becomes a b...

In the auction business, the wholesaler is dying, and that is real change. That's right, the car buyer is going away... he has been... and now at a faster pace. Sure, there will remain standing the big institutions with thier check books and apparatous in place, but the daily hand to hand combat in your used car managers office is almost gone! The new car dealerships exposure to auction selling has expanded tremendously for 20 years. Prior to that the wholesaler was deeply entrentched in the store and dealership mangers relyed on thier buyer for nearly every single deal. Today, we are at place where greater than 70% of new car stores conduct wholesale themselves with zero dependence on the traditional buyer. By this ratio, the wholesalers opportunity for profit has been reduced and with sharp increases in fees to sell at aucion, the wholesale margins continues to deteriorate. I can't tell you how many times a week I hear the wholesaler tell me how tough it is for him beca...

If prices are measured by book value on average, than you could say the market is about average . If you single out trucks, it quickly becomes a soft market. If you gauge small cars... try to guess what a Focus or Elantra will do! It may be mid-summer, and it has been hot... but not as hot as cars at auction! The auction business itself, as a whole, is in a rapid state of change and that has had more effect on prices than we give credit to. The shortage of cars crossing the blocks are still out there, but are selling through different channels . Finance companies sell direct. Rental companies have mature wholesale channels outside the auctions. OVE, AutoTrader, Cars.com... all outside channels that have syphoned vehicles out of auction lanes as well. I believe that these are major reasons as to why the "remaining" cars at auction have jumped to the levels they have. It has been the push away from the physical auction from the major consignments sources that has increased val...

For the past 2-3 weeks I have been making a point of seeking out the most experienced auction dealers and asking them of the market we're swimming in. As strange as it seems there really is no panic or worry ... rather that this too will pass and the march will go on. The big concern I hear voiced in the vast middle of the auction populous is where the cars will come from over the next 10-14 months; the short term. What there doesn't seem to be is an understanding that after that period, there will have been a complete correction or adjustment to the "new" levels in availability of vehicles. New car sales made the adjustment away from the heady days of huge fleets and rental car gluts and adopted creative leasing, sharp incentivizes, and deep discounts. Today's level of 12.6 million new vehicle sales annually* will continue to feed the used vehicle supply and despite the "short term fear", there will in fact be cars available to buy at auction in the fu...