New Software Guides Car Dealers Through Unfamiliar Territory

Many auto dealership used-car operations are resorting to “buy anywhere” sourcing strategies in the face of high wholesale costs and a nationwide vehicle-inventory shortage.

Those go beyond auctions and trade-in channels to acquire inventory.

“Acquiring inventory is the No.1 challenge facing dealers today, and will be for some time to come,” Dale Pollak, vAuto founder and Cox Automotive executive vice president, tells Wards.

But going beyond traditional acquisition channels, such as auctions and trade-ins, puts dealership appraisers and buyers in unfamiliar territory.

“Opportunities and risks are different, at a time when the market won’t forgive buying the wrong car or paying too much,” says Pollak (pictured, below left).

In response, vAuto has added to its ProfitTime inventory management platform an enhancement called Global Acquisition. It’s billed as the first multichannel used-vehicle acquisition system. Its software uses multi-source market data to guide appraisers and buyers as they obtain inventory from assorted channels. Those include dealer-to-dealer networks, service lanes, off-lease and off-the-street.

Dale Pollak vAuto

In terms of accountability, Global Acquisition offers a computer-screen dashboard that helps dealers and managers know how well their appraisers and their buying practices meet a dealership’s inventory acquisition and appraisal strategy.

The dashboard shows vehicles sourced from each channel, whether they were purchased on- or off-strategy and why, and how they ultimately perform as retailed units.

Consequently, dealers can see what is or isn’t working in each channel and act accordingly.

Mindsets vary in the used-car acquisition field, Pollak says, citing as an example the difference between buyers and appraisers.

“The buyers are at auctions, which are competitive environments where there are fellow bidders,” he says. “The trade-in appraiser is at the dealership with an audience of one.

“If you don’t have an acquisition strategy, the appraiser can offer $17,000 for a trade-in, the customer says ‘I want $19,000,’ the appraiser passes, but the next day the dealership’s buyer spends $19,000 for essentially the same car at auction.

“Who’s right, the buyer or the appraiser? Global Acquisition helps figure that out with investment scoring.”

Pollak emphasizes the system isn’t intended to set firm prices for dealerships. “If the software says a vehicle’s wholesale value is $18,400, it doesn’t mean the dealership can’t pay $19,000 for it. Appraisers don’t want to be told a firm price. But they do want a common reference point.”

Says Randy Kobat, Cox Automotive’s vice president-inventory management solutions: “You make money when you buy a car, not when you sell it. This has never been truer than in today’s volatile pre-owned vehicle market.”

Pollak says Global Acquisition “brings retail and wholesale together” by predicting the probability of a vehicle selling at a particular price within seven days, based largely on market purchasing data.

But Pollak notes dealerships characteristically can differ. “Some dealerships sell vehicles faster without pricing cheaper.” And some don’t.

vAuto launched Global Acquisition at the recent National Automobile Dealers Assn. convention and expo in Las Vegas.

Dealers who had participated in a pilot program seem to like the system.

“Global Acquisition tells us what our endgame is going to be while we’re appraising the car,” says Tim Nelson, general manager of Beaverton (OR) Honda. “It helps us focus on how to acquire a vehicle, not what we’re going to do with a vehicle if we acquire it. You can’t make anything on a car if you don’t first buy it and buy it right.” 

Kelly Summers, general manager for Bill Knight Ford in Tulsa, OK, says, “We know we have to be aggressive if we’re buying off the street.”

Steve Finlay is a retired Wards senior editor. He can be reached at [email protected].