The law of supply and demand has flipped to become a new bylaw for auto dealers: demand and supply. There’s plenty of demand in the marketplace, but not nearly enough supply. This can be blamed in large part on the global semiconductor shortage causing automakers to either slow vehicle production or shut down completely.
The pandemic may have limited some travel and transportation habits, but Americans’ enthusiasm for cars hasn’t cooled. In fact, the auto market appears to be on fire for the foreseeable future. Nationwide, dealers face challenges to secure sufficient supply of the most desired vehicles: pickup trucks, crossovers and SUVs. With supply scarce on new car lots, consumers are snapping up pre-owned vehicles. That leaves dealers scrambling to find new sources of used cars.
Digital auctions help fill inventory gaps
Savvy dealers are turning to digital wholesale auctions to help negotiate inventory constraints. Online auctions have existed for many years, but the pandemic forced more dealers to pivot from physical auctions to online. Dealers and wholesalers are not only saving valuable time and money doing business this way, they’re also helping to ease the inverse demand vs. supply issue.
In fact, this had led some physical auction fans to convert.
With digital auctions, dealers can easily search for their desired vehicles and place bids during designated auction periods. Can’t take a chance on being outbid for that great pickup or SUV? Some sites offer a buy now price option, allowing immediate purchases — including transactions outside of traditional business hours.
This provides dealers with a competitive advantage, giving them a better chance to secure the limited inventory available and help meet strong used vehicle demand. At the same time, digital auctions help provide an effective and efficient way for dealers to sell off languishing trade-ins, so their team can focus on acquiring and selling the cars and trucks customers want.
Using Digital Platforms Effectively
In our experience, it doesn’t take long for dealership staff to embrace digital auction platforms, such as Ally’s SmartAuction. We recommend logging on every day, as there’s always fresh inventory and updated prices. Saved searches are an efficient method to ensure you don’t miss new, desirable listings that will morph into sales. We recognize most sales staff don’t have the luxury of sitting glued to their computer screens all day, so SmartAuction’s mobile app was designed to allow staff to quickly view, buy and sell vehicles with a few taps on their phone.
The Real Numbers
The urgency to use digital tools for inventory management cannot be understated. According to a recent report from J.D. Power, “used retail prices are 15% above where they were at the end of 2020. Used-vehicle prices have shown no signs of softening and are expected to remain exceptionally strong for the foreseeable future.”
With much of the business moving online, it’s imperative that dealers consider leveraging and investing in technology that streamlines operations. When used effectively and frequently, digital auctions are a smart tool to help dealers attack inventory challenges while freeing up more time to serve customers.
About Ally 3PR
Ally 3pr offers an end-to-end vehicle remarketing process to auto lenders for sale of repossessed or off leased vehicles. 3pr provides clients access to Ally’s robust remarketing strategy that includes selling vehicles through Smartauction – Ally’s industry leading wholesale online auction, access to our network of best in class auction vendors, and most importantly access to a robust buyer base – increasing opportunities for higher sale proceeds. We’re pleased to offer 3rd parties including finance companies, banks, and credit unions access to our full end-to-end remarketing services – only from Ally.
By Steve Kapusta
Senior Vice President of Remarketing Services, Ally Financial
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