News headlines proclaim the recession is over and things are looking up across the broad economy. Stock markets are generally trending in the right direction again. Some vehicle manufacturers are reporting stronger-than-expected financial results. New-car sales are showing strength that was not there just a few months ago. This is all good news!
Those of us in the used-vehicle market are not too surprised about any of this. From the start of the year we have seen strength in the wholesale and retail sectors that exceeded most estimates. In July, the ADESA Canada Used Vehicle Price Index increased by approximately 2.1 percentage points over June, seasonally adjusted, at a time of year when values typically decline (See Sales Report – Used – page 23).
Beyond the raw numbers, both physical auction attendance and online participation have been trending higher all year as more dealers than ever before are entering the used-vehicle market – not surprising given the challenges in retail new-car sales over the past several months. Retail demand for used vehicles has stoked wholesale demand and we have noticed an increase in requests for training on how to purchase vehicles online. This is indicative of more dealers trying their hand in used-vehicle sales to offset challenges on the new side of the business.
Getting into used
If you are not currently an active participant in this side of the business, you may be wondering how to get more involved. There are a few ways to source used inventory for your lot. Some dealers source exclusively from the trades they take in on other sales while many interact with each other or wholesalers to get the specific vehicles they need. The auction companies also offer a variety of ways to source inventory and this is a side of the business that is constantly evolving.
Not long ago you would have to physically attend an auction site, on a specific day, at a specific time to purchase the vehicles you need. While hundreds of thousands of vehicles are still purchased this way in
For many potential buyers, the cost in time, effort and money to travel to the auction to purchase only one or two units is deemed excessive. That is why we have seen so much growth in the online side of the business. Many dealers who previously only sourced inventory through trades or a local wholesale relationship are now hopping online to purchase as needed. While there may be a little reluctance to try something new, the support systems are in place to make the online experience painless.
The quality of the information that is available online for vehicles being offered is constantly improving as sellers and auctions work together to present potential purchasers with the content they need to make good buying decisions. Online content is increasingly being derived from electronic condition reports that capture information in a consistent manner. Additionally, more attention is being given to photos to ensure that the vehicle is being represented fairly. Aspects like image resolution and lighting are being considered to improve the user experience and there are more photos online now than ever before.
New Motor Vehicle Dealers Act in
Another element affecting the wholesale market and the quality of vehicle information is the pending implementation of the Motor Vehicle Dealers Act (2002) in
With a variety of channels available to source vehicles and better online content to support vehicle offerings, there has never been a better time to try out the used vehicle side of the business. The auctions are well prepared to assist potential buyers, with great orientation programs and hands-on training available only a phone call away. In fact, ADESA, for one, has implemented an in-store dealer training program where a qualified trainer will come right to the dealership. Hundreds of dealers have taken advantage of this program and are now quite comfortable sourcing inventory and purchasing online. ADESA’s online buyer base has grown over 25 percent so far this year as more and more dealers engage in the market virtually.
Post-sale support
Finally, it is critical to address the post-sale support process. After the vehicle is purchased, either at the physical auction or online, the buyer needs to know that they are going to get the service they need, whether it is moving the vehicle to their location or gaining access to an equitable arbitration process. The auctions are ideally suited to handle these aspects of the transaction as well. Each auction has dedicated staff to handle vehicle transport and any arbitration claims that arise post-sale. As the buyer, you have access to the appropriate people to facilitate the transaction from start to finish.
With the strength of the used-vehicle market and all the supporting mechanisms in place, now is a good time to get involved and gain some of the benefits for yourself.
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