In a very broad sense, there are three major remarketing channels in the wholesale market today: Upstream, Midstream and Downstream.
The accompanying chart provides a basic graphical description of these channels. Certainly, there are different interpretations for each of the terms and industry players, be they buyers, sellers or auctions, may describe them slightly differently than we are doing here. However, the core concepts underlying each of the channels are well-understood and accepted across the business.
Upstream
Upstream is the term we use to describe vehicles that are located in a storage location other than a physical auction. Technology now allows us to offer these vehicles for sale on the Internet from a variety of remote locations, though the vast majority of upstream vehicles are being stored for a temporary period at a dealership. Inspections and photographs are captured at these locations in order to support the online offering of the vehicle and, if purchased, the vehicle is transported from the storing location directly to the purchasing dealer’s location.
In today’s market, most upstream units are off-lease vehicles being offered by one of the manufacturer finance organizations after the original retail lease has been terminated. An increasing number of off-rental, corporate lease and dealer consigned vehicles are also being offered through this channel as the buyer bases mature to the point where there is significant demand for these units on the Internet as well.
Midstream
If the vehicle does not sell during the upstream offering period, which is typically only a couple days, most consignors will then assign that vehicle to an auction location. The receiving auction will coordinate transportation to get the unit from the storing location to the auction. In days past, this would result in a period of time where the vehicle was not available for sale. However, technology has once again provided a great benefit to the remarketing business as vehicles are now able to remain ‘on-sale’ on the Internet while in-transit to the auction. This is the midstream channel – the period between the upstream offering and the vehicle’s arrival ‘downstream’ at the auction.
Utilizing the inspection and photos from the upstream sales process, vehicles will be offered to wholesale buyers, even if they are sitting on a transport truck. This midstream channel provides incredible benefits to our industry since a greater percentage of the available vehicles will now always be available for sale.
These midstream vehicles will all arrive at an auction, whether or not they are sold. If they are sold while in transit, upon arrival at the auction they will be segregated in the yard and held for the purchasing dealer. At this time the auctions can provide value-added services like post-sale inspections and reconditioning.
Downstream
Unsold vehicles will go through the normal auction processes as they are prepared for upcoming sale events in the downstream channel, which today comprises the traditional physical auction as well as a variety of online events while the vehicle is being stored.
As a dealer looking to source used vehicles, you should not be too concerned with what the terms ‘upstream’, ‘midstream’ and ‘downstream’ mean. The tools available to help you find the vehicles you need do a good job of directing you to the inventory, regardless of its physical location. The most important thing to recognize is that more vehicles are now available earlier and for a greater period of time, making it easier to find what you need, when you need it.
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