turning wholesale buying into competitive advantage
Post on 13-Apr-2017
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Majd G. Saboura
Director of Wholesale Business Development, vAuto
Turning Wholesale Buying into Competitive Advantage
4
Interactive Poll Question 1 (insert after slide 3):
How has your auction sourcing game plan changed in the last
12-18 months?
We’re going to more auctions than we used to.
We’re buying a few more cars online than we used to.
We don’t go to physical auctions; we only buy online.
Our process really hasn’t changed.
5
The wholesale landscape is becoming increasingly complex
6
Wholesale Market Trends
Increasing supply
0
2
4
6
8
10
12
1999 2001 2003 2005 2007 2009 2011 2013 2015
MillionsofUnits
NAAA Member Auction Volumes
7
Monthly Lease Penetration Rates
Source: Edmunds.com
30.1%
32.0%
33.2%
31.9% 31.8%
30.9%
Dec'15 Jan'16 Feb'16 Mar'16 Apr'16 May'16
8
Wholesale Market Volumes
Off-Lease Units Driving Supply Increase(units in millions)
2.55
3.1
3.6
4.0
2015 2016 2017 2018
Wholesale Market TrendsIncreased Wholesale Price Volatility
“Almost everyone is expecting that prices will decline. To get to
what we’ve expected for 2016, we’re going to have to have a
steeper fall off.”
- Thomas Webb, Chief Economist, Manheim
10
Retail Market Trend
Strong Market—Record-Setting CPO Sales
11
Retail Trend
Increased Need For Auction Vehicles
12
Retail Market Trend
More “near-new” used vehicle
inventory
13
Retail Market Trend
Margin Compression
Continues
14
Two Take-Aways From Trends
NEED TO “BUY RIGHT”
TO MAXIMIZEFRONT-END GROSS
INCREASEDINCREASED
COMPETITIONFORTHEAUCTION VEHICLES
“RIGHT”
Two Common Auction Complaints
1. Tough To Find Right Cars
2. Tough To Buy Right Cars
On The Money
16
With more wholesale supply why is it so hard to get the right auction
vehicles at the right prices?
17
Interactive Poll Question 2 (after slide 15):
What’s the “right” amount to pay for an auction vehicle?
At/below average auction prices for the unit (e.g., MMR).
A % above average auction prices, if the car meets certain
conditions.
A set % below the retail asking price, factoring in acquisition,
pack, other costs.
Not sure
Two Responses To Auction Sourcing Challenge
Look Harder
Look Smarter
19
Experience/Instinct Driven
o Not using tools and technology
o Not using market/scarcity reports
Preference For In-Lane Purchases
o Visiting 1 or 2 auctions – maybe?
o Need to replace sold inventory with
something
Look Harder, Dealers
20
More effort/time with less reward
o On average review 100 to buy 1
o 40+ hours a week researching/prepare
More risk of paying too much, aged
units
o Aged units over 60 days sourced at auction
o Out of sync from market
Look Harder, Dealers
21
Look Smarter, Dealers
Data-driven, disciplined
Assess profit up-front then condition/history
Stick to data/metrics to guide profit-focused purchase
Total Gross Mindset
Complete view of all data points
Sacrifice front end gross for total gross (F&I, etc…)
22
Look Smarter, Dealers
Online emphasis for efficiency
Expand Auction sources – on average 7-10 auctions
More online vs. in-lane – 60/40? 70/30?
Less time researching, more time buying
85% discipline / 15% instinct
Focus on right vehicle for the right price
23
Biggest complaint today is overpaying for vehicles at auctions Look smarter dealer redefines overpayment
24
Interactive Poll Question 3 (after slide 21)
Which of the following best describes you?
A Look Harder Dealer
A Look Smarter Dealer
Not applicable
Crystal Ball
• Rise of buyer-driven recommendations (e.g., Amazon, Netflix,)
• Outsourcing/redeployment of acquisition resources (Sonic/Manheim)
• Ongoing margin compression
• Need for increased effectiveness and efficiency
Q & A
28
Thank You!Majd G. SabouraDirector of Wholesale Business Development, vAuto
majd.saboura@vAuto.com
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