WHOLESALING traded cars online has the potential to put significant fresh profits onto the bottom line as dealerships look for alternatives to boost revenues and returns.

With revenue challenges from many quarters of the automotive retail sector, a move by Cox Automotive to bring its Dealer Auction system from the UK to Australia could not be more timely.

Dealer Auction is a proven way of disposing of traded cars that has the potential to displace the current ad hoc system where handfuls of wholesale traders swim around used-car managers in franchise dealerships picking off unwanted vehicles before selling them on to other dealers.

In practice, this current outdated system is time-consuming and denies dealers of profits that are, in fact, available from traded vehicles.

The alternative, Dealer Auction, has been operating in the UK for 11 years and this year conducted its millionth online auction of franchise dealers’ cars.

Only franchise dealers cars are listed and wholesale buyers have to be vetted and approved by Dealer Auction to register on the system.

At any one time, Dealer Auction typically has between 1700 and 2000 cars listed in auctions that last between 24 hours and seven days. Cars can be loaded and bids submitted 24/7, 365 days a year.

The UK system, which resides in the online cloud, last year handled 90,000 vehicles and is expected to handle 100,000 cars this year.

Dealer Auction is being launched in Australia at this year’s AADA Convention which runs at the Melbourne Convention and Exhibition Centre from September 9-11.

The head of Dealer Auction in Australia, Scott Allen, has moved Down Under to launch the system after 10 years as a dealer principal within a dealership group in the UK which was an early adopter of the Dealer Auction system. More recently, Mr Allen was general manager of Dealer Auction in the UK.

When fully operational across Australia, the essence of the system is that it will:

• Allow dealer groups an exclusive viewing of unwanted trades within the entire group before they are offered to the wider trade. This is especially relevant as dealer groups acquire more and more dealerships and require strict oversight of trade-in disposals across the group.
• Expose unwanted trades to a national audience of trade buyers. This drives increased competition for trades and higher returns.
• Bring to dealers a significant increase revenue from the sale of unwanted cars.
• Provide a new, broader source of used-car stock at a time of increasing competition among dealers to locate suitable used cars to sell.
• Rapidly dispose of unwanted cars, recover cash faster, reduce holding costs and free up vehicle holding spaces for more productive uses.
• Bring more rigour and reduce conflicted parties within the disposal unwanted of trade-ins compared with the present ad hoc system which has, until now, persisted for want of a better solution.

Cox Automotive Australia (CAA) plans to roll the system out across Australia, starting in Queensland and completing the process by the end of 2020.

The fact that CAA has the ear of so many of the nation’s largest dealer groups suggests that the system should get a warmer-than-normal reception, especially as the system has such a strong impact on preserving margins on traded stock within the group.

Also, a fast take-up can only accelerate the benefits for all franchised dealers as more and more stock, and therefore a better variety of stock, becomes available.

Other key features of the system include:

• Only franchise dealers can list cars. Buyers are bidding against other licensed wholesalers only.
• Cashflow. Cars must be paid for within 72 hours.
• Yard management. Cars must be collected within 72 hours.
• Full control. A dashboard shows dealers what they are bidding on, what they are watching, what they are the highest bidder on, what they missed out on and what they have won.
• Stock can be listed for auction at any time. Bids can be made any time.
• Priority to clear unwanted cars quickly. If a car does not make reserve, a team of negotiators steps in to try to close the sale so the cars are not left to lie dormant. In the UK the target is to call the highest bidder in one minute.
• It takes about four to five minutes to load a car with an extensive range of pictures or video, a strong description and industry-standard, very detailed appraisal of any damage.
• Communication is by email. Emails are sent to the buyer and the seller to confirm a transaction. The buyer needs to contact the seller within 24 hours to arrange collection.
• One login per site with multiple users; some with the ability to view but not buy.
• Strict tracking to ensure buyers do not try to back away from purchases.
• Convenient and flexible – buyers are not required to be in a certain place at a certain time.

LINK TO INTERVIEW

Scott Allen, who used Dealer Auction as a dealer principal in the UK for a decade before running the company in the UK for the past 14 months, is interviewed by publisher John Mellor about how the site transformed the disposal of unwanted traded cars and boosted the bottom line of participating dealers by hundreds of thousands of pounds a year.

By John Mellor