How to Bundle Cars Together to Improve Wholesale Profitability and reduce bidder fatigue. (Video)
Experienced used car managers have known about bundling wholesale cars since the beginning of the automotive industry. The term “Bundling” or “Packaging” is the practice of taking a group of properly priced (desirable) wholesale vehicles and packaging them together with vehicles that you are having trouble selling, (the undesirables). Used car managers typically tell their wholesale buyers, “I’ll sell you these three beauty’s if you take this sled with them.” Bundling, effectively gets rid of your trouble inventory and reduces vehicle aging.
Bundling in a lane style auction:
Bundling in person directly with wholesalers is a lot easier than packaging at a lane sale auction. The problem is that a lane sale is in sequential order. You tend not to accept losers early on because you don’t know in advance if you are going to profit from cars sold later in the day. As one veteran block rep told me, “It’s hard to juggle all the vehicles in my head while standing on the block, so I tend to no-sale more cars than I have to.” Another seller told me, that he tries to leave his worst cars till the end so that he knows how much he has to work with. “The problem with listing my bad cars with higher lane numbers is there are less buyers left at the end of the auction, so my strategy can sometimes backfire.”
The advantage of dealer held auctions:
Dealers who hold their own bid sale style auctions have an advantage in that they can wait until the end to see how they are doing before they take the bundle. They can reject major losers or deals that don’t make sense and take some losers because when mixed- in, the overall result is a profit.
This may be why most bid sale auctions exceed 80% sell rate, because there is no guessing, the numbers are right in front of them before they accept or no-sale any vehicles.
Bid sales are non-sequential, in fact most bid sales don’t even use run numbers because they are not needed. Therefore, the used car wholesale manager can make his/her decisions at the very end, when they have all the facts. They can choose to mix in a bunch of losers in to a highly profitable day, increasing sell rate and making a bunch of buyers very happy. One wholesale manager put it best “Happy bidders = returning bidders. The higher my sell rate, they higher my profits.”
Bid Sale Bundling as Opposed to Selling to Individual Wholesalers:
If you are currently selling cars directly to wholesalers bundling can be your best friend, but the bundles tend to be smaller than in a full bid sale. We also run the risk of being too friendly with our wholesalers. Relationships with your buyers are important, and letting them win a little fuels your success. But one on one wholesale transactions usually profit less than full bid sale auctions.
Why? It’s simple really: more bidders = a higher number of bids. A higher number of bids = a higher chance to receive a higher bid. Especially in a silent sale where they don’t know who they are bidding against.
In conclusion, bundling can be a great way to increase wholesale profit, reduce days in stock and get rid of our mistakes.