Gut vs Market Metric:
Even though it has been proven beyond a shadow of a doubt that appraisal tools do a better job of finding the ACV (actual cash value of a trade) vs gut instinct, wholesale managers still want to go to auctions to stay in-tune with the market.
“I have to go because it’s how I get the ‘Feel’ for the market.” Said one wholesale manager standing in the lane at Manheim on Tuesday as he scanned the vin of a car in the lane to ‘Quick Appraise’ it before he bid.
For the most part, wholesale managers have stopped using their gut or have been told by their CFO to cap their purchases at MMR or some other market metric, but yet they say gut is a factor in their bidding
Is it Possible Wholesale Managers Like Going to Auction?
I think most definitely yes, even though sniffing fumes and driving two hours to get there is a pain, they enjoy the experience. For some they just want to get out of the dealership for others they like the social aspect of attending an auction.
“I know they’re not my friends, but I really enjoy roasting my fellow wholesalers in the lane with a fist full of awful pizza in one hand and my smartphone in the other.”
Especially for big buyers, there is a rush associated with buying 25 or 30 cars at a sale. “It’s an alpha dog moment when you line up and the end of the day with 30 slips in your hand.”
What is the Impact of a Missing Manager?
Some dealers have figured out that asking their best appraiser to leave the dealership for three days per week is actually damaging their wholesale profitability.
“I don’t want junior managers stretching thousands of dollars on an appraisal without consulting with our remarketing manager.” Said one group owner privately, “That’s why we do everything in our power to keep him in his office (the cockpit) where he can make a Real Difference to our wholesale bottom line.”
More on Missing Manager can be found in this article, “Where’s the Owner/Manager? MAA”
Incentives (AKA Bribes) & Other Auction Attendance Hooks
Incentives are very alluring to wholesale managers and was a touchy subject for me when I directed a large dealer group in Buffalo, NY. The fine line between what is a promotion and an actual bribe.
We felt the impact of incentives in our finance office with banks offering trips and clothing. In our Parts Department where our parts managers were being offered tickets to the races and even autographs from supermodels.
Wholesale incentives include, lodging, flights, food and prizes. In some cases, cash prizes that are untraceable.
I am not saying that this is the reason your managers want to go to auction, but it maybe something to consider when you find their office empty, especially when they could have just bid online via simulcast.
Should We Duplicate the Positive Social Aspect in Our Online Auctions?
Now to the point of this article. Do we need to recreate the social aspect of lane sales in our online properties? Absolutely!
There are many positives, including the gut feel for the market, making our jobs fun and keeping a finger on the pulse of our competition.
But we also have an opportunity to avoid the dark side.
How to “Be Social” in Our Online Auctions.
To me, the term “social” in business stands for “Community” and “Communication” both of which are easily accomplished online. If you are reading this article on LinkedIn you can see first hand what I am talking about.
At my company we have many of the social aspects of companies like Facebook and Yelp built into our rating system. Plus, the ability to chat on a car creates some level of community
But it’s not the personal one-on-one that so many online buyers miss.
Could We Accomplish Both? Social and Keep Managers in the Dealership?
I think so. It’s called an online bid sale auction.
For years, almost 10% of dealers around the country have been wholesaling cars using silent bid sale auctions. These are very social environments with one major difference: In online versions of bid sale auctions (such asAuctionSimplified.com), a buyer can pop in for a half hour and return to his office to bid, or better yet bid from the car from his/her smartphone.
The advantage is that you can create the social feel by providing inexpensive food and beverages while maintaining a relationship with your buyers.
There are a percentage of buyers that want to touch and drive the car before they bid, a bid sale inspection day accomplishes everything they need while providing the missing in person environment that everyone craves.
For more info on holding an inspection day check out this article: Hold a Bid Sale Inspection Day for Auction Success
Drawings vs Incentives
You can maintain a social environment without compromising your integrity by holding simple drawings at your events. This encourages attendance and allows you to interact as they are filling out the slip. But more importantly, it provides a little buzz around a sort of static environment that online creates.
If you put some effort into providing a fun environment online combined with a way for buyers to actually interact with you, it is possible to create a social feel that rival’s lane sale auctions.
Kevin B. Leigh