Crowd-sourcing your Wholesale Cars

noun the practice of obtaining input into a task by enlisting the services of a large number of people, either paid or unpaid, typically via the Internet.

“It’s like crowdsourcing your wholesale auctions.”

I was discussing one of the auction reports we provide with Jeff Rubin, COO of the Competition Automotive Group, when I was struck by something brilliant he’d said:

“I could not believe how many buyers looked at our wholesale cars online. And from such a distance. It’s like crowdsourcing for wholesale auctions.”

“Crowdsourcing.” I have to admit, I’d never thought to use that term to describe what we do for franchise dealers, but no other word so perfectly represents the service we provide. When our conversation ended, I thanked Jeff for providing the simplest way to explain what an Online Dealer Bid Sale actually is, and immediately added it to our presentation sales deck.

A little background: Jeff is one of the most passionate and tech savvy dealer operators in the industry. His office looks more like a cockpit than a managers office, with four computer monitors displaying data from the various entities he’s responsible for, and he has a keen instinct for all things related to the automotive industry. He and I have been working together for the past few months to move their company, a highly respected luxury dealer group on Long Island, from wholesaling to a few local wholesale clients to holding a full fledged Bid Sale auction.

A Bid Sale, for those of unfamiliar with the term, is an organized silent auction. Local used car dealers visit franchise dealers and bid on cars, usually trade-ins, that the selling dealer does not want to keep for a variety of reasons. Some have high mileage, an accident reported on Carfax, an airbag deployment; basically any car that doesn’t fit their minimum standards.

Our company had just launched Competition Automotive Group’s Bid Sale on Auction Simplified, which exposed their 45 wholesale cars to our ever expanding network of 6,000 buyers – hence the term “crowdsourcing.”

Why Silent Auctions?

Competition Automotive Group, which owns Infiniti, BMW, Mercedes-Benz and Subaru dealerships, made the decision to run an online Silent Bid Sale several weeks ago. They carved out precious space in the back of their beautiful Infiniti location, they created a new Auction Manager position, and began listing their cars online with Auction Simplified.

For their Bid Sale auction, they brought in trades from all of their participating locations, allowed local buyers to inspect their vehicles in person, and distance buyers to inspect online. The result was surprising for any first time dealer auction – an over 80% sell rate.

Due to privacy agreements we do not disclose profitability for any of our partner dealers, but we can say that in the Bid Sale industry the average is well over $550 per car. A compelling reason indeed, because most of the profit comes from the silent bid style and the absence of the sellers fees normally incurred at big box auctions.

Dealer Transparency is Key

Dealers have been holding silent Bid Sales at their dealerships for years. In fact, it is estimated that 10-12% of dealers are offering their cars directly to wholesalers, but these Bid Sales usually focus on local buyers who attend in person and turn in a paper bid. Online Bid Sales have changed that by providing buyers from all over the country a transparent, safe and flexible way to bid on cars while maintaining that neighborly feel for the loyal, local buyers. The distance buyers gain access to used cars they would never have seen at traditional auctions and get an assurance that the cars are “as described.” Bidders assurance is key – buying online requires a high degree of trust. Buyers want to know exactly what they’ll be getting when they send their trucks to pick up the cars they’ve won, and after that trust is established, they’ll come back for more.

Lawrence Cohen of LMC in Elmira, NY put it another way:

“Auction Simplified’s Bid assurance is a deal changer for the way I buy cars. Not only providing condition reports and photos/description of the vehicle flaws, it means if the seller misses something we are not stuck. They really have our back.”

Technology has Made it Easier, and Process Keeps it Safe.

With the software available, dealers can offer “True Silent” sales. True Silent means that the dealer cannot cherry pick winners or pick their favorites because Auction Simplified only lets them see bids after they’ve accepted the winner. It’s a game changer in establishing the legitimacy of a Bid Sale because it eliminates any possibility of deceitful auction behaviors.

But technology can only take it so far, which is why so many auction App companies are achieving less than average sell rate, some as low as 20%. By relying exclusively on software these Apps are never going to maximize the potential of a wholesale auction, and it shows: their profits are barely on par with offsite sales.

It takes strong process and a buyer friendly, customer centric atmosphere to succeed in the wholesale business. That is why we were so excited to partner with Competition Group. Their core value of transparency naturally aligned with what we are trying to achieve for our growing list of buyers.

Unplugging from the Traditional Auto Auction Method.

Dealers running old school pen and paper bid sales have been the driving force behind the growing trend towards “unplugging” from the big box auction addiction. For some reason, dealer bid sale auction success has gone unnoticed in the mainstream automotive newspapers. Auction Simplified has been trying to change that with their web site, which focuses on the emerging dealer wholesale method.

Finding the Buyers to Crowdsource Your Wholesale Cars.

One of the largest struggles in holding a private wholesale event is finding buyers. It usually starts with grassroots efforts such as pop in visits and postcard invitations. Over time, most Bid Sales attract 30-40 locals that show up each week to view inventory and place bids. Auction Simplified jump starts the process by registering on average 200-300 new, location specific buyers for each online bid sale, and also notifies their national buyer base.

“We have a tried and proven method of getting buyers to come to our participating dealers. Our buyers love it, they want to bid, they want the access that we provide which practically guarantees the wholesale bid sale will succeed.”- Anthony Snellings, head of Buyer Development at Auction Simplified.

The 1st Time in Decades That Dealers Can Repossess Wholesale from 3rd Parties

As technology improves, including tracking, auditing and reporting, dealers finally have a choice when it comes to the method of wholesaling there cars. With most of the hurdles overcome, dealers are looking closer at wholesale buyers as the partners they once were. Adding local buyers with national crowdsourcing it is a win for franchise dealers.

About the Author:

Co-Founder / Writer / Serial Growth Hacker Kevin Leigh co-founded Dealer Simplified, LLC, a company dedicated to simplifying automotive software. The goal of Dealer Simplified is to jump-start the profit centers in dealerships while keeping the processes and software simple and easy to understand and implement. Kevin is also an accomplished author and is passionate about writing and blogging. His latest novel, “Gollup the Woods” was inspired by the stories he heard from his father on their many trips through the Irish countryside. Kevin currently resides in Alden, New York with his wife Mary and their three boys. Leigh spends his spare time volunteering with various community organizations.


We highly recommend Auction Simplified which not only has great bid sale software they also teach their dealers how to hold world class successful events.