Keeping used-car wholesaling within the group
How dealerships shift their inventory without shopping on the open market
Heins: Program eases trades among dealers.
Cary Donovan wanted every used vehicle in Sam Swope Auto Group's inventory to be retailed by a dealership within the group.
So Donovan and Dale Pollak, founder of vAuto Inc., created some tools and rules to sell used cars and trucks among the group's stores. But they needed an online auction to make it happen. So last year, Donovan turned to the nation's largest auction company.
"I went to Manheim and told them I wanted a uniform and structured ability to sell cars within the group and not have them go into the open market," says Donovan, director of used-vehicle operations at the privately held Louisville, Ky., group. The goal: "Give all 15 of our stores the opportunity to buy that car."
The result is the Swope Trade Network, an internal online auction for the group.
Sam Swope Auto Group is among 10 large dealership groups using Manheim's Dealer Trade Network under a private label agreement, says Susie Heins, vice president of dealer sales at Manheim. It also was the first group to pilot the program for Manheim last year.
Sam Swope Auto Group is part of Swope Automotive Group, which ranks No. 71 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 8,784 new vehicles in 2011. Swope Automotive Group also sold 14,616 used vehicles in 2011.
Other groups using Manheim's internal auctions include privately held Hendrick Automotive Group, No. 6 on the Automotive News list, and publicly traded Asbury Automotive Group, No. 7.
"The purpose is to make it very easy for our dealers to trade cars and be much more efficient internally," Heins says. The system also makes it easy for dealership groups to take vehicles that their stores don't sell within a preset time frame and sell them on the open market, typically on Manheim's ove.com online platform or at a physical auction.
Used-vehicle inventory management software from providers such as vAuto and FirstLook help dealership groups by feeding stores' inventory to Manheim.
But the program only works well if a group has a strict limit on how long a dealership can try to sell a vehicle before sending it to auction, Heins says. Also, the group's used-vehicle operations must be centralized "because there has to be someone that drives it," she says.
Donovan is that person at Sam Swope Auto Group. Here's how the program works at his store:
A so-called aged used vehicle -- one that's unsold after 45 days -- is listed for sale on the Swope Trade Network. The group's stores can bid from 8 a.m. to 2 p.m. Donovan sets floor prices of the vehicles posted for sale and makes sure they are accompanied by photos and seller disclosures.
Of the group's aged used vehicles, 90 percent are bought by another dealership within the group, which also has 45 days to sell it. The remaining 10 percent, plus vehicles that were purchased by a sister store but didn't sell within the time limit, are typically sent to a physical auction.
"Why not just move it from one store to another?" Donovan says. "Just because it doesn't sell in one location doesn't mean it won't sell at another."
You can reach Arlena Sawyers at firstname.lastname@example.org.