Today, we catch up with Todd Sanders, Executive Director of Remarketing Services, at Ally Financial, to discuss how dealers can successfully navigate the used-car bubble amid ongoing pandemic conditions and continued supply chain and microchip shortages.
Though the inventory crunch seems to be lessening, dealerships are still working to cope with lower-than-typical sales figures and scarce inventory.
___________________________________________________________________
Transcript:
Advertisement: It is time to take your dealership from 0 to 100 from dedicated underwriter and account executive teams to comprehensive training courses, Ally has the resources needed to help take your business to the next level. Contact your local account executive today.
Jackie Charniga, Automotive News: Hi, everyone. This is Jackie Charniga with Automotive News and welcome to the All Ears podcast. This podcast is sponsored by Ally Financial and is produced by the Automotive News Content Studio. In each episode, we delve into topics important to executives in automotive retailing. We tap Ally leaders to offer actionable solutions for dealers and others to successfully navigate transformational changes in the industry. Today, we catch up with Todd Sanders, executive director of Remarketing Services at Ally Financial, to discuss how dealers can successfully navigate the used car bubble amid ongoing pandemic conditions and continued supply change and microchip shortages. Though the inventory crunch seems to be lessening, dealerships are still working to cope with lower than typical sales figures and scarce inventory. Hi, Todd. Thank you so much for taking the time.
Todd Sanders, Ally: Hi, Jackie. I thank you for letting me come on.
JC: Let's jump right in. Although there are some signs that conditions are improving, the continued supply chain in chip shortages affecting automakers new car production also continue to affect the used vehicle market. What's the latest you're seeing and hearing in terms of wholesale and retail prices and the consumer demand for used vehicles?
TS: Well, Jackie, sourcing inventory remains a priority and a challenge for dealers. While you said most dealers are experiencing a slight increase in new vehicle inventory, there's just not enough trade-ins or off leased vehicles to meet demand for the used car customer. In addition, there are still nontraditional used car buyers out there, like rental car companies who are still competing with dealers to help them supplement their fleets. Because of these factors, we're still seeing wholesale prices and retail prices remaining high and a lot higher than normal and we anticipate that happening for the remainder of the year.
JC: Todd, are you seeing the used vehicle marketplace improving and are dealers finding used vehicles to sell?
TS: Well, it really depends on what you mean by improving. Consumer demand is still very high and strong, and the retail strength of the consumer is still very healthy. Those things are improving and doing well. As far as inventory, there's still inventory to be found. You just need to be more diligent when looking for it. Many dealers have put a lot of new programs into place like one thing they are doing concerted effort into sourcing vehicles directly from the consumer. It is helping them pick up some vehicles. But what we are hearing from our customer is its very time consuming and it's very competitive. So, if a dealer is calling customers and saying hey, would you want me to sell your car to me or would you like me to buy your vehicle? They are getting customers to respond, but when they're responding, they're finding that they've already got four or five offers on that vehicle and it is becoming a little more expensive to them to source, as well as they're having to contact more and more customers to get a few people to come in and sell their vehicles. But, the closing ratios are low, but they are helping them find vehicles. That is the one nice thing about online auctions like SmartAuction. We have thousands of vehicles at your fingertips every day. In fact, this morning, we have 31,800 vehicles on our site at 6 a.m., and that number will generally increase over the next couple of hours as consignors continue to add vehicles on the auction. So, when you can go to one place and look at that many vehicles, I mean, that is a pretty easy way to find the type of vehicle that you're looking for to fill your needs.
JK: Digital auctions were already growing in popularity before the pandemic hit. And in the past two years, we have seen a huge increase in dealers shopping for used inventory and digital auctions, including Ally’s SmartAuction platform. Is there a way you can offer a few tips or best practices for dealers as they use these online auctions to source used vehicles?
TS: My first tip I would make is make sure you are on every day. As I stated just a few seconds ago, we had over 31,800 vehicles on the site this morning. The good thing about that is 13,900 of them were day one vehicles and what that means is today the first day those vehicles have been on the site. Every day we have thousands of new vehicle postings so if you miss a day, there is a good chance you may miss the vehicle that you're looking for that you need on your lot. The next thing I would say is to set save searches. If there are certain vehicles or a certain vehicle type that you are looking for all the time, like a four-wheel drive or midsize SUVs, you can set up save searches so when you log on to the site, you can pull those cars up that are more important to you and then spend less time searching for those vehicles and looking at the right vehicles that you need for your dealership. And then last but not least if you see the car that you like, but you do not see it for the price you're looking for. Maybe you are using the V-auto, maybe you're using some other tool to kind of determine what price to buy it. Even if you find a car that has an opening bid or opening price that is more than you're willing to pay for it you can make an offer on those cars. We saw a good percentage of our cars via offer. So, let us say you see that car out there and they want $22,000 but you are willing to pay $21,300 go ahead and make an offer on it. A good a good portion of the time, those deals will either come back, either agreeing to that price or countering and then you can settle on a price that is good for both of you.
JC: That's excellent advice. What are some of the benefits of using online auctions for dealers today?
TS: The most important benefit is that you do not have to leave the dealership. Everyone is extremely busy these days and you really do not have the time to take one or two days out of your week to go to an offsite location to look at cars. This way you can stay in the dealership, and you can focus on other important items like servicing your customers. That in addition to like platforms, auction online platforms like SmartAuction are typically open twenty-four seven. We have two live auctions a day that one runs from 9 a.m. to 2:30 p.m. and the second runs from 4 to 8. But outside of those two live auctions, we are open twenty-four seven. A lot of our vehicles have what they call buy it now prices so if you see a car that you like and you like the price, you can go ahead and hit it and you can hit it seven days a week. So, it is very convenient for you to then be able to use it and when you are free and available that you can actually get on the site and locate the cars that you need. And then again it is a great way to sell your inventory as well. Every dealership has mismatched inventory or aged inventory or has a trade that just does not fit what they need. This is an easy way for you to put the vehicle on sale while it is still on your lot while you may be trying to still retail it and if you got a great price for it on SmartAuction, then you can look at selling it and then you do not lose any time. I guess those would be some of the benefits that any online auction would do. And then last but not least online auctions survive by providing the inventory you are looking for and then the customer service that you need in order to be comfortable and make sure that that transaction is painless and easy. At SmartAuction we have a sales team and a customer service team there to help you in any way to help you buy or sell. And we have an arbitration team that works very hard to handle any arbitration quickly and fairly. And the key to getting people to stay online is to make sure that they think that they are getting a good deal and they're getting the car that's represented like their what they're seeing. We work hard for that every day to to make sure that the buying experience and the selling experience is simple and works the way it is supposed to.
JC: That's it for this episode of the All Ears podcast. A big thank you to Todd and on behalf of Ally and the Automotive News Content Studio, thanks for listening.
Advertisement:Want to run laps around your previous business goals. Ally has the resources and tools to help your dealership succeed with dedicated underwriter and account executive teams, customized F&I solutions and comprehensive training courses, Ally can help your business crush every lap. Ready to get started? Contact your local Ally account executive today.
