Ontario dealer Al Revell no longer buys any vehicle at the physical auction.

Instead, the co-owner of Revell Ford Lincoln in Verona, Ontario takes care of all his store’s wholesale buying needs through OPENLANE.

A case study on Revell’s store from OPENLANE revealed that a few years ago, Ford was steering its dealers to utilize its OPENLANE-powered Accelerate program for buying off-lease vehicles. So, Revell chose to give it a shot.

“Initially, we started using OPENLANE strictly to buy,” he told Auto Remarketing Canada. “In general, it helps us fill holes in our used-vehicle inventory.”

Revell also noted: “Once I started using Accelerate, I stopped going to auctions. I haven’t been to an auction in about five years.”

While all dealers might not take the same measures that Revell has, the online environment certainly has become an integral part of how Canadian dealers take care of their wholesale buying and selling needs.

The physical auction is still a fundamental and vital part of the wholesale process for many dealers. However, some have chosen to employ various online avenues as supplementary means to not only find used units, but sell wholesale as well.

For Revell’s store, after getting its feet wet with sourcing, the store eventually got into online wholesale selling and now moves at least four to six units a month that way.

“It’s just a different source for your sales. We’ve been successful profitably,” Revell explained.

He also noted that some wholesale units have fetched retail profits, while with others the store was happy to take a “minimal loss” to move a stale unit off its lot. Not all of his wholesale sales are done via OPENLANE. As Revell pointed out, “We have a wholesaler working for us and he helps us turn over our used inventory as well as repping units at the local auction in Kingston.”

It appears that more and more dealers are becoming like Revell in the sense that they use various online avenues to fulfill at least some of their wholesale needs.

In fact, online sales comprise a quarter of all vehicles sold at Manheim Canada, said Cheryl Munce, who had been vice president of strategy, online and business development for the company and now is general manager at Manheim Toronto.

She further noted that based on year-to-date data, half of Canadian dealers are buying online and 45 percent are selling.

“Combined, 57 percent of Canadian dealers are using online channels,” Munce told Auto Remarketing Canada.

When asked how Canadian dealers and consignors are using Manheim Canada’s wholesale avenues for buying and selling, Munce noted: “Dealers today are living by the motto ‘Cash is King’ and finding ways to turn inventory faster. As a result, many dealer consignors are discovering that they can expose their retail lot vehicles simultaneously to a wholesale audience using OVE.com without ever moving the vehicle.

“The dealer can list vehicles themselves using a Seller Disclosure and when the vehicle sells, the vehicle needs to be brought to a Manheim auction for inspection and final sale. Other than the transport and sell fee, the listing fee on OVE.com is free,” she continued.

“Alternatively, we have Manheim Direct where we will send Manheim-approved inspectors to the lot for a nominal listing/inspection fee and when the vehicle sells, the listing/inspection fee is credited back to the seller and the buyer can pick up the vehicle directly from the dealer seller,” Munce further explained.

But, like with most business tools, there are challenges along with the advantages and key points of strategy and advice that dealers should take to heart.

With that in mind, Auto Remarketing Canada investigated what guidance Revell, Munce and others in the Canadian auto industry have for dealers in the online wholesale arena.

Online Advantages

Cathie Clark is director of brand development with the AutoPark Group of Dealerships, which sells about 400 to 500 used cars per month at its four stores throughout Ontario.

The group goes to the Web to find many of the used units it hopes to sell, as about 30 percent of wholesale purchases are done online through a myriad of channels.

AutoPark taps into everything from ADESA LiveBlock to the online offering of OEM financial arms.

“Anywhere they’ve got cars, we’re buying them,” she said, later noting that using online wholesale channels to buy cars “just gives you a much more extended reach.”

AutoPark has only been selling wholesale units online for about 60 days and has done this exclusively through OVE.com. Clark said about 90 percent of their wholesale sales are done online.

And using the Web-based wholesale channels certainly has its advantages.

“We get better money and we sell out of our market,” Clark noted.

She later explained that, “We are able to get a higher price for the units sold through OVE because they are available to dealers in all markets across North America, and of course demand and value varies by trading area.

“In addition, often dealers are fulfilling direct request sales via the wholesale online vehicle exchange sites, and since they are certain of quickly turning around a retail sale at a known dollar amount, they are willing in some cases to pay more for the vehicle they ‘need’ than they would for a stock inventory piece,” Clark continued.

Meanwhile, John Trivett — who owns a small operation in St. John, New Brunswick called the Used Car Depot — does not typically sell vehicles wholesale (online or otherwise). However, for the past three years he has used the Web for 100-percent of his wholesale buying needs

Trivett turns to the online offerings of Manheim and ADESA and utilizes OPENLANE to some degree, as well.

As a small dealership owner — the store sells 15 to 18 used cars per month — buying online keeps Trivett from having to be on the road all the time, allowing him more time in his store.

Revell echoed a similar sentiment. Before switching solely to OPENLANE for wholesale sourcing, the dealership personnel — located between Montreal and Toronto — had to travel three hours either way to sales in those big cities, creating added costs such as paying drivers and travel expenses.

“By sourcing them online, we get to keep the vehicle right here,” Revell said. “I find that not only do we save with expenses, but you’re offering your product nationally.”

He explained that his store has made sales to British Columbia, a four-hour plane trip away. Selling online just opens a huge network of buyers.

Revell said that “It’s far reaching as far as the exposure we have for the product,” while at the same time, the store doesn’t have to transport it two to four hours away to bring it to a sale.

It not only opens a national network of potential buyers, but also keeps the dealer have from missing out on a potential sale because the unit is right on the lot. So basically, instead of spending time transporting several hours away to a sale, the vehicle remains on the lot for someone else to see, too, and potentially buy.

“We represent them online and they’re right here,” Revell stated. “You don’t have the added insurance risk of moving them two, three, four hours away each time.”

And for buyers, it means choosing from a national base of vehicles, as well. So, there’s greater selection of vehicles.

“It allows me to pick from thousands of cars, instead of hundreds,” Trivett pointed out.

Buying online also affords a bit more thorough research.

The night before an online sale, Trivett goes online to see what cars are being offered, which cars he is interested in and the market value of these models. He also grabs a CarProof report for the vehicles.

And while he could still do that kind of preparation in advance of a physical sale, say a vehicle comes available during the sale that was not on the original list. In the online environment, it’s much easier to quickly research the vehicle. In the lanes of a physical sale, a dealer might not have that luxury, Trivett said.

Offering her take, Munce suggested that “the first advantage that comes to mind for a buyer is more inventory — everyone’s looking for inventory, and going online allows you expand your options exponentially. We have many thousands of vehicles available at any point and time.”

Munce continued: “For sellers, the expanded potential buyer audience you get online is a great advantage. And with OVE.com, sellers are not only exposed to North American buyers, but also to buyers around the world via ExportTrader.com. Other advantages: It’s convenient, timely, and efficient — you can buy or sell anytime, anywhere. Finally, our auction policies make it as ‘safe’ as in-lane trading so there are no worries. In fact, a buyer has a longer arbitration period when buying online.”

Challenges to Consider

That’s not to say there aren’t challenges that come with utilizing online wholesale channels.

While acknowledging she couldn’t pinpoint any other downsides, Clark noted that like with any innovation, there can be the occasional technological hiccup. Say, for instance, a dealer’s Internet goes down or his computer won’t start.

Revell doesn’t see any reason for hesitancy in online buying, claiming: “There’s very little risk.”

“You might miss the odd burn mark (inside a vehicle) … but normally speaking, they’re well-represented,” Revell noted. “If you do run into a problem, you can get arbitration if you do it in a timely manner.”

When asked what she might tell a dealer who is apprehensive about going to the Web for wholesale needs, Munce offered this advice: “Give us a call. We can help them overcome most reasons for apprehension. If they’re new or uncomfortable with online buying and selling, we have representatives at every location and at our corporate office who are happy to walk them through the process and get them very comfortable with shopping and transacting online.

“While we offer all levels of training, the truth is, most folks find it so easy after they try it, that they become online ‘regulars’ in no time. We also have a national trade desk where expert reps provide concierge service to both buyers and sellers,” Munce continued.

“They are very familiar with the inventory and can even find vehicles that aren’t listed for purchase. The other reason we’ve heard for apprehension is fear the vehicle may not be in the condition they thought it was — we offer a range of inspections and reports available that can give them additional confidence in the quality of the vehicle they are buying,” she added.

Advice for Dealers

Moving along, the dealers and Munce also shared with Auto Remarketing Canada some pointers for dealers who are considering using the Internet to buy or sell wholesale vehicles for the first time.

Starting it off, Clark stressed that buyers should make sure they preview units before buying and check it out thoroughly. And for sellers, it’s all about integrity.

“You have to call the car the way it is or else you’re doing a disservice to the dealer on the other end of the computer,” she noted.

Providing some more tips for sellers, Revell said it’s important to think with the mind of a buyer.

“You have to be professional in the way you represent a vehicle,” he pointed out.

As for buyers, Revell emphasized: “You need to look the vehicle over when it comes in just to make sure there’s nothing hidden. It’s no different than buying at a physical auction.”

Trivett implores dealers to make sure that they understand and are comfortable with using the Web. Knowledge of the tools is key.

“You’ve got to be pretty sure you understand all the tools that are available to you and that you use them,” Trivett stressed.

Wrapping it up, Munce shared: “Regardless of the sales channel, price the vehicle according to the market. Do not add a premium to the floor price when selling online; buyers are savvy today and they know what vehicles are worth.

“In the absence of a live auctioneer who, during a physical sale can keep adjusting the starting bid to obtain an opening bid, it is especially important to set your starting bid a bit lower (approximately $300) than the wholesale market value to entice active bidding and increase likelihood of purchases,” she continued. “In fact, some sellers will set their starting bid to equal their floor, which automatically turns that vehicle ‘green,’ meaning it will be sold!"