Retail remarketing has been adopted by many over the years, but has only recently established itself as a bona fide channel in the commercial remarketing space. Progressive remarketers are increasingly weaving retail into their broader remarketing strategy as they seek increased proceeds, speed, and efficiency for their own vehicles, client vehicles, repossessions and lease returns.

While there’s no “right way” to remarket at retail since each seller’s needs are unique, several best practices have emerged to maximize sale proceeds and efficiency.

When considering retail, some remarketers focus on their “best” cars or those that have shown solid performance at the auction, some focus on their “worst” cars or those that are otherwise difficult to sell through the auction, and still others choose to sell a mix.

Ultimately, your inventory, sales goals, experience in the retail channel, and buyer behaviors will drive which approach makes the most sense for you. To help you make the most of your retail remarketing opportunity, here are four leading options to consider.

Strategy 1: Send your best cars
Focus: Boost net remarketing proceeds for models performing well at auction

One common resale approach is for companies to send only their “best” cars to retail instead of to wholesale channels. Vehicles performing well at auction likely do so because the retail market is “hot” for those vehicles, so why not skip the wholesale channel and sell directly to the retail buyer?  

Selling the highest demand vehicles through a wholesale channel certainly leaves retail profits for the dealer, so as a remarketer, selling through a retail channel will instead capture those profits for your company or your clients.  These “best” vehicles also tend to sell the quickest, so any concerns about the speed of sale through the retail channel could be mitigated by sending star vehicles directly to the front line. 

For example, you have a fleet of white work vans with 80,000 to 100,000 miles that are consistently selling quickly at auction at prices above what you consider average. The reason those vans are selling well is that small- and medium-sized businesses, enjoying continued success in a long-running bull market, look for these vehicles to affordably support their growing operations. So, the demand is high.

If you push these vehicles straight to retail rather than auction, you will increase your margins with higher net proceeds.

As a real world example, at CarLotz, we recently had a client consign dozens of Jeep Grand Cherokee Limited units with under 60,000 miles. While these vehicles do quite well in the lane, we saw the whole batch sell in under 20 days for upwards of $1,500 more than the auction was delivering, net of all fees and expenses.  These vehicles are hot in the lane because they are hot at retail. 

This “Strategy 1” may feel counterintuitive. The auction channel has been around for so long that it is the easy and default choice for the remarketing team. As alternative channels have emerged, such as retail, online or dealer-to-dealer auctions, some remarketers have chosen to participate in the emerging channels with vehicles that are the hardest to sell at auction.

The remarketers who employ Strategy 1, however, recognize that high demand auction vehicles generally perform even better at retail, leading to a significant bump in proceeds as compared to the wholesale market. 

Strategy 2: Send your worst cars
Focus: Minimize the hit you’ll take at auction trying to move low-demand program cars

Strategy 2 is employed by remarketers that find themselves with high volumes of lower-demand program vehicles that generate little interest in the auction lane, such as what the industry has seen recently with low-trim level small and midsize sedans.

The thinking is that these vehicles are going to be difficult to sell under any circumstances, they will take several runs at the auction, and you’ll likely end up with a net check that leaves your clients or your CFO wondering what happened. The retail channel may or may not take slightly longer on these vehicles as they flood the market, but you’ll end up with a net check of $800 to $1,200 or more over what you would have received at auction; so, why not divert to retail?

For another real world example, at CarLotz we recently had a client consign 25 white Chevy Cruze units that came light on features. The client saw decent auction proceeds on the first few it sent to the auction, but interest in these vehicles quickly dried up and left them staring at significant potential losses.

We spread them out across our lots regionally and found several small business buyers that bought several at a time, enabling the seller to realize increased proceeds through the retail channel.

Strategy 2 has to be evaluated on a vehicle-by-vehicle basis, as sometimes poorly performing wholesale vehicles maintain such slim interest at retail that cutting your losses at any price in the auction lane may be your best bet. Vehicles with meaningful cosmetic damage, debilitating mechanical issues, significant rust, or unique special ordered features may be best suited for the auction lane instead of Strategy 2.

Strategy 3: Spread the big batches across channels
Focus: Avoids a dump of cars waiting in auction yards

While some remarketers have a mix of cars, others are constantly dealing with large batches of the same vehicle over and over again. With one model or just a few models to sell, you have to be especially careful not to overload the auction market and drive down prices.

For example, if you know that you have 70 Fusions every month coming back from clients or off-lease, you’ll likely oversupply the auction market and run out of buyers, thereby decreasing proceeds — or worse, risk having your fleet sit in auction yards week after week until buyers sell through their inventory and show up again.

Alternatively, you can start with the retail market first, where you can try to connect with buyers who will come in at a retail price. Then, the remaining cars that don’t sell can go to auction, or you can split the vehicles across retail, online, and physical lanes to maximize the eyeballs that your vehicles attract.

As an example, a few of our larger fleet management clients have identified six to ten models (Fusion, Equinox, Altima, Impala, etc.) that they consistently remarket in high volumes (ie, dozens per week). These FMCs have decided to keep two to three vehicles of each model on each of our lots across the country at all times and as we sell them, they replace them, thereby always accessing the higher proceed retail market with these units while still pushing a bulk of these vehicles through the lanes.

Strategy 4: Send a mix of high- and low-demand cars – be an active experimenter
Focus: Take the “portfolio” approach and constantly experiment with different channels and triage strategies to optimize speed of sale and net proceeds across all your vehicles

By pushing your vehicles through retail, online and physical auctions, you can take advantage of the various buyers that exist in the remarketing world. Wholesalers, dealers, consumers, small businesses, non-profits, international exporters and others all have unique ways in which they source their vehicles for use or resale. The way to maximize your proceeds across your entire remarketing portfolio is to access as many of these buyers as possible.

At CarLotz, we’ve seen the largest of our clients utilize their and our analytical capabilities to continuously optimize the right vehicles for each channel. That means testing different vehicles in different channels and different geographies across various times of the car buying cycle to maximize overall portfolio returns and speed of sale.

In any remarketing strategy, the goal is to find the right option for your specific vehicles, pricing goals, and buyers. By looking beyond auctions and taking advantage of online and retail channels, you can address common remarketing challenges — and boost your proceeds.

Michael Bor is co-founder and chief executive officer of CarLotz.