Tim Walters retailed so many new vehicles in 2017 that the trade-ins on those sales were more than enough to stock his used-car operations.

But his new-vehicle sales have slowed and in March, the owner of Elkland Chevrolet in Elkland, Pa., found himself at a physical auction for the first time in about 18 months.

“It’s kinda funny that you’re bidding not only against people on the floor, but bidding against people on a television screen — but it’s been that way for a few years,” said Walters, who now regularly visits online auction sites SmartAuction, operated by Ally Financial and GM Financial’s DealerSource. “I’m just basically doing the same thing I was doing five years ago. You check out a couple of online sites, and you go to a physical auction every now and then just to get your bearings, so to speak.”

When it comes to acquiring used vehicles for their lots, dealers such as Walters are both kicking tires in-lane and clicking tires online, to get the job done.

They are also increasingly using technology to help them identify the exact used vehicles they want that have the potential to deliver the profit margins they desire.

Comfortable with technology

John Poteet, managing partner at Louisiana’s 1st Choice Auto Auction, in Hammond, La., said as digital technology has become more sophisticated over the last dozen or so years, dealers have become more comfortable buying used vehicles electronically.

Policies and arbitration rules governing those sales created and adopted by individual auctions on their own and as members of the National Auto Auction Association, makes it easier for dealers to buy vehicles with confidence, Poteet said.

Condition reports are more uniform now, and contain more vehicle photos, which help, too, he said.

“We started simulcast in 2006, and it took a year to sell five vehicles,” said Poteet, who sells vehicles on EDGE Pipeline and OVE.com and plans to add SmartAuction to his online auction offerings this summer. “Now, 10 percent of our sold units each sale day is sold on simulcast.”

Bill Pearson, dealer operator with the Stanley Auto Group’s GMC and Chrysler, Dodge, Jeep and Ram stores in Gatesville, Texas, said finding the mostly off-lease vehicles that he prefers to buy is fairly easy, but finding them at prices that yield acceptable margins, is not.

“The variable cost to sell a car has increased so much, based on things such as cost of personnel, interest rates, the cost of technology,” he said. “It isn’t that the cars aren’t available. It’s finding them at an acceptable gross profit based on what it takes to actually sell a car.”

Ready, set parameters, search

A new software product from vAuto that allows him to set parameters — such as vehicle make and model, mileage, condition and distance from a dealer’s store — to acquire the vehicles he wants, is helping, Pearson said.

The tool searches auction industry sites, identifies vehicles that would likely yield a desired profit and then pushes those listings to his mobile phone, he said.

“The big thing is instead of you going and searching, it’s bringing them to your hip pocket on your phone,” said Pearson. “You take a look at it, look at the condition report and click to buy it now or click to decline it.”

Though Brenna Stansberry, owner of Park Marina Motors in Redding, Calif., enjoys her weekly visits to a physical auction to buy vehicles, she believes that brick-and -mortar auctions are destined to get smaller and smaller, and online auctions will be even more prevalent.

She also believes that buying and selling late-model used vehicles online that are up to about 3 years old can work fine, but “when you’re looking at cars that are 5 or 6 years old, it’s not that easy.”

Keeping tabs on fees

Chevy dealer Walters notes that selling unwanted vehicles at auctions has become a lot easier over the last few years because some auctions are “bending over backwards” to attract dealer consignment business.

The auctions where he disposes of his unwanted cars and trucks also pick up his vehicles and represent the vehicles on his behalf when they cross the auction block, he added.

“I literally have not had to go to an auction to sell a car in five years,” Walters said.

But he calls the auction fees of $450 to $500 per vehicle “insane.”

“The fees seem exorbitant, but it’s the cost of business, and I don’t know how to get around it,” he said.

Allen Chery, general manager of Larry H. Miller Fleet Lease, the wholesale arm of the Larry H. Miller Automotive Group, of Sandy, Utah, said the company first offers its aged inventory for sale to other dealers in its own online auction.

Vehicles that don’t sell in the venue are then sent to nearby physical auctions, Chery said. “We purchase (used-vehicle inventory) on the upstream manufacturer websites or closed factory auctions,” he said. “They either have limited or no buy fees. “As an organization, our national contracts with the various auctions keep our sell fees at a reasonable price.”

Kriss Nash, an independent dealer who buys, retails and wholesales vehicles for his Wiley Auto Solutions in Atlanta, said he prefers doing business at smaller auctions because fees at some larger auctions have doubled over the last four or five years. “Four years ago you might buy a $15,000 car, and your fee might be $220,” said Nash of fees at larger auctions. “Now it’s $450, depending on who you buy it from.

“That’s why a lot of guys are trying to do business with smaller auctions. As the costs have gone up, customer service has gone down. Smaller auctions are trying to peck away at that business.”