While brick-and-mortar auction houses might be a more comfortable marketplace for some, when it comes to obtaining profitable used vehicles priced $12,000 and below — the best deal might just be online.

Dealers who want to be sure they have turned over every stone in search of inexpensive vehicles can take advantage of all upstream closed online sales, first offered open sales or trade-ins offered up via mobile apps, says ADESA’s Doug Hadden.

Working online allows dealers to get more done in a short amount of time, he said during a webinar hosted by the American International Automobile Dealers Association on Tuesday. 

Hadden, who is executive director of dealer sales and services at ADESA, said that taking advantage of online automotive marketplaces, such as mobile apps and wholesale websites, empowers dealers to engage serval sources of inventory without ever having to leave their lots. 

In the webinar, titled, “Where Have All the Good Used Cars Gone?," Hadden discussed in detail how taking advantage of these opportunities can help dealers locate and purchase profitable vehicles between $8,000 to $12,000.

“It’s always been a problem to find the right used cars for your lots — it always been a struggle. For years it’s been that way. But there are some things that have changed recently in the industry,” Hadden explained.

“Our industry changes almost daily now — you never know what you're going to read in the headlines, but as we all know … not only for your retail customers, but for you as a dealer or a manager … to more accurately find the right vehicles, you're going to need to be online.”

Get online

Hadden first discussed how upstream closed online sales hosted on wholesale websites can be vital for dealers in need of fresh used-car inventory.

“If you’re not familiar with it, make sure you get familiar with it. There’s a lot of opportunity there,” Hadden stressed.

He explained that dealers have access to wholesale websites available from manufacturers and captives.

This opportunity is especially crucial for dealers because newly grounded vehicles available to dealers on wholesale sites are often in better condition and have lower mileages, Hadden added.

“Take a good look at those cars that are grounded at other dealers’ lots — you’re literally taking cars from your competition and bringing them to your store and making money. So, take a good look at those vehicles, and don’t pass ones you think are bad,” he went on say.

Hadden also emphasized that when buying inventory, dealers shouldn't be afraid to go after used vehicles others may have passed on, because that doesn’t mean that those vehicles can't be profitable for someone else.

He stressed that passed up vehicles aren’t necessarily “bad cars,” and they might be the right car for the next person.

“When you’re on that website — whatever it is, you can see all those vehicles that other folks passed on. It used to be, ‘Well if they passed on it, it must be a bad car’,” Hadden explained.

“It might be a bad car for that lot where it was grounded, but it might be a great car for you. So, you really need to make sure that when you’re going through and look[ing] at those vehicles, don’t think that they’re bad cars. By the way, with any of these online upstreams, you have more protections,” he continued.

With wholesale websites, dealers can take advantage of lower fees, as well as save both the time and money it takes to commute to an auction house regularly.

Be first

After taking advantage of closed online sales, Hadden discussed how first offered open sales are another great opportunity for dealers to find inexpensive and high-quality inventory conveniently online.

“Now why is the first open so important? Well here’s what I see. I see a lot of folks that are non-franchise taking advantage of this, so why aren’t franchise folks taking advantage of this?” Hadden explained.

“How about off-lease only? These guys have thousands and thousands of these off-lease cars, and they all buy on that first open opportunity …Even wholesalers, these guys I think are out in Tennessee, they literally buy hundreds and hundreds of these cars a week,” he continued.

Hadden then shared how those wholesalers detail the vehicles they acquire, “get them dressed up,” and may also make them CPO eligible just before taking them back to the auction.

“You’ll never believe who buys them. Yes, the dealer that did have the chance to buy that car earlier upstream. Why pay somebody else to clean the car up when you had the first opportunity to buy that vehicle?” he said.

Additionally, Hadden also advises dealers to consult their inventory management systems in order to make the best decisions when in search of the right vehicle for their inventory needs.

Lastly, Hadden urges dealers to get the most out of mobile applications for buying and selling when looking for or receiving fresh trade-ins.

Via mobile apps, dealers now have the ability to quickly open bidding for their latest trade-ins.

Hadden said buying dealers can easily find available inventory in real time because selling dealers on wholesale apps can start the selling process online before completing an appraisal.

Just by using a mobile device to take pictures, dealers can have their latest trade-in posted for sale in minutes. “Now you can be taking a car in-trade, snap a few photos and get a bid right then and there on that car,” Hadden explained. “You’re literally buying and selling vehicles at the time of the appraisal.”

Vehicles acquired on one day can potentially be bought on the same day.