Non-auction purchases are a great option for an independent auto dealer looking to expand their used car inventory or fill empty lot spots. But where should a dealer go to find these vehicles? Here are a few potential sources in addition to the auction that dealers could keep an eye on—and some ways floorplan financing from automotive lenders can make non-auction purchases easier.
Trade-in cars from customers
Seeking out car trade-ins from your community can offer a number of benefits. There’s likely to be less competition with other dealers over car inventory. Including a trade as a part of a sale can make closing that deal easier, replacing or enhancing a customer’s down payment. And it’s convenient—it’s hard to beat a “seller” bringing a vehicle directly to you.
There are a few things that dealers can do to attract more car trades. Advertising within your community that you’re actively seeking out vehicle trades is a good start—online advertising, including Google Ads, YouTube pre-roll ads, and Facebook lead generation ads, can get the word out. And if you want to go old-school, traditional advertising like billboards and newspaper ads can be effective as well.
A dealer should also leverage a positive reputation to attract customers of all kinds—including vehicle trade-ins. According to a 2022 study, more than half of consumers are only using online reviews to choose a dealership. Make sure happy customers are sharing their experiences with your prospects, and those prospects are more likely to become customers as well.
There is one potential downside to accepting trade-in vehicles—dealing with the lienholder payoff. If a lender still holds the title to a car that’s being traded in, that lender will obviously have to be compensated. That said, some automotive lenders like AFC offer services that can help dealers handle lienholder payoffs, including verifying payoff, assisting in remitting funds, and following up on titles on your behalf.
Buying from wholesale dealers
Wholesale dealers are another outlet for your dealership to find high-quality inventory—and they offer a few unique benefits. For one, building a trusted relationship with a wholesaler may pay dividends for your dealership. Not only can you build familiarity with the dealer’s pricing and types of vehicle offerings, but you might also get extra perks like sneak peeks at new inventory. Additionally, in many cases purchasing from a wholesale dealer offers the opportunity to save money on things like fees and transportation.
Purchases from private individuals
Making a “street buy” will offer many of the same benefits that a trade-in will. There’s massive diversity in the used car inventory available to a dealer for purchase. Plus, that street purchase can help you build a relationship that could lead to a future sale off your lot. And, like in a trade, you can attract sellers to your dealership via marketing and reputation rather than having to seek out inventory yourself.
The primary difference between a street buy and a car trade is that your range of sellers is not restricted to people who are looking to replace a vehicle. They may have already purchased a new vehicle and are simply looking to get a little cash back for their older ride, they may be downsizing, or they may just need the money. But no matter the reasoning, any person who’s looking to sell could be your next great car inventory source.
Purchases direct from retail car dealers
In addition to working through the auction process, a dealer can make a move on used car inventory by going straight to the source, and completing a deal with another dealership. While locating the specific vehicles you want might be a bit more involved than scouring the lanes at your favorite auction, it may end up being cheaper. By purchasing direct, you can avoid the bidding war with other dealers chasing the same vehicle, and you can also cut down on fees.
Leverage the relationships you’ve built over the years with the other dealers in your area—you may be competing with them, but one dealership’s aged inventory could be your diamond in the rough.
The right automotive lender makes non-auction purchases easier
One of the major selling points behind making your car inventory purchases at an auto auction is the ease with which you can finance purchases using a dealer floorplan. But with the right automotive lender—and the right financing in place—all of these types of non-auction purchases can be handled just as smoothly. Don’t neglect a potential source of amazing inventory!