When you buy used vehicles from private sellers, there are several advantages. On the surface these benefits might appear obvious, and they are. However, achieving results involves strategic planning and proper execution.
In this edition of VAN University, we explore three of these advantages. We discuss why and how you benefit from these things when buying from private party sellers. And we compare and contrast these advantages to other conventional means of sourcing vehicles, particularly auctions.
Why Buy Used Vehicles from Private Sellers?
- Increased Profitability
- Acquire Higher Quality Inventory
- Community Outreach
Increase Profitability to Combat Margin Compression
As VAN President and Co-Founder Tom Gregg states in this video, “There are no signs that profitability in the years ahead will be getting any easier.” Quite the opposite actually. Therefore, increasing profitability to combat margin compression is of growing importance.
When you buy used vehicles from private sellers, you acquire those vehicles quicker than when buying from auctions. Vehicles acquired at auction hit your books on day one. However it could be 7-10 days before they are ready for your lot.
This gap has a major impact on your bottom line, says Aaron Gomez in the video. And often you are “relying on condition reports for these vehicles that you may have never seen before.”
Auctions are raising their fees to combat Margin Compression as well. When you buy used vehicles from private sellers, you avoid these fees. Naturally, this help improve ROI from your used car marketing strategy.
- Acquire inventory more favorably, less competition, less cost
- Reduce acquisition costs; lane fees, transport from auction, additional fees
- Minimize time-to-line, decrease holding costs
Acquire Higher Quality Inventory
As Aaron states in the video, vehicles at auction are typically coming from other dealers. This means they have already aged on the lot and not sold. And there are reasons they did not sell, which lead to surprises.
With a proactive strategy, seeking out vehicles from private sellers, you have a chance to source vehicles sooner. Yes there are other challenges with this approach, but fact is you can acquire fresher inventory.
One common benefit is that private sellers normally put a lot of work and effort into preparing their vehicles for market. Whereas with trade-ins, this is uncommon. Because of this, reconditioning and repair costs can often be minimal.
- Faster turning inventory, lower days in stock
- Better inventory positioning, market days supply
- Lower reconditioning and repair, consumer prepares vehicle
Community Outreach - The Marketing Benefit
Private party sellers in your area are not necessarily in the market to buy a new vehicle...at that time. However, chances are they will need a car at some point. When interacting with these consumers, you have an opportunity to build rapport and establish trust.
Each conversation leads to a contact for your CRM. Over time, you are building on a database of consumer contacts. This makes it possible to expand your marketing outreach.
- Talk to consumers in your market you would not have
- Build your CRM database, innumerable contacts
- Provide valuable service for consumers in your market
Watch the Preview
Get the Complete Conversation - Get the Right Tools
As you can see, there are significant benefits to buying used vehicles from private party sellers. To accomplish these things, you need a strategy. A strategy complete with the right tools, the best information, and great partnerships.
VAN University was designed to be a place where dealers can go to get these things. The videos on our blog feature only previews of these conversations. But to access the complete conversations, all you have to do is sign up with VAN University.
Signing up is free and you may unsubscribe at any time. By doing so, you will be notified of each upcoming VAN University event we have planned. You will also be granted access to all of the materials offered, including the complete conversations.
The full videos are trimmed and modified to move through the contents more swiftly. This allows for quicker viewing. However, we always encourage attending the live webinars where you can be part of the conversation. You can also participate in the Q&A.