Two Reasons Why No Acquisition Source Compares with Street Purchases

"I don't think there is one source that can compete with private party purchases when done right," -David Long, Dealership Operations Executive.

These are the words from our friend and colleague David Long, executive of dealership operations for multiple auto groups over the last decade, in a recent online panel discussion with industry thought leaders in the user car business. Long has helped lead the development of several used car profit centers, and he is a staunch believer in consumer vehicle acquisition.

"When I think about auctions,” says Long, "and I think about sourcing and where to get cars, it still is mind-boggling to me how many dealers there are that step over private party purchases."

What Long is referring to here is that so few dealers embrace a strategy that leads to consumer acquisition. Buying cars from private sellers is not just about sourcing vehicles profitably. It’s also about acquiring new customers that you wouldn’t see otherwise.

Consumer Vehicle Acquisition is Profitable

"With the last two buy centers I had the benefit of setting up, one generated four million dollars worth of private party retail gross that the company would have never seen, and that's in one year, Long explains.

Long goes on, “If we measure our used car business and business units and we look at the amount of gross profit generated on auction purchases relative to trade efficiency relative to private party relative to a couple other sources that are out there, I don't think there's one source that can compete with private party purchases when done right.”

Private Party Purchases Bring More Customers

Beyond being more profitable, buying cars from private sellers brings in new customers that your dealership would not likely see otherwise. This is another point Long emphasizes.

Most customers do business with you because they buy a new or used car from you, or they need service. When you attract consumers for the purpose of buying their vehicle, the process is effectively another marketing arm for consumer acquisition.

Faster Turn and Higher Gross

The benefits don't stop here. Here is Long talking about his experience acquiring used cars from private party sellers while serving as Used Vehicle Director at Del Grande Dealer Group in San Jose, California:

• Faster Turn
• Higher Gross
• More Variety
• New Customers

"Buying direct from Private Party Sellers brought us close to $4M in additional company gross, on cars that we would have never found, from people we probably would have never met. Those vehicles also turned more than 4 days faster than our average acquisition, for about $300 to $500 more per car."