Do you know what the 4 core “w’s” of a successful car dealer are? They are as follows: “what to buy”, “where to buy”, “who to sell to”, and “where to sell”. And “how to sell” should be included as well. Wow, that looks like a lot of work (and reading) to do. So we’ve decided to highlight just one of the w’s: “where to buy”.
We have already called attention to the Pros And Cons of Using Proxy Bidding At Car Auctions. Today we want to be more specific in regards to the proxy bidding feature itself and how car dealers feel about using it.
The place to buy: online auctions
Online auctions are a huge time-saver for dealers who want to constantly extend their acquisition reach and still have a life.
If you need to buy 100 cars within a couple of weeks, online auctions can really come in handy. And instead of hopping from place to place and standing in auction lanes until your legs feel like they’re going to fall off, you can sit in your air-conditioned office and buy your vehicles online.
With the rise of digital in the automotive industry, it has made it possible for dealers to cut their travel expenses and reduce the time that is involved by restocking their inventory through online sources. Of course, there will always be dealers who prefer to go old school, but the physical vs. online ratio has been moving in favor of online participation.
Even so, many dealers don’t get the full potential out of it, avoiding features they either haven’t tried yet or have tried in the past and failed. As you may have already guessed, we’re talking about proxy bidding.
What is proxy bidding?
If you have ever played a strategy video game, you can recall that there is a quick combat option. This allows you to skip manually fighting and to proceed directly to the results of combat, which will be based on the initial forces and resources ratio.
Some may consider this to be less interesting, but it does save a lot of time.
The proxy bidding option is very similar to that. It allows you to skip manual bidding and jump to the results of an auction.
With proxy bidding the system places bids on your behalf, gradually increasing the bid from the starting price up to the maximum bid you set for each particular vehicle.
If your maximum amount is met, the system sends you an outbid notification and you no longer would be “fighting” for that vehicle. If you’re the highest bidder by the time the auction closes, the vehicle is yours.
Proxies can be very helpful when you are either not able to watch one auction, or simply not able to watch all of them. The number of vehicles, as well as the amount of online lanes is too vast to be doing the bidding manually.
Proxy bidding is a great way to substantially streamline the vehicle acquisition process. Besides, your proxy bid always remains confidential during the whole process.
The top 5 reasons why dealers should use proxy bidding:
1. You don’t have to attend and monitor the auction to bid
The first and foremost reason to use this is really the amount of time you will save. Since the system does all of the bidding for you, you can get more done in the meantime.
2. You can determine the price you are willing to pay ahead of time without any external pressure or influence
Very often, due to the auction rush, you can end up paying more than you initially would pay for a particular vehicle. This isn’t because you suddenly decided that it is worth more, but rather in the heat of the moment just to outbid your competitor.
Proxy bidding cancels out that possibility from happening. Before the auction starts, you can calmly go through the auction item preview page, choose specific vehicles that you want to bid on, calculate the expected retail selling price, and set the maximum amount as your proxy bid. No more emotionally-driven decisions.
3. You can bid on multiple vehicles simultaneously
If it wasn’t for proxy bidding, you would have to monitor all of the lanes with your selected vehicles to avoid being outbid. That could be arduous work if you have like a couple dozen of them. Since the process is entirely automated, the number of vehicles you can simultaneously bid on is limited only by the total number of vehicles that are presented at the auction.
4. There is always room to bid up
Proxy bids are easily modifiable. You can view, edit, and cancel each proxy bid submitted. Also, if you have decided to keep an eye on one particular vehicle because you either already have a customer waiting for it or you know it’ll sell quickly, you can always bid up to win the vehicle.
5. You can extend your acquisition reach beyond local brick and mortar auctions
And this way you won’t have to take time-consuming trips to out-of-state auctions, just select the vehicles you want to bid on and set the proxy amounts.
Why is dealer participation still relatively low?
Despite the fact that proxy bidding is a proven and efficient system for reaching multiple outlets at the same time, statistics shows that only about 40 percent of dealers use this feature as part of their vehicle acquisition plan. This could be due to some of the following reasons:
- Dealers are unfamiliar with the proxy bidding process and the way it works
- Dealers deliberately set their maximum bid amounts below an acceptable wholesale acquisition price in hopes to either “steal” a vehicle or to avoid winning every bid,
- Dealers enter an auction unprepared, perhaps unaware of what vehicles their inventories actually need, and end up relying on their gut instinct (although it may work sometimes, it’s not a reliable way to feed your inventory).
Luckily these reasons can be addressed fairly easily:
– Learn how to use the proxy bidding system
– Calculate every vehicle’s gross profit margin before bidding
– Set a reasonable and realistic price
– Do your homework to determine what units you need to be bidding for and bid only on vehicles that your dealership needs now and in the near future.
The final word
Although proxy bidding is meant to make the life of car dealers much easier, it still remains underutilized by the majority of them. We don’t advise that you source vehicles through proxy bidding alone, but in conjunction with live simulcast and brick and mortar auctions, it can really help you to easily facilitate the vehicle acquisition process.