A funny thing happens to auto dealers sometimes. They’ll make a trek to a big used car auto auction in Columbus or Detroit and end up buying or selling a car from a dealer located a block away from them back in Cleveland.
Traveling to Columbus to complete a transaction with someone down the street was a colossal waste of money for all involved. The seller had to pay to transport the car to the auction, either by truck or by paying a driver, plus there are auction fees and the time invested. The buyer had similar fees and had to get the car back to Cleveland where it originally started.
The Greater Cleveland Automobile Dealers’ Association recognized this was an inefficient process for local transactions.
“The e-commerce committee was looking for ways to reduce expenses,” says Gary Adams, president of the organization that represents 208 dealers in 13 counties in Northeast Ohio. “They came up with the idea of a wholesale vehicle exchange.”
Dealers spend a lot of time keeping the right mix of used cars on the lot. Each dealer has his or her own preference for how many compacts, sedans and trucks they want. They also move out trade-ins that don’t match their inventory. For example, Ford dealers tend to deal primarily in used Fords and will probably be looking to get rid of a Toyota that someone traded in on a new Taurus.
“They take the cars they don’t want to auction to sell them,” says Adams. “There’s a lot of time and money involved in this process. They wanted to come up with a way to market vehicles to fellow dealers.”
The result is a wholesale vehicle exchange at http://www.gacada.orgthat had $3 million in inventory after less than a month from its launch.
“What we’re trying to do is before a dealer takes a car to auction, they can post it on the site,” says Adams. “If another dealer sees the car and is interested, they can go over to the dealership and take a look at it.”
Adams notes that the site isn’t meant to actually sell the car, but rather just advertise it to other dealers. Because dealers usually want to see the car first hand before making a purchase, the group opted not to go beyond the listing function, which includes detailed information on the car and a contact name and phone number.
Sellers can now list all their excess inventory for other dealers to see, and buyers can search locally for the car they need to finish the right mix for their lot. Members of the organization have unlimited access to the site for $25 per month or $200 per year. The potential buyer pool was increased by allowing non-members and wholesalers access to the site for $75 per month, but they can only search the inventory and are not allowed to post listings.
So far, 35 dealerships are participating, but Adams expects that to grow because the used car market is set to explode. The 0 percent financing is producing a glut of trade-ins, rental companies are dumping inventory because of reduced demands and leased vehicles are being returned at a higher rate than before.
“There’s a real glut of inventory, and dealers need to move that product,” says Adams. “While this site will never replace the auctions, it is one other option for the dealers.”
