Continued from article: Argument for you to Focus on Wholesale

On a personal note, my first manager actually called wholesale buyers, “Lot Trolls”, a very derogatory term that annoyed me deeply at the time, since my father was an independent dealer. From my perspective, my dad represented middle-class America, a first-generation immigrant working his butt off to raise his six children. Not at all a ‘lot troll.’
At the time though, I didn’t really understand how it had come to this. How did dealers start to view these small business owners like lower class citizens? Granted in every industry there are unscrupulous people who are disruptive and dishonest, but the Indy’s, or Independent Dealers I know are just trying to eke out a living in a progressively more difficult environment.
A week later, the GM invited Mike to visit the auction with him. He picked up Mike at his house then drove two and half hours to the Butler Auto auction in Pennsylvania. Between drive time and time in the lane, they spent most of the day away from the dealership. When Mike asked why they needed to be there, the GM told him it was part of the process of taking cars to the auction. It would be his job to be there to sell them in the lane. Again, Mike felt weird about the idea of being away from the dealership for a full day each week, especially when he was just trying to get a handle on his new job. Plus, he would have to let his girlfriend know that on some occasions he would need to be out of town at auctions overnight, something he never expected when he took the promotion.
Today, dealers can have cars staged at auctions all over the country and in some cases spend countless days out of their offices representing their cars. On a Tuesday last spring, I drove down Delaware Avenue in Buffalo, the golden mile of used cars in our area, only to discover that 80% of used car lot owners were out of the office at the Adesa auction. Because of the nature of a lane sale auction, it can take the better part of a day to finish. So, dealers are forced to shut down for the day while trying to buy and sell inventory. This is the reason why so many Indy’s are looking for alternatives and why buying direct is so appealing to them.
Meanwhile, the used car managers from franchise dealers are forced to spend time away from their dealerships as well, “repping” their cars, or worse yet, paying an additional fee to have the cars represented by a paid seller’s representative. Sometimes costing as much as $50 – $150 per car depending on the market.
Often, these same dealers are paying for the privilege of losing money on wholesale. Something has to change, we needed to figure this out.

Next up: Can Off-Site Auctions Be Your Best Choice? or Buy the Book

Kevin B. Leigh is the co-Founder of Auction Simplified and the wholesale book “Wholesale Simplified” and can be reached by email at me@kevinleigh.com