Let’s face it, it’s a terrible time to be short on the quality inventory that comes from customer trade-ins. But who’s buying all those used vehicles? The answer: Large used-car aggregators. And that’s a threat that dealerships are only just beginning to realize. 

According to CarMax’s quarterly report, the company alone bought a record 341,275 vehicles from consumers in the first quarter of 2021, a 236% increase from a year earlier and 77% more than two years ago. That’s more than 1 million used vehicles in one year that aren’t taken to dealerships as trade-ins.

While that number is staggering, what’s even more significant is the effect on dealers’ bottom lines. When a customer sells directly to an aggregator company:

 

• the dealer loses a valuable asset. This trend lowers dealers’ margins because dealers traditionally make the highest ROI on trade-ins with a complete service history.

• that used car becomes a competing retail unit. And it’s likely offered at a lower price given the massive volume of cars and low margins with which the companies operate.

• the dealership loses a retail sale. Customers might intend to sell to a national retailer and then buy from a local dealership. But once they see the huge selection of cars for sale from a company they’ve already sold to, they buy there, too. 

• the dealership loses future service business. Any car that’s not bought there probably isn’t coming back in for warranty work, routine maintenance, or other repairs. 

• the brand loses loyalty. It used to be that a customer traded an old Toyota for a new Toyota at a Toyota store. But when a customer sells their old Toyota to a national retailer, it’s just as easy for them to spot another attractive make among that buyer’s inventory. 

It’s not a losing battle, though — if dealers can update the way they handle trade-ins to make them as quick and easy as the bigger guys. 

 

Rather than asking the customer to schedule an appointment to physically take the vehicle to the dealership a week from now, dealers can send a certified ACV True360 inspector to the customer’s home or business within 24 hours. Equipped with ACV’s proprietary technology, that third-party inspector can provide an incredibly accurate condition report and unbiased appraisal in about 20 minutes so that the dealer can offer to buy it on the spot.

If it’s not a vehicle the dealer wants to buy, the inspector can launch it to a live online auction immediately. The dealer still gets value from the trade-in (and everything that comes with it) and the end result is the same for the customer: sold car, good experience, money to spend at the dealership.

In markets where the huge online retailers have already begun to buy, ACV can help dealers stay competitive. In markets where the online giants haven’t set up shop, though, these tools can help dealers carve out a niche reputation as the easiest car sales experience in town. And no national chain can compete with that. 

 

Dealers interested in learning more about how ACV can help them buy more cars from consumers, contact educationalwebinars@acvauctions.com, rbarone@acvauctions.com, or a local ACV territory manager.