AAR is pleased to bring dealers a new segment, “Auctions in the News” that covers relevant topics prevailing in the auction world.  We at AAR want to keep our subscribers up to speed on happenings in our industry.

J.D. Power is launching a new online auction, partnering with Superior Integrated Auctions, launching J.D. Power Marketplace, permitting nearly 11,000 dealers access to inventory through its new platform.

The philosophy behind the new online auction stems from J.D. Power’s Technology president Phillip Batista’s statement- “Prices for used vehicles at physical auctions have skyrocketed due to high demand,” J.D. Power Dealer Technology president Phillip Battista said, “straining dealership budgets and reducing profitability. J.D. Power Marketplace offers a large volume of the high-quality, low-mileage vehicles consumers desire, and those vehicles deliver better margins for dealers.”

The article goes on to state that this new online bidding platform will integrate with DMS systems (presumably vAuto and other similar programs), allowing dealers to bid in a competitive environment.  There is an emphasis that the “large supply of inventory creates more competitive prices than local auctions”.

Here is AAR’s quick take on J.D.Power’s new auction-  in theory, more places to buy cars tends to water down the buyers-  for example, I have found it easier to buy wholesale inventory on “X” online platform, turn around and flip those cars at our local Manheim auction, making a tidy profit (usually).  Why is that?  I’m not smarter than everyone else, it’s a matter of numbers.  I purchase vehicles on “X” channel with 2-4 online bidders, and sell the vehicles at Manheim, with normally 50-90 bidders online.  It’s simple- there is power in numbers, and the vehicle has many more eyes on it, yielding a higher sales price.

Let’s revisit J.D. Power’s statement, the “large supply of inventory creates more competitive prices than local auctions”.  To my way of thinking, that means in essence, “Our auctions don’t bring as much money as the Big Box Auctions do, so our buyers will be happy and buy from us”.

Obviously, a new auction channel normally creates buzz in the industry, and buyers and sellers alike, but eventually the honeymoon is over, and the sellers come out of the ether—— this begs the question:  Why would sellers continue to offer inventory in a channel that the auction itself claims to bring less money than other competitors?

Let us know your thoughts in the comments below.