Car Dealership Used-Vehicle Ops Draw More Automaker Interest

“Used cars were a dirty word when I was on the OEM side,” says Patrick Janes of vAuto. “Back then it was new, new, new.”

Steve Finlay, Contributing Editor

September 24, 2019

3 Min Read
certified pre owned sign resized no 2(1)
Janes says more automakers believe their dealers need strong used-car operations as a pillar of profitability.

Automakers are showing a greater interest in dealership used-car operations, says Patrick Janes, who has worked on both sides of the business.

“OEMs are moving more into the used-car space,” says Janes, a business development director for vAuto, an industry software provider of inventory-management, wholesale-acquisition, market-demand and pricing data.

“For OEMs before, it was, you worked for the factory and didn’t get deep into used cars,” he says. “You sold new cars; it was very new-car focused.”

He began his auto career fresh out of college working for Nissan, assigned to field and corporate work. He did that for 14 years, then became a general manager of Nissan and Subaru stores in Staunton, VA, near Charlottesville. He joined vAuto about five years ago as a performance manager, helping dealerships use technology to stock and sell used cars.

Every major automaker runs certified pre-owned vehicle programs to remarket their off-lease vehicles. One might think OEM used-car interest wouldn’t extend beyond that, but it does these days.

Patrick Janes Headshot.jpg

Patrick Janes Headshot

“They haven’t limited it to CPOs,” Janes says. “CPO vehicles create good customer retention and loyalty, but I’m also seeing OEMs opening up and saying, ‘Our dealers need strong used-car operations.’ That’s a pillar of dealer profitability, and there’s more of an OEM effort to work with them on that. (Patrick Janes, left)

“It’s exciting because used cars were a dirty word when I was on the OEM side. Back then it was new, new, new.”

The enhanced automaker used-car interest in part involves building brand awareness. Affordability is another element.

The average transaction price is $37,000 for a new vehicle, $20,000 for a used unit. “That’s a huge affordability gap,” Janes says. “The used car is where you bring many consumers into your brand and then move them up the cycle while still getting the benefit of parts and service business, which OEMs need. That’s part of the mindset shift.”

His vAuto job focuses on drumming up business for Stockwave, a software product that helps dealers acquire wholesale inventory by giving them assorted information, including where vehicles they’ve expressed an interest in can be purchased in the wholesale market.

vAuto’s core product is inventory-management software designed to help dealerships select, price and sell vehicle stock based on marketplace supply-and-demand analytics.

In 2016, vAuto introduced Stockwave to take inventory management to a new level, because it requires less hands-on work for dealers to replenish their pre-owned vehicle inventory.

Stockwave allows dealers to set up parameters for the types of wholesale vehicles they want. The software’s “spiders” crawl out to auctions and other used-vehicle supply sources. Stockwave can push results to dealers, notifying them of what’s available that suits their stated needs.

Some dealers use that bring-it-to-me digital tool, however “a high percentage of our users like to shop,” Janes says. “They use the Stockwave market data and the saved-search tool, but we’re seeing most of them want to proactively search and shop.”

Does that reflect a human psychological dynamic that shoppers like to find their own way?

“My experience in working with car dealers and being in that fray for a long time is that there’s this hands-on, control-my-own-destiny perception,” Janes says. “It is someone who wants to roll up their sleeves and do the legwork to prove they can find the right cars. Stockwave still helps them do that.”

Asked to cite benchmarks dealers should follow for a more calculated approach to used-car operations, Janes says: “We still believe dealers need to find fast-moving inventory, although some of that has changed because with ProfitTime (another vAuto product) we’ve seen some cars have a value where the calendar isn’t as critical.

“But at the point of acquisition in the wholesale market, pay attention to market days’ supply, vehicle demand and pricing to market. I keep coming back to that local market data. You’ve got to find that car that has a bit more margin and moves a bit quicker. Have a wholesale strategy for that car as to how it will perform, then back into what you should pay for it.”

About the Author(s)

Steve Finlay

Contributing Editor, WardsAuto

Steven Finlay is a former longtime editor for WardsAuto. He writes about a range of topics including automotive dealers and issues that impact their business.

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