By Tim O'Leary

Aged used vehicle inventory has reached epidemic proportions. As a consultant, I've witnessed this in dealerships throughout the country.

The majority of these aged inventories, which I define as units over 30 days old, are made up of auction purchases. It's alarming to me that in most cases, there is no written process for purchasing used car inventory from auctions.

Given the economic times and condition of the retail auto market, used vehicle departments are performing an increased role in ensuring a dealership's overall success and profitability. Aged inventory is an ailment that's sapping profits. One way to help cure that problem is the implementation of a solid process for purchasing and processing auction vehicles.

Stop losing gross! Make the following 10 auction practices part of your written policy to reduce exposure to inventory aging:

1. Decide what you really need – What vehicles fit your sales market? Always remove personal attitudes and feelings from this process and stick to the facts. Review your last 90-day vehicle sales log. Look for optimal units, including the year, make, model, and price bands of wholesale and retail units that have a short shelf life and return better than average grosses. Review this with the sales staff to get their opinions and buy-in to the vehicles you need and want to purchase.
2. Determine where to shop – Check the online sites of auctions near you and decide which auctions have the best match for the units on your buy list.
3. Get the facts – Download or manually copy important information about possible purchase units at the auctions you select. Include items such as sale date, auction lane and run number, vehicle year, make, model, series, body style, color, odometer, VIN, and seller.
4. Execute due diligence – To eliminate problem units, review AutoCheck^® Plus on each vehicle you are considering. Book out vehicles to get a full picture of what they are worth. For example, to help establish a real market based retail price, use Black Book to calculate rough to average book values for buying, NADA for loan value, and major Internet sites to see the advertised price for similar vehicles. Calculate auction fees, transport costs, and reconditioning to ensure profitability.
5. Make a shopping list – Create a printed list of the vehicles you want to purchase, including lane and run numbers. Enter final bid parameters so you know your spending limit for each vehicle. You must remain focused and disciplined, buying only the units you need while not exceeding the buying price you set in advance.
6. Take a hands-on approach – Arrive at the auction with your buy list several hours before the sale starts. Touch and inspect each vehicle you are considering to ensure there are no damage or paintwork issues. Verify the model, mileage, engine, transmission, options, etc.
7. Start selling immediately – Immediately transport the purchased vehicles back to the dealership. Even before the units arrive, add them to all Internet sites with a full description and competitive pricing. Indicate that photos will be coming soon.
8. Execute a walk-around – As soon as vehicles arrive at the dealership, have the management team take the entire sales staff on a walking tour to review the purchased units and establish knowledge of vehicles, pricing, etc.
9. Expedite reconditioning – The vehicles must be displayed on the front line within 48 hours of arrival at the dealership. Time is of the essence and the clock is ticking.
10. Start the show – Have the used car manager inspect the vehicles to ensure they are front line ready, attaching the FTC stickers and window labels. Make sure the market-based price and several pictures of the vehicle are on all Internet sites. Inform sales and Internet staff of the vehicle's availability.

Why do used vehicles age? They are priced out of market, there are reconditioning issues with the vehicle, the vehicle is unavailable for sale, or the vehicle is not a good fit for your business model.

Avoid these problems. Consistently follow your own clearly defined, written auction policy, leveraging the steps outlined here. You will help your used vehicle department avoid vehicle aging and maximize efficiency and profitability.

Tim O'Leary is a senior business consultant for Reynolds Consulting Services and has extensive experience in new and used vehicle sales management.