Whether you frequent auctions often, you’ve never participated in one before or you are somewhere in between the two, auctions have a lot to offer powersports dealers who are looking to amplify their pre-owned inventory.
According to the latest survey by the Motorcycle Industry Council,* 53 percent of 2016 retail outlets specialized in selling used vehicles as opposed to new, which accounts for $320 million in used motorcycle sales for the year. Along with accessories, parts and services, the used vehicle market retail sales volume consists of $2 billion.
With spring approaching, National Powersport Auctions is preparing for its busy season, according to COO, Jim Woodruff.
“Spring and early summer are the strongest seasons in the wholesale market,” Woodruff said. “As the snow melts across all 50 states, dealers know that retail consumers want to ride and dealer demand for product skyrockets.”
Geographic locations play an important role in the market demand.
“Consistent with tax seasons and ‘spring markets,’ we see an uptick in prices during the March through July timeframe,” said Michael Dwyer, manager of Eastern Powersports Auction, located in Connecticut. “What is important to remember about the Northeast, we experience a shorter riding season than much of the rest of the country. The units that EPA offers have much lower average miles than the rest of the country. This creates a high demand for our vehicles throughout the year.”
Similarly, the same seasonal sentiment carries for Insurance Auto Auctions.
“Seasonality will always be a consideration, particularly with powersports purchases,” said John Bean, vice president of centralized operations at IAA. “Warmer weather will elicit more motorcycle interest, and colder weather will prompt more demand for snowmobiles. But we find our IAA Rec Rides online exclusive auction is a great channel year-round. That is why we shifted to the twice a week online-only model for these vehicles.”
The shift to online auctions is not a new feature to the world of auctions, but new technology is making it easier for more people to attend based on convenience. Dwyer noted that EPA sells, on average, 50 percent of its inventory to online bidders across the U.S. and Canada.
“Our auctions are always live with online bidding capabilities,” Dwyer added. “There are advantages to both, but what is important is that EPA makes it easy to do business, whether they attend live or online. We facilitate by offering back-end customer service, from follow up with buyers, to making sure it is easy for transporters to pick up and move the units. We strongly feel that the excitement, the spirit and the emotional aspect of a live auction coupled with the online bidding component remains the best method for each of our customers.”
They aren’t the only company who is seeing a rise in online sales.
“Currently we are seeing an 85 percent online to 15 percent live split,” Woodruff said. “Technology and buyer convenience have caused our online number to grow every year since NPA introduced Simulcast. We recently started doing at least one Simulcast-only live auction each month in addition to our normal facility auctions.”
Alternative channels to traditional auctions has pushed several companies, including IAA, to create more opportunity for the buyer. Their Rec Rides auction is a one-stop shop that pools powersport units from over 180 of IAA’s U.S. locations’ inventory to be sold through an online-exclusive auction model.
“Because our Rec Rides auctions are held at the same times and days each week, buyers can visit the auction page ahead of time to view powersport vehicles that will be upcoming for auction,” Bean added. “IAA organized this online exclusive auction to feature only powersport vehicles; it is easy to navigate. On the vehicle details page, potential buyers will be able to learn all about the vehicle specs and attributes and will also discover the physical location of each vehicle. This aids in understanding what transport might look like, and allows for live previewing, where applicable.”
No matter what auction you are attending, each has a specific process that each vehicle undergoes to create transparency for the buyer. This includes cleaning and detailing; an inspection with condition report, noting any mechanical and cosmetic repairs; a completion of the needed repairs and an online listing that is accessible to buyers, which includes photographs and a finalized detail report of the vehicle.
With all of the behind-the-scenes work complete, an echo across all three auctions emphasized the preparation that dealers must take before they step onto the auction floor: “DO YOUR HOMEWORK.”
“Like anything, powersports dealers should prepare for the auction by doing their homework,” Dwyer said. “Each dealer can look at the run list of available units, the condition reports and market pricing to determine what they are willing to pay. Additionally, they should have a good idea on other costs associated with getting each purchase home, such as transportation costs and any cosmetic or mechanical repairs. Having these key factors planned out will cause each buyer to be focused and make better purchasing decisions.”
“The key to making money in pre-owned powersports is in the buy,” Woodruff added. “If a dealer reviews the photos, condition report and VIN history, he or she has a much greater chance of valuing a vehicle accurately. Once a dealer has a value they are comfortable with, they need to stick to that number when bidding. If they follow this process for every auction item, they will have a much greater chance of making money or holding margin on their retail transaction.”
For first-time attendees, all three auctions recommend a buyer start by attending a live sale.
“We realize the auction world can seem intimidating, so ask questions,” Dwyer explained. “Our staff are experts in auctions and we are more than happy and available to help. We always suggest that anyone who is considering participating in an auction come and attend a live sale. This is the best way to gain experience and confidence. Even if no purchase is made, knowledge can be acquired that gives an advantage when the time comes to make a purchase or sell some inventory. Auctions also provide a great opportunity for networking and gaining insight on the current wholesale market. This information can be utilized for efficiency.”
With so much information available at your fingertips, bidding and acquiring powersports vehicles has never been easier. Are you ready to bring more inventory into your showroom?
* © 2018 MIC Motorcycle Statistical Annual: “53% of 2016 retail outlets specialized in selling motorcycle-related parts, accessories, riding apparel, used vehicles or service, but did not sell new motorcycles, scooters or ATVs.”