INVENTORY STRATEGY

TheBuyingGame I

Like a game of skill, buying inventory is all about strategy, gut instinct, optimizing tools and luck. Learn tips and trends from seasoned auto

recyclers that can minimize the need for luck and increase odds for success. BY MICHELLE KEADLE-TAYLOR

t’s a buy or die business,” said David Gold, owner of Standard Auto Wreckers. “Buying is one of the most important aspects to our business. We need to know how to buy well and make sure you actually need the vehicle you are buying.”

Jonathan Morrow, M&M Auto Parts, agrees. “Buying has changed dramatically over the last couple of years. Data has become the most important factor in analyzing cars to purchase, even to the point of determining which cars have a high core value and adding that to the bid. Recyclers also have to evaluate their data to determine what their customers are looking for and stop buying cars because you like them or they have made money in the past.”

Auto recyclers agree that the buying process is one of the most important aspects of their business and that running a successful business in today’s climate means using data available, looking for ways to stay ahead of the current market trends and staying flexible. “Cars are not getting any less expensive unless you are buying low-quality, high-mileage vehicles,” said

28 Automotive Recycling | May-June 2015

Megan Watson-Rons, Purchasing Manager, ABC Auto Parts. “Finding good outlets to get vehicles is a challenge and one of the biggest challenges and opportunities we face as auto recyclers is how to find more cars at lower prices and not compete for the same vehicles with the entire world.” RD Hopper, ARA’s Second Vice President and

Treasurer, and President of Sonny’s Auto Salvage, says more of the major factors affecting current buying trends come from unlicensed buyers being able to pay more for cars than auto recyclers. On the surface, its a challenging situation. The key is to become a smarter buyer. “Over the last few years, our fixed overhead has gone through the roof with insurance costs, worker’s com- pensation, etc. and the cost of goods has gone from being an average of 40% over the last couple of years to 50% average,” said Hopper. “As recyclers know, the sales fees went up from five to 10% on average to close to 25% in the last eight years. Back then, the insurance company absorbed part of the cost of auctioning cars. Competition between auctions and the abundance of Internet and overseas buyers has led to 90% of the expense being shifted to the buyer. “The unlicensed or illegal buyer who doesn’t have the overhead can spend more on cars than we can.