Josh Callahan, Senior Director, remarketing services at Ally Financial, talks ways to help dealers source used vehicles more efficiently and maintain their used car margins.
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Emma Hancock: Hi everyone. Welcome back to the All Ears podcast. I'm Emma Hancock, host, and strategist at Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News Content Studio. In each episode, we explore topics that are important to leaders in automotive retailing. Our guests include experts in their field from Ally, plus dealers from around the country, and we cover tips and explore insights that can help dealerships successfully navigate the transformational changes taking place in our industry. So, on that note, let's get into our topic for today. We're going to be talking about ways to help dealers source used vehicles more efficiently and maintain their used car margins. So much has changed since 2021, even since 2022. And we're at a point now in 2023 with a rise in retail prices, interest rates and inflation. And it's making affordability a key issue. The demand for used is still very high. According to a recent Automotive News article by C.J. Moore, the need for used vehicles remains elevated until new vehicle supply fully recovers. We're also seeing wholesale used vehicle prices come down significantly from last year's record highs. Plus, dealers are putting greater emphasis on creating new, affordable options for in-market customers. Our guest today is Josh Callahan, Senior Director, remarketing services at Ally Financial. Welcome, Josh, thanks for being here.
Joshua Callahan: Thanks Emma, happy to be here and thanks for the opportunity to speak with you today.
Emma Hancock: Yeah, it's great to have you here. So, Josh, we're seeing dealers across the country put a greater emphasis on their used car strategies in an effort to maintain profitability. What are some key differences you're seeing this year compared to, say, 2021 and 2022?
Joshua Callahan: Well, I think this year we're seeing a more measured approach in the marketplace in acquiring used vehicles. In 2021 and 2022, we saw more of a buy everything, get as many cars on your lot as possible for you to sell to customers out there be it new customers or the used customers. Today, we're seeing more new vehicles back into dealership lots and dealership showrooms, certainly below pre-pandemic levels. But this also presents an opportunity because it's still less than what it has been in the past. So, dealers have the opportunity to transition that new customer to a used vehicle and take advantage of all the profit opportunities that come with that used car: additional back end grosses, some additional service hours, some additional shop hours, and certainly some additional service lane opportunities for that customer when they come in for service.
Emma Hancock: And you know, a lot of the vehicles, used vehicles that might have been not of interest to a dealer, certainly have been of late with customers shopping older, higher mileage, used vehicles. What are some ways dealers can efficiently and confidently source these kinds of options.
Joshua Callahan: Well in today's market certainly want to know what you're getting and where you're getting it from. You want to buy from trusted sources out there in the marketplace that stand behind their vehicles, stand behind their sales. And if something ever goes wrong with that purchase, if something ever goes wrong with that vehicle, you want to know whoever you're buying it from is going to stand behind that vehicle to be able to make it right for you as the buyer or simply take the vehicle back. As long as you have faith in the transaction, the company standing behind it, the business that they've been in for decades, it's certainly an opportunity to take advantage of those online sources.
Emma Hancock: Trust is more important than ever for sure. With a focus on profitability with every used vehicle transaction, including trade in, what are some ways dealers can help maintain margins?
Joshua Callahan: Well, in today's market, you want to buy vehicles that make sense for your customers. Buy the right vehicle at the right time. Know what vehicles are going to work well in your marketplace, know what vehicles you can stretch a little bit further on in order to get those onto your lot and take advantage of the customers in the marketplace. In today's market, certainly we have new customers going back to dealerships lots, but we have limited inventory out there for them to shop. So, it's a perfect opportunity to get that new customer into a used vehicle and take advantage of all the profitability options that come with that used vehicle.
Emma Hancock: And you bring up a good point, knowing your market because there's so many regional differences with the types of vehicles that dealers are buying. So, from a time management perspective, how might dealers source more diverse used vehicle options?
Joshua Callahan: Well, certainly online auctions are the wave of the future, and it makes a lot of sense in this day and age. We learned that during the pandemic that buying a car online is not as scary as it once was. And companies like Ally, like SmartAuction are standing behind their purchases, standing behind the vehicle they sell for their buyers in the marketplace. In today's age, we think that longer term auctions, more than just a couple of minutes, more than just a couple of hours, make sense for the buyer where they have the ability to research their vehicle, do the due diligence on that and while continuing their day to day operations as the used car manager or at the dealership. With SmartAuction, we run two auctions per day and certainly gives the buyers plenty of time to look at vehicles, do their due diligence, make sure they're buying the right car at the right time for their customers.
Emma Hancock: So much convenience with that type of service like SmartAuction. Josh, you've covered so many good tips: maintaining profitability, advice for sourcing older vehicles with confidence and some of the changes we're seeing in the used car marketplace. Thank you so much for your great insights.
Joshua Callahan: Thank you. Appreciate it.
Emma Hancock: That is it for this episode of the All Ears podcast. I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio, thanks for listening and bye for now.
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