You Should Get Out and Hunt Inventory

Inventory is a big key to the success of Buy Here Pay Here (BHPH) and Lease Here Pay Here (LHPH) dealerships. Without ready rigs on hand, sales simply cannot happen. Dealers are often discussing inventory challenges and strategies, both in person and online. Common questions include where to source vehicles, which types to buy, how much reconditioning is appropriate, and what to avoid.

Many dealers struggle to source enough units, while others report record sales. This feast-or-famine situation extends beyond inventory to staffing and collections: some locations can't hire enough people, while others maintain a loyal, long-term staff. Similarly, some dealerships face high repossessions and charge-offs, while others maintain strong collections and low write-offs. The difference usually lies in the management’s effort and approach.

COVID changed the landscape for acquiring inventory. New car dealers learned they could profit from higher mileage used cars, which was critical to their survival, so they started keeping more trade-ins, reducing the supply of used vehicles available to our operations. BHPH/LHPH dealers relied heavily on franchise dealer trade-ins, but this source has diminished.

Today, BHPH/LHPH dealers must sort through vehicles they take as repo’s. Finding others trickling down from used car departments and other finance companies repossessed units at auctions, hoping to find the best among less desirable options, you know, the “cream of the crap”. You could get enough vehicles before in only a few hours a week, supplemented by wholesalers. Now, dealers spend time every day, often remotely, to find enough vehicles. The best opportunities come from standing in the lanes, getting to know the auction personnel and other dealers.

Online auctions present challenges: many have bad condition descriptions, and it’s easier to miss issues when not inspecting cars in person. I spoke to one dealer that had close to 20 vehicles sitting they had purchased, all needing engines before they could be sold. There’s also the risk of auction personnel showing favoritism toward onsite dealers, resulting in missed opportunities for remote buyers.

Dealers who consistently maintain healthy inventory levels tend to be those who physically attend auctions. They inspect vehicles in advance, checking dozens in person, opening hoods, smelling interiors, and scanning for diagnostic codes. By personally evaluating vehicles, they can bid stronger knowing the condition and often secure a bargain because they are there.

Onsite dealers also benefit from relationships with auction staff, resulting in smoother title processing, faster arbitration, and quicker transportation of purchased vehicles. In contrast, those relying solely on online purchases may have delays and don’t seem to have as much control of the process.

While not every dealer can attend auctions regularly, the most successful are those who put in the necessary work, regardless of weather or time constraints. The frequency and effort required for inventory acquisition have increased, and hands-on involvement saves money during and after the sale. That Nissan is easier to bid if you can see the replaced transmission and fresh gaskets. The vehicle may be run a red light but if you know what to look for, it can be a bargain.

Jack Carter’s (GIADA) presentation at BHPH United last spring illustrated this approach, showing what to look for in various vehicles and emphasizing the importance of evaluating cars in person. He “colorfully” appreciated those who preferred online buying, that practice created more opportunities for handson buyers to grab the bargains. Jack was looking for examples like the Nissan above. Also avoiding cars where the interior was not cared for or tires that are mismatched. Knowing which vehicles were avoided by many buyers for problems known by most, Jack would look for the vehicles where the particular problem had already been addressed. Learning what to look for and being at the sale can help you make more money and give your service more time to stay on top of what mechanical issues your portfolio presents.

Managing a dealership involves many responsibilities each week. Success often depends on the willingness to invest time and effort, as well as the ability to trust and delegate tasks to your best people. Inventory helps drive customer visits. Ultimately, profits are made during the buying process, so it’s a big advantage for someone—whether the dealer or a trusted buyer—to personally inspect vehicles before purchase. Trying to avoid buying vehicles without direct, hands-on evaluation to ensure the best outcomes for your dealership.