How you as a car dealer can increase your income at car auctions
The coronavirus crisis has put many dealers in a tight spot. First, business collapsed due to the protective measures and the associated lockdowns, then the prospect of a possible purchase premium slowed growth. Now it has been decided: Apart from an increase in the purchase premium for electric cars, there will be no further purchase premiums in the car trade.
Now business can start again. But will it continue as before? Have consumers only postponed buying a car, not canceled it? This seems difficult to imagine in view of the new economic conditions. Short-time working and the economic downturn are leading to uncertainty among consumers, who will be cautious as a result. The result is increased pressure on margins for retailers. It is therefore important to weigh up costs and income now in order to avoid unnecessary expenditure.
The most important price drivers at car auctions
Cars are bought at auction and not sold. This applies to customs auctions, the sale of accident vehicles or residual value exchanges. The price development at an auction therefore depends largely on the buyers, which of course does not mean that Seller has no influence on the price. It is just that measures that Seller can take take place before the auction. For example, Seller has to make the decision on use long before the auction and decide whether refurbishment is worthwhile. So you could say that an auction from the seller's point of view follows the principle of "first the work, then the fun", and the fun in this case is a high price in remarketing. But what influences this sales revenue? The price drivers in remarketing are diverse.
The most important thing after the decision on use is the choice of marketplace. When it comes to choosing the right sales environment, dealers today basically have the choice between traditional physical auctions and online auction platforms. In physical auctions, the vehicles are taken to an auction location and auctioned off there. The share of physical auctions in the B2B used car trade is declining sharply. This is mainly due to the costs, the slow processing and the enormous logistical effort involved. At online auctions, Seller can advertise the cars themselves or, in some cases, commission an external vehicle expert to do so. The listing by an objective expert increases transparency for buyers and leads to higher average sales proceeds. At the same time, Seller only incurs costs if the sale is successful.
Advantages for used car dealers
Online auction platforms are cheaper for Seller than physical ones due to the efficient process design. Furthermore, online platforms can offer faster processing, as the complex logistics of physical auctions are no longer necessary. A distinction must be made here between platforms that offer the full service, for example their own payment processing and internal transportation solutions, from a single source and providers that only arrange third-party services. Comprehensive services offer speed in processing, increased transparency and responsibility for all process steps.
How you as a car dealer can get more out of your vehicle
The basis for a high sale price is a complete vehicle valuation and as many photos as possible, so far so good. But what else helps to increase the price of your vehicle? First of all, you should make sure that your asking price is realistic. Excessive prices are a deterrent, whereas low prices can trigger a bidding war. Particularly in the hot bidding phase, very high proceeds are often achieved for vehicles that were based on a cautious price assessment. Such bidding effects should not be underestimated. The duration of the auction also plays a role. Interest in an advertisement is generally highest when it has just been placed. At the same time, a longer auction duration increases the number of potential bidders. It has been shown that a longer auction duration is recommended for more specialized vehicles that appeal to a smaller customer base, while fast movers often exceed the desired minimum prices even after a short time on the platform. As a general rule, you should try to keep the number of auction rounds low and not exceed three auction rounds. If there are bids below the desired reserve price, it is advisable to talk to an industry expert. Bids in upcoming auction rounds rarely exceed the highest bid in previous rounds. You should therefore make use of personal contact with auction platform employees during renegotiations, if this is offered by your platform, in order to better assess the bidding potential.
With the help of these tips, Seller can increase your revenues in B2B remarketing. If you have any questions or suggestions, we look forward to receiving your feedback.
