How you as a car dealer can increase your revenues at car auctions

by Halit Özdemir

The Corona crisis has left many dealers struggling. First, business plummeted due to the protections and accompanying car foreclosures, then the prospect of a possible purchase incentive slowed growth. Now it's been decided: Except for an increase in the purchase premium for electric cars, there will be no further purchase premiums in the automotive trade.

Now business can get going again. But will it continue as before? Have consumers only postponed the purchase of a car, not cancelled it? This seems difficult to imagine in view of the new economic conditions. Short-time work and the economic downturn are creating uncertainty among consumers, who will be cautious as a result. The result is increased pressure on margins for retailers. So it's important to weigh costs and returns now to avoid unnecessary expenses.

The main price drivers at car auctions

Cars are bought at auction, not sold. This applies to customs auctions, the sale of accident vehicles or salvage exchanges. So the price development at an auction depends largely on the buyers, which of course does not mean that sellers have no influence on the price. It is just that measures which sellers can take take place before the auction. For example, sellers have to make the usage decision long before the auction and decide whether it is worthwhile to refurbish the item. 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 usage decision is first the choice of marketplace. When choosing the right selling environment, today's merchants basically have a choice between traditional physical auctions and online auction platforms. In physical auctions, vehicles are brought to an auction site and auctioned off there. The share of physical auctions in B2B used car trading is declining sharply. This is mainly due to the costs, the slow processing and the enormous logistical effort. In online auctions, the seller can advertise the cars independently or, in some cases, commission an external automotive expert to do so. The inclusion of an objective expert increases transparency for buyers and leads to higher average sales proceeds. At the same time, costs are incurred by the seller only in the event of success.

Advantages for dealers of used cars

Online auction platforms are more favorable for sellers than physical ones due to the efficient process design. Furthermore, online platforms can offer faster processing, as the complex logistics apparatus of physical auctions is eliminated. A distinction must be made between platforms that offer a full range of services, for example their own payment processing and internal transport solutions, from a single source and providers that merely broker third-party services. Fully comprehensive services offer speed in processing, increased transparency and responsibility for all process steps. 

Increase remarketing revenues

How you get more out of your vehicle as a car dealer

The basis for a high sales revenue is a complete vehicle valuation and as many photos as possible, so far so good. But what helps beyond that to increase the price for your vehicle? First, you should make sure that your asking price is realistic. Exaggerated prices are a deterrent, whereas low prices can trigger a bidding war. Especially in the hot bidding phase, very high proceeds are often achieved for vehicles for which a restrained price valuation was used as a basis. Such bidding effects should not be underestimated. Auction duration also plays a role. Interest in an ad is generally highest when it is newly posted. At the same time, a longer duration of the auction increases the number of potential bidders. Here, it has been shown that a longer auction duration is advisable for more specialized vehicles that appeal to a smaller clientele, while fast-moving vehicles often exceed the desired minimum prices even after a short time on the platform. As a general rule, try to keep the number of auction rounds low and do not exceed three auction rounds. If there are bids below the desired minimum price, an exchange with an industry expert is recommended. Bids in upcoming auction rounds rarely exceed the highest bid in previous rounds. Therefore, take advantage of personal contact with auction platform staff during renegotiations, if offered by your platform, to better assess bid potential. 

With the help of these tips, sellers can increase their revenues in B2B remarketing. If you have any questions or suggestions about this, we welcome your feedback.