Chapter 1. About Auctions
An Overview: History, Benefits and Use
The auction industry is an elaborate network of businesses and individuals who work together to facilitate the exchange of used vehicles and used vehicle information.
Auctions are one of the oldest forms of transacting commercial exchanges. They date back to the times of Babylon and ancient Greece where art, land animals and crops were auctioned. In fact, the Roman Empire itself was auctioned.
There are many alternatives for remarketing cars, including using wholesalers, selling between dealers and selling direct to consumers. Each of these has a place in the remarketing system. Often, the auction environment is ideal because it provides a dynamic trading floor where open, live competitive bidding is fast-paced and true market value is determined with each vehicle that comes to the auction block.
Benefits of Auctions
There are many benefits provided to participants in the auction process, including:
- Market Liquidity. Auctions allow consignors to convert cars into cash quickly.
- Pricing Distinct from Volume. Auctions can move large volumes of vehicles without depressing prices.
- Critical Mass of Buyers and Sellers. As auctions have become larger and more efficient, they have been able to bring together the needed number of vehicles and buyers to achieve market values for vehicles and ultimately establish a national used vehicle marketplace.
- Credible Pricing. Auctions give the industry an objective view of what vehicles are worth in the marketplace.
- Internet Applications. Auctions have embraced Internet technologies to increase efficiency and offer additional services to both buyers and sellers.
- Process Integrity. Auctions have employed information technology and a strong code of ethics to help eliminate odometer rollbacks and title laundering. Standards for frame damage and condition reports have also become more consistent industry-wide.
- Reconditioning Value. Most auctions have state-of-the-art reconditioning facilities that enable sellers to maximize total return on investment.
- Affordable Participation. Auction fees, as a percentage of vehicle selling prices, have gone down during the past ten years.
Generally, a person chooses to go to an auction that is nearby. However, there may be benefits in attending auctions in more than one place, even investigating auctions in different parts of the country. By going to different geographic locations, dealers may be more able to find certain makes or models that fit their inventory needs.
Auction Services Available
There are a number of services provided by auction operators. Besides the core business of facilitating the exchange of vehicles between buyers and sellers at the auction itself, other services include:
• Data Management
• Title Management
• Online Services
• Dealer Management Systems
• Payment Clearances
• Mechanical Repairs
||• Dent and Other Cosmetic Repairs
• Car Detailing
• Reconditioning: Paint and Bodywork
• Lease Portfolio Management
• Internet Solutions
Auctions add value to both the transaction process and to the vehicle itself. To the transaction process, auctions provide a secure and neutral setting for the transfer of vehicle ownership at fair market prices. And to the vehicle, auctions contribute condition reporting, reconditioning, title work, etc.