Wednesday, 23 June 2010

A little background on car auctions

Well, this is my first post on my first Blog. I don't really read Blogs, so mine might be a little unorthodox! I hope this won't detract from its usefulness or interest, but please feel free to give me some pointers!
So, where have car auctions come from?
Well, basically they came about as places to dispose of unwanted vehicles. These days they call themselves things like "Remarketing Centres", but in the past, they were much smaller and less used. Most of the larger ones were "closed", or trade only. Dealers would send vehicles there that they chose not to stock. This could be for any number of reasons.
For instance, on the whole, franchised dealers will only retail used cars of their own brand, so part-exchanges of other makes would be sent to auction.
Most dealers, whether franchised or not will have a policy on what cars they retail. There are mileage criteria, condition, whether a warranty company will accept a policy on them, reconditioning costs and even the past experience of whether the particular model sells, or not.
Also, most dealers have a policy on age, both in terms of the age of the car, and how long it has been in stock. It stands to reason - unless you have a concourse Aston Martin DB5, it's unlikely that your car is appreciating in value.
To this end, when the car has been in stock for the given number of days, a decision has to be made as to how to dispose of it. Like all businesses, cash-flow is vital, and several thousand pounds tied up in a car that nobody is buying is dead money.
This is usually when cars find themselves being sent to auction. There may not be a profit, there may even be a small loss, but the dealer will realise his capital to re-invest.
There would also be a proportion of vehicles with known problems, not always, in fact rarely disclosed!

In the early days, then, auctions were places that the public either had no access to, or avoided. People liked the reassurance of a car with a warranty, or at least to be able to take it back if there were a problem.
As time has passed, however, things have changed. The larger auction companies realised that if they allowed the public in, they would make more money. They charge a non-account holder higher buyer's fees; retail customers bid higher than trade, so they realise higher prices for the cars, which in turn makes more money in seller's commission; higher prices meant that they could attract more and more dealers to send their stock there, which in turn meant more buyers were attracted by more stock.
Indeed, the bigger auctions will often process over 1,000 cars in a day, and many, if not most of these will actually be good quality cars.
So what's the problem? It looks like everyone's a winner, doesn't it? Well, in my next post, we will look at how things are these days, and what effect market forces have had on the whole thing.
See you soon!


Small business web directory by catagory and pages
Get listed under car auction category. Also try at Beauty | Business | Construction | Education | Finance | Health | Insurance | Jobs | Medical | Real Estate | Travel

No comments:

Post a Comment

ping website