The boss of a cloud-based retail solution has said that car dealers could more than double trade sale profits by moving from physical auctions to an online auction platform, reports Car Dealer magazine.
Cooper Solutions claims to have analysed the transactional costs associated with both physical auctions and recent online auctions. Through the research, it was found that many dealers at physical auctions are overspending and racking up unnecessary costs.
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Barry Cooper, the managing director of Cooper Solutions, said: “The fundamental difference between the two methods of trade disposal are that physical auctions charge buyers a considerable fee, generally around two-thirds of the total transaction cost. Selling dealers pay the other third but will often be offered a volume rebate to bring this down below £100 per unit. It is the buyer’s costs that stand out and which will directly influence the price paid.
“A regular buyer will pay more than £200 for a car worth £3,000 and £250 for cars over £5,000. Volume brands achieve average selling prices around £3,000 per unit for trade cars and prestige brands up to double that.
“All retailer stock is, therefore, expensive to buy at auction and there is every probability the buyer will pay more in fees than the selling retailer will achieve in profit.”
Having analysed more than 65,000 individual car transactions, Cooper Solutions found that physical auction fees and costs usually ended up being more than the profit from the sale.