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Classifieds vs Auctions
Where to buy if you are a car dealer
5 min read
According to ACEA data there are 243 million passenger cars on the EU’s roads today, with an average age of 11.5 years. This number doesn’t include buses, trucks, light and heavy commercial vehicles and other mobile machinery.
The used car industry therefore is huge in Europe and whether you are contributing by selling just a handful or several hundred or even thousands vehicles per month there are several different options available when it comes to acquiring the inventory in the first place.
Let’s have a look at some of the options and talk about their advantages and disadvantages.
There are 243 million passenger cars on the EU’s roads today.
Classifieds
European auto dealers tend to purchase cars, SUVs, light trucks and other inventory online on classified portals. There are several of them available, some have been in the industry for many years, others are relatively new. These online platforms are designed similar to each other, by using filters such as car year, make, configuration, price, etc. Usually, dealers of all sizes purchase their inventory on the biggest portals and transport the vehicles to their respective locations.
Historically, the automotive industry has been entering the ecommerce space quite slowly. However, Covid-19 pandemic had an impact on current consumer behavior. Indeed, classifieds offer a wide selection of vehicles available at your fingertips. There is an option to view 360° photos and videos. You don’t need a special license to use these sites as the listings are available to both corporate and private buyers.
With millions of cars available on classifieds, it takes a tremendous effort to negotiate every single purchase, especially when the prices are higher than at an auction. The car can be sold while the dealer is on the way to see it. You may become a victim of a fraud, get no service history report, wrong mileage, misleading condition status.
«Prices are also higher as the classified aims to sell the car with the highest margin possible. Another thing to keep in mind is that there is no guarantee about real damages and there every single car is located in its own place.»
It's more advantageous for smaller dealers who don't have the high volumes to work directly with suppliers or who buy cars periodically and have more time to spend on each vehicle.
Auto Auctions
The biggest differences between a car auction and classifieds are the vehicle selection and access to buyers. Even though on an online platform there is a huge variety of vehicles, an auction offers off-lease cars, typically owned by the banks, leasing companies and other financial institutions. These types of vehicles are newer, usually well maintained, have a detailed service history report.
As a rule, participation in online auctions is limited to car dealers and professionals who can prove automotive sales activity. For that reason, only the industry players get to attend.
Most auctions are able to deliver your car/batch of cars by using a transport company.
One of the advantages of the auction is the lower price of vehicles.
Savings can be made on the logistics as well. After winning the desired bids, most auctions are able to deliver your car/batch of cars by using a transport company. The big number of hubs eases pick up for several cars at a time. In a nutshell, you bid online without negotiation, get the high quality and the low price inventory. Also, cars will be ready for pick up from one of the auction`s warehouses or logistics company hubs so you could pick up a batch of cars at once reducing the price of transportation per car.
«One of the advantages of the auction is the price. Vehicles are typically owned by the banks, leasing companies and other financial institutions. These types of autos are newer, usually well maintained, come with a detailed service history report and low mileage.»
Is it worth buying a car at auction?
Therefore, for automotive professionals who know the market and are familiar with vehicle conditions, auction is the faster and cheaper option for buying ex-leasing cars. Buying a car at auction pros and cons depend on the business size and existing processes.
| Classifieds | Auctions | |
|---|---|---|
| Availability of Cars | Millions of cars at once ✔ | Thousands of cars at a time |
| Prices | High Private owners would like to sell their cars at a higher price, otherwise they would sell it directly to a dealer. Dealers include higher profit margins in the sales price as well as classifieds’ listings costs. * There is a chance of getting a good deal once in a while, however with a very high number of interested parties, you have to be extremely quick and lucky. A sustainable and scalable business should be built on stable operations. |
Low ✔ Major vehicle suppliers prefer a faster turnover and payment of their fleet as opposed to higher profit margins but slower payment terms. |
| Time per deal | 2+ hours You should negotiate by phone or email with each seller. This process could be very time consuming |
Few minutes – almost automated ✔ You can buy cars with a few clicks |
| Access | Everybody All interested private and corporate buyers can purchase vehicles from the classifieds |
Professional car dealers only ✔ Auctions are open for selected auto dealers with the proper documentation |
| Risks | High Small dealers or private sellers are less likely to give you a refund |
Low ✔ Auctions are more liberal to claims as long as you don't make reclamation for every single vehicle, it is likely to get partial refund in case some damages were not mentioned in the appraisal |
| Logistics | Different location for every car | Cars are collected in hubs or even delivered to you ✔ |
| Total/result | ✔ | ✔✔✔✔✔ |
What is the best option?
There are a lot of adepts for each option. Auctions are much more convenient if you are a large car dealer but could be reasonable even if you are a small one but still prefer fresh cars from the first owner. However, if you sell older cars and your revenue is not too big, classifieds could be a good choice.
While speaking about auctions one may think about galleries selling art, for instance or something distant for a regular person. However, it’s quite easy to get a hang of an auto auction and successfully implement this channel in your business.
It should not be viewed as either or as auctions could be used as an additional, convenient and cost effective channel to source second-hand cars to the accustomed process of vehicle acquisition on classifieds. For that reason, effectively combining and diversifying used car inventory acquisition channels could lead to more business to the auto dealer of any size.
eCarsTrade offers online auto auctions of ex-lease vehicles from Germany, France, Luxembourg, the Netherlands and Belgium with a complete maintenance history. We guarantee the quality of the vehicles, fast, simple and transparent purchasing process and fixed commission costs. We are working with both European and non-european used car dealers and traders. Last but not least, our dedicated managers are always available to assist you with your needs.
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