Vehicles sell online, while staying at dealership until sale
Any dealer who has sold a unit at a traditional public auction has participated in the sale process. A vehicle is usually prepped at the dealership, then transported to the auction. All the while, the dealer holds his breath, hoping the vehicle makes it to the block in the exact condition it left the showroom. Then the dealer has to take his or her time to attend the auction, waiting for his unit to hit the block to see what the auction brings.
With IronPlanet Motors, much of that process is alleviated. A dealer’s vehicle stays in the dealership, so transportation fees and frustrations are avoided, and the auction is completed online. To get pricing updates, a dealer simply has to log on to IronPlanet’s website.
IronPlanet began its remarketing business in the construction and agriculture industries, but in January added its Motors division, which specializes in moving pre-owned motorcycles, ATVs, PWC, side-by-sides, golf carts, boats and automobiles. The company’s goal is to help interested sellers, who are mostly dealers, move vehicles that wouldn’t otherwise sell in their local market.
“We drive the sale; we complete the sale; they get their money, and they free up their floorplan,” said Steve Kendrick, managing director for IronPlanet Motors.
To sell a vehicle using IronPlanet’s platform, a dealer must first connect with IronPlanet through the company’s customer care call center, website or a local representative.
“We have a number of folks who obviously work on the dealer side of the business that would be very happy to help,” Kendrick said.
Once a vehicle is chosen for auction, IronPlanet sends an inspector to the dealership to survey the vehicle. The inspector will run a thorough check of the vehicle and take about 30-50 photos for use in the listing.
The inspector won’t test drive the vehicle, but will start the vehicle and check to make sure the gearbox and brake holds are working. To prepare for the best inspection rating and higher quality photos, dealers should make sure all vehicles are in working order and prepped for photographs.
“It would be to their advantage to make it as frontline ready as possible,” Kendrick explained. “We will not detail the unit at all, so if it has mud or dirt, that generally is not good, so we ask them to prep it.”
After the inspection is completed, the inspector will decide if it can be tagged with an IronClad Assurance certification at auction.
“With our IronClad Assurance, we put our stamp of approval on the product, saying we’ve inspected this product, and for the customer, what they see is what they get. There shouldn’t be any surprises. If there are, then if that product has that IronClad Assurance, which most of our products do, then we as IronPlanet will stand by that and handle any claims,” Kendrick said, adding that it’s rare for claims to be filed.
After the inspection, IronPlanet will work with the dealer to target an auction date and set expectations.
“Effectively what we’ll do is talk through what a seller would like to sell, and we’ll discuss their expected product value and then talk about how we manage the process in terms of how to handle the inventory,” Kendrick said.
IronPlanet’s auctions do not have a reserve, and every vehicle that receives at least one bid is sold. However, Kendrick said dealers have been happy with the prices they’ve received, and IronPlanet has a high sell-through rate.
“The auction portion is managed by IronPlanet, and our goal is to meet and exceed the target price that’s agreed to with the dealer,” Kendrick said.
In order to meet or exceed a target price, IronPlanet will start the bidding at a level close to the target. The company wants to keep returns reasonable for dealers, as it wants dealers to become repeat sellers. Sellers must pay a listing fee, which covers the inspection, and a success or seller’s fee after the vehicle moves.
Once a vehicle is inspected, it is expected that the vehicle will be removed from the showroom and earmarked for sale at auction because within about 48 hours of the inspection, the vehicle will appear online with its photos, description and an auction date and time.
“What we’ll ask the dealer to do is quarantine that unit and not sell it because essentially once it goes up for auction, even though the auction hasn’t started, the buyers can make applied bids,” Kendrick said.
The priority bids allow buyers to get in on the action before the auction is launched. Buyers also have access to reports from Cyclechex for vehicle history information.
After a vehicle is sold, the buyer will arrange transportation of the unit, and both the buyer and seller will receive copies of a release, so the dealer can guarantee the vehicle is being released to the right person or transportation company. But the dealer has to worry about little else.
“They’ll have to provide us the titles, so we will handle the paperwork; we will handle the collection of the funds and pay the dealer the net proceeds,” Kendrick said.
With more than 30,000 registered buyers and a wide customer base coming into IronPlanet, Kendrick says the auction is an ideal place to move inventory.
“If they can retail it, that’s what they should do,” he said. “However, if there’s aged inventory or something that doesn’t fit in their franchise or something that has been slow to sell or doesn’t fit in their mix, they should contact our auction, or another auction for that matter, to move the inventory.”
After any pre-owned vehicle has hit a 30- or 60-day threshold without moving, dealers can take advantage of IronPlanet’s timetable and expanded audience to finally clear that vehicle.
“It’s worth the phone call to figure out if this is part of their strategy or not,” Kendrick said. “I think if someone is spending their money, they should consult different channels, and I think the [IronPlanet] process is very straightforward.”