Auto auctions are very popular and are considered a mainstream way to purchase a vehicle, partially thanks to the internet. eBay was one of the first companies to take introduce vehicle auctions to consumers.
Smaller online venues crept into the picture, focusing on specific goods and services, while brick-and-mortar auction houses rode the wave of popularity.
Live auctions take place in many locales, and internet bidding often happens simultaneously, allowing unprecedented participation.
Long a stronghold of automotive inventory liquidity, auto auctions help new-car dealers downsize their extraneous and inappropriate inventory while providing one-stop shopping to used-car dealers looking to stock up.
Dealer-only auto auctions restrict participation to licensed car dealers that have the financial wherewithal to be comfortably involved. There’s a lot at stake, and a lot of money and documents such as titles pass through the office. Some transactions can total tens of thousands of dollars, and all parties need to trust that the fiduciary responsibilities and legal ownership rights are handled accordingly.
For the auction’s part, they receive fees from both the buyers and sellers. (A gambler might say the house never loses.) There’s a buyer’s fee, usually a percentage or fixed amount based on the selling price, that the winning bidder pays upon completion of the sale. There is also an entry fee paid by the seller whether or not the vehicle sells, and sometimes an additional percentage based on the selling price.
Considering a larger auction can put several thousand cars through their bidding lanes in one day, the auction house is poised to earn significant revenue. These auctions generally run one day per week, using the rest of the time to prepare.
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