The Toronto International Car Show has just passed and with it, thousands of drivers will be starting to think about buying their next vehicles. The show is the kick-off for the spring car buying season, typically the busiest time of year for car purchases and leases of both new and used vehicles.
While the thoughts of springtime and a shiny new car in the driveway can bring smiles and excitement to one's mind, one part of the process often is a cause of major disappointment - trading in your current vehicle for a low trade-in price.
However, one Toronto auto dealer plans to change that with a new consumer-to-dealer online car auction where dealers will compete for your trade-in.
"Auctions have always been a major source of used car inventory for dealers," says Viraf Baliwalla, President of Automall Network which has been brokering cars for consumers since 2001 and obtained a full OMVIC dealer's license in 2005. Baliwalla also developed and taught a course on car buying at Humber and Conestoga Colleges.
Auctions have traditionally been the domain of dealers to sell their trade-ins for top wholesale dollar.
"There are three levels of pricing for used cars," says Baliwalla. "1) The retail asking/selling price, 2) the wholesale price which is what dealers will typically pay in a competitive bidding environment like a dealer only auction, and 3) the trade-in price offered to consumers that allows room for dealers to flip at the auction and still make a profit if the vehicle is not sold on their lot after a period of time."
Here's how the traditional car shopping process works:
- Consumers spend a lot of time and energy researching and negotiating on their next car. Since they are getting rid of their old car, they are emotionally detached with that vehicle
- Once they finalize on the dealer that they will purchase or lease from, they are now locked in to using that dealer to take their trade, and have very little bargaining power on the amount they receive
- They typically want an easy and convenient process to get rid of their trade due to the emotional detachment, just wanting the process to be over with and hence accepting whatever is offered
- If not sold on their lot, the trade is often flipped at the auction for a profit.
A requirement of Automall Network's auction is appropriate disclosure of vehicle condition. Dealers often take in vehicles on trade and find they have negative surprises with hidden repair and reconditioning costs. If vehicles require minor repairs to have the vehicle safety-ready, Automall Network arranges to have that done in advance or at least providing the appropriate disclosures so dealers know what they are getting.
"It's like selling a home with curb-appeal versus no curb-appeal," says Baliwalla. "A small investment in putting a fresh coat of paint and some landscaping will yield a much higher selling price that will more than cover the cost of the effort. However, without it, the buyer will offer a lot less to cover those perceived costs and potentially other costs that may be required because the condition is not known. Dealers will pay more if they know what they are getting."
One of the major benefits of trading in a vehicle is the tax savings on the trade-in price. Automall Network's program allows clients to get tax savings if they are buying or leasing another new or used vehicle as well.
Sellers also have the option of consignment at no extra charge where Automall Network will search for a retail buyer. If unsold after 30 days, sellers can take their car back or it can then be sold by auction.
Fees are $600 with $300 deposit and $300 upon successful sale.
SOURCE Automall Network Inc.