Why Dealerships Lose Money Selling Cars to Auctions

Automotive Dealers Lose Profit Selling at Vehicle Auctions

Dealerships are known for selling cars to customers, but many also sell vehicles at auctions. Automotive dealers may have to sell cars at auctions because they are having trouble selling them to customers. However, it’s common for dealerships to lose money selling cars at auctions.

For example, if a dealership has a car on their lot for a long time and hasn’t sold, they may try selling it at an auction. However, because the car hasn’t sold, the dealership may have to accept a lower price than they would like.

Risks of Selling Cars at Auction

Selling cars at auctions can be a challenging and unpredictable process for dealerships. While it can be a way to eliminate inventory that isn’t selling, it can also result in dealerships losing money. However, there are some steps that dealerships can take to mitigate their risks.

Why Dealerships Want To Avoid Auctions

auctions can be unpredictable, and dealerships may not always know what to expect. For example, they may not know how many buyers will show up or what kind of cars the buyers will be looking for. This unpredictability can make it difficult for dealerships to plan and price their vehicles effectively.

Car Auction Fees To Sell Vehicle

When a dealership sells a car at an auction, they must pay fees to the auction house. These fees can be pretty high and vary depending on the auction house and the type of car being sold. For example, luxury cars have higher fees than more common vehicles.

Low Auction Prices Affect Dealerships

Car dealers that sell cars at auctions often have to sell them for less than they would get if they sold them to a customer. This is because auctions are competitive, and buyers are looking for deals. As a result, dealerships need to price their cars competitively, often selling them for less than they would like.

Dealership Auction Competition

Another downside for dealerships selling cars at auctions, they often compete with other dealerships selling vehicles at the same auction. This means that automotive dealers must price their cars competitively to attract buyers. However, if there are a lot of dealerships selling similar vehicles, this can lead to a race to the bottom, with dealerships undercutting each other’s prices.

InfoRide® Auction Success Through Reputation & Demand

One strategy for dealerships to work with auction specialists like InfoRide® is because they have a good reputation and a track record of success. This can help dealerships attract more buyers and get better car prices from selling at an auction.

Dealerships can minimize costs by selling cars in our online auction platform rather than traveling long distances to sell vehicles at standard auctions. Marketing on our auction app can help dealerships save money on transportation costs and reduce the fees they must pay to the auction house.

InfoRide® saves dealerships tons of money by charging a flat monthly rate rather than for each vehicle sold at auction.