“Transparency” was, and still is, a common buzz word at car dealerships. The idea that, if you show the facts to your retail customers they will respond favorably towards your dealership and ultimately buy from you. It has been proven that customer loyalty is directly related to the honest treatment provided by your dealership.
I personally have seen Transparency in action because I was incredibly lucky to spend the first half of my life at dealerships founded on the value of complete disclosure. “Honesty is the best policy” and “Do the right thing” and “Why lie when you can tell the truth” come to mind from meetings I had with my managers at these locations.
Long gone are the days of fat ties and checkered pants and keys being thrown up on the roof to prevent customers from leaving. Replaced with happy smiling non intimidating “Consultants” and “Customer Advocates” with fixed pricing policies, proper appraisal and, wait for it… Transparency.
Auction’s like CarMax Wholesale and AuctionSimplified.com have figured out that transparency works with wholesale buyers as well. By providing an auction environment where wholesale buyers feel welcomed. That the selling dealer “Has their back.” That they can bid with confidence and bid higher because they won’t get burned.
CarMax reported, $949 in wholesale profit per car in the last quarter of 2015 a whopping 6% increase and AuctionSimplified.com reported dealers on their network earning $733 per car not to mention the fact that they have no sellers fees.
It has been proven by bid sale dealers for years that transparency leads to profit.
Example: If a buyer is willing to pay $4,000 for a car at a typical Red Light As-Is Sale, they will lower their bid to accommodate the risk of missing a major repair. So their high bid might be $3,600 or lower, especially if they were burned before by that dealer.
At auctions like CarMax and Auctionsimplified.com buyers know they don’t have to take the car, if It’s not as described, so they will pay a lot more and sometimes exceed their original bid of $4,000 because they can trust the dealer and like working with them.
“When a buyer can trust the seller, they will bid more because they know the dealer will back up their condition report.”
We have proven in retail that transparency results in higher profits and a more loyal customer base. The same can apply to wholesale, especially if the dealer holds their own auction or bid sale, where they can control the whole buyer experience.
Full disclosure is the missing ingredient at “Red Light” auctions. Buyers are not allowed to drive the cars and in many cases are prevented from starting the cars. So they end up having to make jump decisions in the lane. I believe that is why so many buyers like online bid sale auctions because they have time to think and they usually have a full condition report and photos of the problems with the car. So items like rusty rocker panels and ticking motors are disclosed and the buyer has a chance to really appraise the car before bidding.
To accomplish true transparency you need full disclosure in the form of a well thought out condition report. Followed up with a full set of photos of the car so that the potential buyer can review both the condition report and photos online in advance of bidding.
This gives the buyer time to review their bidding options including running their own CarFax or AutoCheck. It allows them time to check the vehicle values with sites like KBB and Blackbook. Then gives them time to arrive at a number they are willing to pay for the unit.
Some old school sellers think that giving them time to really see what is wrong with a car is going to cost profit but I have found the exact opposite. Lack of info causes buyers to build in an insurance discount on their bids as apposed to putting their best number on the car.
Most bid sale auctions held by dealers go so far as to have an inspection day so the buyers can stop by, inspect and drive the vehicles. Talk about full transparency. No wonder the trend towards bid sale auctions by franchise dealers have grown by 100% in the past three years.
There also is a social aspect of the inspection period at a dealer bid sale. It allows dealers to duplicate the auction comradery at their private event. Some dealers go so far as to provide lunch and gifts for attendees.
Bottom line: Everyone deserves honestly and the chance to buy from a company who actually has their back.