What benefits do savvy car dealers get from a car auction in the Philippines?
- Gets rid of unwanted inventory
- Improves cash flow
- Offers the best prices
- Fills up slots with the right vehicles
People are starting to realize the significance of a car auction in the Philippines. Buying secondhand cars for great prices is slowly making more and more sense. Auctions fuel our practical and thrifty souls. It allows us to acquire what we want/need without having to drain our funds.
There are many more ways we benefit from auctions. A quick search would show dozens of articles why we should participate at auctions and how it would positively affect our lives – and our wallets. Most of those articles talk about the benefits the consumer or the bidder gets and rarely does it ever elaborate on how auctioneers gain from holding these auctions.
At the prices they sell the cars, bidders would think that they aren’t making much profit. It’s also logical to think that they are gaining too much since they are selling beat-up cars. It’s hard to tell when you’re only participating as a bidder, so we’ll look at car dealers.
Car dealers stand on both sides of the spectrum; sometimes they are auctioneers and other times they are bidders. The get different benefits from both roles but it all comes together to make their establishment better. What these benefits are and how they affect car dealers are listed below.
Gets Rid of Unwanted Inventory
The most common reasons car dealers hold auctions is so that they can get rid of unwanted cars and free up their inventory. Now, the word “unwanted” can mean a number of things.
It can simply be a vehicle that does not fit into their inventory. Kind of like how a Hummer would look out of place in a smart car dealership. It could also be a car that has exceeded their 100k mile rules. Or a financed car that is past its due date.
Unwanted doesn’t automatically mean old, washed-up, and beyond repair, so you can still get quality cars in these car dealership auctions.
Improves Cash Flow
Being able to get rid of unfit cars don’t only free up their inventories, it also improves their cash flow.
The cars that they sell have been sitting in their inventory for way longer than they like. Keeping a car in good shape costs a lot of money and that eats away on the profit margin each passing day. Although cars don’t really have expiry dates, buyers care a lot about the month and year of manufacturing and use this to determine resale value. So as the car sits in the inventory, the probability of it getting sold continuously dips.
Which is why when a car has reached the dealer’s threshold of inventory period, it makes more sense financially to sell it for whatever price in an auction than incur any further losses.
Offers the Best Prices
As for why car dealers participate in auctions, it’s pretty obvious and similar to why we do it which is to get the best prices for quality goods. Car dealers even have an upper hand because they can participate in dealer-only auctions that are run by actual manufacturers.
In these auctions, they can get their hands on high-quality and well-maintained cars. Some of them are even of the latest models and have low mileages – selling points that are sure to attract buyers.
If they fail to take part in these dealer-options, they still have the opportunity to obtain cars through public auctions that are open to all. They won’t find it difficult to pick out quality cars in these events because they have all the knowledge and expertise that they need.
Fills Up Slots with The Right Vehicles
Contrary to popular belief, car dealerships don’t get their inventory from trade-ins. The ones they acquire through these trade-ins are often immediately set up for auction and aren’t showcased in their lot. Part of the reason is that these vehicles aren’t the right ones for their franchise – as mentioned in the first point.
Majority of their inventory is obtained through participating in auctions. In an auction, they can decide on which cars to get. These are cars that will rightfully fill up their inventory and make their lot look good. And a car lot filled with quality cars attracts more customers and motivates salespeople to do their job well.
Car dealers benefit a lot from a car auction in the Philippines. It isn’t just a way for them to get rid of unwanted cars that serve no purpose on their lot; it’s also how they manage their cash flow and ensure that money is not being wasted on the wrong items.
Additionally, participating in these auctions as bidders allows them to fill up their inventory with high-quality vehicles for relatively low prices. In the end, it makes their lot look good and attracts more customers.
It’s a never-ending cycle. They put their cars up for auction to free up space for new cars that they’ll get through participating in other auctions. Put simply, car auctions are one of the main ways car dealers make a profit!