subject: Improving Auto Auction Profits Through Detailing [print this page] Improving Auto Auction Profits Through Detailing
Besides new car, pre-owned and service sales, F&I, upsales, accessories and auction trades have been part of the revenue and margin package for most GMs and principals.
Trading at the auto auction has been a traditional source of profit for dealerships large and small...and a proven source of inventory. But, few traders take the time to maximize the appearance of the auction vehicles - leaving money on the table.
And while this may seem like a bit of a nuisance to detail and prep trade-ins and inventory for auction, informal studies have shown ROI to be $3-4 dollars for every dollar spent - up to a certain level.
In other words, an investment of a $100 may bring a return and increased selling price of $300-$400. Considering a large dealership may purchase, trade or sell 100+ cars per month, the result could bring $30,000 to $40,000 per month or as much as $500,000 per year.
While there is little scientific data to support this, the empirical evidence is everywhere. Consider this: At larger auctions many of the lanes have prep, detail and wash areas available. The theory being, the more attractive and cleaner the vehicle, the higher the price that can be demanded. This may not be as true for online auction participants, but in-person traders continue to support this assumption.
For larger dealerships, the best plan is to have an in-house or onsite outsourcing provide the services. This lowers costs, provides adequate time for ancillary touch-up - minor PDR, paint scratches, minor interior repair, rim and wheel restoration and general recon (reconditioning) treatments.
Many outsourcing firms provide the entire menu of services or can bring in local best talent to maximize the service while keeping the cost as low as possible.
When preparing for auction, keep in mind that auto detailing and minor reconditioning can provide real ROI for your trades.
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