Dealers have long been frustrated by private-party sales of used-vehicles: cars and trucks sold through classified ads or windshield signs.
Estimated private sales in 1996 were 11.5 million used vehicles valued at $50.2 billion, according to CNW Marketing/Research. Thus, the segment represents a huge potential source of profit. The problem, from the dealer's point of view, is that casual sellers generally prefer not to go to auto dealerships.
Robert Smith, president of AutoList Car Stores Inc. in Gulf Breeze, Fla., believes he has found a way to change that. He is establishing what he hopes will become a national network of franchised used-car stores that will sell cars on consignment for private parties.
'It's amazing to me (that until) CarMax came along, nobody pursued that customer,' said Smith, referring to the used-car superstore pioneer that shook up the industry in 1993 when it began buying cars from people without demanding they buy another car as part of the bargain.
AutoList was founded in 1988. The company has 17 stores in eight states and one Canadian province, and plans to double that number by the end of the year. Sales were $1.5 million in 1996. AutoList is looking for new-car dealers and a few strong independents as franchisees.
A DEALER'S EXPERIENCE
Florida dealer Conrad Darby runs an AutoList store across the street from Darby Buick-Isuzu in Sarasota and another one at his second Buick-Isuzu dealership in Venice.
'It brings us a body of customers that would never, ever set foot in an auto dealership,' said Darby. He believes AutoList could do for the used-car market what companies like Century 21 did for real estate: establish a trusted national brand.
AutoList franchisees pay a fee ranging from $9,995 to $19,995, depending upon territory size and other factors. The fee includes signs, employee training, computers, software and a digital camera. An AutoList dealership employee takes a digital photo of a car, which is put on AutoList's Web site (www.autolistcars.com).
Darby employs three people at the AutoList dealership and runs it as a separate operation.
The AutoList seller sets a price and pays the dealer an $85 consignment fee. Just as in a Century 21-style real estate transaction, on which the AutoList concept was modeled, the dealer and seller agree upon a net sales figure for the seller and a commission for the dealer. That fee could be 10 percent of the gross or $1,000, whichever is larger.
MINING FOR PROSPECTS
AutoList's staff of 75 telemarketers in Gulf Breeze monitors the classified ads in the communities in which the company has a franchise. The callers try to persuade sellers to consider selling their cars at AutoList, because AutoList will take on the hassle and risks.
The pitch can be persuasive. Research by CNW Marketing/Research of Bandon, Ore., shows it takes a private seller 53 to 103 days to sell a used car.
That doesn't factor in the sellers' worries about having strangers visit their homes and having to handle financial transactions and title transfers.
AutoList will either display the car or arrange appointments for would-be buyers to see the car if the customer wants to keep driving it.
AutoList also prints 'For Sale' signs sellers can hang in their car windows with AutoList's number. The owner's insurance, combined with the dealer's garage insurance, covers the vehicle during test drives.
AutoList wants to follow the Saturn Corp. example and divide territories by marketing area - one dealer for every 250,000 people. The company has mailed brochures to 20,000 auto dealers, hoping to lure a few more into the fold.
Dealer Darby believes in the concept. He said he is selling about 20 cars a month, and expects the number to grow. Said Darby: 'I think it's an idea that has absolutely tremendous potential - if they're able to market it successfully.'