Editor's note: An earlier version of this story, which also appeared on Page 8 of the April 13 issue, gave incorrect information about Carphoria’s business model. The company built its business helping consumers sell their used vehicles.
Bob Gault, president of three dealerships in Endicott, N.Y., tried the usual ways to liquidate unwanted trade-ins.
Wholesalers tended to show up at the wrong time and stayed too long. The auctions worked great. But their per-vehicle fees ranged from a few to several hundred dollars, depending on the price of the vehicle. Multiplied times the 100 to 125 units per month he typically sells, the fees could sometimes account for a loss, said Gault, whose dealerships sell BMW, Chevrolet and Toyota vehicles.
So he joined a test last fall for an auction software product that enables him to hold his own online auctions. Now Gault sells on Auction Simplified, a product of Dealer Simplified.
"We still do a little bit with the auctions, but we have an auction here every other Thursday, pretty much," he said. "We sell 90 to 95 percent" of the vehicles offered for sale.
Years ago, dealers who wanted to get rid of aged inventory and unwanted trade-ins had to take those vehicles to a local physical auction. But that has gradually changed over the past decade.
The traditional auction business model is being challenged by regional players and startups that are using technology to offer faster and easier ways to buy and sell used vehicles at wholesale.
And because these companies don't have the overhead that traditional physical auctions have, they can offer their services for less money, even for free in some cases.