Sometimes the best solutions are born from old concepts applied in a new and better way. That’s what we discovered by offering professional car consignment services to our retail customers when we opened in 2013.
Consignment is a natural fit for us in three ways - Operational, Customer Satisfaction, and Financial. In each of these key areas, our consignment program creates what we call, “Triple Wins,” which is based on the belief that all three parties, Seller, Buyer & Dealer should emerge as winners and completely satisfied with the sale of each car:
- Seller - get more money, hassle-free, sell faster
- Buyer - get a “good deal” on a quality, clean car, while being treated with respect
- Dealer - earned income for a value-added service, and additional satisfied customers
Retail consignment fits right in with our traditional Buy, Sell, Trade offerings and our selling customers love the easy process of turning everything over to us. For our internal team, the process of receiving a car on consignment is exactly like buying one from auction, or trade-in or a direct purchase. Brand, reputation and consistency are big deals for us, so regardless of the source, all cars on our lot go through the same process of appraisal, detailing, reconditioning, photographing, pricing and marketing. We make sure when potential buyers browse our online inventory or view cars on our lot, they all appear similar in presentation, quality and pricing method. When done right, retail consignment provides us with an additional source for quality cars – it is about attracting and converting private sellers into consignment customers. These are often one owner, clean, low mileage or unique, hard to find, specialty vehciles that without consignment we would otherwise not had an opportunity to offer for sale.
We’ve seen firsthand that retail auto consignment builds happy and loyal customer relationships. People want to do business with companies that provide more options for meeting their needs. And, it doesn’t matter what type of dealer you are – auto, motorcycle or RV – customers have unique needs on both sides of vehicle ownership as buyers and sellers. So, why not cater to those needs and become their trusted go-to dealer for all their vehicle needs?
For our selling customers, retail consignment offers a smart alternative to traditional dealer trade-in and an opportunity to get more money for their car without the hassles of selling it privately. For our buying customers, consignment provides favorable prices on quality cars from highly motivated sellers. We have hundreds of examples of happy consignment customers that became loyal buying customers because of the positive experience they had with us as a seller. Conversely, when our buying customers see we offer more seller options, they tend to come back to us and refer others to us when it is time to sell a car.
From day one, retail consignment has given us big advantages and measurable financial benefits. Our mix of owned inventory versus consignment inventory tends to be about 50/50 and that frees up a lot of working capital and keeps our operating expenses low each month. By accepting select cars into the retail consignment program, we maintain a great mix of makes and models and get an opportunity to offer high end vehicles that we wouldn’t typically carry as speculative inventory. Retail consignment also provides us with real-time knowledge of the market without having to risk our dollars to find out the hottest, fastest moving models. If a certain model we typically don’t carry is selling well on consignment, you can bet we go buy three or four of them for our owned inventory.
There seems to be a big myth among non-consignment traditional dealers that you can’t make money with consignment or if you do it is not enough to offset liability or hassles. We have found the opposite to be true. When we add up all of our cost savings (holding costs, floorplan costs, market risk, transportation costs, reconditioning costs), plus our consignment fee and commission, plus the additional revenue opportunities from cross-selling (in-house repair & reconditioning, warranty products, insurance products, financing products, accessories, etc.), our consignment sale margins are equal to or better than those of our owned inventory. Unlike owned inventory, we can honestly say we have never lost money on the sale of a consignment vehicle.
Example: Recent Consignment Sale
2012 Audi Q5 2.0T Quattro Premium Plus
- Values by Selling Option:
- Dealer Trade-in $18,300
- Consignment $20,600
- Avg. Retail $23,000
- Sold for cash in 32 days: $22,000
- Seller Gain vs Dealer Trade: $2,300
- Buyer Savings vs Retail: $1,000
- Dealer Revenue: $2,500
- Enrollment Fee $175
- Commission $1,400
- Detail $175
- Buyer Mechanical Warranty $625
- Doc Fee $125
- Dealer Other Benefits:
- $0 holding cost
- $0 floorplan cost
- $0 capital investment
- $0 reconditioning cost
- $0 market price risk
- Quick sale turnover
- Two satisfied customers
We welcome your feedback, experiences, testimonials and case studies about retail consignment selling too. You can include images or photos as well. Be sure to let us know if and how you would like to be noted as site contributor. Please submit material to: Info@RetailMyRide.com.