Friday, 19 August 2011 15:58

How Shop Owners Can Take Advantage of Salvage Auctions

Although used car dealers and insurance companies are the types of corporations that seemingly benefit the most from the salvage auction industry, auto body shops are a less obvious, but equal beneficiary. If properly utilized, salvage auctions can help auto body shops to supplement their existing business by increasing their repair volumes and facilitating access to parts.

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Fixing the Fixed Costs

Auto body shop owners have much of the same fixed-business costs as any other operation. The cost of land or rent, utilities, payroll and upkeep all add to an auto body shop’s overhead. That means that whether a shop repairs 10 cars or 50, the basic fixed cost of doing business will generally be the same.

By utilizing salvage auctions, auto body shops have the opportunity to better utilize their fixed-cost base. One way to use the auctions is to buy repairable cars to fill in work slots. A lot of the cars that are written off as a total loss are actually repairable. Auto body shops can buy these damaged cars through a salvage auction, then repair and resell them for an added revenue stream. Or, if a shop needs multiple parts from a car, it can buy the car, strip it of the parts it needs, and then resell the remainder of the car.

Going Virtual

Top tier salvage auctions utilize online technologies that allow bidders to participate in virtual salvage auctions from the convenience of their home or office. Vehicle searching, previewing and bidding can all be accessed via a click of the mouse. Since the Internet has a global reach, it can vastly increase the size of an auto body shop’s business universe.

Locating Hard-to-Find Parts

Shops can also buy vehicles for parts. Shops often fit used or recycled parts when making repairs to automobiles. They usually source them from a local or regional dismantler, but if they need a large number of used parts, it may be prudent to acquire an entire vehicle, use the parts required and then resell the rest. This method is often helpful in non-insured repair jobs.

If a shop is working on a rare or exotic car with hard-to-find used parts, sourcing from a salvage pool is an option. If the shop can’t find a part on its own, a salvage pool can inform the shop about recent sales of the same rare car. The shop can then track down the dismantler who bought the car and buy the part directly.

An advantage of using virtual salvage auctions for auto body shops is the increased reach it offers when acquiring cars or car parts. Because the auctions are online and available to anyone in the world, shop owners are not limited to the cars or parts in their general vicinity. Additionally, the auctions don’t require bidders to be physically present, which will save the shop owner countless hours of boredom and drudgery, as well as travel costs.

A Level Playing Field

Virtual salvage auctions help mitigate the shadier aspects of auto auctions, such as collusion or intimidation. Collusion can occur when multiple bidders conspire to fix the auction. It cheats other bidders out of a fair auction, and keeps cars from being sold at their optimum price.

However, with the virtual auction, buyers simply enter their bids into a computer, rather than go through an auctioneer or auction manager, who may handle multiple competing bids simultaneously. By eliminating the human element in this part of the process, virtual salvage auctions create a fair auction for all bidders.

Going Once, Going Twice, Sold!

To participate in an online salvage auction, here are three steps:

Step 1: Search and Preview

Bidders from around the world can quickly search through all current vehicle inventories online to find exactly what they want through a variety of online search tools. Each vehicle has digital images and detailed condition information, allowing the bidders to fully preview the vehicles before deciding whether to bid. Bidders can also search for vehicles in their general vicinity and preview them onsite to evaluate the condition first hand. 

Step 2: Preliminary Bidding

Once a bidder has found the vehicle they are interested in pursuing, they can enter preliminary bids online or at bidding kiosks where vehicles are stored prior to the live sale.  

Preliminary bidding is where bidders enter the maximum price that they are willing to pay for a vehicle. The system will then bid incrementally for the bidder up to their maximum bid, even during the virtual auction.


Step 3: Live Sale

After the auction organizer receives the vehicle seller’s transferable title, the car is slated for a virtual sale. Potential bidders continue to compete in the preliminary bidding process up to one hour before the start of the Internet-only virtual sale. When the virtual sale starts, digital images of the car or truck for sale are displayed along with the current highest bid from the preliminary bidding period. When bidding on the vehicle stops, a countdown is initiated. If no one bids during the countdown, the vehicle is sold to the highest bidder.
Now that you have the basics down for participating in a virtual salvage auction, use it to your business advantage. Happy bidding!

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