More dealers are turning to auction companies as a way to relieve their used truck glut. While auctions typically net lower prices than the retail markets, auctions’ benefits can make up for the difference.
The biggest advantage is speed. Instead of turnover measured in months with no sure sign of ending, the auction process is a more defined process taking a matter of weeks.
A February 2017 Successful Dealer survey showed 72 percent of dealers turn used trucks in 60 days or more, and 43 percent need at least three months to move the average used truck.
“If equipment marketing and sales isn’t your core business, selling on your own can be time-consuming and fruitless,” says Mike Cerilli, vice president, marketing at Ritchie Bros.
Stacy Tracy, national director of sales at Taylor & Martin, says auction houses also have proven their worth in normal markets. “Auctions are no longer a method used only by those in distressed situations,” he says. “We can move large quantities of equipment in short order and retain close to retail value.”
Sellers have options
Many auction companies are offering online selling tools to supplement conventional onsite sales. These additional channels can reach much further than dealers’ internal sales team or website.
Some auctions feature unreserved sales, with no price floor, so that all items are sold to the highest bidder. Others will offer a reserve to ensure the seller earns a minimum price. In reserved auction where a truck does not sell, an auction house can add the unit to its sales programs and continue looking for a buyer.
Tracy says Taylor & Martin also offers “guarantee pricing.” If a truck sells for less than a predetermined bottom line, Taylor & Martin pays the difference and charges a higher commission, Tracy says.
“We conduct more than 350 live auctions each year and sell items daily on our EquipmentOne marketplace,” Cerilli says.
Larger inventory attracts more customers
Using the same internet tools used by savvy truck dealers, auction houses draw the attention of many more customers because the scale is so much greater, Cerilli says.
“There are tens of thousands of trucks available for sale around the world on any given day,” he says. “We make sure they focus on yours through multi-faceted marketing campaigns that target both local and international buyers.”
They’re aggressive in promoting, too. All units listed in TruckPlanet’s weekly auctions are featured online for two weeks before going to market, says Paul Blalock, vice president of sales at IronPlanet and its subsidiary TruckPlanet.
Payments are expedited
Because buyers are typically smaller fleets and owner-operators, they often require financial assistance. Most auction houses eliminate that risk for sellers by assuming responsibility for securing financial assistance and completing all transactions. Tracy says Taylor & Martin pays out 10 days after a sale.
Also, he says the company guarantees a sale once a truck passes through an auction. For example, if a purchaser backs out four days after the sale, that loss falls to the auction house.
“We take that on as our problem, not yours,” Tracy says.
TruckPlanet’s customers have three days after winning an online auction to submit payment, Blalock says. Once the company has received payment and shipped the title, the seller’s net earnings are dispensed.
Dealers can benefit from buying
Auctions also can be a lifeline for dealers challenged with finding trucks to meet a customer’s needs.
Say a buyer is looking for five tractors spec’d a specific way and a dealer has only three. The dealer is much more likely to find the additional two tractors via auction than by calling neighboring dealers. That’s especially true if the request is highly specific or requires a truck brand the dealer isn’t associated with.
Blalock says TruckPlanet makes a point of noting its similarly spec’d models purchased from a single owner so purchasers can see how many duplicate models are readily available.
This report is from Big Iron Dealer’s sister site, Successful Dealer, and is part of a series on the best practices for moving used trucks. Read the previous report, “How to find the pricing “sweet spot” for used trucks,” here.