The United States has felt a disruption in every corner of the economy over the last year, and auto sales are no exception. In April, the Manheim Used Vehicle Value Index rose to 179.2, a 26.2% increase from a year ago, according to Cox Automotive.
“It is not uncommon to see a spring bounce in wholesale prices, but a 26.2% increase is a leap by any measure,” Cox Automotive Chief Economist Jonathan Smoke said in a news release. “And, as we begin to see the light at the end of the tunnel that is the coronavirus pandemic, increasing consumer confidence and decreasing unemployment create market conditions that lead to sizable price gains in the first quarter.”
As used-vehicle sales increase with limited demand, you may be wondering how to get the highest value for your car when selling and avoid paying an inflated price when buying. The good news is, there’s more than one way to buy and sell quality used cars.
What is auto consignment?
Auto consignment is when a vehicle owner allows a dealership to market and sell their car for an agreed-upon price. On the buying side, consignment customers often have the option of browsing auto inventory online and requesting upfront pricing before visiting the dealership for a test drive.
“Auto consignment is a great option for both sellers and buyers because it provides all the value benefits and more of a private party sale with the convenience benefits of working with a high-end retailer,” says Michael Bor, CEO of CarLotz. “Sellers don’t have to settle for the lowball dealership offer as they get to benefit from the actual retail price of the vehicle less a small fee for the sale. And buyers get high-quality vehicles at a slight discount to retail and all the benefits of a high-end retailer like financing options, trade-ins and more. It’s truly a win-win.”
How is auto consignment different from traditional used-vehicle sales?
As Bor notes, like traditional pre-owned sales, cars bought through consignment are available for local test drives, and you’ll still find essential items like an inspection report, limited warranty and financing options attached to the deal.
In his experience, CarLotz COO John Foley says the most surprising thing for their customers is what isn’t part of the deal. “Our team, as opposed to traditional dealers, has noncommissioned sales associates,” he says. “So whether or not you even buy a car, they’ll get compensated. They’re just there to take care of you. And if you do want to buy a car, there is no car that as a company or as a team, we are more motivated to sell. We just want to make sure our guests find the car that’s right for them.”
With sales transparency comes a greater understanding of the process for both buyers and sellers, which is less common in non-consignment deals. Foley notes that CarLotz charges car sellers $299 to list and market the vehicle and a flat $799 fee once the car sells successfully. He also encourages buyers to work with their sales associates to compare the benefits of upfront consignment pricing with the wholesale price of a used car. In either case, the terms are clearly outlined. “All of our fees are listed on our web page,” Foley says, “so everybody knows when they buy from us exactly what CarLotz is making through the transaction.”
An online presence with a local feel
Technology has shifted the way consumers prefer to shop for cars. While 75% of Americans still want to see a vehicle in person before buying, most want to do their research, warranty and financing paperwork online, according to consulting firm Deloitte’s 2021 Global Automotive Consumer Study.
The hybrid approach to car buying and selling is already the center of CarLotz’s business model. While CarLotz is a national company, its success hinges on local expertise. “When we select a new market to enter, the first thing we do is find a local champion who understands the market to be our general manager,” Bor says. “Our business doesn’t exist without a focus on hiring the best talent in the local market,” he says. “It’s more about the people than the cars.”
CarLotz’s Lynnwood location has vehicles available to see and test drive locally. “We’ve had a lot of demand for our services on the West Coast,” Foley says. “We are definitely bringing job opportunities to people in the community and also putting more money back into the local economy by helping buyers get the best deals and helping sellers earn more money that they can turn around and spend in their own neighborhoods.”
The CarLotz auto consignment model reduces overhead and inventory costs, so buyers pay below traditional dealer prices. Noncommissioned sales and our simple finance process makes buying easy. Swing by anytime for a test drive, or shop 100% online.