When you think of your local auction house, you may simply think of them as places where you can find you a quality vehicle ready for the road obtainable at an affordable price. However, the auction house is also a money making entity with many different streams of revenue. Here are some of the various ways they bring in revenue.
1) Sales Commissions – Some auction houses purchase cars bought directly from the local dealerships for profit. Others sell cars for the dealership and take a percentage of the profits from the total sale. For example, Dealership A wants to get rid of its trade-in “inventory” so it enlists Auction House A to sell the cars for them. Auction House A agrees to sell the cars and receives a percentage of the sales as a commission for doing so. Everyone leaves happy with profits!
2) Membership Fees – Some exclusive auction sites don’t allow individuals to come in and purchase cars. They require a “membership fee” for people to join the club and to place bids. This format is usually seen in high end auction formats where the average automobile cost is over a hundred thousand dollars!
3) Parts Sales – You may notice parts being sold at some auto auctions. These parts come mostly from junk automobiles and custom vehicles. In most cases, the parts are sold separately, not by auction.
4) Online Auctions – These auctions are hosted over the World Wide Web and are very profitable for the companies hosting them. Auctioneers charge sellers hosting fees which allow them to sell for profit on their website. EBay is the industry leader in online auto auctions.
Auto auction houses are expanding and growing larger across the United States. Their growth is based on customers who find great cars and great prices. As they grow, so will their revenue streams and creativity, along with their appeal to prospective buyers like you.