Most, if not all independent dealers get their inventory from pre-owned vehicle auctions. Some only buy from local auctions and some buy from all over the country. As a result, the auctions hold significant power over independent dealers. It is in your best interest to stay in the auction’s good graces. Watch this video to find out what happens if you don’t.
Below is a transcript of the video:
A lot of folks don’t know this, but auctions have blacklists where if a dealer violates the auction rules, the auction can actually ban the dealer from ever participating in that auction or many other auctions ever again. The auction can also put them on the banned list for floorplan financing so the dealer can’t even get the financing to ever participate in other auctions. It sounds crazy, but I promise you, I have seen that happen.
Another interesting issue I’ve seen where a dealer got banned from an auction temporarily, we were able to get them unbanned or reinstated. A customer came and traded in a vehicle to one of our clients, a dealer. The dealer then took that vehicle to sell at the auction. The vehicle was sold at auction to
another dealer out of state. That out-of-state dealer sold the car to a customer. While that customer was driving the car and parked it, the finance company from before, when our client sold the car from before the trade-in, that finance company actually repossessed the car from the new buyer. The new buyer then contacted their seller, the buying dealer at auction, who contacted the auction, who took the money out of my client’s account that they received for the sale of the car and gave it back to the buying dealer to give to the customer. Now the car had been repossessed by a finance company, so my client, the dealer didn’t have the car and their money had been pulled back out by the auction and the auction blacklisted the dealer. It turns out that the car, when the customer traded it in to my client had been stolen, and had not appeared on the stolen registry list.
I don’t know why. Maybe a glitch, maybe it wasn’t inputted. We had to go through some investigation. We were able to resolve it without having to go too far, thank goodness. It would have been very, very expensive. They were able to sell the car. It then got reversed by the auction, who pulled the money out of the dealer’s account and then blacklisted the dealer. We had to go through, as you could imagine, hoops to jump through to get this thing resolved, get the dealer unblocked.
They had been a user of that auction for over 20 years and we’re still blocked just like that. So loyalty’s important, but I guess not that important, as we learned, but we were able to get them reinstated. Just know that this kind of stuff happens if the rules of the auction are violated. So it’s really, really, really important that dealers who use auctions to buy or sell cars are making sure that they’re following all the rules of that auction.
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Auction Black List