It’s no hidden secret that auto auction fees can add up quickly, especially if the auction’s payment and pickup policies are not strictly followed. Auto auction fees impact both buyers and sellers and play a powerful role in how bu
siness is done. From increasing daily storage fees to reduced vehicle pickup time frames, the influence of rules and regulations in the auto auction world hinders both buyers and sellers.
Impact of Auction Fees on Buyers:
Now any experienced buyer expects there to be a certain number of fees implemented by the auto auction. Buyer fees, gate fees, internet bidding fees and storage fees are all common denominators when participating in an auto auction. Unfortunately, when it comes to salvage vehicles, the price of these fees can sometimes total more than the actual worth of the vehicle. An anonymous recycler and used car dealer in Cooperstown, NY stated that he won a car for the sale price of $150. Then, the auction added on a buyer fee of $25, an internet bid fee of $29 and a gate fee of $59. The addition of the fees brought the price of the $150 vehicle up to $263 and totaled 75% of the price of the actual vehicle.
Now if buyers go into the auto auction with these fees already factored into all of the costs, it may change the amount they are willing to pay for a vehicle. To elaborate, if buyers factor in these extra fees, stick to their original valuations and recognize that the cost of fees equals a price close to the cost of the car then it would make sense for them to only bid half of the valuation for that vehicle. Is this predetermined algorithm really the mindset of most buyers when they head into the auction? It is quite possible for the more experienced, educated buyers but obviously not enough to change the way sellers conduct their business.
Impact of Auction Fees on Sellers:
The irony of the fees implemented by auction houses is that they are enforced to recover the costs of servicing the insurance industry. They are not legitimate fees that represent the costs of servicing the buyer base. Insurance companies set reserves on vehicles, saddle the auction with the costs of holding vehicles extended times and want 25%-35% net worth on true salvage total-loss vehicles. All of which are factors that contribute to raising the overall overhead of running the auction. So the fees implemented at the auction on the buyers are fees that represent the cost of running a profitable car auction, due to monetary pressures and exp
ectations from insurance companies. Now here’s the irony: when the fees go up ↑, the bid amounts go down ↓. Insurance companies are actually losing money because they are getting less for vehicles from buyers because of the plentiful fees from auctions.
The Solution:
Fortunately, the trend of increasing fees and reduced monetary return for salvage vehicles can be avoided. ARA Direct‘s online auction platform can provide a solution for everyone. Hosted by iBidSmart’s white-label online vehicle auction software, ARA Direct allows insurance companies to run auction vehicles straight on their website, eliminating the auction house all together. 
Additionally, ARA Direct provides auction houses with a tool to set up an online bidding option if they do not already have one on their website. Lastly, ARA Direct’s online auction platform gives buyers a virtual market place to bid for vehicles, with limited fees and less hassle. Why not reduce the fees and increase the vehicle worth by participating in “Your Auction, Your Way” with iBidSmart’s online auction solution through ARA Direct.
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