While a variety of factors can affect vehicle conversion rates at auction, in a recent study, Manheim revealed that the presence of a physical title at the time of sale can potentially double vehicle conversion rates. The research also revealed that vehicles with same-day titles contribute to slightly higher online sales via Simulcast and OVE.com.
“Roughly 35 percent of all vehicles at auction are sold without the presence of a physical title and this can negatively affect customer profitability,” shared Ally Pomeroy, customer consultant. “While we observed significant differences between commercial and dealer sellers when it comes to having physical titles at auction, this study focused on dealers because the majority of vehicles with delayed titles are sold by dealers.”
Manheim’s study also showed that while typical dealer conversion rates range between 50-55 percent, the average conversion rate for dealer vehicles with a title present is 86.2 percent, as opposed to 42 percent for delayed vehicle titles. Also revealed was that newer, lower-mileage vehicles have the lowest conversion rates without a title present, while title delay is less of a factor in the conversion of older, higher-mileage vehicles.
“These findings may be due to a dealer’s tendency to have reconditioning work done on older vehicles to get them ready to retail,” Pomeroy said. “Because they are already expecting delays and extra holding costs due to reconditioning time, the title delay is less of a concern.”
Online and Manheim Market Report (MMR):
Having title-ready vehicles can also influence positive online buyer activity. For example, 18.5 percent of vehicles with physical titles present sold online via Simulcast or OVE.com in 2014, compared to 17.7 percent of vehicles with delayed titles. For online transactions, buyer confidence is crucial, and the risk of a delayed title can discourage dealers from making the purchase. And, when it comes to MMR, the study showed that MMR value by dealer groups is the same whether the title is present or not.
The data used for the study includes Manheim’s total wholesale vehicle transactions in the U.S. from January 31 through May 31, 2014. In addition, the study captures only “whole car” data and excludes Specialty and Total Resource Auctions.
To review the results of this study, access the white paper at: http://www.manheim.com/content_pdfs/products/Impact-of-Delayed-Titles-at-Auction.pdf