Auction Broadcasting Company (ABC), headquartered in Indianapolis, has introduced a 100-percent Buy-Back Program, which allows dealers to purchase vehicles from the dealer consignment lane with a 100-percent buy-back guarantee. The dealer has 60 days to return the vehicle to the auction from which it was purchased to receive a full refund of the sale price.

“We wanted to do something to create excitement for dealer consignment,” says Greg Lubrani, manager of business and dealer development for ABC. “Since rolling out this program, we’ve seen more activity in our dealer consignment lanes, and we’ve increased the number of vehicles running in those lanes. Dealers have more choices, and overall, they should feel confident purchasing from the consignment lanes.”

According to Lubrani, the 95-percent buy-back programs, which have been offered in the past, have been somewhat confusing to dealers, and they’re mainly offered in the fleet/lease lanes.

“There is good quality merchandise in the consignment lanes that is often passed over, because dealers feel more confident in the fleet/lease lanes,” says Lubrani. “We believe it’s time to pay more attention to dealers, because dealers are the backbone of the auction industry. That’s why we’re offering this program only in the consignment lane.”

The 100-percent Buy-Back Program was launched in the first week of December 2002 at five of ABC’s auctions: ABC South Tampa, ABC Minneapolis, ABC Nashville, ABC Indianapolis, and ABC Washington/Dulles. Lubrani says a decision has not been made yet as to when the program will be rolled out in its Detroit/Toledo and West Michigan auctions.

“The program has been very successful,” says Lubrani. “We’ve learned a lot as far as how to market and create excitement for the program. We know we need to get the right mix of cars in the dealer consignment lane. For now, we’re going to continue to learn what we can do to better serve our dealers, then I’m very confident we will be offering the program at all of our auctions.”

Thus far, ABC has been marketing its 100-percent Buy-Back Program face-to-face. The sales staff went directly to dealers and explained the details of the program. The first auction to put the program into action was Minneapolis. Lubrani says the registration numbers were up, simply because dealers wanted to participate in the new program. However, there is one downside.

“Dealers think the program is too good to be true. They’re concerned there’s some kind of catch,” says Lubrani. “Through word of mouth, dealers are learning that this program was created for them, and there’s no hidden agenda.”

There are terms and conditions for vehicles that are eligible for the program. Eligible vehicles are private passenger automobiles or light trucks with a GVW of less than 10,000 lbs. and purchase prices between $1,000 and $30,000. Vehicles must not have frame damage or be classified as salvage.

To invoke the 100-percent Buy-Back Program, vehicles must be returned to the auction from which it was purchased no sooner than 55 days after and no later than 60 days after the original purchase. The vehicle must be returned without damages.

There is a fee for the 100-percent Buy-Back Program, which is determined based on the sale price of the vehicle. Dealers can opt out of the 100-percent Buy-Back Program and receive a 90-percent Buy-Back guarantee at no charge.

“In some cases, the dealer already has the vehicle sold at his or her retail lot, so there’s no need for the 100-percent buy-back guarantee, and there is a fee to participate,” says Lubrani. “That’s why we give dealers an option.”

ABC has already seen increased buyer activity and greater buyer confidence in the consignment lanes. ABC hopes dealers will also see the long-term benefits of the program, such as the opportunity for fleet diversification with little or no risk of wholesale losses.

CHART:

100-Percent Buy-Back Program Fee Schedule*

Sale PriceAdditional Buyer FeeAdditional Seller Fee

<$4,000
$100
$100

$4,000-$14,999
$150
$150

$15,000-$30,000
$225
$200

*In addition to normal sale fee.

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