Motor Vehicle Auctions

Car Dealership pricing – market forces Demand Curve There is typically only a small price margin that can be negotiated at a dealership Supply Curve Shortage - under supply Surplus – over supply

Profit for Car Dealers Sale price – Costs = Profit What type of costs would car dealers have? – Wages – Site rental – Lighting – Security – Repairs – Detailing The cost of a car just sitting in a dealership is about $100 a day

Vendor Private Buyers and Dealers Auctioneer Insurance Finance Car Auction Process

Auction Markets are Fluid The auctioneer will start at a certain price Bids commence There is interaction between the vendor and potential buyers If the reserve is reached the car is available for sale The highest bidder buys the car, pays for the car and takes it home that day Why would the price for identical cars be different on the same day?

How auctions work... X If there are a number of similar cars to be auctioned, the first car auctioned in a specific category is usually the best vehicle with the most features and attracts the highest price X X X Subsequent cars.. Generally have less features and attract lower bids If bidders do not reach the reserve price set by the vendor, the car is “passed in” and they have an opportunity to negotiate to reach the reserve price

Auctions generally have finite supply that is all available for sale at a reserve price Demand Curve Shortage - under supply Surplus – over supply Due to restricted supply, a number of buyers may have negotiate through bidding Reserve Price

What are some key differences between car dealers and auctions Car DealerAuctions Vehicles stocked Colour Range Ability to test drive and inspect Warranty Access to buyer after transaction Car dealers will stock a range of vehicles Only stock a limited range and finite supply Generally all colours are stocked Colours are generally limited to saleable colours eg white and silver Yes Guaranteed Available No – can visually inspect and start engine at auction Will honour balance of factory warranty otherwise no buyer protection Need to find independent servicing and repair company

What does this mean? Let the buyer beware....

Your investigation 1.You need to complete all the details in table 2 from the auction 2.Find similar cars (in terms of make and kms) and using internet research find prices in the dealers market 3.Compare and identify similarities and differences

Your Press Release Focus (refer to task sheet) What determines the prices of second hand motor vehicles? The sub questions you need to answer are 1.What is the average price of the car types you saw at action? 2.What is the average price of the same car types in the dealers market? 3.How do the prices between the two markets compare? 4.What factors determine prices (you need 5)? Why is there a difference? Refer to your handout page 3 for some internet sites that might help you out

Example of a Press Release Toyota _detail.asp?clientID=2&prID=4091&navSectio nID=2 _detail.asp?clientID=2&prID=4091&navSectio nID=2 Cadbury /press_releases/2010press/ / /press_releases/2010press/ /

Press Release Format FOR IMMEDIATE RELEASE ON [DATE] Headline: The headline is the most important part of a press release and you should give it careful consideration. Try to grab attention. Go for clarity. Be direct. Introduction: State the reason(s) why the press release is newsworthy. Reinforce the headline. Your body text: should include information about your inquiry. Ensure you answer the focus question and sub questions. Use short, succinct paragraphs Credibility: Include reputable quotes, in-text referencing and supporting graphs Your Contact Details: Include Name, , Phone etc - ENDS-

What to hand in Title Page Press Release APA Reference list Your Review – See back of task sheet Criteria Sheet