After a 30-day window of studying auction sales and their associated auction charges earlier this year — a period that included more than 347,000 vehicles sold by clients — AutoIMS was able to determine the 10 most common charges spotted in the auction marketplace.
And while some, like sale fees, transportation and detailing, were reported quite often, the use of many were relatively infrequent.
“Most vehicle remarketers are responsible for minimizing losses for their organizations, and with an average total charge amount of $385 per vehicle, the most successful clients have found ways to keep auction fee management simple and easily reportable,” AutoIMS said in a that was released this month.
“Auctions benefit by spending less time on reconciliations, and more time on higher-value activities, to serve clients,” it continued.
According to the whitepaper, the top 10 most common auction charges are the following (along with percent of vehicles bearing those charges).
Sale fee: 84 percent
Transportation: 62 percent
Detail: 43 percent
Appearance/reconditioning: 27 percent
Promotional expenses: 20 percent
Material handling: 15 percent
Live Internet sale: 13 percent
Mechanical work: 12 percent
Miscellaneous: 11 percent
Recon: Keys: 9 percent
AutoIMS pointed out that there are 87 different auction charges in its platform, but most are used sparingly. In fact, only five charges had a usage rate higher than 20 percent.
“While the platform allows for 87 different auction charge types, most clients strive to limit the number in use to simplify the accounting process,” AutoIMS said.
The company later added: “AutoIMS was designed to add transparency and efficiency while offering the flexibility to serve many different industry segments, yet auction charges might be an area with too much flexibility.
“Luckily, savvy consignors and auctions have worked with the AutoIMS Client Experience Team to establish guidelines and customizations to enhance their ability to manage charges and other financial reconciliation steps.”
Behind the numbers
Granted, some of the low usage rates for some services/charges — appearance/reconditioning at 27 percent, live Internet sales at 13 percent and mechanical work at 12 percent — might seem surprising.
But there’s more than meets the eye. And the addresses that.
Asked what is driving those seemingly low numbers, AutoIMS vice president Joe Miller said there’s a “broad array of Inventory” involved, including many salvage units, so it is possible it’s just low numbers being requested for these services, he said.
“The other thing to think about is just the nature of the data — and large part of what the paper itself addresses — which is the charges might not all mean what they say. Certain reconditioning might just always be assumed and bundled in to the sale fee or detail categories, for instance,” Miller said in an email.
“The ‘live internet sale’ fee, while very common, may not be assessed on every car that sells to an internet bidder depending on the deal each client has struck with each auction,” he said. “These charges are heavily relied upon by the clients to reconcile sales, but at the end of the day, they are used in a very inconsistent and fragmented way.
“It’s one of the reasons I felt comfortable showing this graphic; it’s more a commentary on ‘how’ clients are being charged rather than ‘what,’” Miller said, referring to a graphic in the report detailing the top 10 charges.
Meanwhile, the transportation charge was one of the higher ones at 62 percent.
“The majority of commercial consignment are ‘pick-up’ orders, where the auctions retrieve the vehicle (as opposed to ‘drop-offs’),” Miller explained. “So it makes sense that it is a common charge, even though the auctions often subsidize this expense.”
After delving into data from two years ago, this figure is also consistent with 2015, Miller said.