We, in the used car market, share a common goal to sell every used car we have for the best possible net price. The methods employed vary, for there is no universal best way to dispose of cars. We consider condition, geographic loca­tion, the market where the car is located and alternatives available to us in that specific area. We do not require new car dealers to bid on any used cars, although the oppor­tunity is given. Typically, new car dealers are not interest­ed in trading any more used cars than they have to, espe­cially fleet-type cars; at least this has been our experience. When a dealer agrees to buy a used car he is assuming a risk, the same as any merchant does when he decides to inventory an item of merchandise. That risk, of course, is whether he will be able to sell the car at a profit after allow­ing for fixed and variable expenses. He more than likely may not need any cars of the specific make and model we may be selling because of current inventory situation, in which case he will be unwilling, and justifiably so, to pay top dollar for the unit. In any case, our experience has been that most dealers are reluctant to bid or commit for a used fleet car and, if we insist on such a commitment, we seriously limit the number of new car dealers willing to do business with us unless we either sweeten the new car deal or price the used car down to the point where a substantial underwriting of the risk by us and profit to the dealer is assured.

Aside from the driver and the dealer there are basically three other ways to go. We can either attempt to open and operate our own retail or wholesale lot, or go to an auction or wholesale broker. Obviously, we are in no position to operate our own lots, nor do we want to. In choosing be­tween auction and wholesaler, we use the same guidelines. Auction operators are engaged principally in a service busi­ness - a service to the seller and a service to the buyer. A wholesaler offers basically the same service so, again, how do we make the decision which way to go . . .

1.        We rely heavily on the past performance of the auction or wholesaler in contention for a specific deal. We have entered every past deal in our computer and are able to draw upon this past performance information on de­mand.

2.        We look carefully at the latest market information avail­able to us for that specific market. Of particular interest are prices there, relative to what we know them to be in possible alternative markets.

3.        We evaluate our car from condition reports available to us so we can determine what the car should be worth and decide whether we can reasonably expect the car to bring the desired figure in its present market area. Does this car need, and does our past experience in the market indicated, that reconditioning is warranted? Does the auction or wholesaler in the area do well with this type of car? Are they really interested in this business or do they do it just as an accommodation? If the auc­tion does best with late-model low-mileage heavies and we have a high-mileage intermediate, we may be forced to seek an alternative.

4.        Like any other service business, we feel that it necessari­ly is a people-oriented business. If the people involved are actively interested, enthusiastic, willing and able to devote the time and energy that this business demands, it is our experience that the desired results will usually follow. This is true of both auctions and wholesalers.

We are familiar with most of the arguments that can mitigate a decision for one method of disposal versus an­other. While auction operators can perhaps claim exposure to the greatest number of potential buyers plus other recon and related services, the wholesaler can claim he will buy today and every day in the week and he will "buy'em as is" without the delays associated with recon work. These and many other arguments can promise to be an advantage in a given situation.

Specifically with regard to auctions and in addition to the items previously mentioned, we look for prompt pick­up, sale and payment, accurate condition reports, and judicious reconditioning if the car and market conditions warrent it. We continue to question, and probably will continue to do so, the wisdom of running all fleet and lease cars as a group, particularly late in the sale, after many of the buyers have already purchased their requirements and departed. Also, it can be argued that the appearance of a large number of similar-type units all in a bunch can depress average prices. Further, unless someone offers a price substantially above what is known to be the market price for a consigned unit, it should not be sold outside before it is run past the block, as we believe there is merit to multiple exposure and competitive bidding.

The used car is the place where a sharp fleet operator can best control his standing costs. He can buy the right car at the right price, maintain proper control of the maintenance and operating costs, do everything else by the book and lose it all at resale time. A good strong market should also benefit auction operators and enable them to better serve us by assisting the fleet and lease operator in taking advantage of the opportunities afforded by the strong used car market.

Jack Lamb is Purchasing Negotiator for the Exxon Company. The preceding speech was his presentation at the National Auto Auction Association convention, October, 1974.