SmartAuction Introduces Limited Credit Lines for Dealers
DETROIT — In an effort to give more dealers the opportunity to try SmartAuction without the hassle of a lengthy credit check, the company has unveiled Quick Start.
Via the new offering, both franchised and independent dealers can gain a limited credit line to bid on and buy vehicles through the online auction platform.
For independent or non-franchised dealers, Quick Start can provide up to a $35,000 daily spending limit for those who qualify.
Meanwhile, franchised dealers who do not have a GMAC or Ally Bank wholesale relationship can qualify for up to $70,000 a day in spending limit. Also, the company institutes a five-unit per day posting limit for dealers who seek to sell via SmartAuction.
For both franchised and independent dealers, SmartAuction said the authorization to release purchased vehicles will be held for three days to ensure ACH clearance of funds.
For dealers who decide to seek a higher spending limit or posting limit, along with no hold on authorization to release vehicles, officials said they can submit financial statements and a recent bank statement to undergo SmartAuction's standard due diligence process.
To qualify for a limited line of credit, SmartAuction indicated that dealers must turn in:
—Application for Auction Access.
—Copy of business/dealer license.
—SmartAuction user agreements, including online auction remarketing agreement, SmartAuction password acknowledgment, ACH authorization with copy of check and omnibus agreement (corporate resolution).
"We're in growth mode," explained Mark Newman, managing director of SmartAuction to Auto Remarketing this week. "We're seeing an emerging market in dealer-to-dealer trades taking on increasing importance. We have committed to growing and diversifying our dealer base. Quick Start is our way of finding a way of simplifying the on-boarding of dealers as we grow our dealer business. We were being very responsive to the market when we created this.
"Maybe dealers can come on our side with a more limited set of reviews and with somewhat limited buying privileges. This is a better situation than dealers not signing up due to the hassle of the review process and better than us taking a long time to get dealers on board. If dealers want to provide more information for larger buying lines, they have the choice to do that," he continued.
He stressed that the limited review process is not designed to bring on dealers who are not credit worthy.
"It's a way of having dealers experience SmartAuction with a limited set of credit information up front," Newman said.
Continuing on, Newman said that 2009 proved to be another record year for SmartAuction. In fact, about 440,000 units were sold via the site, up from about 435,000 in the previous year. He said this is a particularly strong trend given all the turmoil that surrounded General Motors with it filing for bankruptcy and as GM volumes on the auction site fell dramatically.
"We were down by about 60,000 GM units," he noted.
Newman went on to report that SmartAuction sold about 75,000 units in Canada and as a whole, is now looking at moving more than half a million vehicles a year.
"We're continuing to sell at a pretty good clip," he stated.
Furthermore, the company's dealer base expanded by about 1,800 over the past year. It now stands at about 9,100 dealers. Newman again pointed out that dealer-to-dealer trade is one of the fastest growing aspects of SmartAuction's business.
As the company moves away from its traditional role as an avenue for GM dealers, its dealer base has diversified. For instance, about 4,500 of dealers are GM-related, another 1,200 are Chrysler dealers (which came on as GMAC became the primary lender and wholesaler for these dealers), and another 3,000 are diversified dealers, representing other makes and independents.
About 20 percent of the company's revenues come from rental fleets, financial institutions and independent auctions, he added. These clients represented about 100,000 units on the platform in 2009.
"While volume has been down throughout the industry, the fact that we continue to grow in an environment like this is indicative of the success of our business model," Newman said.
"As we continue to grow a presence in the rental fleet business, the vehicles we offer become increasingly diversified. We're taking on a more diversified mix of cars. We sold about 45 different makes last year," he added.
He also pointed out that the introduction of a completely revamped Web site during the middle of last year has also gone very well.
"We launched an all new Web site, or SmartAuction platform, last year. We gave it a pretty major overhaul and brought a lot more functionality to it. We now offer the 24/7 ‘buy now' feature and a very powerful search engine," Newman indicated.
In addition, dealers can now use mobile devices to view the SmartAuction site throughout the day.
"In general, we had a great year. We spent money on launching a new platform; we hit our 3 million milestone and set a new record," Newman said.
He also noted that last year at about the time of the National Automobile Dealers Association's convention, the company introduced QuickTurn in partnership with FirstLook. Newman said QuickTurn now has more than 500 dealers signed up and he indicated that dealers have shown a very positive response.
"We're very upbeat about last year's accomplishments. We're seeing a somewhat better economic outlook for the coming year, and the general mood at NADA was a lot more positive this year. We're looking forward to another successful year," Newman said.
Ally Dealer Rewards is also playing a part in SmartAuction's growth. In addition to financing pieces and insurance pieces, SmartAuction is also included in this special offering.
"Dealers have the opportunity to basically save more money by using more of each product and using all the products," Newman said.