Defining Wholesale and Commoditization


Think about this simple question.  What is “wholesale”?   

The answer is interesting and worth considering when making a decision of what a vehicle is worth, a specific 17 digit VIN.   The  definition it is fundamental understanding a  pricing tool or validity of pricing process.  It is also fundamental using our VIN specific tools.  The following are a few of the levels that fall under the category of the VIN specific term.

1. The VIN in the hands of the owner
2. The ACV trade-in allowance of the VIN
3. The value  the VIN brings resold in the wholesale market either hand to hand, bid lot, or in any D2D marketplace
4. The value the VIN has after being reconditioned, bumpers, wheels, tires, detail, PDR, paint work, etc.  (+$)
5. The VIN value a buyer pays  on a third party platform which increases the “buy” price with fees, transportation
6. The amount the VIN is worth after it has been reconditioned, maybe CPO’d and remains unsold and now “wholesaled” (+$800-$4,000)
7. The value a professional pays at auction in an open professional market and pays fees, inspections, transportation, reconditioning (+$500-$2,000?)
8. The value of vehicle that was bought at the door, traded or sourced an on line platform or in lane auction, fees paid, transportation, recon, and remains unsold and now needs to be “wholesaled”

Obviously there are many variations of the above.  If we start at the beginning of the VIN being “in play”  and end at point 8 above there is a difference in cost that is thousands of dollars, but it’s the same unit.  So what is wholesale?  

TRADE-IN VALUE

Our commoditization tools use ambiguous terms but refer to the definition of wholesale.  At any point in the in-play market of the VIN there is a commodity value on the barrelhead and in the exposed marketplace.  Our “trade-in” value* is barrelhead value considering the DNA of the unit as it presented to our algorithm.  If it is accurate any seller can get paid instantly.  That  is the spot commodity value. *

MARKET READY VALUE

The “market ready” price* is the amount the same VIN with the same existing characteristics could bring if it is presented to a broader market or a critically amassed marketplace.  The theory is  placing a VIN in front of motivated critically amassed motivated buyers, can, should, increase the net return.  The market ready buyer is  typically an end user.   However, there is no guarantee the market ready results regardless of points 1-8 above.   Remember the trade-in value/commodity value remain  intact.   Venues that potentially advance the VIN to market ready include:

1. A motivated wholesale buyer or end user at the point of entry
2. A bid lot operated by a dealership or third party
3. Any D2D on line marketplace
4. Simulcast which has worldwide reach which is critical to finding the best end user motivated to pay more than regional value
5. Auctions on line and in lane that have a much deeper buyer base and financing that enable asymmetrical returns (export)


Like any massively traded asset or commodity  supply and demand dictate spot value.  There are a number of factors that are now readily available to commoditize the automobile: technology, information, network, transportation, transparency, experience,  capability, resources, will, and need.  


*Our commodity guarantee comes with the caveat that the input of options and conditions must be accurate and complete.

As our founder has said for decades, “ If you ain’t a liar we’re a buyer”, now if you are able to log in and make a few entries any unit, anywhere, regardless of year, make, model, or volume is a commodity that can be traded instantly.

 

Robert Hollenshead

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