Auto Auction Service Business Plan, Marketing Plan, How To Guide, and Funding Directory
The Auto Auction Service Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Auto Auction Service business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.
Your Business Planning Package will be immediately emailed to you after you make your purchase.
Product Specifications (please see images below):
- Bank/Investor Ready!
- Complete Industry Research
- 3 Year Excel Financial Model
- Business Plan (26 to 30 pages)
- Loan Amortization and ROI Tools
- Three SWOT Analysis Templates
- Easy to Use Instructions
- All Documents Delivered in Word, Excel, and PDF Format
- Meets SBA Requirements
Auto auction companies are always able to generate income from managing the ongoing purchase and sale of vehicles on behalf of third parties. These businesses play an important part in the automotive industry given that they allow third parties to easily divest inventories of vehicles that they no longer want war are looking to sell in bulk. Also, many auto auction companies maintain strong relationships with area municipal policing agencies as well as state-based police agencies that have vehicles that have been confiscated due to criminal activity. In many instances, auto auctions are able to remain highly profitable in any economic climate through the sales of confiscated property. Additionally, many individuals who have cards that they need to sell will turn auto auctions in order to quickly divest these inventories. As it relates to being an automotive focused business, auto auction companies are able to generate extremely high gross margins from their services given that they operate on a commission basis. Usually, these businesses charge a fee equal to 10% to 15% of the sales price per auction. The demand for auto auction services does not wane during times of economic recession.
Typically, the start of cost associated with the new auto auction business ranges anywhere from $50,000 to $150,000 depending on the facility that we used to carry out these auctions. One of the biggest expenses as it relates to these businesses is maintaining a secure warehouse where vehicles can be safely stored on a daily basis while they are being auctioned.
Given the highly predictable and highly economically secure nature of the revenues generated, most private investors as well as financial institutions have a keen interest in providing the necessary capital in order to develop this type of company. If an entrepreneur is looking to develop a new auto auction business and they’re going to be required to have a business plan. This document should feature a three year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. As it relates to industry research, there are more than 2,000 companies that are actively engaged in the auction sale of vehicles. Each year these businesses generate an aggregate of $8 billion in commission fees. The industry employs 50,000 people, and in each of the last five years annual payrolls have exceeded $1 billion.
As part of the business plan, a full competitive analysis should also be developed. This includes taking a look at all other auto auction businesses within a 50 mile to 100 mile radius of the company’s plan location. A further examination should also include the number of automotive brokers that operate within the market given that these individuals are often able to operate in a similar capacity but on a one and on one basis. Beyond discussing the competition, a full demographic analysis of the individuals and companies that we purchasing vehicles from the auto auction should be included in as well. This includes discussing statistics relating to population size, population density, median household income, median family income, number of vehicle dealerships in the market, annual revenues, annual profits, and the number of vehicles that are bought and sold within the target market. This information is readily available through a number of both public and private information sources and it can be obtained relatively inexpensively.
Finally, within the auto auction business plan – there should be a significant discussion as to whether or not the business is going to actively trade for its own account in regards to acquiring vehicles and selling them to third parties. Most of these businesses strictly operate in auction capacity, they do have the significant ability to generate income through the acquisition of vehicles that can be sold for the company’s own account. This can be a highly lucrative aspect to operations. In fact, many auto auction businesses will begin to operate in this capacity once you have reached profitability.
An auto auction marketing plan needs to be developed as well. This is going to be one of the more complicated aspects of the business planning process given that a number of different marketing channels he to be used in order to generate continued interest in the vehicles that are being sold to the general public. This marketing plan should include a discussion regarding online advertising as well as traditional print advertising. As it relates to print advertisements, there should be a broad-based marketing campaign that focuses on when auto auctions are scheduled, vehicles that commonly come up during the course of auctions, starting bid pricing, and other information related to the location of the business. These advertisements can be distributed among circulars that focus on use automotive sales.
Of utmost importance to the auto auctions marketing campaign is the use of online sales channels. This includes maintaining a proprietary website that is listed among the major search engines including Google, Bing, and Yahoo. Of significant importance to the online marketing is the usage of social media. One of the ways that auto auctions can quickly be brought to profitability is by frequently showcasing vehicles that are for sale via FaceBook, twitter, Instagram, and related social media platforms. As the business develops a strong following via their social media pages – the costs related to marketing will decline substantially given that people will be able to see listings for vehicles are going to be auctioned within any given timeframe. A dedicated social media manager may be hired so that each vehicle that is going to be auctioned during the course of the week can be showcased to the general public via social media means. The return on investment by using social media platforms in order to showcase vehicle for sale can be phenomenal if it is carried out correctly. Usually, a dedicated social media manager that has an understanding of all major platforms has a salary of about $50,000 to $75,000 per year depending on the market. While this may contribute to a much higher payroll expense and marketing costs – the return on investment can be significant if it is carried out correctly.
Finally as it relates to marketing, many auto auctions will maintain strong relationships with area automotive dealers that are looking to acquire inventories on a wholesale basis. This may allow the company to more quickly turn over any inventory from third-party sellers that are simply looking to divest vehicles. Many automotive dealers also will send a representative to an auto auction to acquire vehicles that are underpriced and can be sold in a retail capacity.
An auto auction service SWOT analysis should be produced as well. As it relates to strengths, auto auction services are almost always able to remain profitable given the continued and ongoing demand for the buying and selling of vehicles. The gross margins generated are extremely high as this is commission driven income. The underlying operating costs associated with this type of business are considered to be moderate and the barriers to entry are moderate as well.
For weaknesses, given that there is now a significant amount of competition online among used-car sales platforms – many people have turned to using these entities in lieu of paying a large commission for having a vehicle auctioned. However, there are still a number of people that engage in auto auctions especially as it relates to police seizures. Additionally, many auto auctions will often provide for the sale of lots of vehicles in one setting. This is something that is not often done online.
For opportunities, these businesses can rapidly expand by increasing the size of their marketing campaign concurrently trading vehicles on their own account. Additionally, an entrepreneur that is starting a new auto auction service can establish additional locations outside of the initial companies target market radius. Banks and lenders look to provide these companies with working capital lines of credit that can be used for expansion purposes.
For threats, one of the primary threat is going to be the continued evolution of technology and how it applies to the sales of both new and used vehicles. Again, there is always going to be a significant demand among dealers, brokers, and other entities that deal in a number of vehicles that need to be bought and sold on a daily or weekly basis. As such, there is a very little risk to avian auto auction business in regards to how they will conduct their business moving forward.
In closing, and auto auction service can be a highly lucrative business investment provided that the owner has a strong understanding of new and used vehicle marketing coupled with strong ties to the community so that people that are actively engaged in this business will be come customers at the onset of operation. These businesses tend to do well in any economic climate, and they are considered recession proof for the most part.