IARA’s Certified Automotive Remarketer Program: CAR-18
UNIT: Post-sale Activities
COURSE: CAR-18 Vehicle Resale Performance and Arbitrage
The CAR candidate must be able to illustrate how the factors such as color, options, engine variables, mileage and vehicle condition levels influence resale values. Describe how reconditioning can enhance resale value. Identify and discuss the potential effects arbitrage plays in the remarketing process.
Arbitrage has been defined as the “purchase of a good in one market for immediate resale in another market in order to profit from a price discrepancy.” As a vehicle seller, the remarketer has many choices for a resale channel (i.e., driver, dealer, online, physical auction) and the selection of outlets within each channel (e.g., the online provider if you choose the online channel, the auction company and location if you choose the physical auction channel). Many of the vehicle wholesalers active in the used vehicle market place take advantage of price discrepancies from one market to another in order to extract profit. As a vehicle seller, the remarketer should be aware of arbitrage from both a positive standpoint (making the market more fluid/efficient) and the negative (potentially leaving “money on the table” if selling in a suboptimal market/channel).
At the completion of this module, participants will be able to:
• Define arbitrage
• Define how arbitrage relates to channel selection
• Explain how to measure price discrepancies from one geographic location to another
• Explain the role of a dealer wholesaler (motivations, opportunities)
• Explain how to measure and use vehicle arbitrage to an advantage
• Describe how to reduce vehicle arbitrage through better channel and location choice
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