Carwow has defended changes to its dealer auctions after removing customer reserve prices and retiring its Buy It Now feature.
John Veichmanis, chief executive of Carwow, told Automotive Management the changes followed extensive testing and were designed to reflect how dealers calculate bids and purchase used cars.
He said: “Based on extensive testing, we’ve made a series of changes to our auction platform to reflect how our dealer partners typically calculate bids and purchase cars on the platform.
“With this in mind, we’ve adopted a retail-back pricing approach in our consumer-facing valuations, and we now display the Autotrader retail price in the auction in addition to the existing CAP pricing.
“We’ve removed the customer reserve price from the auction, as testing has shown this increases the breadth of cars that have bids placed on them and improves both customer and dealer satisfaction.”
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Reserve price removal draws dealer criticism
Carwow continues to agree a reserve price with the vehicle owner, but dealers can no longer see that figure before submitting a bid.
The change has drawn criticism from some dealers, who argue that it leaves them bidding without knowing the minimum price the seller has agreed to accept.
Dealers have also questioned the usefulness of displaying an estimated retail price because many already use their own valuation data, vehicle preparation costs and target margins when calculating bids.
Veichmanis said removing the visible reserve did not alter the underlying auction process or mean a successful dealer would automatically pay the full amount bid.
He said: “This change does not impact the underlying auction dynamics: if a dealer is the only bidder on a car and they bid above the reserve price, they will still only pay the customer’s reserve.”
Carwow said its testing showed that removing visible reserves increased the range of vehicles attracting bids and improved satisfaction among dealers and consumers.
Carwow withdraws Buy It Now option
The company has also removed its Buy It Now feature, which allowed dealers to purchase cars that had failed to sell during an auction at a subsequently displayed price.
Veichmanis said: “We have also retired the ‘Buy It Now’ feature, which enabled dealers to buy cars that didn’t sell in the auction at a Buy It Now price.
“We took the decision to remove this because both consumers and dealers were frustrated with the time taken to complete a sale, and we consequently saw high cancellation rates.”
ANPR campaign targets used cars for dealers
The response comes as Carwow launches an automatic number plate recognition (ANPR) advertising campaign intended to increase the supply of retail-ready used cars through its dealer auctions.
The campaign targets cars aged between three and six years and valued at more than £15,000.
Carwow expects more than 1.1 million targeted digital adverts to be displayed each week between July 13 and August 23.
ANPR technology is being used to identify qualifying vehicles as they enter participating motorway service stations in London and the South East.
An advert is then displayed encouraging the owner to sell the vehicle through Carwow.
The campaign is focused on family cars with no more than two previous owners.
Carwow said it is particularly seeking vehicles aged five years or less with fewer than 40,000 miles.
The adverts use break-up phrases including “It’s not you, it’s me” under the campaign title “The Fling”.
Campaign aims to improve dealer stock supply
Ben Carter, global chief customer, marketing and media officer at Carwow, said the campaign was intended to connect dealers with more consumers looking to change their cars.
He said: “There are over nine million car changes every year in the UK, and we want to match more of our dealer partners with high-intent consumers.
“Our research shows 68% of sellers experience emotional distress during the selling process.
“By reaching them earlier and offering compelling reasons to sell, including no seller fees, we can help them move on to their next car.
“This will give dealers rapid access to a better mix of retail-ready vehicles that are in high demand.”
The service station activity forms part of a wider campaign covering consumer and motor trade channels.
Additional advertising will run across Southern and South Western railway services, LeShuttle, social media and motor trade publications.