By D. Hulse
The final segment of the ATK looks at the other side of the auction process- what happens when a car you purchased either fails PSI, or when is run through your shop, has significant undisclosed issues.
Looking back at Parts 1 and 2, AAR provided tips on how to keep a seller’s car sold; largely that involved knowing the NAAA or auction rules and time frames for arbitration cases. The same is true for the buyer side- the rules are the same, but how a dealer leverages those rules is the opposite of a seller’s motivation.
We will look at 3 scenarios for our buyer in Part 3-
1. The purchased vehicle fails PSI
2. The purchased vehicle gets to the dealership and must be Arbitrated- void sale
3. The purchased vehicle gets to the dealership and must be Arbitrated- keep vehicle with adjustment
Seller A from Parts 1 and 2 finally got her arb issues handled, after much handwringing and wasted time. However, her brother, Buyer B, is a buyer for several franchise stores, and he had to get 10 cars bought at Big Box X the other day.
Buyer B puts all 10 of his purchased units in PSI, and he has one PSI fail- he checks his Big Box X dashboard on his phone, and sees he has an “arbitration in-progress” notification. Simply put, this is the easiest type of buyer arbitration issue- the vehicle failed a PSI, and largely, the buyer has little to do at this point. Referring back to the seller steps in Parts 1 and 2, here are the best practices for a failed PSI:
1. Call the auction immediately; if it is sale day, it’s likely the vehicle will not have an arbitrator assigned yet.
2. Take copious notes- again, the failed PSI is the easiest for a buyer to track- the auction does it all.
3. Here are some questions to think about- Do you want to keep the vehicle? The arb threshold for a single repair is $800 (always check the NAAA website for arbitration rule changes). Is the vehicle worth keeping with a price adjustment? Remember, if you accept an adjustment, you can’t arbitrate the vehicle again (save for a title or mileage issue).
4. Follow up with the auction. Just because a sale was voided or there was an adjustment provided, does not mean the auction will be prompt in refunds or payment. Make sure you get paid back or get reimbursed.
Buyer B, on sale day, orders transport for the rest of his 9 purchases. For the sake of this scenario, we will assume that the rest of the 9 ALL passed PSI, and have 14 days to file an arbitration. However, remember these auction rules:
1. In-lane purchases are bound by sale-day arb rules. The unit must be arbitrated on sale day, save for frame and mileage issues. Always check individual auction and NAAA policies.
2. Online (simulcast and OVE.com) type purchases are bound by 10 day arbitration rules (no PSI purchased), arb must be filed within 48 hours of transport receipt, BOL usually requested.
Buyer B receives within 2 days all of his purchases and gets them run through his service department. He is given repair orders on 2 vehicles that need his attention. Unit 1 has lower engine noise under load- it is pretty obvious that this vehicle needs to be arbitrated. Unit 2 is a little trickier- It has several smaller issues- AC is INOP (condenser is bad), and the infotainment is inoperable. Unit 2 is a unit that is pre-sold to a customer, for a hefty profit, and the vehicle is hard-to-find. Buyer B may want to keep his store’s retail deal together if he can get an adjustment on the price.
Let’s look at the best practices for both of these vehicles- Unit 1 needs to be voided, and Unit 2 Buyer B would like to keep with an adjustment.
1. Call/contact the auction immediately. Because these units are within the 14 day PSI timeframe, he needs to file an arbitration through his Big Box X dashboard. Other companies require you call the individual auction and file an arbitration via phone. If filed online, you will get an auto-response indicating the arb was successfully filed. Expect a follow up call or email from the arbitrator.
2. Get your facts together- prior to contact from the auction, get all pertinent invoices or repair orders together. In the case of Unit 1 with engine noise, that is pretty cut-and-dried. For our purposes, we will assume the vehicle has legit engine problems. Additionally, get any costs associated with the transport and miscellaneous items for reimbursement. Most auctions will only pay for transport to and from the auction, but there are exceptions. For Unit 2, seeking adjustment, bear in mind that as a rule, a buyer can only arbitrate for 1 item over $800 (check NAAA rules). In this case, the 2 repair orders total over $1600- determine your dealership’s willingness to negotiate. Submit all invoices to the arbitrator in a timely manner.
3. Concurrently with #2, the arbitrator may have you take the vehicle to the nearest Big Box X location, or in some instances, you will be assigned an on-site inspector to resolve the issue. In the event of taking the vehicle to the auction for inspection, the buyer has 5 days to get the vehicle to the auction. Remember to identify on the vehicle your dealer name, and the word ARBITRATION on the windshield for easy identification.
4. In the event of a successful arbitration filing, the arbitrator will either ask the buyer if you want to void the sale, or seek an adjustment. In the case of Unit 1 (lower engine noise), request the sale be voided. BE SURE THE TITLE DEPARTMENT SENDS THE TITLE BACK TO THE AUCTION. No title will slow tremendously the repayment, and in some cases, cancel the arbitration. In the case of Unit 2 (adjustment), submit the repair estimates to the arbitrator and determine what $$$ amount you can accept. If you cannot reach a fair amount, ask for the sale to be voided. Most buyers do not want to void a sale- but be reasonable, also.
5. Seek another opinion/request the vehicle taken to another mechanic shop. In the unlikely event of the auction not able to replicate the issue(s), request another opinion, OR, have the vehicle taken to another shop for diagnosis. It is critical here you document all communications at this point. If the auction makes a mistake in diagnosis, you may have remedies later on in the event of a poor inspection by the auction.
6. Escalate the case- As in Parts 1 and 2, seeking the AGM or GM involvement is an option. Once again, have all documentation available.
7. Live to fight another day- Sometimes, you will not win an arb case. In the event your dealership has Deal Shield, or other buyback protection, you have either 21 or 30 days to utilize it from the date of purchase. Bear in mind, you will lose transport and expenses, but sometimes, that is better than throwing good money after bad.
8. Register with Auto Auction Review- AAR is dedicated to dealers’ success at all levels; our mission is to create transparency within the auction environment, and to ensure fair practices are upheld. AAR provides a platform for dealers to file complaints, review auctions, and keep stakeholders informed. Register with AAR.com today; it’s free and always will be.
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Review, Rate, and Resolve!
Dane Hulse
President/Founder
AAR