[This article was originally published in 2018 by Trucks, Parts, Service. It has been updated to include more timely information.]
Selling used trucks on a consignment basis can be a win-win for the truck dealer and the owner of the truck. The owner could get more for his vehicle through a consignment arrangement versus trade-in. The dealer gets practically free inventory — a truck on his sales lot that he didn’t have to obtain with a line of credit or buy outright.
But what is consignment? One example is an owner-operator brings his truck to a dealer and he and the dealer (consignor) discuss a selling price for the vehicle. The negotiation involves what the seller hopes to get and what the dealer, based on his experience, thinks the truck is worth. Other examples include fleets phasing out older trucks and OEM dealers looking to move trucks from other brands acquired through trades. Regardless of the scenario, the parties determine a value and discuss a set fee or percentage of the sale.
“You can hopefully make the truck bring the market price,” says Eddie Walker of Best Used Trucks in Rhome, Texas. “An individual will average 10 to 15 percent more for his piece of equipment by consigning it [compared with selling it wholesale],” he says.
Walker has about 65 trucks and trailers on his lot — half of his inventory is consignment trucks and the other half is inventory he’s purchased.
When a consignment customer drives into Best Used Trucks, Walker says he will assess the truck’s mechanical condition as well as what it will take to get it to “sparkle and shine.” A truck might require $1,500 in repairs and another $800 to recondition it to meet the high standards Walker has set for the trucks on his lot. If the owner agrees to those costs, Walker will scour all of his sources of past sales based on year, make and model, and present the owner with what he thinks the truck will sell for. Walker’s fee typically is 10 percent of the sale price, with a $2,000 minimum. “I want all the cards on the table [so the owner] understands what I feel the truck is going to bring,” he says.
If Walker gets an offer on a truck, he will call the owner to see if he wants to accept it. If the offer is below the asking price, the owner will still get a call about the offer, Walker says. If an offer lower than expected is accepted by the owner, the deal results in Walker getting less than his standard. “The way I look at it, it’s my responsibility to get you a cash offer,” he says, adding that given his intuition, experience and the homework he does in pricing a truck, this scenario rarely happens.