What is consignment?
The act of accepting a vehicle for sale on consignment indicates that whilst you as a dealer have not purchased the vehicle, you agree to offer it for sale on behalf of the vendor. The vendor may be a private individual, a business entity, or another motor dealer.
There is generally an agreed minimum sale price, together with an agreed commission which you as a dealer will retain from the sale proceeds. There may also be the agreement to charge an initial Listing Fee – a flat charge to cover your specified costs in bringing the vehicle to the market. You may agree to pay for certain repairs or other costs in bringing the vehicle to a saleable condition, and these costs may be borne by yourself as a dealer, or may be required to be reimbursed by the vendor either at the time the expense is incurred or out of the sale proceeds if any.
Most states require the motor dealer to run a completely separate Trust bank Account in order to accept and sell vehicles on consignment, and this will also include having the Trust Account audited in accordance with the requirements of your State’s Office of Fair Trading legislation in respect of motor dealers. The Trust Account is used to receipt and disburse funds received from customers in respect of the sale of vehicles on consignment, meaning that the money received is actually “on behalf” of the vendor, and as such must be carefully accounted for.
Note that in Victoria, motor dealers are not permitted to accept or sell vehicles on consignment.
Dealerlogic assumes the requirement of a Trust Account - if you do not have one or require one, please discuss your requirements with Dealer Solutions, as using the Consignment package without a Trust account will prove cumbersome.
The Lifecycle of a Consignment Vehicle