For Sale by….?
By Phil Villegas
We’ve discussed in the past that one of the greatest benefits of working at a dealership is having the ability to buy a car that would be considered below market price. However, should selling a car through the dealership also be a perk? We are not talking about traditional traded-in vehicles as part of a normal sale but rather the consignment or pre-trading (a car that is traded in and sold before the new vehicle is acquired) of employee vehicles.
While nowhere as common as employee purchases, we occasionally come across transactions where dealership employees will sell their personal vehicle through the store. When we have come across these transactions, it’s very rare that these transactions have been carried out with the transparency and level of documentation we would expect with an employee or third-party transaction.
For starters, we typically see personnel from the sales department consigning their vehicles. We have yet to come across a transaction where a parts counterman, technician or accounting clerk has had their consigned vehicle show up as one of our internal audit exceptions. And therein lies the core of the issue. Many dealerships do not have an official vehicle consignment policy and it’s seldom, if ever, documented in the employee manual. So, in most cases, consigning of a vehicle is truly an undocumented and unknown process. However, since sales people are on the front line and may have become aware of a past customer’s consigned or pre-traded vehicle, they can take the liberty to feel included in this potential employee benefit.
This is not to state that we believe the potential consignment of an employee vehicle is wrong, only that not having a documented employee policy on the matter is. Like many undocumented policies that employees can benefit from, these are often subject to abuse when left to interpretation. As in the case of a few sales managers that would have their personal cars detailed and parked on the front line of the Pre-Owned vehicle lost. When these vehicles would eventually sell, the Sales Manager would have most of the profitability upside that would either get cashed out through a direct purchase or rolled into a trade. No consignment agreement was in place, where this agreement would have established an estimated selling price and terms, not simply allowing a Sales Manager to have the full use of dealership resources to systematically sell personal vehicles for personal gains.
Simply, if Consignment or pre-trade vehicles are to be allowed, be sure the policy is documented and available to all employees, not just to those who can stand to benefit the most at the expense of the dealership.