While there are a few dealers in the area who participate in auctions, most don't do it on a regular basis, says Johnson Tractor, says President Leo Johnson, who's run 20-some auctions over the years. Johnson holds an auction each year, in which they'll move 125 pieces that will yield sales of $1.5-3 million.
Johnson writes a sale bill, places the ads and hires an auctioneer for a day's work. Here's his advice for running an effective dealer-sponsored auction, which this year will be held on August 3.
OK to Lose Money on Individual Pieces: "We've had times where we lost $10,000 on our first combine, but came out ahead after the fourth. Had we had a reserve price it would've killed the sale on the other three units."
Sell It All: "The equipment is on a 1-way trip out of here," says Leo. "We don't want anything back; there's no reserve pricing. Our philosophy is to close our eyes and send it down the road."
Atract the Jockeys: "Because the jockeys know we aren't competing with them for the units, we'll have some drive 300 miles to attend our auctions."
4-Hour Limits: "Organize things so well that you can maximize the time of everyone involved. Farmers will drive distances to an auction if they can get home that same night."
Sequence Matters: "Present your highest-priced pieces when you'll have the biggest crowd; don't just save them for the end of the day. Present all your combines one after another, highest to lowest estimated value."
Make It a Retail Event: "Treat all attendees like they're customers; not auction-goers. Everyone has a chance to buy something."
Promote Heavily, Gain Intel: "Since most trades qualify for a waiver or low-rate financing through CNH, all of our ads state that we finance and encourage people to call me or Eric in advance to pre-qualify. Not only will it make it easier for them to buy on auction day, but it starts a dialog. We can find out what they're interested in, how much credit they're looking for and to manage expectations. When a farmer shares his needs and financing picture, you'll find some very high probability customers. "
Learn: "Every time we hold an auction, we learn something new, not only about how to improve the auction the next time, but the reality of the market. When customers think their piece is being unfairly valued, we can point to our auction history."