The Dual-Option Offer: A Game-Changing Strategy for Dealers to Acquire More Private Party Vehicles

For years, the Instant Cash Offer (ICO) has been the go-to method for traditional used car dealers to acquire inventory from private party sellers. It’s quick, transactional, predictable and supported by a long list of software providers. But in today’s competitive and margin-conscious market, dealers sticking to a single option, ICO-only private party vehicle acquisition strategy may be leaving money - and customers - on the table.

There’s a growing trend among dealerships facing tighter post-COVID vehicle sourcing challenges. Many dealers have adopted the Dual-Option Offer strategy, which pairs the traditional instant cash offer with a second, increasingly popular sourcing channel - professional retail consignment.

If you haven’t explored this vehicle sourcing channel and strategy yet, here’s why you should:

What Is A Dual-Option Offer?

Instead of offering sellers only one path - "Take our cash offer or walk" - dealers embracing the dual-option offer mindset and strategy provide two clear choices for private sellers to choose from based on their own unique situation - "Which option works best for you, Mr. Smith?"

Door #1  Instant Cash Offer (ICO): 

A fast and easy cash buyout, like traditional dealers.

Door #2 Consign-It Offer (CIO):

Retail the private party's car along side your owned-inventory, then earn a sale commission (typically 5-10% of sale price), plus other revenue streams (F&I, Fixed Ops, buyer trades, etc.) when it sells.

Why Add Consignment? The Benefits Are Clear

Win More Vehicles from Private Sellers

When you give sellers a choice, you appeal to a broader audience. Some want fast cash, while others are willing to wait for more money. With both options, you're more likely to keep the deal in-house - instead of losing it to an online peer-to-peer marketplace or another dealer.

Expand Inventory Without Tying Up Capital

Consignment vehicles boost your lot inventory without requiring an upfront cash outlay. That’s right: zero capital, zero floorplan cost, zero depreciation risk, and no reconditioning cost (seller pays you the dealer to perform get-ready repairs, maintenance and clean-up)

Retail-Level Gross on Every Consigned Unit

Similar to vehicles acquired through traditional trade-ins or wholesale acquisitions, consigned cars are also listed and sold at retail prices. That means comparable gross profit potential - and in many cases, higher customer satisfaction.

Capture More Leads, More Traffic

Dealers can generally price consigned cars more aggressively than traditionally sourced and purchased inventory because the private seller is using instant cash as the base-line value, so anything extra put in their pocket above that is a considered a win. The Good and Great deal list pricing associated with consigned cars equals more web traffic. More traffic leads to more buyers on your lot. 

Differentiate Yourself From the Competition

When every other dealership is making the same “we’ll buy your car” pitch, your Consign-It option strategy becomes your winning edge, your secret weapon. Offering a choice builds trust and gives sellers a reason to choose you over competitors. It also builds new customer relationships, loyalty, and customer retention.

Create a Steady Flow of Seller Referrals

Customers who sell their car for more through your consignment program become loyal advocates. They tell friends and family. This creates a powerful word-of-mouth channel that costs you nothing and can go viral in the marketplace.

“But Isn’t Consignment Complicated?” No.

Not at all. In fact, if you can sell a trade-in or an auction-acquired car, you can manage a consignment deal just as easy. 

Follow these four "Golden Rules" for integrating Consign-It cars into your overall sourcing strategy:

Golden Rule #1:  Maintain Uniform Vehicle Selection Criteria Regardless of Source

Perform your customary vehicle evaluation and appraisal process on every vehicle being considered for consignment, just like you do for trade-ins, ICOs, and auction-acquired vehicles. You decide which cars are accepted or rejected. If you like their car, present them with the Dual-Option Offer. If they choose Consign-It and like your terms (commission rate, process, etc), execute your consignment agreement and stock it into your inventory, "Just Like Any Other Car."

Golden Rule #2:  Be the Retail Expert. Set Upfront Realistic Market Expectations With The Seller

That means show the math side-by-side for both options (ICO vs Consign-It). Be transparent with valuation sources, both wholeale and retail. Most importantly, estimate the net amount or a short range of how much the seller stands to pocket (net) using the Consign-It option. Show them the costs - reconditioning, consignment fees, etc. Finally, let the seller know that "the market" will ultimately determine the final selling price. Along the way, the price will need to be adjusted down and buyer offers must be considered based on aging, leads, traffic, etc.

Golden Rule #3:  Adopt The "Triple-Win" Mindset and Pricing Strategy for Consign-It Vehicles

1. Sellers net more money than original instant cash offer or average trade-allowance.

2. Buyers get a good deal on a good car below full retail

3. Dealers earn good money from sale commissions, reconditioning revenue, F&I income, and create two happy customers and a faster turn rate

Golden Rule #4:  Process All Cars The Same - Get Ready, Sell, Post-Sale

"A car is a car is a car." That means, process all cars acquired on consignment just like any others (i.e., auction-acquired, trade-ins, instant cash aquired, lease turn-ins).  Get them ready, photograph them, list them, market them, test drive them, negotiate them, sell them, finance them, and complete post-sale duties.  There are some small nuances related to Accounting entries and Title processing but super easy to adjust internal processes and workflows.

A Smarter Way Forward

The used car business is evolving. Inventory is tighter, acquisition costs are up, and private party sellers are savvier than ever. Adopting a Dual-Option Offer strategy is more than just good business—it's future-proofing your dealership.

Start saying "We’ll Buy It or Consign It" to every seller you engage and watch how many more sellers say Yes to your offer. You will acquire their car and make good money either way.

For more information, and to get started with dealer training and support, and a steady flow of vehicles on consignment from Retail My Ride:

- Visit our dealer informational website at: SourceFreeCars.com

- Call us at:  833-795-2277 (CARS)

- Email us at: [email protected]