Where Could Your Auction Find Another $825,000?

Put the assumptions on the desk first

Where does your auction spend money after a vehicle arrives—and where could better information change that bill? Start with two familiar lines: the cost of repeat mechanical handling and the losses on arbitration-eligible vehicles. Put your own volumes and costs beside the scenario below, then ask which operating decision deserves a closer look.

The model uses 50,000 arrivals per year and two separate levers: mechanical handling touches and arbitration losses within a defined eligible population. Keeping them separate makes the conversation useful for both operations and finance. The assumption table shows the starting point, while the formula makes it easy to substitute your auction’s numbers.

Earlier diagnostic evidence can support a different routing decision or a more focused review. For the GM, the next step is to connect that workflow with a cost the operation can measure. Choose a representative pilot, record the baseline and give finance enough detail to evaluate the result rather than just the headline.

Lever one: the cost of repeat handling

Assume mechanical handling volume is 25,000 touches before a workflow change and 10,000 afterward. At an assumed $10 per touch, those amounts are $250,000 and $100,000. The modeled annual handling difference is $150,000.

Define a handling touch in terms your team can record consistently: retrieving a vehicle for mechanical review, returning it to parking or moving it again because the first handoff lacked information. Agree whether the assumed $10 reflects avoidable cash cost or allocated labor. That distinction helps finance separate money retained from capacity made available.

For a pilot, record why a car moves and what information each move adds. Include the new scanning and review effort. If the changed process removes one trip but adds another elsewhere, the model must capture both rather than crediting only the convenient side of the ledger.

Lever two: losses on eligible vehicles

Now assume 10,000 certified/PSI vehicles are arbitration-eligible each year—20% of the 50,000 arrivals in this scenario. Model a rate of 4% before and 1% after. On that eligible denominator, the implied claim counts are 400 and 100.

At an assumed average loss of $2,250, annual modeled losses are $900,000 before and $225,000 after. The difference is $675,000. The denominator stays 10,000 eligible vehicles throughout; applying those rates to all 50,000 arrivals would produce the wrong comparison.

The average loss should come from finance’s actual loss definition and records. Agree whether it includes transport, repair, settlement or other costs, then assign each expense to one line of the model. This gives the GM a cleaner comparison and makes it easier to explain which part of the workflow affected the eventual cost.

From gross opportunity to net outcome

Add the two modeled differences: $150,000 plus $675,000 equals $825,000 annual gross opportunity. The word gross is essential. The total is before CarDr fees and incremental deployment or operating costs.

Net equals gross minus actual scan, report and service fees minus incremental deployment and operating costs. Use the fees relevant to your scoped products and workflow rather than inserting a fixed current package price. Hardware, training, integration and additional review effort may affect your actual net calculation.

Keep retained margin, throughput and avoided losses in separate columns. Recovered inspector capacity may help the team handle a peak or review difficult vehicles more carefully; cash savings appear when spending actually changes. A clear cost ledger lets finance recognize each benefit once and keeps the operating case grounded in the work being measured.

Sensitivity is where the conversation gets useful

One percentage point lower claim rate on 10,000 eligible vehicles at $2,250 per claim represents $225,000 modeled gross loss difference: 10,000 × 0.01 × $2,250. That is a sensitivity calculation, not a prediction that a pilot will deliver the change.

Handling: 5,000 / 10,000 / 15,000 fewer touches at $10 = $50,000 / $100,000 / $150,000.

Likewise, each 1,000 fewer handling touches at the assumed $10 represents $10,000 in modeled handling cost. Test smaller changes, different eligible volumes and different loss values. A worthwhile net result should not depend on treating the most optimistic scenario as the only possible outcome.

The existing auction calculator lets your team explore its own inputs. Its defaults need not match this article’s scenario. Enter your actual arrivals, eligible population, rates and losses, then review handling assumptions separately. Reject an eligible population larger than the total arrivals and keep comparable definitions across periods.

Let finance establish the baseline

Before deployment, document measured claim counts, eligible volumes, losses and handling costs. Agree a follow-up window and track the full operating effort. Separate changes in inventory or policy from changes in the diagnostic workflow where possible.

After the pilot, reconcile actual net costs and outcomes rather than announcing the headline number. The value of this model is its transparency: a GM can challenge every input, finance can reproduce every calculation and the team can see which operating decision is worth testing next.