Car Importers Tap Power of Platforms to Tame Price Volatility

In a way, used cars are like stocks, options and bonds from the point of view of Ryan Davidson, founder and CEO of Trade X, in that volatility is an opportunity for profit.

“Inflation and volatility [are] actually what drives our business,” Davidson said. “The more of that, the more opportunities there are to have mispriced vehicles, and so we thrive on it, and the more that exists, the more opportunities there are for transactions to convert.”

Cars are also like people in that they are either left-handed or right-handed. More on that later.

Automating Auto Imports

The cross-border auto trading platform helps dealers and fleet owners import used vehicles from other countries.

Auto dealers, fleet owners, rental companies, mobility solution providers and importers can access the Toronto-based company’s product to search for specific makes or models with the platform’s “instant request” service, review specific search results to evaluate prices and “make vehicle purchases in a safe, transparent and secure manner,” the company said.

The company offers dealers a streamlined business process, cutting out parts of user responsibility like “logistics, quality checks, sourcing of registered importers, real-time price analysis, homologation, re-titling and customs clearance,” all of which Trade X handles itself.

Launching in the Dominican Republic

Trade X recently opened its B2B trading platform to the Dominican Republic.

According to Davidson, the Dominican Republic is a huge buyer of left-hand-drive imported used vehicles. Being on an island, dealers look to import from geographies that are closer, the U.S. being a primary source. Participation in the Trade X exchange gives them the ability to figure out where the car should come from based on a holistic view of the economics, not just geography or traditional relationships.

Read also: Cross-Border B2B Car Dealer Trade X Expands to Dominican Republic

“So giving them access to vehicles from Mexico, Canada, U.S.A., Europe, the Middle East, China and South Korea gives them a lot of options based on price specification and transit time,” Davidson said.

Critically for buyers and sellers alike, payments in the sector are almost entirely automated, Davidson said. And though automated clearinghouse and wire transfers are still common, the company has partnered with Flutterwave, a FinTech that allows it to “push and pull” payments between markets.

“We’re looking now at partnering and integrating with several other payment providers to allow us to have that similar flexibility,” he said.

Riding the Market

According to Davidson, the market for used cars has retained much of its pandemic-era strength, but there are complexities.

“There have been some ups and downs. There were unprecedented spikes followed by unprecedented declines. It’s been a combination of short supply and increased demand with sporadic solutions with respect to the parts supply chain which create more volatile pricing fluctuations emblematic of the past couple of years,” he said.

The used market is also much more dynamic than the new vehicle market.

Automakers typically have a difficult time gauging what the currency market will do ahead of their production cycles, so prices are set six months to a year in advance. The used market involves sophisticated arbitrage modeling that dealers typically wouldn’t have access to without a platform like the one Trade X offers.

“You have currency fluctuations, and inflation as a double-edged sword. For example, with the euro currently less valuable than the U.S. dollar, European inventory is very attractive to dealers in other markets.”