Localized Payments Put Developing World’s Auto Dealers in the Driver’s Seat

Sometimes, the buyer who will pay the most for a used car is in another country. In the U.S., Canada and European Union, environmental regulations and policies that prioritize electric vehicles over conventional ones reduced the market for older vehicles.

In developing countries in West Africa, Latin America and Asia, on the other hand, with fewer auto factories and a lack of access to good public transportation, older gas-powered vehicles are in much higher demand.

“In many of these countries, a rising middle class is eager to own automobiles and willing to pay top dollar to purchase even significantly older models,” Luciano Butera , executive vice president and chief operating officer at TRADE X , told PYMNTS.

Facilitating Cross-Border Transactions

To illustrate the high demand, Butera said that between 2015 and 2020, about 23 million light-duty vehicles were exported to 208 countries and territories from the four main exporters: the EU, Japan, South Korea and the U.S.

TRADE X, a B2B cross-border automotive trading platform, brings together buyers and sellers of used cars and facilitates those transactions.

On April 12, the company announced a strategic alliance that allows Wholesale Express , a Canadian auction platform, to link its feed with TRADE X’s proprietary, artificial intelligence (AI)-powered “Brain” platform to analyze suitable inventory to broadcast to global auto markets. TRADE X plans to forge other alliances in the future.

Read more: Auto Trading Platform Trade X Launches Auction Alliance Program

Taking Advantage of Arbitrage Opportunities

Cross-border auto sales have been accelerated by the current shortages of new cars and subsequent high prices of used cars, which Butera said makes it a viable way to increase revenue on a per-car basis over a broader set of used cars.

“This allows sellers to take advantage of inherent arbitrage opportunities in vehicle pricing and currency, as well as benefit from foreign demand for older vehicles while at the same time providing buyers greater access to inventory their markets are currently deprived of,” Butera said.

Despite the demand, there have historically been several barriers to entry in international automotive trading, including poor transparency and confusion around logistics, homologation, vehicle condition, currency conversion and arbitrage.

“In recent years, dealers who have managed to trade internationally have done so in a largely fragmented and non-compliant way, relying on personal contacts and messaging apps,” Butera said.

This ad hoc approach has paved the way for mistrust and fewer protections for buyers and sellers, which in turn has limited trade — and has not always placed the industry in a positive light.

Accepting Local Currency — and Local Payment Preferences

To solve these challenges, TRADE X offers a seamless end-to-end process for sourcing and distribution.

For one thing, the TRADE X “Brain” ensures that vehicles are being broadcast only to the specific trade corridors where they meet compliancy requirements and offer a significant arbitrage opportunity. The company’s ecosystem also handles logistics, homologation, compliance requirements and payments.

“TRADE X pays sellers in their local currency and accepts buyer payments in their local currency,” Butera said. “Additionally, TRADE X users can use all traditional forms of payment typical to their in-market practices when they purchase on the platform.”

The TRADE X ecosystem handles everything from luxury vehicles to vehicles that are more than 10 years old. Every market has its own sorts of vehicles that are in highest demand, Butera said.

“TRADE X opens a new world of possibilities for buyers and sellers,” Butera said. “Instead of limiting automotive trading to local markets, TRADE X connects buyers and sellers all around the world, ensuring that sellers are getting the highest possible global bid and buyers have access to inventory that would otherwise be unavailable to them.”

See also: Wholesale Used-Vehicle Prices Fell in March After Factoring Seasonal Adjustment