Car brokers in Australia

Car brokers specialise in helping car buyers source and buy cars. They typically offer services such as finding a particular used car model to fit a budget, getting the lowest price on a new car, or negotiating with a used car seller on behalf of a client who has already located the car.

History

There have been car brokers operating in Australia almost as long as there have been car dealers. Car dealers recognised that some individuals stood out in their circle of friends or community as experts on car buying. The dealers started offering them a spotters fee each time they brought a customer to the dealership. If the customer bought the car, the broker, or spotter, was paid. After some time, a business model evolved in which businesses set up and called themselves motor brokers.

Motor brokers were typically started by car sales people who wanted a change of lifestyle. They were usually one-person operations that operated as de facto car dealers. They were licensed as car dealers and focused on achieving the best bottom line deal for the customer.

As the popularity of the Internet increased, the first pure online car brokers appeared around 2003. These car brokers are characterised by the lack of a dealer's licence and by dealing only in new cars. This minimises the labour component of the business and allows a high level of automation. Despite car brokers having existed for decades, general public awareness of them in Australia remains relatively limited.

Buying new cars

Car brokers work with their own established network of new car dealerships. When a client requires a new car, the car broker contacts one or more dealers in their network to determine which one will provide the required car at the lowest price. Delivery and location parameters may also be considered. Some car brokers offer to deliver the car to the client's home or place of work.

Buying used cars

Some car brokers can help source used cars as well as new ones. In many of these cases the car broker buys the car and then sells it to the client. Used car brokers are generally licensed. The reasons for holding a dealer's licence include the following.

• The car may be bought at an auction where private sellers cannot bid.
• The car may be sourced from a private seller, but the buyer must purchase from a licensed dealer because of financing requirements.
• Clients often prefer buying from a licensed dealer because statutory warranties apply in most cases.

Many clients buy used cars through brokers without first seeing the car.

Other services

Other services provided by car brokers can include the following.

• Test drives. Using a car broker to arrange test drives removes the situation of having to attend a dealership and be subjected to a sales pitch while trying to evaluate a car.
• Car finance. A finance broker is often aligned with the car broker to source discounted finance. Pre-approved finance may also be arranged. Interest rates vary widely, and arranging finance independently can be cheaper.
• Extended warranties.
• Paint protection, rust protection, window tinting and other third party options and accessories.
• Car insurance.

Regulations

Many car brokers disclose their referral fee (also called dealer fee) on their websites. These referral fees are usually minimal amounts also known as "spotter fees" and as dealers are not having to pay for extra advertising or staff costs they welcome the extra volume orders from their regular brokers.

Alternatives

As the popularity of the Internet has increased, car brokers have become less common. Online classified and broker-style systems are now more visible, and online web applications have replaced much of the traditional broker role. Broker fees have in many cases become listing fees, with some sites also charging a spotter fee once a deal is completed.