Lanelogic operated 2 programs that looked solid when the used-vehicle market was strong but led to problems when the sales got soft.
Like a stock exchange
Lanelogic’s used-car brokerage worked a bit like a stock exchange.
• A dealership client tells lanelogic it wants to sell a used vehicle. Lanelogic appraises the vehicle and sets its price.
• Lanelogic identifies a dealership that needs that car. Lanelogic picks up the car from the seller and ships it to the buyer. After the buyer receives the vehicle, he pays lanelogic for it.
• Lanelogic hands over the money to the seller. The seller transfers the title to lanelogic, which gives it to the buyer. The buyer and seller both pay lanelogic a $200 fee.
• If the vehicle does not sell after 45 days, lanelogic buys it back for the price the dealership paid, minus a depreciation fee ranging up to $600.
Risk-free guarantee?
Another program allowed dealers to lock in the wholesale price of any used vehicle on their lot, no matter where they had obtained it.
• The dealership asks lanelogic to appraise a used car on its lot.
• The dealership pays lanelogic an average fee of $400.
• Lanelogic appraises the vehicle and offers to pay a specified price for it if the dealer can’t sell it within 45 days.
For the managers of used-car lots, it looked like an offer that you couldn't refuse.
