It sounds counter-intuitive, but our experience has shown us that “going direct” is something that really does not factor into catalytic converter Sellers getting the highest prices, and if it does have an impact, we think it is minimal.

I agree, this is a tough concept to wrap your head around, but let’s look at this through another example that all catalytic converter Sellers are familiar with, Insurance Companies that sell salvage vehicles.

If going “going direct” is the best way to get the highest value - why wouldn’t Insurance Companies just cut out the Auto Auctions and just deal directly with auto recyclers?

Why are Insurance Companies willing to pay fees to sell their cars through an auto auction when ANY auto recycler would gladly deal with them directly?

Insurance Companies have some issues, but they are not stupid. They have figured out that Creating Buyer Competition (through an auction process) is a better method for getting the highest value for their salvaged vehicles than by “going direct” to the auto recyclers.

This is a great analogy, just like Auto Recyclers don’t truly know the market value of their scrap catalytic converters, Insurance Companies don’t know the market value of their salvaged vehicles. But, to get around this lack of knowledge, Insurance companies have figured out that auctions, which Create Buyer Competition, get them the highest possible price.

I would also like to point out that Insurance Companies rarely, if ever, send vehicles, on “assay” to auto recyclers and then get paid based on how much the auto recycler actually makes off of the vehicle. (More on this later.)

I understand, on the surface, it does seem like “going direct” should be the better way to go... But, if we look at this transaction a little deeper, we will see there are numerous hidden factors that have a significant and positive impact on ‘unit buyers’ but have no impact with assay buyers.

Assay buyers’ transactions are simple. It makes no difference to them if the PGM market is up or down. Assay buyers take no risk in the transaction, rather, they take a percent of what they “claim” your converters are worth.

In contrast, Unit buyers will adjust their buy prices depending on any number of changes in the Supply & Demand factors.

Here are a few examples:

• If the unit buyer is starved for material – they will cut their margins down to the bone to buy your converters. Assay buyers won’t do this.
• If the unit buyer has a hedge position at above-market prices – they can pay prices that NO assay buyer can compete with because assay buyers pay the market rate.
• If the unit buyer wants to expand their operations into a new market – they often will operate at break-even, or at a loss in order to buy a customer base. Assay buyers rarely do this.
• If the unit buyer is pressured by a new competitor coming into his market – they can operate at break-even or at a loss to keep the competition out… Assay buyers don’t have to do this.

Not at all. We are NOT promoting assay selling or unit selling as better or worse. What we ARE promoting is that to be a successful Seller - over the long term – the Seller AND the selling process must be flexible in order to sell on a unit basis when it’s appropriate and to sell on an assay basis when it’s appropriate.

And by “appropriate” Scott means when it is in the Seller’s interest and results in the highest possible price. It is important to note that to help Sellers be flexible and take advantage of the market conditions that exist in their favor, they can sell the same LOT of converters both by assay and by Unit on ScrapCATapp’s online Auction Marketplace and see what buyers bid the highest amount.