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Auction group's incoming president sees '13 volume up
Paul Lips, incoming president of the National Auto Auction Association, figures that higher new-car sales in the past couple of years will lead to higher auction industry sales starting in 2013.
The U.S. auto auction industry is poised next year for its first sales uptick since 2007, says the incoming president of the National Auto Auction Association.
Paul Lips bases his optimism on simple math: The higher new-car sales of the past couple of years will generate more trade-ins and more off-lease and repossessed vehicles.
Lips, executive vice president of operations and finance at ADESA Auctions Inc., takes over as association president at the group's annual conference Oct. 2-5 in Orlando.
The outgoing president, Charlotte Pyle, will become chairman. Pyle, 47, owns Capital City Auto Auction in St. Albans, W.Va., and Mountain State Auto Auction in Shinnston, W.Va.
"We knew this day was coming, that it would be a down year for the auction industry in terms of volume," says Lips, 44, who predicts that auction sales this year will mirror last year's volume of 7.7 million units. Between 2001 and 2008, auction sales hovered around 9.5 million to 10 million units, association data show. Starting in 2008, the industry's unit sales have dropped each year.
"So hopefully we'll see a little bit of a bounce back in the years to come, when the off-lease cycles return back in our favor and with new-car sales having picked up in the last couple of years and staying steady," Lips says.
As the association's president-elect, Lips has worked closely with Pyle over the past year and plans to continue many of the projects begun under her watch.
For instance, this year the association established its first political action committee. That committee assisted the group's legislative committee in working to successfully block a proposed amendment to a major highway funding bill in the U.S. Senate. The amendment would have required each auction company to photograph every vehicle that rolls through its lanes and keep the photos in a database.
Though auction companies and the companies for which they sell vehicles photograph vehicles sold online, the companies do not photograph every vehicle sold at auction. The mandate would have placed a heavy administrative burden on auctions, the association argued.
Though the auction industry's lower vehicle volume is mainly the result of fewer new vehicles having been sold and leased during the recession, other market dynamics also are contributing.
For instance, Avis Budget Group has partnered with AutoNation Inc.'s online arm to sell retired rental vehicles directly to consumers. AutoNation Direct also could buy the customers' trade-ins.
Still, Lips believes that some dealers who bypassed auto auctions over the past two years will be back as new-car sales and availability pick up. He says many franchised dealers kept their trade-ins for retail sale because new-car sales were down and because the earthquake in Japan in March 2011 hampered production last year.
What auctions do best
"When you look for efficiency and ease of use, large populations of buyers with a lot of liquidity," the auctions do that best, he says.
The industry also will have the volume of repossessed vehicles rebound in the coming years as new-car sales increase, Lips predicts, citing an increase in subprime financing for new-car buyers.
Lips joined ADESA in 1996 in its finance department and quickly moved through the ranks. In 2004, he was appointed vice president of investor relations and planning and in 2005, senior vice president of operations. He was named to his current position in 2007.
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