Auction companies think outside the block
Online and off, strategies aim to help dealership groups
Auction companies are crafting ways for large dealership groups to buy and sell used vehicles more efficiently online and off.
"Technology makes a lot of this much easier to do," says Tim Zierden, ADESA senior vice president of dealer sales and services. "We're trying to facilitate some of the business models our dealer partners are asking for."
Manheim and ADESA, independent auction companies and SmartAuction, an online remarketing channel run by Ally Financial Inc., are hammering out a landmark initiative to list vehicles for sale simultaneously on competitors' online remarketing platforms.
Large-volume sellers, such as captive finance companies and large dealership groups, favor the change because they want every vehicle to attract as many bids -- and as much money -- as possible.
But that cooperative effort hasn't stopped Manheim and ADESA from racing to create and customize their own initiatives for dealership groups. "For Manheim, it's about creating innovative solutions that embed us in their day-to-day decision-making and their strategic planning," says Susie Heins, Manheim vice president of dealer sales.
AutoNation Inc. of Fort Lauderdale, Fla., the nation's largest dealership group ranked by new-vehicle retail sales, will add Manheim's Dealer Trade Network to its used-vehicle arsenal this year, Heins says.
With Dealer Trade Network, dealership groups use Manheim's online auction platform to conduct private internal auctions for their groups' stores to buy and sell vehicles from one another. The tool has an analytical feature that helps target the right vehicles to the right markets within those groups and price vehicles to sell in the least amount of time and for the most money.
"Inventory sourcing is always top of mind for these guys," Heins says.
Hendrick Automotive Group in Charlotte, N.C., is among the big groups using Manheim's trade network. It also is the first group for which Manheim built a physical auction lane exclusively for the group's use in selling its used vehicles. The Hendrick auction is inside a building on property shared by one of its stores. It gets inventory from trade-ins generated by Hendrick's 11 dealerships around Charleston, S.C. Manheim runs the pilot program, which started in March.
The weekly sale draws about 40 to 50 dealers to the physical site and another 30 to 40 online bidders from as far away as Dubai, United Arab Emirates and Ukraine, says Chris Little, Hendrick vice president of variable operations.
The group sells about 97 percent of the 100 to 140 vehicles it offers for sale each week, Little says. "We're not bringing them here to appraise them," he says. "We're bringing them here to sell them."
Manheim also will set up a three-lane auction for the group later this year in Charlotte. Hendrick is No. 6 on the Automotive News list of the top dealership groups based in the United States ranked by new-vehicle retail sales.
In May, ADESA unveiled a remarketing Web site for Prestige Management Services of Paramus, N.J. The dealership group offers its used vehicles on the site to a hand-picked network of wholesale buyers, primarily independent used-vehicle dealers, Zierden says.
Vehicles are offered to the network's buyers for one day. Vehicles that don't sell are offered to all buyers with access to adesa.com for two days. After that, any unsold vehicles are run through the lane at an ADESA physical auction. ADESA handles all paperwork and vehicle inspections.
Chris Turner, vice president at Prestige, says the 7,500 to 10,000 used vehicles that the eight-dealership group typically sells annually at wholesale are now being offered for sale on prestigedealerdirect.com.
Prestige ranks No. 45 on the Automotive News dealership group list.
"The goal for us is to get the cars sold further across the country and in markets outside of the Northeast," Turner says.
"In our first couple of sales," he says, the group saw bidders representing "as many as 34 states bidding on our cars. There are a lot of off-lease cars in the Northeast and a real shortage of cars in other parts of the country."
You can reach Arlena Sawyers at email@example.com.