The events of the past few weeks were pivotal for the future of auto auctions, a brick-and-mortar industry struggling to come to grips with the Internet Age.
First, a new alliance of auctions met in New Orleans April 2 and took the final steps toward forming an online services company. Auto Auction Services Corp. will design systems it hopes will make its member auctions' computer systems compatible and help manufacturers and other big consignors manage and sell huge used-car fleets. The company wants to become a kind of electronic supermarket, offering all auto auctions a selection of high-tech products and services.
But the next day in Long Beach, Calif., ADT Automotive and ADESA Corp., two of the five original board members, withdrew and formed their own alliance. ADT and ADESA are the nation's second- and third-largest auction companies respectively.
The pullout splits the auto auction industry into two technological camps. The ADT-ADESA group represents 54 auctions. The new company - industry giant Manheim Auctions and two groups of independently owned auctions, ServNet and Independent Auto Auction Services Corp. - represents more than 100 auctions.
Each group is trying to make it easier for customers to sell and manage fleets of used cars in cyberspace, while preserving the auctions' investments in pavement and buildings.
Now the Auto Auction Services Corp. board is now left with three members: Manheim and the two independent groups.
Last week, the new corporation named Don Meadows, 45, director of vehicle remarketing for Donlen Corp., a Northbrook, Ill., vehicle leasing and fleet management firm, as vice president of operations.
The corporation also named Nichols Research Corp. of Huntsville, Ala., to develop software and a Web site, aascend.com, taking the best elements from systems at participating auctions.
Each subscriber to the corporation will pay a $2,500 fee if they sign up before June 30. The fee then goes up to $5,000, said Larry Brasher, president of Auto Auction Services Corp. and owner of three West Coast auctions.
Among the big beneficiaries of the alliance are the independent auctions, which cannot afford to spend as much as the chains can on technology. The new alliance allows them to benefit from research already done by Manheim and the larger independents.
FINE-TUNING THE LION
ADT and ADESA will work to develop a computer system containing many elements of ADT Lion, the program ADT has spent about $5 million to develop.
The two companies will get more than just technology. ADT gains access to the services of ADESA's sister company, Automotive Finance Corp., which offers wholesale floorplanning assistance to dealers. ADESA and Automotive Finance are both owned by Minnesota Power Inc. of Duluth, Minn., and are part of its Automotive Services Division. ADESA and ADT also plan to cooperate in using their huge truck fleets.
The ADT-ADESA alliance has given rise to talk that the move is an engagement, and that a marriage will be announced soon. Spokesmen for Minnesota Power and Tyco International Ltd., which owns ADT, said there is no truth to rumors they would buy or sell their auctions.
NO BRIDGES ARE BURNING
The two auction camps were diplomatic about the split, leaving open the possibility of later cooperation. Said Tony Moorby, ADT president: 'I don't want anybody to think this is the creation of some standoffish relationship. Far from it, I think this is a healthy thing.'
Though they were clearly disappointed the attempt at unifying the industry had come within a hair's breadth of succeeding, Auto Auction Services Corp. founders tried to put a good face on the ADESA-ADT withdrawal.
'If there are 265 members of the National Auto Auction Association, there are probably 100 different systems out there,' said Ray Nichols, secretary of the new corporation and chairman of BSC America Inc., a Hunt Valley, Md., group of five auctions. 'If we wind up with just two, that's not as good as one, but it sure is better than over 100.'
Now the real work begins - getting skeptical big customers, including the manufacturers and finance companies, to buy into the new systems.