Two of North America's largest auto auction chains are expanding in Canada to handle a glut of off-lease vehicles and an increasing number of American buyers.
Adesa Corp. of Indianapolis expects its subsidiary, Adesa Canada Inc., to add at least four auctions during the next three years, including one in Toronto.
Its chief competitor in Canada, Manheim Auctions Inc. of Atlanta, has improved its auction in Oshawa, Ontario, and is expanding its auction in Toronto.
Keith Williams, a Manheim regional vice president who oversees 10 U.S. auctions in the Northeast and the company's two Canadian auctions, says Manheim's business in Canada is growing by leaps and bounds.
For example, from 1997 to 1998, sales at the Toronto auction increased by 40 percent. Williams expects 1999 to be another year of tremendous growth.
Brian Warner, president of Adesa Canada, anticipates business at the company's three auctions - in Ottawa, Ontario; Montreal; and Halifax, Nova Scotia - will increase 120 percent in 1999 and another 100 percent in 2000.
COMING OFF LEASE
One of the biggest reasons for the rapid rise in auction business is the increase in off-lease vehicles coming back on the market. DesRosiers Automotive Consultants Inc. of Toronto estimates 320,000 to 325,000 vehicles in Canada will come off lease in 1999, more than triple 1995.
Additionally, a growing number of U.S. dealers and wholesalers have been coming to Canadian auctions to take advantage of the favorable exchange rate.
Last year, Manheim spent about $300,000 Canadian to improve its four-lane Oshawa auction and handle the business increase. Currently it is spending millions of dollars in Toronto to add property, facilities and lanes, Williams said.
Manheim recently bought 40 more acres in Toronto, bringing the site up to 140 acres. It is adding reconditioning and mechanical shops and two auction lanes. Manheim has tentative plans to add two more lanes by year end, which would give the Toronto auction 14.
Williams said Oshawa and Toronto also are installing equipment to handle Manheim's computer services, including its Cyberlots online auctions and its AutoConnect used-vehicle Web site.
'Manheim is positioning itself to be No. 1 in Canada,' Williams said.
Adesa Canada has the same goal. According to Warner, the company spent about $5.5 million Canadian in 1998 to buy real estate and double the size of its reconditioning operation in Montreal. In 1999, it plans to spend about $3.5 million Canadian on improvements at Montreal, Halifax, and Ottawa.
Adesa Canada also will step into the Toronto market May 1 when it moves its headquarters there from Ottawa. The company also has bought property in Toronto for an auction that could open in 2000 or 2001.
Warner said the company prefers to acquire auctions instead of building them, but he added that there is room for another auction in Toronto, Canada's largest metropolitan market with more than 4 million people. Currently Manheim and Canadian Auction Group serve the Toronto market.
But before Adesa Canada opens shop in Toronto, it will build or buy auctions within the next 18 months in Vancouver, British Columbia and Calgary, Alberta, Warner said. Within three years, Adesa Canada also must be in Winnipeg, Manitoba, he said.
Adesa's strong position north of the bor-der has attracted its sister company, Indianapolis-based Professional Auto Remarketing Inc., to the Canadian market. Professional Auto Remarketing, which remarkets vehicles for fleet, lease and finance companies, recently leased property in Toronto and Buffalo, N.Y., so it can begin importing Canadian vehicles into the United States.
Professional Auto Remarketing is partnering with Superior Auto Sales, a registered importer in Hamburg, N.Y., said CEO Sue Buxton.
Although the import market could drop again, Buxton thinks demand will always exist for hot vehicles from Canada to supplement the U.S. market.