ADT Automotive Inc., one of the nation's top wholesale auto auction chains, has entered the retail market with a used-vehicle certification program and a well-known stop sign logo.
Industry officials say ADT Certified, which was launched April 13 at ADT's Arena Auto Auction in Bolingbrook, Ill., near Chicago, is the first such certification program from an auction company that features a retail warranty.
It also marks the first time ADT, of Nashville, Tenn., has used the blue stop sign logo of its sister company, ADT Security Services Inc. ADT and ADT Security Services are subsidiaries of Tyco International Ltd.
'We think we can get a lot of traction out of (the logo),' said Bob McDevitt, ADT senior vice president of sales and operations.
By supplying ready-for-retail certified vehicles to dealers, ADT says it can attract more bidders to its auctions and consequently boost wholesale prices for its own customers, the vehicle consignors.
HELP FROM D/C
ADT is getting some help from DaimlerChrysler in introducing ADT Certified to Midwest dealers. During the April 13 sale at Arena, DaimlerChrysler kicked off the day by selling 82 off-lease vehicles with ADT Certified stickers prominently displayed in the passenger-side windows.
ADT Certified vehicles carry a 90-day/3,000-mile warranty from JM&A Group of Deerfield Beach, Fla. The warranty begins the date of the retail sale and covers engine, transmission, drive axle, brakes, steering and electrical components. The certification also provides 24-hour roadside assistance for one year, travel breakdown protection and rental car coverage.
Each vehicle comes with a warranty booklet and a five-minute videotape explaining what ADT Certified is.
The DaimlerChrysler sale was open to all dealers, as will be subsequent certified sales by DaimlerChrysler at Arena through July.
At the April 13 sale, dealers bought the vehicles in less than an hour. Twenty franchised DaimlerChrysler dealers bought the majority, 52 vehicles overall. But the real story was the 10 independent used-car dealers who bought 20 vehicles typically only available at DaimlerChrysler's closed auction sales.
The National Independent Automobile Dealers Association, based in Arlington, Texas, sent out 5,300 faxes to its members to inform them about the sale, according to R.B. Grisham, executive vice president of the association.
'Any time the manufacturers open their doors like this, we're going to get the word out,' Grisham said.
Franchised dealers, on the other hand, are never eager to share vehicles with independent dealers or dealers from other franchises.
Dave Fritz, owner Jeep Eagle of DuPage, in Wheaton, Ill., bought 13 ADT Certified vehicles at the DaimlerChrysler sale. But Fritz would rather see DaimlerChrysler sell vehicles under the Chrysler Certified brand, not ADT Certified. Plus, he would like to see those vehicles sold at closed auction sales, which only DaimlerChrysler dealers can attend.
Franchised dealers have little to worry about. Although DaimlerChrysler is the first ADT Certified customer, the auction company has a different target in mind.
'Our target audience has always been the banks and leasing companies,' said McDevitt.
Automakers such as DaimlerChrysler already have nationally known brand names to use on their certified programs if they so choose. However, vehicle consignors such as finance, leasing and fleet companies, which have no auto brand, will benefit from dealer recognition of the ADT auction name and consumer recognition of the ADT Security logo.
ADT so far has recruited Bank One Corp. and hopes to get consignors Wells Fargo & Co., World Omni Financial Corp. and GE Capital Services on board soon.
ADT began certifying used vehicles at Arena for General Motors in 1997 using the same 110-point inspection it now uses for ADT Certified and Bank One Certified.
ADT runs the inspection process at special certified centers at auctions near Chicago, Atlanta, Nashville, Minneapolis, Dallas and Newark, N.J. ADT said it will add certified centers at auctions near San Diego; Tampa, Fla.; Kansas City, Mo.; Detroit; and San Francisco.
Consignors, including dealer consignors, pay $125 to send each vehicle through the certified center where problems are diagnosed and then repaired elsewhere at the auction. ADT estimates that the consignors pay an average reconditioning cost of $400 per vehicle to bring them up to the certified standard.
Just before the April 13 sale, ADT CEO Tony Moorby cited figures from the National Automobile Dealers Association and CNW Marketing/Research showing consumers are willing to pay $500 to $1,200 more for a certified used vehicle.
ADT expects to benefit too. ADT will make money from the reconditioning and hopes to increase its overall market share by attracting more dealers and more vehicles to its auctions.
Said Moorby: 'It's a recipe of a little bit of everything.'