Manheim Auctions Inc. will spend about $200 million next year to replace and update 28 auto auctions formerly owned by ADT Automotive Inc.
Manheim, of Atlanta, wants to make sure the auctions can handle the rising volume of off-lease vehicles in the next few years.
The increase in off-lease vehicle volume is the result of leasing growth. Leases grew from 1.85 million in 1993 to 4.1 million in 1999, says CNW Marketing/Research of Bandon, Ore.
According to ADT's '2000 Used Car Market Report,' 1.8 million to 1.9 million off-lease vehicles will be remarketed annually at auctions through 2003. That compares with 588,000 off-lease vehicles remarketed through auctions in 1993. Dennis Berry, the Manheim CEO who oversaw this year's acquisition of the ADT auctions, said the $200 million investment is double what the company spent in each of the last five years to expand, update and move Manheim auctions to meet industry demands.
Manheim closed the deal on the $1 billion acquisition of ADT in October. As part of that transaction, Manheim sold eight ADT auctions and one Manheim auction to competitor ADESA Corp. of Indianapolis to satisfy federal anti-trust laws. Manheim, the largest auction company, has 116 auctions worldwide, including 86 in North America.
NEW AUCTIONS COMING
Three former ADT auctions - Detroit Auto Auction, Nashville Auto Auction and Baltimore-Washington Auto Exchange Inc. - are being replaced by new complexes.
Ground was broken on the 200-acre, 12-lane Detroit auction in September. It will have a 71,000-square-foot office; a 60,000-square-foot detailing and reconditioning shop; a 58,000-square-foot paint and body shop; and an 11,400-square-foot training/meeting facility. It is scheduled to open in July 2001.
The company plans to open the 260-acre complex in Nashville during the third quarter of 2001, and the 170-acre Baltimore-Washington auction is scheduled to open in mid-2001.
Berry said the company's other goals are to introduce Internet technology tools to help independent dealers operate faster and more profitably.
Berry takes over as CEO of Cox Enterprises Inc. on Jan. 1. Dean Eisner, vice president of business development at Cox, succeeds Berry as Manheim CEO.
Berry and Eisner insist that since its ADT acquisition is complete, the company's strategy has not changed: to make Manheim a better company, not just a bigger one.
'There will be no significant changes,' Berry said. 'We have the important work of blending ADT and Manheim into a better company.'
Added Eisner: 'It will be more evolutionary.'
The evolution already is well under way.
For instance, Manheim offers the former ADT's Remarketing Solutions and Service Solutions services to its customers. Remarketing Solutions handles the entire remarketing of vehicles for clients, including lease termination, transportation and title transfers. Service Solutions operates sites at which consumers drop off end-of-lease vehicles.
Manheim, which plans to enter the heavy-duty truck auction, is using the former ADT Fort Wayne Vehicle Auction in Fort Wayne, Ind., as its springboard. The Fort Wayne auction is one of the few that specializes in heavy-duty trucks.