DaimlerChrysler's captive finance company is testing a program to let dealers purchase off-lease vehicles over the Internet before the vehicles are sent to auction.
The 45-day pilot program debuted Feb. 9 in the Boston area.
DaimlerChrysler is one of a growing number of companies turning to the Internet to dispose of vehicles once destined for traditional wholesale auto auctions. General Motors, American Suzuki Motor Corp. and Hyundai Motor America started similar programs for off-lease and/or retired rental vehicles in 2000.
Kathy Blake, manager of lease portfolio strategy at DaimlerChrysler Services, would not say how many vehicles are being offered online but said dealers who participated purchased 66 percent of the vehicles up for sale on the first day.
The program is available to the 209 dealers in the Boston zone who floorplan their vehicles with DaimlerChrysler Financial. Dealers access the vehicles using the financial service's Electronic Lease Vehicle Inventory System. There is no charge.
Blake said dealers who shop for used vehicles online can save time and money associated with traveling to a physical auction as well as auction fees.
'It is not our goal to eliminate sending vehicles to (physical) auctions. It is to look for alternative channels to reduce the days in the process and support residuals,' she said.
Blake said it takes an average of 30 days for an off-lease vehicle to reach a physical auction. But this program makes the vehicles available to dealers within five to six days after they have been turned in.
If the pilot is successful, the company plans to roll it out to all dealers, probably starting in the Northeast, Blake said.
'Things could go quickly; potentially, we could have four or five other marshalling centers this year,' she added.
Blake said the financial service will not offer any vehicle that has more than $300 to $500 worth of repairs and will buy back the vehicle if the dealer is not satisfied. And the company will not take all of the best off-lease vehicles for the program and send what's left to physical auctions.
'If we sent poor quality vehicles to the auction, that would affect auction prices,' she said. 'We don't want to do that.'