In 1999, Thomason Auto Group in Portland, Ore. wholesaled nearly 10,000 used vehicles - often one-by-one and deal-by-deal.
The receivables were high, and the losses were substantial. President Scott Thomason knew there must be a better way to run this part of the business.
So he converted an old service building into an indoor auction lane and became a partner with Brasher's Cascade Auto Auction in Portland, Ore. Last May, Thomason began an independent auto auction, which is held each Friday.
The auction started with 42 wholesale buyers. Selling 120 to 180 vehicles a week, the auction now draws 70 to 90 independent car dealers and wholesalers from as far away as Arizona, Montana, Southern California and Utah. It is not open to the public.
The auction helped the dealership group reduce its outstanding receivables from $1.5 million to less than $30,000.
Thomason said the auction is the perfect way to dispose of trade-ins the dealership group does not want.
'We're known as the volume leader, and the response has been remarkable,' said the 46-year-old dealer.
The 10-franchise Thomason group is part of Asbury Auto Group.
'The volume of trade-ins and the work it takes to wholesale them was insurmountable,' Thomason said. 'Now, once a week, we're able to put the cars we don't want through the auction.'
Thomason has two Ford and two Hyundai franchises and Toyota, Nissan, Honda, Subaru, Mazda and Suzuki franchises. Thomason also has four used-car stores stocked from trade-ins and vehicles bought at auction.
Thomason said he got the idea of the in-dealership auction after hearing about it from David McDavid of the David McDavid Auto Group, which also is part of Asbury.
'I flew down to Texas and looked at what they were doing; I knew I wanted to try it,' Thomason said.
Thomason said trade-in vehicles that do not meet the group's retail standards are sent to auction, as are vehicles that have been reconditioned but did not sell within 60 days.
Poncho Redfern, Thomason's fixed operations director, said reconditioned vehicles that go to the auction are sold with a seven-day limited warranty; all others are sold as-is.
The average vehicle sale price is just under $3,000, and the auction is an absolute sale - meaning every vehicle is sold, regardless of price.
To make the auction work, Thomason struck an agreement with Brasher's. The wholesale auction company administers the sale and provides key people, such as the auctioneer, ring men and drivers. Thomason has a full-time auction team, including a host, auction manager, lot supervisor, reconditioning and detail teams, and internal administration personnel.
Brasher's promotes the Thomason sale to its buyers and at its Thursday auction.
Thomason said only his used-car inventory is sold during his Friday sale, which lasts about two hours.
Thomason declined to say how many new and used vehicles he sells.
Asbury, of Berwyn, Pa., is the second-largest dealership group in the United States, according to the 1999 Automotive News Top 100 Dealership Group tally. Privately held Asbury retailed 102,000 new and 66,000 used vehicles in 1999.
Thomason, a second-generation dealer, earned money for college by working in his father's Ford store in Oregon City, Ore. He purchased the store in 1983 and built the business into a 10-store group.
He sold controlling interest in his dealership group to consolidator Asbury in 1998. Under the agreement, Thomason continues to operate the dealership group.