Auction Broadcasting Co. has purchased three U.S. auction sites. The nation's third-largest vehicle auction company operates 10 sites.
The Indianapolis company plans to acquire another site by year end and build or acquire six more sites by 2006. It won't disclose the locations it seeks.
"After that, we'll play it by ear," says the company's founder, Mike Hockett.
Hockett, 62, also founded what now is ADESA Corp., the No. 2 auction company. Auction Broadcasting won't grow as large as ADESA, which has 52 auction sites in the United States and Canada, Hockett says.
But he expects the company to become twice its current size.
"When you have to do all that you have to do for factories, you have to have critical mass as it relates to your corporate manpower, your corporate capabilities and corporate" Internet technology, Hockett says.
Hockett founded Auction Broadcasting in 2000 with three partners: Bob Rauschenberg, Trent Knox and Carl Miskotten. Rauschenberg, 60, says the company's growth has been limited by difficulties acquiring appropriate auction sites.
"We'd find property and couldn't get the zoning done," he says.
This month, the company added auction sites in Murfreesboro, Tenn., and Fort Pierce, Fla. It acquired a site in Cartersville, Ga., in August.
The number of factory-controlled off-lease vehicles that are remarketed at wholesale auctions is declining. Many captive finance companies and other lenders cut back on leasing in the past few years, reducing the number of leased vehicles returning to the market.
Manheim, the nation's largest auction company, estimates that by 2006, off-lease volume will be about half of the industry's 2002 peak of 3.45 million vehicles.
Most automakers offer off-lease vehicles to dealerships online. Many of those vehicles never go to a traditional auction site.
Auction Broadcasting and its competitors are doing more business with dealers who must sell excess inventory. Auction companies also are investing more time and money in their electronic sales channels.
The growing use of technology will reduce the size of auction sites, Rauschenberg says. As a result, he adds, Auction Broadcasting is acquiring smaller sites with a track record of handing dealer consignment business.
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