NEW YORK -- Vehicle volume at auctions isn't what it used to be.
That's why dealers, long prized by auction companies and online remarketing channels as buyers, now are also being pursued as sellers.
"We've weathered the storm well, but it's one car at a time," said Jim Hallett, CEO of KAR Auctions Inc., parent company of ADESA Inc. "Every single car makes a difference.
"It's volume, volume, volume. How do we make up for lost volume?" Hallett said during an interview at the National Auto Auction Association conference here last month.
"We're very focused on the dealer consignment segment of the business," even if it's just five to a dozen vehicles for sale from a given dealer, Hallett said. Dealer consignment business refers to vehicles sold at auction on behalf of individual dealers.
Fewer vehicles are coming off lease, rental companies are keeping their vehicles longer, and dealers are opting to keep trade-ins on their lots. As a result, auction volume at NAAA-member auctions, online and in physical lanes, is expected to dip again this year to 8.6 million from 8.9 million in 2009 and 9.5 million in 2008, predicted Ira Silver, NAAA's chief economist.
Meanwhile, Internet-only auction companies are siphoning off more business from traditional auction companies, as dealers opt to buy and sell without the time or cost of travel. OpenLane Inc. said its second-quarter sales grew 14 percent from the second quarter of 2009. In 2009, the online auction company sold almost 400,000 vehicles for its clients in the United States and Canada.
And while overall auction sales fell, SmartAuction, owned by Ally Financial, said its volume has held steady at almost 260,000 vehicles in the first six months of 2010 or about half of what it sold in all of 2009.