Sonic Automotive Inc. and Hendrick Automotive Group have signed or extended agreements that make Manheim, the nation's largest vehicle auction company, those groups' exclusive provider of remarketing services.
The deals also include technology to help centralize the groups' processes for wholesaling vehicles by eliminating the need to send a representative to a physical auction.
Sonic recently renewed its exclusive partnership with Manheim, which consolidates Sonic's remarketing business to between 15 and 20 Manheim locations. Sonic, the nation's third-largest dealership group, will sell used vehicles at wholesale only through Manheim.
The agreement doesn't limit where Sonic will buy used vehicles, though Manheim executives indicated they hope that the familiarity bred by the exclusivity pacts will help the auction company capture more of Sonic's buying business.
That business will grow. In the fourth quarter, Sonic plans to open a stand-alone used-vehicle store in the Denver market, as the first in what Sonic sees as a nationwide network of used-only stores.
In addition, on Jan. 1, the auction company entered a similar deal with Hendrick, said Susie Heins, Manheim vice president of dealer sales. Hendrick has begun moving vehicles it had waiting for sale at other auctions to Manheim locations, she said.
Heins said the agreement with Hendrick, the nation's sixth-largest dealership group, is for three years. She would not disclose the length of the renewed agreement with Sonic but said it is for "several" years and that the relationship is "going on the third year."
Manheim is also providing technology that enables Sonic to represent and monitor its vehicles remotely from Sonic's centralized Retail Trade Center at the dealership group's headquarters in Charlotte, N.C., as those vehicles are sold at Manheim physical auctions.
Dealership groups typically sent a representative to be present at auctions. Not now.
Manheim's "remote seller" feature enables Sonic representatives, via computer, to see who is bidding on Sonic's vehicles and how much the bids are. It also includes a chat feature so Sonic representatives can change prices, comment on vehicles and answer questions from bidders.
Heins said Sonic and Manheim began using the feature in some auctions in midsummer last year. The national rollout was completed Dec. 1. Since then, Sonic's conversion rate -- the portion of vehicles offered at auction that are sold -- has improved about 15 percentage points "to the high 90s," she said.
Hendrick, as part of its exclusive agreement with Manheim, will begin using the remote-seller feature in the May-June time frame, she said.