Mercer put the report together last summer and fall, conducting anonymous interviews, auction site visits and separate research. He presented the report, which looks five to 10 years into the future of the industry but excludes salvage auctions, at the NAAA convention in November. It is available on the association's website: naaa.com. He discussed his findings with Automotive News this month.
The report includes a positive forecast for the overall auction industry, citing annual new-vehicle sales estimates of 17 million though 2025, a growing U.S. population and IHS' estimate of 296 million vehicles in operation by 2023, among other trends. "Divorce is great for the auction industry," Mercer added in comments at the NAAA convention in Palm Springs, Calif.
That data shows there certainly will be vehicles that need to be remarketed. How they will be remarketed depends on other growing trends, one being vehicle quality.
Increasing vehicle quality makes it easier to streamline a digital process, but it also means vehicle life will increase. As vehicle life increases, the need for physical auctions will remain, Mercer says.
"As car quality gets better and better, it should be easier to digitally auction a car because a 2-year old Honda Civic with 10,000 miles on it is a very definable concept. There's very little risk in it," Mercer said. "But this also means that cars last longer. So we have more and more cars that are 10 or 12 years old out there, and the older they get, the more you need to inspect the car.
"That's one of the pushes and pulls of forces in the world that make it hard to come up definitively about where this equilibrium lies," he added.