Findlay Auto Group's auction centralizes wholesaling

Chad Leavitt said he became "painfully aware" a few years back of the discrepancies — and thus inefficiencies — among Findlay Automotive Group's many stores when it came to vehicle wholesaling.

Leavitt, Findlay's chief accounting officer, would go to an auction in the group's home base of Las Vegas and see Findlay used-car managers peppered throughout multiple lanes and selling at different times — all with wide-ranging results.

"Your sales effectiveness is greatly depleted if you're running in that manner," Leavitt said.

Leavitt began studying the nearly two dozen brands the group represents at its 33 dealerships. He figured some of those brands should do better on the wholesale market than others and subsequently be treated accordingly. He also wanted to leverage Findlay's brand name as it is one of the largest franchised retailers in Nevada. And he wanted to help his stores get rid of aging product.

So in 2017, Findlay created its own auction.

"I was trying to create a venue where we could sell to each other in a systemized manner and for the right money and really be able to swap inventory with our stores," Leavitt said.

The group, which retailed 27,134 new and 19,834 used vehicles in 2020, tapped Manheim to power the auction, which runs on its simulcast platform, but Findlay determined the flow and size and generally designed what the auction would look like, Leavitt said. It is open to both Findlay's buyers, as well as others.

The auction is in Henderson, Nev., next to a CarMax-run auction held on Tuesday mornings.

"And we run our auction right after," Leavitt said, adding that attendees of the CarMax sale can literally walk across a parking lot and through a gate to Findlay's auction. "Our attendance is very high because they were already out in the neighborhood to buy, so that's been magical."

The auction includes a mobile trailer with an auctioneer inside, and large screens. Findlay built a shade structure with bleachers and provides cooling fans in warmer months. Cars are driven through a loop with someone in place to assist the auctioneer. About 200 vehicles go through the auction per week; it had a 73 percent sales rate last year.

Vehicles to be auctioned come from 28 Findlay stores in Nevada, Arizona and Utah.

The auction has helped Findlay's used-car managers "not be afraid of a car," Leavitt said.

"So when we're taking a car in on trade, we're getting that instant feedback of what our sale's bringing," he said.

It helps Findlay stores be "bolder" with how they transact on trades.

"If it's not a retail unit, it's got to go to wholesale," he said. And "we're not afraid of them."

The auction originally had a preview day for Findlay stores only, but "our buying behavior was very low," Leavitt said, pointing to the group's then-decentralized nature.

"We're buying from each other now at a higher rate than we ever have," he said. "It just took some time for that culture to creep in."

If a Findlay vehicle is going to be wholesaled, it must first go through the group's mobile auction. If it doesn't sell, it can be wholesaled elsewhere.

The topsy-turvy used-vehicle market of late — prices rose to record levels this spring and summer before some recent cooling off — has not hurt the group's auction, Leavitt said.

"The market has been crazy," he said. "And we've had a couple 100 percent sale days where we sold every single car for way over" Manheim's estimated wholesale value.

The auction has experienced a slight volume decrease, but not as much as one might expect, Leavitt said. With the industry's new-vehicle shortages, dealership groups are generally keeping more trade-ins to retail themselves to keep inventory levels up. Findlay typically doesn't retail vehicles with 120,000-plus miles or vehicles with recalls with no fix, he said. But trades that fit those categories are still being wholesaled.

It helps that Findlay's auction features franchised dealership trade-ins vs. repossessions or former rental cars.

"The magic and the gold in auctions is the new car trades," Leavitt said. "And for us to have them all in one place, representing so many different brands — it has created a total following. And I think that's why it has been such a successful sale."