Manheim reaches 75th year in turbulent 2020

Last March, Manheim was set to host a large event at its Pennsylvania namesake site to celebrate its 75th anniversary.

There was to be an overview of the auction's history, a special sale with more than 600 vehicles, and company leaders would be on hand to discuss the vital role the used-car market plays in the auto industry. Lunch would be provided.

The event never happened. Manheim had to make history, rather than just celebrate it, when the company switched its 70-plus auctions in the U.S. to all-digital sales within a matter of days as the COVID-19 pandemic raged.

"We knew that it was going to be an evolution," Manheim President Grace Huang said of the rise of digital sales. "We never meant for our lanes to go 100 percent digital block, especially in the course of a weekend," she added, referring to when auctions are without cars or bidders in lanes. "So we saw what was possible."

Digital sales have been something the company had been looking to perfect anyway, but the abrupt shift to them overnight was massive.

Manheim leaders who have overseen the auction company's growth and evolution since a top Cox Automotive executive considered parting with the business can now celebrate the 75th anniversary with an added degree of accomplishment, and maybe even a deep breath — if only temporarily.

Manheim's roots date to 1945, when five men from Manheim, Pa., auctioned a handful of cars at a single-lane location. By 1959, it had become the world's largest auto auction, a title it still holds for wholesale vehicles.

Cox Enterprises bought Manheim Pennsylvania in 1968. By 1989, it had grown Manheim to include 25 auctions in the U.S.

Cox Automotive CEO Sandy Schwartz, a 35-year veteran of the parent company, said that in his first 20 years with the firm he'd see the Manheim people from afar and wonder what they did.

"And we used to joke all the time that we'd go to these big corporate meetings, and they'd be the ones in the plaid sport coats," Schwartz told Automotive News, adding "and we realized they were the ones that were making money and doing really cool stuff in the marketplace."

Eventually, Cox Enterprises Chairman James Kennedy asked Schwartz to oversee Manheim. "He said to me, 'I want you to tell me if this is a business we should keep, we should operate for years to come,' " Schwartz recalled. Kennedy said he didn't want what had happened to newspapers to happen to the company's wholesale auto auction business. It was a comparison that resonated with Schwartz, himself a former newspaperman.

A couple of months later, Schwartz said he returned with his verdict: "I said, 'The wholesale marketplace is an amazing business. But we just need to invest. We need to invest in technology, we need to invest in digital, we need to invest in people,' " Schwartz said. "And [Kennedy] pretty much quite frankly gave me a blank check to do that."

Schwartz estimates that over the past seven to eight years alone, more than a half-billion dollars have been invested in upgrading and reengineering Manheim, as well as launching products and services.

Much of that investment happened after Janet Barnard took the helm in 2014.

While she was there, $300 million to $400 million was invested in the operating platform that runs the auction. "What it did more than anything was it took very disparate standalone businesses and brought them together under one platform," Barnard said.

Perhaps not ironically, while Manheim celebrates 75 years for its single location in Pennsylvania, it continues to become location-agnostic.

"Under the old, very decentralized standalone world, clients had to literally go location by location to do business," Barnard said.

After the transition, clients could make one phone call or one site visit and handle all transactions in one place, through one team, she said.

Now, as chief people officer, Barnard is focused on taking the traditional work force and largely moving it mobile — if need be, they can work out of their homes or vehicles — or providing mobile services such as RideKleen. "We have to think how we create experiences for … people if they're not tethered to a location," she said.

Huang, president since 2017, has guided the company through one of the most turbulent periods in its history, when it had to abruptly switch to all-digital auctions in late March. "And the only reason we were able to do it was because of all the investments we had made in the technology in the prior years," Huang said.

From 2018 to 2019, Manheim invested more than $100 million in its digital marketplace. Part of the investment included enhancing its online inventory channels — overhauling search functions to be more intuitive and personalized, for example — as well as the launch of the Manheim Express mobile app in July 2018 and upgrading its imaging processes.

Manheim had launched its website for dealers in 1997. In 2002, it held its first sales via simulcast.

Its first all-digital auction sale — in which cars were displayed on screens rather than running down the lane — was that same year, at Manheim Tucson in Arizona.

Manheim ended 2019 with about half of its sales being made to digital buyers. After going all-digital in March of this year, the company eventually began allowing buyers to return to lanes in limited amounts in June. And this month, it began to once again run vehicles down lanes at select locations.

Company officials are quick to note that safety at auctions — a topic often tied to the fact that 2-ton machines are rolling through indoor buildings — remains paramount.

But at the end of the day, or after 75 years, Manheim will also cater to its clients' needs, company officials said.

The abrupt switch to digital was a difficult one for some clients, Huang said. Some dealers prefer to see cars and trucks, especially older models, running down the lanes live and in-person. Looking ahead, Manheim aims to meet those in the business of buying and selling wholesale vehicles wherever and however they prefer to do business.

"We have spent years putting plans and technology in place, so that we could switch on a dime," Huang said of the digital shift in March. "And now our journey is about bringing all of our clients along, and making sure everyone goes on that same journey."