National Auto Auction Association eyes future
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October 26, 2020 12:00 AM

Auction association eyes road ahead

David Muller
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    KAR Global halted its ADESA auctions in March and quickly shifted to all-digital auctions. In-lane bidders are now allowed at most auction sites, but vehicles are not running through lanes.

    In a year unlike any in memory, National Auto Auction Association leaders are lauding vehicle wholesalers for coming together and finding strength in their partnerships — even among competitors.

    "We weren't trying to save an industry; what we were trying to do was keep the industry informed," CEO Frank Hackett said, adding that wholesale industry chiefs held weekly calls during the early stages of the pandemic. "The fact is that you have an industry that all competes against each other, yet we were all talking — everybody had a role."

    The auction trade association canceled its annual convention set for this month, but that did not keep the group from its tradition of passing the baton from the outgoing to the incoming president. Julie Picard, Manheim's vice president of industry partnerships, was installed as president in a virtual ceremony Oct. 8.

    Picard and her predecessor, Laura Taylor, general manager of Charleston Auto Auction in South Carolina, outlined priorities to Automotive News for the auction industry as it wraps up one of the most unusual years in its history.

    Picard: Used-car safety a priority

    Picard cited safety as a top focal point, especially with regard to recalls. The National Auto Auction Association, the National Independent Auto Dealers Association and the National Automobile Dealers Association are working together to ensure that the purchase of used cars is as safe as possible for the end consumer, she said.

    "And this will take working together as an industry towards a user-friendly and more efficient way to actually obtain the recall data," Picard said.

    She also noted advanced safety technologies as an area of interest for wholesalers. Some vehicle consignors have been in discussions with Pivet, Cox Automotive's Atlanta-based mobility hub, to work with the auction industry to make sure radars and sensors on vehicles with advanced safety technology work properly.

    Electric vehicles, while at relatively small numbers overall, also is an area of interest for the association, Picard said, as more EVs make their way to wholesale auctions. Manheim also has been working to better understand the life cycle of EVs, she noted.

    Incentives on new and used vehicles also is an area association leaders will watch, Picard said.

    Virtual handoff

    Normally, Picard would have taken the reins from Taylor at an in-person ceremony during the association's annual convention, which was set for Oct. 6-8 in Dallas. But the group in June called off the gathering because of the pandemic.

    Taylor: Industry leaders united

    In the early stages of the crisis, industry players joined together for the collective benefit of the wholesale market, Taylor said.

    "We may have not had a convention this year," she said. "But it was much bigger than that, with the leaders being together and discussing what we need to do."

    The year began with high expectations for the used-vehicle market. January and February activity pointed toward a market that was especially hot as it headed into what was supposed to be its prime, tax-refund season. But by the end of March, the wholesale market, like many other aspects of the U.S. economy, appeared to be in free fall.

    For the week ended April 12, just 19,000 vehicles were sold at wholesale auctions, a figure that was down 83 percent from the pre-pandemic weekly average, according to J.D. Power. Retail used-vehicle sales at franchised dealerships during the first 12 days of April tumbled 63 percent vs. the same period in 2019. Wholesale values then climbed to record levels throughout the summer.

    In March, Manheim and fellow auction giant KAR Global's ADESA made the decision to switch to all-digital auctions nearly overnight. ADESA even decided to halt auctions altogether for about two weeks as state and local governments issued stay-at-home orders and as hospitals in some parts of the country were overwhelmed with patients fighting COVID-19, the disease caused by the coronavirus.

    As the virus continues to spread in the U.S., remnants of the turbulent spring remain. Manheim and ADESA have allowed in-lane bidders to return to most auction sites, but vehicles still are not physically running through lanes.

    Quick to adapt

    That abrupt shift to digital operations was like a bandage being torn off, especially for some more traditional independent auctions that had been making a slower shift to the digital world.

    "It was really amazing how those [NAAA] members were able to get ramped up so quickly and adapt to a digital way of life," Picard said.

    Some independent auctions have returned to running vehicles through lanes. Still, Taylor said, the digital shift has only helped sales.

    "We found that in-lane bidding is also what kept the flow going of price points, of the shortage of inventory," she said, adding that she had never seen such a high rate of sales in the lanes as what occurred this summer when the wholesale market rebounded.

    Those high conversion rates came as dealers have scrounged for new and used vehicles for their inventories, and vehicle prices have remained high since the lows of March and April.

    Government stimulus money and late tax returns essentially extended the selling season for used vehicles through the summer.

    Said Picard: "It's really unlike anything the industry's ever seen."

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