Remarketers will have their work cut out for them with waves of off-lease vehicles hitting the used-car market. But it’s glad tidings for some auto-industry people.

Because of high lease penetration rates of late, 3.1 million vehicles (most of them two and three years old) came off lease last year, hundreds of thousands more than that are due this year and the number is expected to exceed 4 million in 2020.

“Selfishly, that’s really good news for us,” says Janet Barnard, head of the Manheim auto-auction chain. But that depends on things going smoothly.

“If all we become are parking lots as these off-lease vehicles ramp up, that’s not good,” she says. “If things don’t move, that’s not successful.”

To used-car wholesalers and retailers alike, pre-owned vehicles are like bananas, not fine wine; they don’t age well.

One of Manheim’s biggest challenges today “is finding space to put all those vehicles,” says Dale Pollak who heads vAuto, a Cox Automotive brand along with Manheim and a provider of dealership inventory-management systems.

But no one is surprised by the off-lease onslaught. It is predicable, given how lease terms are structured. “We knew it was coming,” Barnard says.

So she and her colleagues have focused on various solutions. One of them: If dealers can’t readily go to the auction, the auction will go to them.

That’s why Manheim plans to expand its mobile division, which sends “auction-in-a-box” facilities to select cities.

The operation is designed to bring remarketing services to underserved areas and reduce dealers’ long-distance transportation costs. The company projects a 20% increase in mobile auction sales this year and plans to visit several smaller markets without an existing Manheim auction nearby.

“We are extending our reach and truly driving success for our independent and franchise clients through mobile auction sales and new smaller Manheim standing locations,” says Grace Huang, Manheim’s senior vice president-inventory services.

Manheim last year built such smaller standing auction facilities in Cleveland, Norfolk, VA; and Witchita, KS. A new one opened this year in Little Rock, AK. More are planned in Des Moines, IA, and Lubbock, TX.

Manheim added 23 new mobile sale sites in 2016, bringing the total to 45 nationwide. The company currently conducts more than 60 sales each month across 20 states and says it expects the format to grow exponentially in 2017.

The pop-up operational equipment includes a trailer for the auctioneer and other workers, electronic screens showing the bidding and portable technology that allows for simulcasting.

Locations have included a baseball field, a winery and local dealerships.

Partly for demonstration purposes, Manheim conducted a mobile auction on a blocked-off street in New Orleans during the 2017 National Automobile Dealers Assn. annual convention there.

Such auctions “fill the gap on the local side between physical and online auctions,” Barnard says. “We can scale up and down as needed.”

While the mobile operations have been around for a while, “the time has never been better for clients to capitalize on their flexibility, efficiencies and cost savings,” Huang says.

The expanding program now generates the highest sales rate among all Manheim channels. The sales rate last year was nearly 70%. Twenty percent of mobile buyers use the service exclusively to purchase wholesale vehicles for their retail lots.

“The enthusiastic response we get from dealers, who are thrilled Manheim is coming to town, validates our focus on mobile auctions,” Huang says.

sfinlay@wardsauto.com