Despite Frets, Auto Auctions Could Interconnect

SAN DIEGO – Some auto remarketers swoon at the idea of vehicle-auction firms uniting online to create big interconnected bid-a-thons. Others get prickly at the thought.

Avid support comes from consigners in the wholesale market who sell large numbers of used vehicles, many of them off-lease.

Auction houses are less gung-ho at the prospects of collaborating with competitors to stage joint Internet auctions on shared platforms or ones linked by modern technology.

Talk among backers, detractors and in-betweeners makes the issue a hot topic at this year’s National Remarketing Conference here.

Sellers are sold on the idea because they envision an increase in bidders, mainly dealers looking to restock their used-car lots.

Buyers may like the prospects of a wider selection of vehicles and a screen full of biddable click picks. But the amped-up auction action could drive up inventory- acquisition costs.

Auction firms worry the respective brands and reputations they’ve cultivated over the years suddenly could get lost in the crowd. They also warn that different business models and inherent competitiveness may clash with the concept of multi-listings and wide-open, cross-channel online auctions.

“It would require auctions working together as friendly competitors,” says Dan Heinrich, GM Financial’s vice president-asset remarketing. “Consigners feel the need for them to do that. It’s a question of putting our dancing shoes on.”

“Cross-bidding is what we’d like to see,” says Leslie Ruhe, senior relationship manager at US Bank Asset Remarketing. “When we started talking about this, everyone said, ‘Yeah, we can do it.’”

Now, worriers wonder if it should be done. “Some people in the auction community are looking at this in bewilderment,” a conference attendee says.

“Dealers will drive a lot of this,” says Dan Kennedy, manager-remarketing for General Motors. “The people who buy the cars will decide more than we as consigners will.”

Currently, three online auto auctions particpate in a limited joint effort. But the setup has shortcomings. For instance, if a bidder on one website meets a consigner’s pre-set minimum price, the other two websites are locked out. Potential technical glitches include inadvertently selling the same car to different bidders on different channels.

“We’re closer, but we’re not there yet,” John Manchin, Subaru of America’s national fleet remarketing manager, says of the technology to take it to the next level. “Let’s stop talking about it and start doing it.”

Voicing reservations is Tom Cornellier, Ford’s manager-auction operations and e-business. “We sell most of our cars to Ford and Lincoln dealers, and I have to be concerned for them. I’d hate for there to be unintended consequences.”

Robert Stahl, Ally’s executive vice president-remarketing, is struggling to grasp the possible ramifications of extramural auctions under one cyber roof.

“I’ve thought this through 100 times, and each time I come up with a different scenario,” he says. “If I am a dealer logged into one system and buying at another, who do I set it up with? Who handles the paperwork? Do we connect to every platform or operate a consolidated platform?”

The challenge is to standardize the process, Heinrich says. That would require auction firms, particularly major players such as ADESA and Manheim, “sitting down at the table and agreeing on something, even though they’re competitors.”

That’s a tough order, Cornellier says. “And I wouldn’t underestimate the technical issues.”

Adds Pierre Pons, CEO of ServiNet, an online auction firm:  “You don’t want to go to market with something that doesn’t work.”

Multi-listings are the easy part, says Jay Cadigan, Manheim’s vice president-industry relations. “But what about settlements, arbitrations, fees and deliveries? Not all auctions operate the same.” 

Bob McConkey, president of DAA Northwest auction, adds: “We’ve cooperated on standards, but not on selling cars. On the surface it sounds do-able, but the consignment community doesn’t realize how complex this is. We’re working on it, though.”

Creating a linked system incorporating all the processes of individual auctions houses is an awesome undertaking, Pons says. “I get what consigners want. But come to the party with more than just a wish list. Come with checkbooks, because this will cost a lot of money.” 

It’s always about money, says James McIver, CEO of American Auto Auction Group.

That includes the sheer competitiveness of business, he says. “Can I walk into Sam’s Club and use my Costco card? Do I want to build up other auctions at the expense of mine? Of course not. Cut us a little slack.” 

Subaru’s Manchin admits to motives for seeking an online auctionpalooza. “I want to sell cars on the most channels for as much money as possible and as quickly as possible.”

All parties must benefit or a joint venture of this nature won’t work, says Levi McCoy, LeasePlan USA’s director-remarketing. “Make sure everyone gets a piece of the pie. If someone is cut out, they’ll lose the enthusiasm.”

Online wholesale auto auctions now are standard ways to buy and sell. When they  first appeared about a decade ago, skeptics questioned whether dealers would bid on cars without seeing them for real in auction lanes.

Dealers more likely bid online if a vehicle is a 2- or 3-year-old model. About two-thirds of Subaru’s off-lease late-model units are sold at Internet auctions. “They’re nearly new vehicles,” Manchin says. “Dealers don’t feel they need to inspect them.”

On the other hand, dealers typically travel to brick-and-mortar auctions to see for themselves what older cars look like before placing bids.

“Ten years ago, there was a lot of hesitancy about Internet auctions,” Ally’s Stahl says. “Now, there isn’t.”

McCoy says: “What we went through with the idea of remote bidding back then sounds like what we’re going through with multi-platform discussions now.”

Some conference attendees say a physical auction is the place to be. “No one makes money on online auctions. You make it in the lanes,” McConkey says.

Real-live auctions aren’t going away, Cadigan says. “People once thought we’d be selling 75% of (auctioned) cars online. That hasn’t happened.”

McIver adds: “Nothing is more beautiful than seeing two bidders butting heads and an auctioneer getting everyone up.”

As for the prospects of creating one big online auction block, he says: “I want to proceed like porcupines making love. Very carefully.”

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