Going, Going, Gone Online

Try it. You'll like it. That could be the advice given by wholesale auction companies, encouraging dealers to participate in the online end of the auction scene.

Plenty of retailers are doing so already, using computers to buy and sell vehicles rather than sending employees to “physical” auctions. At least 21% of Manheim's business is now conducted online, and growing, says Joe George, group vice president of the auction company's mobile-solutions units.

Used-car buyers can do three things online, he says:

Certainly, some dealers stick to the traditional auctions. “But that's the exception, not the rule,” George says.

He speculates the holdouts “haven't had the opportunity to have it presented to them in a way that” makes the process sufficiently clear.

To help win them over, Manheim offers seminars and workshops at auction locations, showing prospective participants “here's how you do it, here's the buttons to push,” George says. “Once they try it, the adoption rate is good.”

Like other auction groups, including ADESA, SmartAuction and Openlane, Manheim offers simulcasting of live auctions.

On the computer screen, the prospective bidder can watch and hear the action in real-time, as it's taking place in the lanes. When a desired vehicle comes along, the viewer can bid “as if you're in that particular lane,” George explains.

Manheim offers an alternative bidding experience with Online Vehicle Exchange (OVE.com). Roughly like eBay, it is a time-bound auction. Vehicles are posted online, and potential buyers must make their bids before a specified deadline.

Pre-sale versions of run lists that describe each vehicle expected at a given auction are available a week before the event and updated daily. Anytime during that period, dealer representatives can create a workbook for themselves or simply take notes on what vehicles they are interested in.

What makes online auctions possible is detailed information about each vehicle listed.

“We highly encourage condition reports,” George says. Participants rely on the grading system because that and other information takes the place of a prospective bidder seeing, touching and inspecting a vehicle in person.

Multiple photos are a “must,” and explanations of known defects are invaluable. The greater the amount of information available for a given car, the more likely it will attract an acceptable online bid.

Participants generally have the same recourse for a vehicle that deviates from the information supplied, but most people accept the grading system. “For the vast majority, it's a consistent system,” George says.

One potential obstacle that can make newcomers uneasy is simple geography. Many of the actual auctions may be “in locations you haven't dealt with before,” George says.

In addition to basic unfamiliarity with a new facility, there's the question of transport. Manheim addresses that issue by providing “transportation bids.” A guaranteed quote is available online, in advance.

Not only are more dealers gravitating toward online used-car transactions, but many are doing it using smart phones rather than desktop computers back at the office.

“We're actively pursuing our mobile strategy,” George says. Manheim estimates 77% of online buyers already possess mobile devices.

Bidders can create and carry a mobile workbook with them, listing information on all the vehicles that interest them at upcoming auctions. That information can then be consulted anytime, at the office or on the road.

Then, when it's time to start bidding, all the details needed are right in the bidder's hand. This fall, Manheim will start to use optical VIN scanning for greater efficiency.

No, online auctions aren't quite the same as being there. Many regular auction-goers like the noise, excitement and camaraderie of a live, in-person experience.

But others like the convenience, extended reach and other benefits of buying and selling online.

“Dealers are creatures of habit,” says Tom Kontos, executive vice president-customer strategies and analytics for ADESA, speaking at the Automotive Economic Forecast and Financial Forum.

“Many of them still want to kick the tires, smell the fumes,” he says. “But with online tools, a bidder can assess the action in lanes without being there. Think of it as your virtual inventory.”