Physical Auctions Hold Their Own

Not going anywhere soon are brick-and-mortar used-car auctions with fast-talking auctioneers, an assemblage of buyers and vehicles lined up for their turn in the bidding lanes.

“Plenty of cars will go through those lanes,” says Sandy Schwartz, president of Manheim, an auto remarketing company with a network of auction facilities.

But digital auction action grows every year, much of it by popular demand.

“At every customer meeting we have, people ask, ‘When are cars going to be everywhere?’” Schwartz says, referring to an omnipresence that online auctions offer. “The digital marketplace with great condition reports and lots of pictures of the cars is where it’s at.”

Manheim is trying to eliminate the distinction between physical and digital auctions, says Joe George, the firm’s senior vice president-product development.

Many physical auctions also include simulcasts for online bidders, he notes, describing a scenario in which a buyer at a physical auction also bids online.

“Someone can be standing at one lane and using a computer tablet to bid on a car in another lane,” George says. “Or someone can be at home bidding in their pajamas. We want to offer auctions on all channels.”

Last year, “nearly 10 million visits were made to the Manheim marketplace from mobile devices, up 140% from 2011,” Schwartz says. Mobile access of another sort has “taken off” in the past year, he adds.

“Manheim’s Simulcast Everywhere brings the auctioneer and live auction environment to the seller’s location,” letting sellers remarket vehicles faster and giving dealers access to larger wholesale inventories.

Mobile devices give online bidders “everything at their fingertips to make a good buying decision,” Steve Harward, senior manager of TD Auto Finance, says at a recent National Remarketing Conference.

“The physical lanes will never go away, but we are looking at huge strides in technology and seeing so many people using mobile devices,” he says, noting rapid advances. “My first-generation iPad is a dinosaur.”

Tom Cornellier describes the advent of simulcast technology as “an a-ha moment.” He is Ford’s manager-auction operations and e-business. Auto makers remarket many of their off-lease vehicles by selling them at auctions.

As much as he is impressed with the technology of online auctions, “we are firm believers in the physical auction as the revealer of prices,” he says at the remarketing conference. “It is where the value is established. I am not going to try to outsmart the market.”

Some rules apply whether an auto maker is remarketing cars at online or off-line auctions, Cornellier says. “All cars look good in a lane. I want ours to look great. We are dusting off some old ideas.”

Another tried-and-true auction lesson: Don’t put luxury cars in the middle of a bunch of entry-level compacts going up for bid. “That’s a dumb move,” says John Manchin, Subaru of America’s national fleet remarketing manager.

Also ill-advised is trying to auction off Mercedes-Benz AMG performance vehicles in snow states in the middle of winter, says Allison Lind, a remarketing strategist for Mercedes-Benz USA. “That’s not a well-timed move.”

Accurate condition reports are particularly vital for online auctions, where bidders only see images of the vehicles, Manchin says. “We strive for continuous improvements in condition reports. You don’t want to arbitrate if you don’t have to. We want to establish 100% confidence.”    

Online auction photos sometimes don’t fully show the extent of a flaw, Lind says. “If there is a dent, putting a ruler next to it is a good idea. If repair work was done on a vehicle, it’s a good idea to show before-and-after pictures or even a video of the reconditioning work being done.”

Not all auction vehicle-report contents are of the same quality, says Gene Detrick, corporate used-vehicle director for Earnhardt Auto Group, a 13-store dealership chain in Chandler, AZ. “Some auction descriptions are complete while others are untenable to the point that you can’t use them.”

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