ONLINE CAR AUCTIONS By David Miller - Cox Automotive Canada
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ONLINE CAR
AUCTIONS
By David Miller
auctions. When there's a shortage in online," explains Dale Pollak, founder
ONLINE AUCTIONS harvesting trade-ins or off-lease, a sale is
only a few clicks away.
of vAuto. "The trend corresponds
to Manheim and ADESA auctions
SAVE MUCH "At certain times of the year, it's hard
reporting year-over-year gains in online
transaction volume."
MORE THAN TIME to source from your own customer
portfolio, so you have to backfill with To understand the scope of online
auction purchases," explains Matthew auctions, one only needs to look at
TWENTY YEARS AGO, A DEALER walked into Bird, general sales manager of Manheim, North America’s leading
one of the local wholesale auctions and Volkswagen Waterloo. provider of vehicle re-marketing services
battled it out with others to replenish their that employs 18,000 people enabling them
stock. It took time, effort and skill to not The used car lot hasn't gone global like to register 8-million North American used
only strike the right deal in order to help Amazon, but dealers on average like Bird vehicles per year.
the bottom line, but to build up a good- have upped their usage over the past five
looking aisle of cars to show off to your to ten years. Bird's inventory consists of 60 According to Ken Morin, general manager
customer base. per cent auction buys with the majority of of Manheim Toronto, it all started through
those being made online. Manheim's first simulcast sale in 2002,
All that has permanently changed thanks where 65,000 dealers enrolled across
to the internet. Much like Amazon has A lot of the online trend can be attributed North America.
turned the brick and mortar retail game to companies like TradeRev (a wholesale
on its head, the world wide web has inventory system that connects dealers "The uptick was felt from inception and
forced businesses to evolve, changing the from all over North America), and leading has continued to grow ever since. Today at
landscape of the used car dealer lot and online auctions such as ADESA and our Canadian auctions, online attendance
the entire buying/selling process. Manheim that had to endure growing has grown to represent 53 per cent of total
pains until gaining legitimacy and attendees on average, and we anticipate
With the wealth of knowledge online, eventual traction from dealers. that upward trend to continue as we
customers now arrive prepared with continue to develop our suite of digital
information and pricing for a specific "In the past two or three years, we’ve seen tools to help dealers turn their inventory
vehicle in mind. And in many instances, more dealers rely on online auctions faster and more efficiently."
that very vehicle has arrived via the for at least 50 per cent of their auction
internet through one of the various online purchases, with some going 100 per cent
12 | THE ONTARIO DEALER
ONLINE CAR AUCTIONS | DAVID MILLER
Time and convenience favours online online or in-lane," explains Stephanie
Turner, senior manager, business
The most obvious reason for the push development & strategy for Cox
towards online from in-person auctions Automotive Canada.
comes down to saving time and money in
acquiring pre-owned inventory, as well as Will in-person auctions cease to exist?
the potential for greater reach. No longer
do dealers have to send their pre-owned Between the time, money and scope
sales manager or auction specialist to a of online auctions, it begs the question
physical auction, potentially taking up to whether in-person auctions have a
three or four hours between transport, the ticking shelf life? Yet, every company
auction itself, paperwork or figuring out and dealership interviewed for this
delivery. It can be even worse, bringing a piece believes there's still a place for in-
bunch of drivers along to collect the cars person bidding.
purchased.
"We are a long ways away from
traditional auctions closing up shop,"
"In the past two or KEN MORIN | MANHEIM TORONTO
explains King. "Me being a car guy, I try
to be analytical, but I like to touch what
three years, we’ve I'm buying before I bid on it. It's one
With nine years in the wholesale auto thing to look at conditional reports and
seen more dealers business, King however cautions other you can trust them to a certain degree,
dealers when selling their lots online. but just because they call it a 4.5 out of
rely on online "Many want to liquidate their wholesale 5, doesn't mean I will give it that same
units this way to maximize profits rating."
auctions ..." and mitigate losses, but that can end
up backfiring when you are not being King understands that online tools are
With online auctions, daily buys through strategic. To use online auctions great to have, but not a perfect system.
standard bidding sales or even buy-it- successfully, you have to be open He feels you can't blindly accept every
nows can be made at the office or on a minded and well versed in how to statistic and rating online, and the
mobile app by registered dealers with an liquidate inventory." edge that he additionally relies on
OMVIC license. With new listings posted comes down to the human element
daily, ADESA and Manheim auctions can Manheim aims to help that process out by of common sense and experience. In
be planned a day or more in advance with supplying plenty of information through addition, working with the management
Manheim's running Tuesday morning and condition reports, vehicle history reports, at physical auctions can help one out in
Thursday night; ADESA's occur Tuesday and other disclosures. the long run.
afternoon and Wednesday morning.
Other online auctions sprouting up can "With so much information at the dealer's "There's more of a personal feel to it,
also be found on a daily basis. fingertips, taking advantage of the especially when you need some help or
information at hand, will allow them a service to be provided."
"There's still a time and place for to buy and sell with confidence and
traditional in-person auctions, maximize profitability – whether that is
considering their large volume of sales,
but the frequency and legitimacy of
online auctions has made it difficult for
dealers to take the time out of their busy
days to go to them," adds Bird.
Anthony King, pre-owned sales manager
of Michael Boyer Chevrolet Cadillac
Buick GMC echoes Bird's statement
with his auction buys (30 per cent of his
inventory) over the past year being close
to 70 per cent online.
"I prefer to go to a bricks and mortar
auction, but that is a time consuming
STEPHANIE TURNER | COX AUTOMOTIVE CANADA
proposition lately."
VOLUME 6, ISSUE 3 | 13
ONLINE CAR AUCTIONS | DAVID MILLER
Even though Bird is more analytical, he also believes there's still
value in looking at a vehicle rather than a computer screen.
"I can walk around it, find a scratch and determine things that
way. Is it paintwork or polish? How good are its tires or its
brakes? You're not always going to get those really good photos, PRIMER ON
ONLINE AUCTIONS
so you're still making an assessment of what you're being told."
Luckily, large online auctions at ADESA and Manheim have
an arbitration policy in place for those situations. They can
mediate a situation when an item wasn't accurately described
leading to an adjustment in price or a return of the winning
vehicle in question.
1 Before doing anything, each dealer has to have an
OMVIC license to participate in an online auction.
Once that's in place, you have to be affiliated with
"Never allow a gut feeling to a registered dealership and a legible copy of the
representative's current driver's license has to
overrule hard data..." be provided and an auction pass will be granted.
They are for wholesale automotive dealers only and
"We offer assurance and visibility through a number of products closed to the public.
such as Manheim’s Pre-Sale and Post-Sale Inspection and our
Enhanced Vehicle Imaging System (EVIS) to build further trust in
the online marketplace," Manheim's Morin explains.
2 Taking ADESA registration as an example, they
require the following paperwork: Application,
Morin goes on to say that physical locations are important, but Dealer and Individual Acknowledgement Form,
will be more geared to older model years with high mileage. Personal Guarantee, Power of Attorney, GST/HST
number, Bank Authorization Letter and Dealership
Pollak doesn't anticipate physical auctions going away as well, Credit Information Form.
but he does see in the future an advancement of "upstream"
inventory availability, allowing dealers to purchase wholesale
vehicles before arriving at traditional auction platforms.
3 Once you're set up, go through the auction run list
a day in advance. Target certain vehicles you want
"Ultimately, the wholesale market will be less defined by the and use the filter to weed out certain model years
physical presence of available inventory as new technologies and high mileage vehicles.
and tools help dealers make a larger share of digitally-based
transactions, irrespective of the vehicle’s location."
What the future holds? 4 Check out all the condition reports from the online
auction and its CarProof report (history, accidents,
prior damage).
It's never easy to predict what the future holds, but with any
industry, it's tough to bet against the internet and advanced
technologies.
5 Set your proxy bids and use your time wisely for
other dealership matters.
Online auctions are simply another example of how the internet
connects businesses and people around the world for quick
and documented transactions that can save time, effort, storage
and most importantly, money. Whether it's an online auction at 6 The market can always shift, so make adjustments,
re-check your list and act accordingly.
ADESA or Manheim, uploading data and pics with TradeRev, or
any other auction, they're all here to stay in order to liquidate or
fulfill the dealer lot in a smooth and quick manner.
7 Good luck and safe bidding!
In the end, all of this transparency helps both the dealer and the
consumer. Dealers may not have the same margins, as they used
to, but at least they're able to constantly turn over stock. On the
other side, consumers are receiving more positive dealership
experiences with a level playing field of reasonable prices
offered without having to drive around and haggle.
And that seems like a win-win for all involved! ■
VOLUME 6, ISSUE 3 | 15
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