NORTH DIGHTON — Manheim, the world’s largest wholesale auto auction company, does things on a grand scale.
Last year the automotive industry sold 14.5 million new vehicles in the United States. As positive as that number is, the used car market, doing business as usual, was selling 40.5 million vehicles.
Manheim was involved in eight million of those transactions, representing more than $50 billion in value. Its 2012 revenues were $2.7 billion from its sites in 106 locations in 14 countries. To read Manheim’s 40-page 2013 Used Car Market Report is to get the insiders’ look at the industry.
We were invited to tour the company’s New England operation, located on 251 acres at the site of a former Taunton racetrack, on May 13 as it dedicated a 3.5 megawatt solar installation that covers 52 of those acres and protects 28 acres of wetlands.
On the ground, 10,000 solar panels are arranged in four groupings with an additional 2,000 on top of Manheim’s auction building, body shop, and reconditioning center.
The solar project, in association with the Taunton Municipal Lighting Plant, will provide enough power to supply 400 homes as well as 29 percent of Manheim’s on-site needs.
Area student Logan Rodrigues, a sixth grader at St. Peter Paul School in Fall River, was selected to cut the ceremonial ribbon because of her science project, which designed a way to provide solar power for her bedroom.
“Did it work?” she was asked.
“No, it didn’t because I didn’t have an inverter. That’s the piece that converts direct current from the solar panel to the AC current used in houses. But it would have,” she responded.
After the ceremonies, Janet Barnard, executive vice president and chief operating officer of Manheim, joined New England GM Tim Hoegler in giving us an overview of Manheim’s operations.
The Taunton facility alone sells upwards of 1,000 cars each week at Tuesday morning and Thursday afternoon auctions.
In addition to the 10-12 live auction lanes at Taunton and other auction sites, there are “digital lanes” where an auctioneer is selling cars on a big screen TV. Those cars may be out on the auction center’s lot—or at another location entirely.
In the digital age, sellers can present their inventory via OVE.com (Online Vehicle Exchange, Manheim’s 24/7online wholesale marketplace), via defined-time online sales events, in buy-it-now listings, or traditional live-bid sales. Manheim’s “Simulcast Everywhere” service brings the physical auction environment into dealership offices and other off-site locations nationwide.
An increasingly important factor in these auctions is a reliable “condition report.” While these reports aren’t necessary for on-site auctions, vehicles with condition reports are five times more likely to sell on the digital platforms. “It’s a sign of how data and analytics are replacing the old-time buyer’s ‘Golden Gut,’ snap judgment of a vehicle,” says Barnard of the system, which rates vehicle conditions in tenths of a point from 1-5.
Another sign of the changes is that the physical distance between buyers and the vehicles they purchase is growing. It’s about 190 miles for physical sales at a site, 439 miles for Simulcast online buyers and 552 miles for OVE.com buyers. The result is increased business for transport companies, including Manheim’s in-house service resulting from the acquisition of Ready Auto Transport.
As the used-car market has evolved in recent years, Manheim’s operations has expanded to include reconditioning, bodywork, consulting, transport, listing assistance, market reports, and mobile listing, searching, and bidding services.
Auction cars, however, still come from traditional sources—rental companies, fleets, vehicles coming off lease, dealer consignments, and repossessions.
Used car values remained high in 2012. Both mid-sized vehicles (2 percent) and pickups (2.6 percent) gained in value throughout 2011, while vans stayed even and compact cars declined 2.8 percent.
With the nation’s fleet aging and buyers holding onto cars longer, vehicles that are seven or more years old accounted for 38 percent of used-car sales in 2012.
In 2012, CPO (Certified Pre-Owned) sales by dealers increased six percent to 1.84 million units and franchised dealers’ used-car sales increased eight percent to 15 million units as they kept more of their trade-ins for resale.
Better quality new cars mean more predictable (and higher) residual values after leases expire or at trade-in. With credit loosening for auto buyers, leasing increased to 2.5 million units in 2012, up from 1.1 million during the Great Recession year of 2009. Traditional leaders Mercedes-Benz (54.2 percent) and BMW (46.4 percent) had the greatest lease penetration in 2012 compared to domestic brands Chrysler (11.1 percent), Ford (16.8) and GM (14.7).
Down the road, more cars going out on lease this year means more quality used cars coming to market.
Lime Rock Park in Lakeville, CT caps its Trans-Am weekend today *May 26* with the Royals’ Garage Car Show to benefit the Wounded Warrior Project ($10 entry for cars, $5 for spectators). “Military, retired or active, pay $5 to enter a car, but most, not surprisingly, give us $10 or more,” says the track’s Rick Roso … Today also is the Chesterwood Vintage Motorcar Festival, a tradition since 1974, at the home of sculptor of Daniel Chester French in Stockbridge, MA.