Manheim Auction Shows Used Cars Are Major Business

GOING ONCE, GOING TWICE: A 2006 Toyota Tacoma 4x4 EX pickup truck goes through the lane with the board noting it’s an “as-is” sale (red light). The condition report rates it a 1.9 on a scale of 5. It has 152,816 miles and the high bid is at $9,500.
GOING ONCE, GOING TWICE: A 2006 Toyota Tacoma 4x4 EX pickup truck goes through the lane with the board noting it’s an “as-is” sale (red light). The condition report rates it a 1.9 on a scale of 5. It has 152,816 miles and the high bid is at $9,500.
Bill Griffith

North Dighton, MA—Car auctions are big business. When you consider that there are almost three used cars sold each year for every new car sale, the total value of used-car transactions ($391 billion) approaches that of new car sales ($470 billion).

To see how a used car auction operates, we went to visit Manheim New England’s auction facility in this town just a few miles north of Fall River. Manheim is based in Atlanta, but it has 106 locations in 14 countries (69 in North America alone) and 20,000 employees. Revenues were $2.9 billion in 2013.

Manheim New England’s auto auction facility during a sale day has the feel of a racetrack on a big stakes race day. The racetrack comparison turns out to be apt. Manheim’s 250-acre venue was once home to the Taunton dog track. Manheim took it over in 1981, and that same palpable air of electricity still presides. Many dollars are bet on picking winners—be they dogs, horses, or horsepower. At Manheim, the bettors are dealers looking for a winner.

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“Chances are that most every car will come through an auction during its lifetime,” says Tim Hoegler, general manager of the facility. “We’ve seen some cars go through five or six times. Unless a car changes hands in a series of private sales, it’s likely going to see an auction.

“If a car sits on a dealer’s lot for more than 30 to 60 days, they’ll often bring it back to the auction hoping to either get their money back or find something else to freshen their inventory.”

All 12 selling lanes in North Dighton were running during our visit, each with its own auctioneer and drivers for every car. Thursday night auctions are smaller and less pressured. “We’ll run four lanes then,” Hoegler says. “It’s geared more toward smaller dealers, say a gas station owner who fixes up a few cars to sell as part of his business.”

Such an auto auction is no place for the novice or the unprepared, so the proceedings are limited to licensed dealers who are registered with Manheim. “You can make a $5,000 mistake in an instant,” Hoegler says.

“The buyers may not be wearing suits and ties, but they’re some of the smartest car guys around,” Hoegler adds. “They’ve examined the inventory, they’ve decided beforehand what cars they’re going to bid on, and they know the order in which those cars will be coming through the lanes.”

Hoegler’s auctioneers can earn up to $900 per day. They run each car through in 30 to 90 seconds, and “the average auctioneer sells about 50 percent of the cars in his lane,” according to Hoegler. “The best will do 70 percent or more. But remember that the seller, who is standing right there, has the final say on whether to accept the top bid.”

Bidding isn’t limited to dealers in the building. Today, about a third of buyers operate online and can bid from all over the world. But “you want to keep as many people in the tent [a modern building, actually] as possible,” Hoegler says. “We never want to lose that sense of excitement that you’re feeling today. However, it gets harder and harder for the small guy to keep up.”

Besides having an ECR—electronic condition report, which rates vehicles on a scale of 0 to 5, with 3 being “average”—every vehicle goes through its lane under a computerized board that presents its vital statistics along with a series of colored lights: Red—the vehicle is being sold as is. Green—the car has no single needed repair that would cost more than $500. Yellow—it has known and documented problems. Blue—title is not available at this time.

One change to the industry came during the 2008-2010 recession when dealers began keeping and re-selling trade-ins with 80,000 or even 100,000 miles on their odometers—cars that previously would have gone straight to auction.

During our visit, Hondas and Toyotas in particular and Asian cars in general seemed to be best-sellers—possibly because the Boch dealerships were running cars through one lane and Billy Ryan, Boch’s seller, “has a well-earned great reputation,” says Hoegler. In another lane, Hertz was holding a closed auction for Chrysler dealers, and in still another, Enterprise had a TRA—total resource auction—in progress, featuring cars wrecked by renters but full of sought-after parts.

Meanwhile, there was still more bidding going on in the Manheim office as transportation companies competed to deliver the freshly sold vehicles to their new owners’ lots. By noon the lanes were empty and dealers were settling up at the clerks’ windows, hoping the cars they’d bought would be winners.

The North Dighton operation is average-sized for Manheim, with almost 1,700 cars passing through 12 sale lanes each week on Tuesday morning and Thursday night. By comparison, Manheim’s Pennsylvania operation has 33 lanes and can move 10,000 cars a day.

Etc.

It’s not every day that the average Joe can bomb around in a new BMW, but that will be the case at Gillette Stadium in Foxboro now through June 22. The stadium is the first stop on BMW’s Ultimate Driving Experience, a nationwide tour that offers the opportunity to drive the company’s vehicles in a variety of programs. For schedules and to register, visit bmwusa.com/ude. Among the offerings: a teen driving school, self-guided demo drives, street drives, an autocross program, and full-day car control clinic. Some programs have a fee.