CARY, N.C. -
As the mobile auction format continues to attract more dealers across the country, companies within the industry are continuing to push the wholesale auction experience and communicate the benefits that many used-car managers praise.
“We’re averaging well over 60 mobile auctions per month around the country right now, and that’s a huge increase from just barely over 20 a year and a half ago,” said Manheim’s Randy Beil. “Our core product is what we call true mobile; that is where we bring either a trailer or a bus fully equipped to handle an auction, simulcast, and an auctioneer.”
Beil, who is vice president of local/mobile at Manheim, said a large part of what he and his team does is to grow Manheim into different markets across the country where the company might not already have a presence.
“What we’re really trying to do is create a model to get into these markets, partner with dealers we already do business with and try to get more of their low-end business,” Beil said. “That’s exactly what we’ve done largely in our growth in the past year and a half.”
He said Manheim has been able to get in many cities through existing partnerships with dealer groups.
The company’s mobile sales are launched by two different platforms it refers to as true mobile and mini mobile. True mobile is its largest and core product.
“You get 100 percent of what you see in the auction but you bring it to the dealership, so we bring the auction to the dealership, and that’s what we call true mobile because that’s exactly the core of our product,” Beil said.
“We bring that auction to the dealership and we largely sell their trade-ins from that store or four or five stores at that auction. Some locations host sales once a week, sometimes we do it every other week, sometimes we do it once a month. It all depends on the volume that dealership has.”
Manheim has been expanding its mini mobile product over the past six months, according to Beil.
What differentiates them from a true mobile is it’s much more of a permanent auction, such as a two, three or four-lane facility.
“This is a basically a full on auction as far as a dealer is concerned, often it’s a one, two, three-lane auction that we get into a market and we open up a small auction and it’s a stand-alone auction for all practical purposes, but internally from our standpoint it’s kind of like a satellite auction because its’s still managed by a parent auction,” he said.
“We rely on the parent auction’s staff to help support the functions of the satellite auction.”
Of all the cars Manheim sells at its mini locations, all of the revenue and all of the expenses flow up to that parent auction.
“We brand them and we market them, we advertise them, it’s a stand-alone auction that looks a like just an others,” Beil said.
Mini mobile auctions bring in about 40 to 50 different sellers to each sale, while true mobile is usually one consigner, according to Beil.
The fundamentals of mobile
Digital technology is a fundamental resource mobile actions depend on, says Ryan Rickey, general manager of XLerate Group’s Your Auction Mobile sales.
“Traditional brick-and-mortar, where dealers go in and can check out cars week-in and week-out, sometimes these mobile auctions have a greater travel time. Rickey said. “We depend on the internet and our marketing tools via the internet so people can check out extensive pictures, pre-sale inspections — things of that nature, just to give them the confidence to bid online and or show up in person.”
Your Auction Mobile’s sales allow dealers managers to remain in their stores and focus on retail as opposed to running the “gauntlet of auctions,” he said.
“In today’s climate, post the recession, secondary lending became more aggressive and dealers started holding on to that c-paper. Having the auction onsite gives you a chance to potentially retail some of those vehicles you'd otherwise be wholesaling weekly,” Rickey said.
Taking it to a higher level
Auctions In Motion (AIM) started in 2006, as a completely mobile sale. It was purchased by what is now known as XLerate in in 2012.
“We literally went to the dealers’ lots and we would set up our pop-up tent along with a couple of trailers that would support the auction,” said George Pero, AIM founder and general manager at Corry Auto Dealers Exchange, an XLerate auction.
“The business gained momentum,” Pero continued. “First it was a bi-weekly sale and then it was a weekly sale and then it gained so much attention and critical mass business that we thought that the next step in progressing the expansion and growth of the business was to get a single free-standing facility where we would run a one-lane auction.”
When asked about any challenges associated with mobile sells, Pero said: “Challenges really aren’t that many or significant; I would say running out of space when you have a lot of consignment.
“For consignment, for a one-lane mobile sale is 150 to 200 units, they become so popular that we run out of space.”
The challenges associated with mobile sales are similar to those of any auction, according to Jane Morgan, who is president of specialty auction divisions at ADESA and oversees mobile auction offerings and helps in geographic expansions.
“Educating dealers on how mobile sales work, why they should try mobile sales, and how mobile sales can benefit their business may be considered a challenge,” Morgan said.
Space may be a challenge, depending on the size of a dealer’s lot or the type of inventory, like if it is a mobile auction for heavy-duty trucks, for example.
Mobile auctions entails working with the seller to select their inventory in advance so it’s competitive in the marketplace, Morgan explained
She said selecting inventory far enough in advance is important to allow time to best match the right buyer to the right product.
Rickey added that a challenge he recognizes is larger competitors within the industry. “As an auction company, you see groups such as the larger groups in the industry — AutoNations, CarMaxes, they’re figuring out ways to do it themselves,” he said.
“The margins I think, are getting skinnier,” Rickey went on to say. “Profitability has to change, we just need to be aggressive and provide a service above and beyond our competition.”