How Wholesale Auctions Power The Used Car Industry

When we go to a dealership to purchase a pre-owned vehicle, the common assumption is that the car has been traded in to that particular dealership. While that may be the case for some vehicles (especially those that are of the same brand as the actual dealer) a great deal more come from other dealers all over the country. There is a vast, complex network that supports this industry.

Manheim is one of several national used vehicle wholesale auction companies. Their auctions, and the dealers that move cars to and from these massive facilities essentially drive the used car market, and have helped it grow to a place previously unseen. Allow me to explain.

When I was in college, I spent a week helping out at an animal shelter. I helped build a structure that would house medical equipment and got to play with some puppies. It was a great time. While there, I learned that the shelter had a network of vans, transporting animals in their care to locations where they would be the most likely to be adopted. If it was found that Boston was a huge market for terriers (get it?), then more terriers would go to Massachusetts, while more lapdogs would be transported to shelters in Manhattan. It was very advanced and matched supply to localized demand.

Manheim 02

NEWS: Read more of the latest automotive news on BoldRide

This is the way that Manheim’s national and international network of facilities are operated. Manheim has 69 facilities in North America and another 37 around the world, and they represent the channel by which used cars make their way into used dealership storefronts. These cars from new and used car dealers, manufacturers and company vehicle fleets, bank lease companies and rental companies. Other companies like this include ADESA, Interstate Auto Auction and Car-Tech Auctions.

On average, once or twice a week, local dealers come down to the massive Manheim facilities to bid on cars for their own dealer fleets. But before they can go across the auction block, they are inspected, an online profile is created, and the seller determines the amount of attention the car requires before going to auction.

Manheim 03

Manheim has a very intricate system to determine how to handle a car when it comes into their possession. If it is determined that detailing the vehicle will significantly improve its value at auction, it will get the attention. If such attention will not affect the price, it will cross the block as-is.

Vehicles are documented, photographed, and vehicle profiles are placed online. Dealers can take the old fashioned route and check out cars in person, but they can also examine vehicles online. According to Tim Hoegler, general manager of Manheim New England, dealers are coming to auction more prepared than ever. “When we first started this,” says Hoegler, “there were no computers. Now dealers spend the whole week researching cars, and they come to auction fully researched and ready to go.”

Dealers may take their time researching vehicles either online or in person, but when auction day comes, it’s another beast entirely. “We call it sensory overload,” says Hoegler, “Our MA facility has 12 lanes with 100 to 200 cars coming down each lane throughout the day.” On average 40 to 45 cars cross the auction block per hour, and Manheim says the general industry average is about 60 seconds per vehicle.

Mahneim 01

Once cars are purchased, they may be moved that afternoon, or several days later. It is on the dealer to arrange for travel once the cars are purchased, though Manheim does offer services to connect dealers with transport services. If a dealer is moving cars across the country, he may wait for the next auction so that his vehicle transport will be completely full when it’s time to move.

I asked how the industry would be different if an entity like Manheim were not there to facilitate these transactions. “The used car market would bottle up,” says Hoegler, “manufacturers need a way to distribute their vehicles. The franchise dealers would stick to their own brands, but as you can see, dealers have branched out to take on any brand, to make sales.”

Would the auction facility be inclined to say that? Sure, but they have a point. Just as I watched the dogs and cats leave the animal shelter, off to a location where they have the best chance for adoption, national networks like these offer used vehicles the best opportunity to be purchased. Why would a dealer try to sell the inventory they have if it’s not moving, and they know another type of car can sell better at their location? Dealers even sometimes change out their inventory for a whole new lineup, and it helps the customer get closer to the car they are looking for. Next time you Car Fax a used vehicle and see that it is from another state, you now know why.

--

Did you know that you can get stories like this on the Yahoo mail app?
Download it here.

Latest News

  • Missouri, Kansas students co-winners of National Spelling Bee
    Missouri, Kansas students co-winners of National Spelling Bee

    By Ian Simpson OXON HILL, Md. (Reuters) - Eighth-graders Gokul Venkatachalam of Chesterfield, Missouri, and Vanya Shivashankar of Olathe, Kansas, were co-winners of the Scripps National Spelling Bee on Thursday. Gokul ended a tense standoff before a packed hotel ballroom and an ESPN television audience by spelling "nunatak," an Inuit word for an exposed ridge in a glacier. Vanya, whose sister Kavya won the Bee in 2009, said she was dedicating the shared win to her grandmother, who died in …

  • Singer Ed Sheeran and his 'lazy eye' immortalized in wax
    Singer Ed Sheeran and his 'lazy eye' immortalized in wax

    After six Grammy nominations, several hit songs and numerous sold-out concerts, singer Ed Sheeran donated a few hours to Madame Tussauds sculptors who worked to create his likeness, revealed on Thursday.     "They put you in grey underwear and a grey vest. "I think it will be quite weird for me, but I think it will be cool seeing what my own parents created," he said. …

  • 'San Andreas' set to shake up box office despite faults
    'San Andreas' set to shake up box office despite faults

    By Alicia Avila LOS ANGELES (Reuters) - Director Brad Peyton grilled scientists, scoured earthquake footage and submerged sets in one of the world's biggest water tanks to create the biggest earthquake ever to hit California in his new film "San Andreas." That effort might pay off at the box office, where the Warner Bros film is expected to be the top earner in its debut this weekend, with an estimated $40 million in ticket sales. "We spent a lot of time grounding the experience and …

  • Youthful contestants at U.S. Bee not just whizzes at spelling
    Youthful contestants at U.S. Bee not just whizzes at spelling

    By Ian Simpson OXON HILL, Md. (Reuters) - The youthful contestants at the U.S. Scripps National Spelling Bee boast a lot of interests in their lives besides spelling, with athletes, musicians, actors and writers among the almost 300 competitors. Shiv Lamba, 14, juggles being one of the best young spellers in the United States with playing football for the national developmental squad. The eighth-grader from Centreville, Virginia, said he studies spelling constantly, including while …

  • Trevor Noah to take over 'The Daily Show' on September 28
    Trevor Noah to take over 'The Daily Show' on September 28

    South African comedian Trevor Noah will replace Jon Stewart as the host of the last-night comedy parody "The Daily Show" on September 28, Comedy Central said on Thursday. The Viacom Inc.-owned cable network made the announcement on its website and with a brief video of Noah, 31, testing out the set in the studio and sitting in the chair as Stewart came up from behind him. …

  • Hungary Cannes sensation may help country face dark past
    Hungary Cannes sensation may help country face dark past

    By Marton Dunai BUDAPEST (Reuters) - The makers of the award-winning Hungarian film "Son of Saul" said on Thursday they want as many Hungarians as possible to see it in a country that has been plagued by anti-Semitism and xenophobia. The film -- the tale of a Jewish "Sonderkommando" death camp worker who finds a corpse he believes is his son's and sets his mind to burying him amid the horrors -- won the jury's Grand Prix at the Cannes Film Festival this month. Director and screenwriter …

  • Actress Lindsay Lohan taken off probation in driving case, prosecutor says
    Actress Lindsay Lohan taken off probation in driving case, prosecutor says

    Actress Lindsay Lohan has completed her community service in a 2012 reckless driving case, a judge found on Thursday, allowing her to leave probation for the first time since 2007, a prosecutor said. The 28-year-old "Mean Girls" star was required to finish more than 100 hours of community service in the case in addition to rehabilitation and therapy. Los Angeles Superior Court Judge Mark Young found Lohan had completed that obligation and ended her probation, Santa Monica chief deputy …

  • "We were awful" - Pink Floyd's Waters on band's early days
    "We were awful" - Pink Floyd's Waters on band's early days

    By Edward Baran LONDON (Reuters) - Pink Floyd founding members Roger Waters and Nick Mason joked while unveiling a memorial plaque on Thursday that they were so bad at first that they wouldn't have passed an audition on a talent show.    The pair, together with the late Richard Wright, formed the group while studying architecture at the former Regent Street Polytechnic in central London between 1962 and 1965. The psychedelic and progressive rock band went on to become one of the most …

Loading...