Automobile Auction Business Nearly Wiped Out By Social Distancing

Many folks have no idea how the CoronaVirus nearly wiped out the used car automobile auction business as we dealers once knew it. I say we because I’m a retired auto dealer with better than 40 years experience. Many thousands of used cars are auctioned weekly. But the coronavirus brought that thriving business to a grinding halt several weeks ago. And with social distancing auctions will possibly never be the same. Large players like Adesa and Manheim are switching to simulcast.

dealers at wholesale auto auction. Image credit Manheim auctions.

Manheim who already had internet simulcast bidding did just that exclusively. Unfortunately dealers were looking at poor quality photos, instead of the live auction video of the cars on the block. It was not the format online bidders were accustomed to and sales dropped kike a rock.

So now social distancing requiring people stay a minimum of 6 feet apart, the automobile auction businesses will stay closed. This business moved hundreds of thousands cars monthly throughout the U.S.A. There was the fleet and lease return sales. Banks and finance companies selling their repossessions. Franchised dealers auctioning their trade-ins. Wholesalers buying cars needing reconditioning. Just the wholesalers reselling the units they bought earlier probably accounted to ten percent of sales or better. But not any time soon thanks to the China covid-19 virus.

Google earth screen-shot of Manheim Tampa auto auction provided to show how big this flaccidity is. The auction building selling lanes are next to the marker. And the massive reconditioning facility to your left.

aerial view of Manheim auto auction tampa

In the Tampa Bay area alone the cars piled up. Franchised dealers went to Facebook ads to offload their trade-ins. It is said Manheim Tampa has something like 8,000 cars that are parked bumper to bumper in rows. It’s also said they fenced in part of the dealer parking to store cars that were to be auctioned before the coronavirus as non-essential businesses were shut down.

The used car automobile auction business is more than just a place to buy and sell automobiles. Auctions are the unofficial car dealers school. Dealers must learn this business the hard way. There is no college or trade school to learn the car business. Here dealers learn all about whats hot and what’s not. Back years ago a dealer buddy said, watch that guy bidding against the coke machine.

At Manheim Tampa, this sign says the facility is currently closed. I can’t even begin to imaging the loss this industry is taking. Has government went too far shuttering businesses? This company is part of Cox automotive worldwide group with 780 weekly auctions. 8M vehicles registered annually. 80K dealers.

facility closed sign at Manheim Tampa FL

Now this previous fantastic business model is making big changes. Online bidding will be the new business model. Gone are the days of kicking the tires. Reaching in the drivers window on the block shaking the steering wheel, and seeing if the air blew cold. Sellers and buyers will rely on condition reports (CR) performed by the auction house itself. No CR you get what the photos show.

Another used car market is Online Vehicle Exchange (OVE) that is another part of Manheim’s niche marketing. Registered dealers when adding inventory to their websites can also export that inventory to OVE with many available dealer photos. Dealers can buy online with ove and optionally request a condition report (CR) be done by the auction guaranteeing a vehicles condition.

eBay Motors when it launched in 2000 was the talk of the town. Dealers at auctions were saying “this car will bring $$ on on eBay” now it’s mostly abandoned by car dealers. Meg and Pierre became millionaires as buyers and sellers were defrauded by fraudsters who screwed the founders community values and trust into the ground. It was trust that made selling cars online work so well. That too is gone forever! 😥

Meanwhile the stockpile of cars is building up. Dealers are peddling $1,000 trade-ins on Facebook and Twitter. It’ll take months to make the change. Many old school dealers may end up out of business. It’s been known for years that car dealers are slow to accept technology. Like selling cars on Facebook, many dealers want to hear the phone ringing. That’s old school selling. Any dealer who want’s to be successful better work Facebook leads via smartphone and the messenger app. Buyers want to inquire about a car they are interested in by messaging the seller and asking any questions online. If a seller snoozes the buyer moves on and someone else gets the sale!

Normally I blog about politics and are a strong Trump supporter. Born in 1952, and being a lifelong used car dealer and ASE certified mechanic, I’ve seen our country go to hell over the years. I’ve witnessed Detroit who once built the finest cars in the world build total garbage. GM is still the mark of CRAP in my personal opinion. No wonder the Japanese took over the car market. Want a new or late model well built American car? buy a FORD which in my opinion is the best bang for the buck! The 2021’s normally would be coming out in a couple of months, but with the huge stockpiles of 2020 models still sitting on auction and dealers lots, may come out later this year.

A guy I’ve known for decades is another example of how covid-19 hurt the car business. He started out working in the auction industry at a small independent auction. Later he went to Manheim and had 2 years until retirement, but was furloughed last week. In corporate America it’s all about the bottom line profit. Meanwhile life goes on in the newly revised automobile auction business!

I'm an outspoken good ole southern boy. Fidonet computer bulletin board system operator, hobbyist webmaster, and MAGA blogger. Just hanging out in cyberspace keeping up with tech, 'blogging my opinion' without beating around the bush!

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