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Auto auctions: Navigating the new normal
Unprecedented high values for auto auctions during pandemic
This year the effects of the Coronavirus pandemic swept through the nation, affecting multiple industries—including the auto auction industry. Many auto auction facilities were either shut down or running auctions almost entirely remote.
Those running remotely were feeling the effects of new protocols, such as dealers no longer being able to preview cars, car owners not allowed on the block with the auctioneer, and the auctioneers not able to connect with the buyers as they had before.
John Nicholls, CAI, AARE, AMM, of Nicholls Auction Marketing Group, said in an NAA webinar in April that what was an uncertain season might have been the moment when auto auction professionals could show how important they are to the auto auction industry.
“To say that it’s an artificial environment is an understatement,” Nicholls said in the April webinar. “It’s very sterile. It’s not a lot of fun right now.”
However, since April, Nicholls said many automobile auctions are now operational once again. Some of the auto auctions are allowing dealers and representatives on site during auction days, and some are still not allowing dealers on site. Dealers are now welcome to preview the vehicles on nonauction days; however, some are still 100 percent virtual on auction days.
Sales are generally doing very well too, Nicholls said. In early April, inventory was at regular capacity and the sales percentages were at an all-time low. But now inventory is low and sales percentages and values are at an all time unprecedented high—a very different scene than we saw just a few months ago
“In 30 years, I’ve never seen sales prices like I am seeing now for this extended period of time,” Nicholls said. “In my opinion, we are at dangerously high levels as far as prices are concerned. Auctions that typically would view 70 percent sales rates as amazing days are seeing 90 percent plus sell through rates— unprecedented. The effects of supply and demand are in full force.”
At some auto auction facilities like Manheim, ADESA and CarMax auction vehicles are not being driven through the lanes. Because of this, Nicholls said Manheim officially released all ringmen companywide in order to give ringmen the opportunity to seek other employment. Manheim has stated that the door is not closed, and there is a possibility that, in certain arenas, the ringmen may be brought back, Nicholls said.
John Nicholls, CAI, AARE, AMM
According to a press release statement from Manheim President Grace Huang on July 20, 2020, Manheim has recently been able to bring back approximately 3,000 furloughed team members as they are transitioning operations to meet the demand.
While the demand is positive right now and the situation is looking up, pandemic levels remain unstable and virus spikes could affect operations once again, Nicholls said. Only time will tell. v
For more resources on the effects of COVID-19, visit auctioneers.org/covid19.
