Auction Handook
Transcript of Auction Handook
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AuctionHAndbook
A Guide To WholesAle Vehicle RemARkeTinG
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secondediTion
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This book is a reference guide to todays
used vehicle auction sale. Its intent is to
help consignors, dealers, remarketing
industry professionals, and others work
within the oldest and most efficient
market system as it applies to vehicles,
with and without wheels. The information
is provided to help sale participants find
desired vehicles, effectively buy and sell
vehicles, understand and utilize operatinglocation services, and have a successful
experience every time they visit a sale.
Now is a great time to be in the used
vehicle business.And a great time to visit one of ouroperating locations.
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About Auctions
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How An Auction operAtes
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buying A VeHicle
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selling A VeHicle
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c o n t e n t s
A Guide To WholesAle Vehicle RemARkeTinG
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eVAluAting A VeHicle
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remArketing tecHnology
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glossAry oF terms
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Throughout this handbook are boxes entitledInsider Tips. Weve included these in an effort
to highlight some of the facts that are most
important to know.
INSIDER TIPS
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Auction
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c H A P t e R 1
About Auctions
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The auction industry is an elaborate network of businessesand individuals that work together to facilitate the exchangeof used vehicles and used vehicle information.
An Overview: History, Benefits, and Use
HistoryAuctions are one of the oldest forms oftransacting commercial exchanges. They dateback to the times of Babylon and ancient Greecewhere art, land, animals, and crops were auctioned.In fact, the Roman Empire itself was auctioned.
There are many alternatives for remarketing cars,
including using wholesalers, selling between dealers,and selling direct to consumers. Each of these has aplace in the remarketing system. Often, the auctionenvironment is ideal because it provides a dynamictrading floor where open, live, competitive biddingis fast-paced, and true market value is determinedwith each vehicle that comes to the auction block.
Value of Auction SalesThere are many benefits provided to participantsin the auction process, including:
mart lqty. Auctions allow consignors toconvert cars into cash quickly.
Prgdtt fr V. Auctions can movelarge volumes of vehicles without depressing prices.
crta ma f Byr a sr. As auctionshave become larger and more efficient, they havebeen able to bring together the needed number ofvehicles and buyers to achieve market values forvehicles and ultimately establish a national usedvehicle marketplace.
crb Prg. Auctions give the industryan objective view of what vehicles are worth in
the marketplace. itrt Appat. Auctions have embraced
Internet technologies to increase efficiency andoffer additional services to both buyers and sellers.
Pr itgrty. Auctions have employedinformation technology and a strong code ofethics to help eliminate odometer rollbacks andtitle laundering. Standards for frame damage and
condition reports have also become more consistentindustrywide.
Rtg Va. Most locations havestate-of-the-art reconditioning facilitiesthat enable sellers to maximize total returnon investment.
Affrab Partpat. Auction fees, as apercentage of vehicle selling prices, have gone
down during the past 20 years.
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Auction Supply and
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Demand Dynamics
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Almost 100% of all franchised dealers attend auctions.
Generally, a dealer attends an auction that is nearby. Some participate remotely online.However, there may be benefits to participating in auctions in more than one place,even investigating auctions in different parts of the country. By including moregeographic locations, dealers may be able to find certain makes or models that fittheir inventory needs.
Auctin lcatin Attenanceby Franchise deaers
Auction Attendance
Wy 28.00%
mty 34.54%
Qartry 15.79%
Aay 21.67%
onine Auctin Attenance
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There are a number of services provided by auctionoperators. Besides the core business of facilitating theexchange of vehicles between buyers and sellers at theauction location itself, other services include:
Marshalling Data management Insurance
Title management Repossession Online services Payment clearances Transportation Mechanical repairs Dent and other cosmetic repairs Car detailing Advertising
Reconditioning: paint and body work Consulting Lease portfolio management Financing Inspections Internet solutions Auction certification Logistics support
Auction Services Available
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Q. Why is the remarketing industryso important?
Certainly, the size and scope of the industry
establishes its importance, but more significantis that used vehicle remarketing:
Provides stability to a cyclical new vehicle market,giving dealers a safe harbor when new vehiclesales drop;
Determines true vehicle value because, through liveand online auctions, prices are a pure reflection ofopen, competitive bidding and are not influenced
by direct or indirect incentives;
Provides a catalyst for new vehicle salesbecause1) most households must dispose of a used vehiclewhen buying a new one; 2) new vehicle financingis secured by what, in fact, becomes a used vehicle;and 3) finance companies rely on used vehicle valuesto set residuals on their leases;
Helps build brand image and customer loyaltybecause most vehicles sold (72%) are used vehicles.Manufacturer certification programs are theforemost example of using used vehicles to buildbrand image and customer loyalty.
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Q. Why have auctions beenaround so long?
People have had the need to make commercial
transactions for centuries and have found a secureand neutral setting as the preferable method tofacilitate the exchange.
Q. Why do auction locations providereconditioning services?
For the benefit of both buyers and sellers. Sellershave found that reconditioning is an investment
it more than pays for itself. And because timeis money, buyers prefer a reconditioned vehiclebecause it can be put out for sale immediately.
Q. How has online technology changedauction sales?
On the one hand, online technology such as ManheimSimulcast has expanded the live auctions reach by
bringing many more virtual buyers into the lanes andby letting sellers represent their vehicles remotely.Online technology has also made it possible forattendees to quickly and easily garner a host of usefulinformation before they arrive at the physical auction.
On the other hand, online technology like OVE.comhas made it possible for dealers to pinpoint the exactvehicle they want without attending a physical auction
and to purchase inventory anytime, from any locationwith an Internet connection.
FAQFrequentlyAsked Questions
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Nearly 10 million cars are sold at an auctionlocation every year. Auction locations varysignificantly in size, number of employees,acreage, services offered, facility configurations,as well as the volume and types of cars beingsold. Physical locations can have as few as acouple of lanes or as many as 25 or more.
Some facilities are on sites of fewer than50 acres, while others occupy hundreds of
acres and incorporate multiple buildings andoperations. Some operations function with ahundred or so employees, while the largerones can employ as many as a thousand people.Many facilities offer shops for reconditioning,mechanical and other repair services, as well asservices to assist in transportation, financing,
arbitration, inspections, titling, and a host ofother services.
Wholesale auctions exist to help dealers sell cars. Every serviceis focused on accomplishing that objective efficiently, rapidly,and accurately. Auctions are neutral trading floors, offeringsecurity and integrity to buyers and sellers who come togetherto conduct business.
Auction Profiles
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Pre-Sale Activities
Check Online Inventory
Consignment to Auctions
Condition Reports Marketing
Auction Certification
Auction Inspections
Reconditioning
Auction Sale Overview
Activity at an auction takes place wellbefore the sale day, starting with receivingconsignments of vehicles from varioussellers, including dealers, manufacturers,
banks, rental car companies, and othercommercial businesses and governmentagencies. These activities are all coordinatedbetween the seller or their representativesand the auction location staff as part of thePre-Sale Activities. On sale day, hundredsto thousands of cars will be processedand sold at auction. Once the sale of acar is agreed upon, there are a number
of activities for the auction location tofacilitate to complete the transaction anda number of services offered by the auc-tion operation to assist in enhancing theexchange as part of the Post-Sale Activities.The diagram to the right summarizes theprocess, and the pages which follow providemore specifics on each.
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The Sale
Open, Live,
Competitive Bidding
Manheim Simulcast
OVE.com
Post-Sale Activities(and Other Services)
Post-Sale Inspections Reconditioning
Payments Title Transfers Financing Transportation Advertising Online Marketing
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Check Online Inventory
OVE.com is a virtual wholesale automotivemarketplace, offering registered dealers 24/7electronic access to buy over 10,000 vehicles frommajor OEMs finance and fleet companies beforethey hit the physical auction lanes.
Consignment to Auctions
Auction locations receive vehicles for consignmentfrom dealers and commercial accounts 24 hoursa day, 365 days a year. Vehicles are brought to thelocation by rail and transport truck, but can also bedriven by dealership employees, consignor repre-sentatives or, if special arrangements are made, by
auction location employees. Upon arrival, check-inpersonnel scan the Vehicle Identification Number(VIN) of each vehicle and verify the year, make,
and model number against a VIN decoding data-base. They also record the date and time of arrival,overall condition, and consignor of the vehicle.
Vehicles will have run numbers (see Run Lists,pages 32-33) assigned that indicate which lane, atwhat time, and in what sequence the vehicle willrun through the specified sale. Vehicles will eitherbe provided a run number for that days sale aspart of the check-in process or will be stocked intoinventory at the auction location for sale ata later date.
There are differences in the processes for dealers andcommercial accounts which consign cars to theauction location. Detailed explanations for both
commercial and dealer consignment are outlinedon the pages that follow.
4 Auction HAndbook
Pre-Sale Activities
Consign to
Auctions EarlyThe auction processworks best when vehiclescan be reconditioned,processed, and marketedwith as much lead timeas possible.
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Commercial Consignment Overview
Every day, personnel work with factory, rental car,fleet, and financial institution representatives,some of whom maintain offices at the auction site,to coordinate the arrival of their vehicles. Together,these teams handle all the necessary paperwork andmake a number of decisions in preparation for thesale, including when the vehicles will be sold, thesequence of the vehicles for the sale and what, ifany, work needs to be done on the vehicles. The
starting place for this analysis is assessing thecondition of each vehicle.
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Following check-in of vehicles for commercialconsignors, an auction condition report writercompletes a vehicle condition report. Most condi-tion reports are prepared on a handheld computer.Condition report writers are trained, certifiedprofessionals who have taken courses on properlyand thoroughly identifying a vehicles condition.
Many vehicles arrive in top-notch condition, butthe condition report on others might note that thevehicle has a flat tire, a dent on a quarter panel, acracked windshield, or more substantial body ormechanical issues. Condition reports list the recom-mended reconditioning work needed on a vehicleand the estimated cost of repair. The reports alsograde vehicles on a common scale (see ConditionReporting, pages 62-63). Condition reports and
vehicle photos can be posted online, which allowsan auction account coordinator to discuss withthe consignor or their representative each vehiclescondition, as well as the suggested repairs. At thatpoint, the commercial consignors may rely on auc-tion location account coordinators to give them anidea of what they might expect to receive for thevehicle if sold as is, and what added value couldbe gained by making various enhancements.
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Critical to the success of any auction sale isattracting many buyers and sellers whose interestsare complementary. All auction locations bringthis expertise to their customers. They may
employ telemarketers who call dealers locally oraround the country to inform them of upcomingsales and promotions. In addition, they will sendfaxes or e-mails of pre-sale lists or direct-mailflyers to a targeted set of dealers who frequent theauction sale or who have made the auction loca-tion aware of their buying needs. Advertisementsare placed in automotive trade publications, and
announcements are put on the auction locationsWeb site. Posters adorn the lobby, and displays areoften created to attract interest in upcoming events.In many instances, online promotions, sweepstakes,or prizes are promoted to attract buyers.
At crtfat
Many auction locations will pre-sale-certify a vehicleto help a consignor build confidence in the cars
condition. There are usually levels of certificationavailable (see Auction Certified Inspection, page 61).
Commercial Consignment Overview(Continued)
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Dealer Consignment Overview
Similar to commercial consignment, hundreds ofdealer cars are consigned to auctions for each sale.To help facilitate the process, most operatinglocations have dedicated dealer account repre-sentatives and a staff of dealer account managersto ensure the experience is a favorable one for theconsigning dealer. These dealer account teamswork with dealers and their representatives in a
variety of ways, including:
Ensuring the dealer chooses the most appropriateplacement for each vehicle being consigned.
Assisting in setting realistic price expectations foreach vehicle being sold.
Establishing a pattern and reputation for the dealeras a credible and consistent seller.
Finding the appropriate lanes and run times. Providing assistance to sellers and encouraging
them to represent their vehicles at the time of sale. Developing plans to enhance the prospect for
increasing sales rates over time. Assisting with any issues in the exchange process,including the required paperwork.
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Auctions bring together large numbers of buyersand sellers on sale day to facilitate the fair markettrade of vehicles for true market values. The auctionsales may also be broadcast over the Internet todealers nationwide in simulcast transmission(see Manheim Simulcast, page 87). Auctionlocations themselves never take ownership ofvehicles but, rather, receive fees for the services pro-vided. The open, live, competitive bidding on saleday is extremely quick, and results are driven bybuyers competing for the same vehicles.
Dealers, who are the only buyers participatingin wholesale auction sales, may have preregisteredto participate, while others may need to registerthe day of the sale. These dealers may be local
or might have traveled long distances to maketheir purchases.
Auctions may run multiple lanes of vehicles atone event (see Understanding Lane Activities,page 43). Drivers who work at the auctionlocation bring cars through the lanes wherethe vehicle, the seller, potential buyers, and thepaperwork on the vehicle all meet with aprofessional auctioneer. The auction lotpersonnel coordinate to ensure that the rightcar is in the right place at the right time.
The Sale
Confer with theAuctioneerAuctioneers can get a feel for thecrowd. Get their advice on thestrength of the market that day.
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The auctioneer facilitates the sale of each vehicle,which, on average, takes about 60 seconds. For moreon specifics of buying and selling, see Buying a Vehicleand Selling a Vehicle, Chapters 4 and 5, respectively.
To keep participants updated at the auction,electronic monitors are often available to providethe status of various auction activities, such asarbitration outcomes, if bids, and the statusof vehicles in each of the lanes (see If Bids,
page 46).
Front Office Administration
The auction location employs numerous specialistson its staff, including payment clerks, title clerks,and financing personnel, among others, to ensurethe sale runs smoothly and transactions are
completed effectively. Payment clerks handle thou-sands of buying and selling transactions at each sale;title clerks will ensure that the documentation andtransfers for each of these transactions are managed;and Manheim Financial Services (MAFS) personnelwill often assist in what has become the financing ofhundreds of millions of dollars worth of transactionsat the auction locations.
Arbitration Services
Dealers who have made a purchase but are concernedwith some aspect of the sale or vehicle can seekarbitration. Each location is staffed with personneldedicated to assisting in these situations (see Servicesfor Buyers, pages 50-52, and Services for Sellers,page 66).
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Auction Fees
Most auctions use a sliding scale to set buyerand seller fees. These fees vary nationwide, but areusually related to the actual sale price of the vehicle.
Transportation Services
Consignors, dealers and remarketing professionalswishing to arrange transportation for their vehiclescan contact either the operating location orManheims Transport Solution to gain access to anationwide network of transporters. ManheimsOne Call Does It All Premium TransportManagement Services, powered by ManheimTransport Solution, will handle the entire process for
both inbound and outbound transportation needs(see Vehicle Transportation, page 52).
Advertising and Marketing Services
Coordinators can help dealers advertise theirpurchases immediately. Before vehicles leave thepremises, dealers can arrange to have vehicles postedon AutoTrader.com (a retail online classifiedadvertising and auction service) or advertised in one
of a number of publications, from newspapers tospecialized magazines showcasing vehicles to thepublic. Auction locations can also help dealers placevehicles on retail or wholesale Internet sites suchas Manheims OVE.com site that provides 24/7remarketing opportunities.
Post-Sale Activities
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At the request of the buyer,auction locations performdetailed arbitrable issueinspections that can beguaranteed for 7 or 14 days.
Pt-saipt
Dealer floorplan financing,as well as rental car financing,are available from Manheim.
Fag
Locations provide guaranteedfunds to sellers and areresponsible for collectingfunds from buyers.
Payt
Some operating locations havetheir own delivery fleets; somehandle the arrangements fortheir dealers with outsidevendors while others utilizeTransport Solution to handlethe entire process, utilizing anationwide network of qual-ified transporters for bothinbound and outbound
transportation needs.
Traprtat
Many locations facilitatetitle transfer and storage,as well as electronictitle searches.
Ttg
Locations can assistcustomers in selling theirvehicles in wholesale andretail environments.
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Q. Do auction sales in differentparts of the country operatedifferently?
In general, most operate in the same way. However,there can be small, but important, differences,based on geography, auction chain, tradition, etc.Variations can occur in areas such as arbitration,presentation of run lists, role of ringmen, etc.
Q. How do live auctions comparewith In ternet au ctio ns?
Live auctions bring together a critical mass ofbuyers in a neutral bidding environment wherethere is the immediateinteraction of open bidding.Live auctions comprise the only marketplace wherebuyers get to kick the tires. Moreover, live auctions
provide on-site reconditioning services.
Internet auctions (Manheim Simulcast andOVE.com) allow the dealer to bid without leavingthe dealership; they also allow dealers to utilizemultiple auction locations, and they facilitate
24/7 buying and selling. Internet auctions can bean effective way to purchase specifically targetedvehicles and for consignors to gain visibility fortheir products. Today, new technology, includingdigital photo booths, provides a more realisticpicture of online vehicles.
Q. How does an auction locationmake money?
The primary source of revenue is fees for servicesprovided to both buyers and sellers.
Q. Do certain auctions specializein certain vehicles?
Many auctions cover a wide array of sale types,from off-lease vehicles to factory program cars
to dealer consignment. Auctions also run specialsales, such as collectibles or high-end luxury units.Some sites regularly schedule boat, motorcycle,RV, personal watercraft, and other PowerSportvehicle sales.
FAQFrequentlyAsked Questions
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NAAA Auction Members
Auction locations come in all sizes and shapes. Thelargest have more than 20 lanes, the smallest, one ortwo. Over 350 national and international membersbelong to the National Automobile AuctionAssociation (NAAA). This organization demandsthat its members meet certain requirements andoperate secure, neutral auction settings. A list ofNAAA auctions can be found at www.naaa.com.
Auction Formats: Open and Closed Sales
There are basically two types of wholesaleauction sales:
Open: An open sale means that any registereddealer may attend. The majority of auction salesare open. Open auctions usually offer a range ofvehicles from various sources. However, an opensale may be specialized and concentrate on asingle class of vehicle, such as special dealer
consignments, off-lease, rental or fleet vehicles.
Closed:A closed sale limits who may attend.For example, a manufacturer may hold a salethat is only for its franchised dealers.
In certain circumstances, to meet governmentrequirements, auctions may open consignmentsales to the public.
Both buyers and sellers usually choose an auctionlocation based on their specific needs, whichmay include:
Vehicle types being consigned Geographical convenience
Reputation of the operators Services offered Marketplace dynamics
Choosing an Auction Location
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Auction Calendars
Most auction locations schedule regular, recurringsales on the same day of the week (e.g., a regularopen Tuesday sale and a biweekly closed factorysale). Special sales may be scheduled for other daysof the week. Most sales are held during the day,though night auctions do occur; weekend auctionsare rare.
The calendars most often indicate what kindof vehicles (off-lease, dealer consignment, factory,etc.) will be offered for sale and may even includeinformation on who will be consigning thevehicles and the number of units in the sale.
Many auction locations advertise their calendarsin trade publications. (For a list of industrymagazines and Web sites where sale information
is published, see pages 109-111.)
Multiple AuctionCalendars Focus
Buying OpportunitiesIt works to a dealers advantage to getcalendars from more than one auctionlocation. Once a dealer has requesteda calendar, they will be put into thatlocations database and will receiveregular information. In addition, if
requested, the location will updatethe dealer on specific vehiclescoming to auction that meet hisor her buying criteria.
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Local Auction Web Sites
Local auctions usually maintain Web sites thatinclude information on:
Travel directions and maps Registration information Sale-day lane schedules Pre- and post-sale inventory lists Market reports Internet inventory
Events calendar Services Contact information Financing options Airport/hotel pickup
Auction Tours
Auction locations welcome the opportunity to showcustomers how the auction works and are eager toprovide a tour of the facilities, as well as spend timewith an individual explaining the details of theoperation, the bidding process, and more.
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Whats for Sale
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Salvage Auctions
Select Manheim locations with specialized facilities,staff, and service conduct sales whose offeringsinclude salvage, damaged, disabled, and recoveredvehicles and equipment, along with scrap andparts. See www.totalresourceauctions.com.
Exotic Highline Events
Featured at select Manheim locations, these auctionssell exquisite nameplates such as BMW, Rolls Royce,Ferrari, Porsche, and many more. These auctions
sales draw buyers from around the world.
Specialty Auctions
Sale offerings at these select Manheim locationsinclude motorcycles, boats, recreational vehicles,and PowerSports units.
Mobile Auctions
These auction sales are conducted on the sellers siteand were created to meet the needs of fleet-sizedgroups of trade-ins. The Manheim Mobile Auctionsolves the logistical problem these sales present ofmoving large quantities of vehicles off premises.
For example, mobile auctions have been used to selllarge quantities of hail-damaged vehicles.
Heavy Truck and Equipment Auctions
These auctions offer everything from semis tobox trucks.
Other Types of Auction Sales
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Dealers must register to attend and bid on units at an auction. This can be done on the day of every sale,but, for convenience, many dealers preregister. Registration can be completed in person, online, by fax,or by mail. Forms are available at www.auctionaccess.com. Dealers can preregister at the Web site as well.
Ease of Use
Many auction locations use a national
dealer registration system for the conve-nience of customers. Dealers need onlyregister once to bid at more than 150auctions. They can also update their infor-mation online 24/7 using myACCESS!Log on to www.auctionaccess.com.
Dealer Registration Checklist
A completed Dealer RegistrationForm includes:
Dealership nameLot addressDealership taxpayer ID numberCompany typeBusiness typeBusiness phoneInsurance company
Bank, finance or floorplan companyReferences
Signed Authorization and Guaranty Form
Taxpayer Identification Form (Form W-9)
Bank Authorization Letter (allowing the bankto release credit information to the auction company)
State Sales and Use Tax Certificate of Exemption(if applicable)
Copy of dealership check
Dealer Registration
Copy of dealership owners government photo IDand photo IDs of all authorized representatives
Surety Bond and Division of Motor VehiclesBond, if required by state
Authorization Letter for all authorizedrepresentatives
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Identification Cards
Dealers who complete the registrationprocess (along with their registeredrepresentatives) are issued a permanentidentification card, shaped much like acredit card and called an AuctionACCESScard. This card grants access for dealers tobuy and sell vehicles. AuctionACCESScards may be inserted into kiosks placedaround the auction site to receive bidder
badges and other information.
Auction HAndbook
Register Once with AuctionACCESS
Register one time with AuctionACCESS, and a dealer is automatically registeredat more than 160 auction locations in North America.
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Bidder Badges
A bidder badge is typically required for a dealerto bid at an auction. It is worn in plain viewso the auctioneer can see it. To receive a bidderbadge, a dealer can simply insert his or herAuctionACCESS card into a kiosk atmost auction locations.
The badge displays:
Auction sale week number Dealership name Bidder name Bidder number
Self-Service Auction Kiosks
Electronic kiosks are placed throughout most auctionlocations. By inserting an AuctionACCESS cardinto a kiosk, a dealer can obtain the following:
Run list of sale-day vehicles Run list of upcoming sale days Buyers summary Make and model summary Bidder badge
Driver badge Gate pass Block summary If sale summary
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Auction locations make available computerized lists of the vehicles running in each sale. These lists aresegmented by the selling group, such as the commercial consignor, dealer consignment, etc. These lists,often referred to as run lists or block summaries, can be obtained in person from the auction kiosk orvia fax or e-mail. In some cases, auctions maintain customized Internet sites for individual dealers andautomatically post the sale lists to their private sites (see Manheim.com, page 85).
These lists are updated regularly.Run list data may vary, but the followingtypically will be indicated:
Lane in which the vehicle will be for sale Vehicle run number (this is an auction-
assigned sequence number given to thevehicle or group of vehicles consignedby one source)
Vehicle year, make, model and body style Vehicle color
Vehicle mileage Vehicle equipment such as air
conditioning, power steering, etc.
Auction HAndbook
Year: 2004
Model:Camry LE
Body Style:4 Door Sedan
Auction Run List
Run Lists
Make:Toyota
Mileage:
94,044
Engine:4 Cylinder
Lane #4
Run #58
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Customized Run Lists
Auction locations can provide customized run lists by car model, car make,or even by year. Dealers can request the list organization that suits their needs.There is no charge for this customizing service.
Customized Run List
Know the MarketSuccessful dealers at auctions armthemselves with knowledge aboutwhat vehicles are bringing in thewholesale and consumer markets.
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Guidebooks
Guidebooks are often used by dealers to givethem a pricing framework for the vehicles theyare considering buying and selling. Due to thevarying methodologies used in developing thedifferent price guides, the resulting values for thesame year, make, and model may differ.
Industry Information
Various publications, newsletters, and Internetsites with information, reviews and opinions onused vehicles can be helpful reference material(see Related Materials, pages 109-111).
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of Key PointsSUMMARY ch a al ha mah yr .
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Auction
HAndbookch4
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Pre-Sale Inspection
Dealers have the opportunity to inspect the vehiclesthat will be going through the lanes. The mostsuccessful dealers arrive early and roam the pre-salelot to assess the condition of vehicles they mightbe interested in purchasing.
Dealers buy almost 10 million vehicles at auction per year.The better a dealer has prepared for the sale, the better thechance of having a profitable experience.
Walk the LotPreview the vehicles of interest.
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Sale Day Preparation
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Sales Lot Parking Plans
Some locations provide a sales lotparking plan that outlines wherevehicles are located. Vehicles aretypically parked in groups thatcorrespond to the lanes in which theyrun. Parking lot plans are typicallyavailable at the locations front desk.
Floorplanning Financing
Manheim has $1.5 billion infloorplanning available todealers. Other companies havesimilar plans.
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Windshield Markings
Each vehicle ready for auction is marked on itswindshield. This marking, either printed or writtenby hand, is prepared when the vehicle is checked in.
The markings contain:
Seller name Model year Run number
Odometer reading Lane assignment
In some cases, the condition of a vehicle is alsomarked on the windshield.
4
Read UpGet the daily ManheimMarket Report (MMR) atwww.manheim.com toknow the latest wholesalevehicle pricing trends.
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Many elements converge in the lanes of an auction,where the vehicles are auctioned from the blockone at a time.
Block Area
The block is the elevated area where the seller, the
auctioneer, and some auction administrative staffconduct the sale. The auctioneer and the blockclerk are on the block throughout each sale. As asellers car enters the lanes, that seller may also beon the block to represent their car to the bidders.
The Auctioneer
The auctioneer provides detailed information about
the respective vehicle for sale, makes appropriateannouncements about the vehicle, discusses priceexpectations with the seller, and calls for biddersfrom the lane and online. The auctioneer managesthe bidding process and ensures that interestedbuyers are acknowledged in the bidding. Oncethere are no additional bidders on a vehicle, theauctioneer will complete the sale or discuss
alternatives with the seller if the car did not meetthe sellers minimum price (also known as thefloor price) and all of this is done in about60 seconds.
Ringmen
At some auction locations, ringmen assist
auctioneers in identifying bids and clarifyingissues in the bidding process.
Block Clerk
The block clerk is the person who records thewinning bid for each vehicle, the amount andthe dealer who purchased the vehicle, as well asall other transaction details.
Manheim Simulcast Technology
Simulcast broadcasts the live action from the lanevia real-time audio and video. It expands buyersand sellers marketplaces (see pages 87 and 105).
Understanding Lane Activities
4A Guide TO WhOlesAle Vehicle ReMARkeTinG
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What Do the Lights Mean?
The lights above the auctioneer are there to indicate the conditions under which that vehicle is being sold. Itis the sellers responsibility to make the proper announcements from the block and ensure that the appropriatelights are lit. It is the buyers responsibility to understand the announced conditions and what the lights mean.Though lights differ by location, this is a summary of what might typically be found in an auction lane.
DriVe
cAution
Yellow Light: Caution, Listen Up
Yellow indicates a vehicle that is being soldunder announced conditions. These conditionsare announced prior to sale by the auctioneerfor the seller. Buyers cannot arbitrate forannounced conditions.
Green Light: Ride and Drive
Green is a statement by the seller that thevehicle is being sold free of any knownmajor defects, including:
Drive train Engine Transmission Rear end
It may also cover other items such as airconditioning on vehicles of a particular age.
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As is
no titLe
Red Light: What You See Is What You Get
The vehicle is sold as is and is notsubject to arbitration.
Blue Light: Title Absent
Indicates a vehicle being sold without a titleon the premises. It is usually announced fromthe auctioneers stand that this vehicle is titleabsent (or title attached). If this vehicle issold, the seller has a certain period of time todeliver the title to the buyer.
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Floor Price(also known as the low or the reserve)
Sellers can put a floor price on vehicles they areselling, which indicates to the auctioneer the lowestprice the seller is asking for the vehicle. If the floorprice is not met, the seller can reach an agreementwith the auctioneer while on the block to lower thefloor price and attempt to sell the vehicle while itis still in the lane. If the bidding fails to reach the
agreed upon floor price, the vehicle can still be soldon an if bid; otherwise, it will leave the lane as ano sale (see Floor Prices, page 65).
If Bids
If bids are usually facilitated by the auctioncompany and state that a bidder agrees to buy avehicle if the seller will accept the offer within
a specified period of time. If bids are usuallymade on vehicles that did not meet sellers priceexpectations (see Pricing Consigned Vehicles,
pages 64-65). On sale days, the auction locationhas a department dedicated to facilitatingif sales.
Title Absent
When a vehicle is sold as title absent, the title isnot available the day of sale. If this occurs, individualauction rules should be consulted.
Screen DisplaysAt most locations, dealers can consult variousscreen displays that have information on:
Status of vehicles crossing auction blocks bytheir run numbers
Status of if sales Status of vehicles in arbitration Status of post-sale inspections
Special messages
Bidding StrategiesEach dealer has their own bidding style.The important thing is to be sure theauctioneer or ringman knows when adealer is interested in a vehicle so theirbids are noted.
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Dealer Vehicles
Dealer vehicles for sale at auction are primarily trade-ins and aged inventory. In some cases, a dealer willtake a vehicle in trade that does not meet his dealer-ship profile and will immediately offer that vehiclefor sale at auction or through an online channel suchas OVE.com. Often, if a dealer cannot retail a vehiclewithin a certain period of time, he or she will bringthe vehicle to an auction for a quick sale.
The condition of dealer-consigned vehicles variesgreatly. Most are not reconditioned at the auction,but this is changing as auction locations demonstratethe value of reconditioning to the seller.
Fleet/Lease Vehiclesoff-la ut
Vehicles in this commercial category are consignedfrom manufacturers captive financial arms, fleet/leasecompanies, banks, and financial institutions. Vehiclesare usually limited in the number of miles that canbe put on the vehicle and are held to some kind ofmaintenance contract; these vehicles are often in
good shape and, therefore, desirable.
Off-lease units tend to be older than rental companyor factory vehicles, and often meet the needs of adealer who is looking for noncurrent-year units.Auctions offer leasing companies the fastest and mostefficient method of remarketing large volumes ofvehicles. Moreover, because of the high volumeand desirability of these units, lease vehicles are
usually offered in dedicated lanes. At times, theyare sold through upstream electronic venues.
Rta (n-Prgra r R) ut
Risk units are vehicles that a rental company didnot receive under a factory repurchase program.Therefore, the rental company has the responsibilityof remarketing the vehicles.
The vehicles are usually current-year models.They have usually been in a regular maintenanceprogram and tend to have been well kept. Thesevehicles also reflect the reputation and integrity ofthe rental company.
Rp ut
These vehicles are generated by manufacturersfinancial arms, leasing companies, banks, andfinancial institutions. Repossessions fall into twocategories voluntary and involuntary. Auto auctionsmeet all the Federal Uniform Commercial Coderequirements of a commercially responsiblemethod to sell repossessed vehicles.
Types of Consigned Vehicles( pag 26-28)
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Ft ut
Fleet units are vehicles that come to auction froma company car fleet, trucking companies, or thegovernment. These units may be owned outrightby businesses or leased from fleet managementcompanies.
Fleet vehicles tend to be more than two years oldand, in most cases, the cars, vans, or trucks haveminimal options and high mileage but have been
satisfactorily maintained. Many dealers feel com-fortable purchasing these units at auction or online.
Auction sales offer fleet consignors the quickestway to remarket large volumes of similar vehicles.
Factory (Program) Vehicles
Based on manufacturers marketing strategies,fleets of vehicles are sold to rental companies undervarious programs. Manufacturers programs withrental companies may call for the repurchasing andremarketing of these vehicles by the manufacturerin closed auction sales.
Program cars are most often all current-model-year
units, and are still under factory warranty. Often,the manufacturers sell these available vehicles inclosed physical or online auctions, only to their fran-chised dealers. This gives the factorys dealers firstpick at current-model-year, quality used vehicles.Program cars also give the dealer an opportunityto put a customer who cannot afford a brand newvehicle into a current-year used vehicle and possiblysave the sale for the brand.
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Dont Let $100 LoseYou the Car You Want
Profit opportunities are usuallyavailable to dealers who know theirinventory needs and their markets.Sometimes, securing a desirablecar for one more bid can be worththe investment particularly if itcan be sold quickly.
INSIDER TIP!
Buyers Checklist Register Review upcoming sale
Note cars on the Internet Review recent auction prices Get there early to inspect cars Note run times and lanes Get a feel for prices on similar
vehicles Make yourself known to the
auctioneer
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There are a number of services provided to buyersat the auction location after they have made pur-chases, including post-sale inspections, arbitrationservices, test-drive opportunities, purchase payments,title services, vehicle transportation, and advertisingof their purchased vehicles.
Post-Sale InspectionsDealers who have purchased vehicles may usepost-sale inspection services. A team of mechanicsinspects the mechanical and frame components ofthe vehicle looking for arbitrable issues. Fees are setaccording to vehicle value and are also dependent oninspection type (frame, mechanical, or complete)and length of inspection guarantee ( 7 or 14 days).
Arbitration
Arbitration is a valuable service provided byauction locations to protect the interests ofboth buyers and sellers and ensure the vehiclein any transaction has been properly represented.
An individual employed by the auction company,
a neutral party in the buying and selling process,arbitrates any disputes. Arbitration time limitsvary by auction. Manheim auction locations haveadopted the National Auto Auction Associations(NAAA) National Arbitration Policy at all its U.S.and Canadian locations. Manheim customersreceive the same arbitration process and standardsat any location they visit.
All NAAA auctions have a procedure for inves-tigating, and hopefully resolving, issues betweenbuyers and sellers. Arbitration usually applies tovehicles that were announced and sold under thegreen light. Controversies can be resolved by thetwo parties coming to some kind of financialadjustment on the selling price or, if the arbitrationfinds the buyers complaints accurate, and no mon-etary compromise can be reached, the sale may becanceled or unwound. Arbitration services are freeto buyers and sellers.
Title Services
Once payments for purchases have been made,title specialists at the operating location will assistdealers in the administration of transferringnecessary documents. Manheim title specialistsare available on all sale days and are capable ofprocessing titles for all 50 states.
Auction HAndbook
Services for Buyers After a Purchase
50
Arbitration PoliciesFamiliarize yourself with thearbitration policies of the auctioncompanies you attend, as thepolicies among them may differ.
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Test Drives
At many locations, if a buyer presents a valid driverslicense and his sold invoice to the arbitrationdepartment, he or she can test drive the purchasedvehicle. Many auction locations have test tracksfor this purpose.
Purchase Payments
After completing purchases for the day, buyers goto the auction locations front office to finalize theirtransactions, which includes paying for purchases,transferring titles and receiving gate passes. Buyerscan pay for vehicles in a number of ways, includingcertified checks, cashiers checks, company checks,money orders, cash, wire transfers, drafts, or with
authorized floorplan financing such as offered byMAFS. The final price of the vehicle will be thebid price for the vehicle, plus the buyers fee to theauction location and fees for any other services thebuyer has requested.
Frontline Services
Vehicles can be made frontline ready before theyever leave a Manheim auction location. Many loca-tions have one-stop shop reconditioning servicesthat can make vehicles frontline ready before theyleave the location, enabling vehicles to sell fasterand at a higher price. Services include vehicledetailing, light mechanical repairs, minor interiorand exterior repairs, auto body repair and vehiclecustomization.
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Gate Passes
After the transaction is completed, a gate passwill be provided by the front office to allowthe purchased vehicles to be released fromthe premises.
Vehicle Transportation
Transportation of purchased vehicles can be arrangedby the buyer in a variety of ways, including:
Transport Solution Auction location local delivery service Independent transporters Dealer-employed drivers /transporters.
Advertising
Operating locations can assist dealers in placing
classified ads for the vehicles they have purchased.Ads can run in various newspapers or specializedpublications. In addition, operating locations canhelp a dealer advertise online to retail customers orto other dealers (see OVE.com, pages 86 and 105).
Auction HAndbook
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Q.Whats the difference betweenauction certification and post-saleinspection?
Pre-sale certification is requested by the consignorand takes place before the sale. Post-sale inspectiontakes place after the sale and is requested by thebuying dealer.
Q. Can a dealer buy a car at auctionand resell it at auction the same day?
Yes. The dealer will have to re-register the vehicle.
Q. Do all operating locations useelectronic registration?
Most do, but some do not yet have this technologyin place.
Q. How long in advance does a dealerneed to register for an auction sale?
The sooner the better, but dealers can register atany time even on sale day.
Q. How do I register one of myemployees or another representativewho can bid for me?
Dealer principals can authorize representatives tobid for their organization at the time of registrationor via a Letter of Authorization. Authorizedrepresentatives must have a valid drivers license.
Q. How extensive is the ManheimPowerSearch inventory?
Manheim PowerSearch gives you access toapproximately 100,000 vehicles, all of which aresearchable by key criteria mileage, color, bodystyle, and price. Manheim Market Report pricingis integrated into the site, so finding the vehiclesbuyers want is quick and easy.
55A Guide TO WhOlesAle Vehicle ReMARkeTinG
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Sellers who represent their vehicles accurately and setrealistic prices consistently sell a high percentage, earnthe buyers trust and enjoy more success at auctions.
Inventory Into CashNothing is more important to a consignors successthan turning inventory. Auction and online salesare the best way for consignors to turn slower-moving inventory into cash. Dealers who succeedat a sale follow a consistent pattern of trustworthybusiness conduct (see page 17 for Sellers CanMaximize Vehicle Value at Auctions).
=$
Consigning a Vehicle
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Required Information
To consign a vehicle, the consignor must providea full description of the vehicle, including theVIN (see VIN, pages 70-71). For best results, theconsignor should have the title at the auctionlocation prior to the sale.
Sell Consistently toIncrease Sales RatioBuyers get a feel for sellers, theirinventory, and their pricing flexibil-ity over time. They become comfort-able with sellers who represent theirvehicles accurately, set realisticprices and consistently sell a highpercentage. Likewise, the consignorwho sells cars only intermittentlyis unknown to the buyers, and
their vehicles are less likely to besought out.
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There are several ways sellers can enhance the valueof vehicles they are trying to sell. These includereconditioning, certification, and effectivelyrepresenting the vehicles on the block.
Reconditioning Services
Most locations are equipped with reconditioningoperations and some have full-scale operationsdesigned to make vehicles frontline ready. Theseservices include:
Paint services
Dent removal Light mechanical repairs Body work Collision repair Detailing Glass replacement Upholstery cleaning, replacement or repair Tire replacement Airbrushing
Parts Presentation of a Condition Report (which can
be used to discuss recommended reconditioningservices to consignors and buyers)
Vehicle customizations
Maximizing a Vehicles Value
Reconditioning CanBe ProfitableReconditioning is a wise investment.Many consignors have seen that$1.00 spent on reconditioning canprovide $1.50 in return.
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Auction Certified Inspection
Many auction locations offerconsignors a vehicle certificationprogram. The program allowsthe seller to choose a level ofcertification. Manheim offers a32-point inspection, includingexterior and interior condition,fluid levels, and a test drive bytrained personnel. The Manheiminspection is guaranteed for 14 daysafter the sale.
6
Detailing: A Good InvestmentFirst impressions of a vehicle do matter, and many consignors use the auction
facilitys detailing services to present their vehicles in the best light.
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Condition Reporting
Manheim Condition Reports provide valuableinsight into the visible condition of a vehicle priorto sale (in the lane or online). Our trained andcertified CR Writers electronically recordinformation about current damages and priorrepairs, tire and tread depth, options, equipmentpackages, value-adding features, and the overallcondition of the vehicle. The reports assist
consignors with remarketing, reconditioning,and floor pricing decisions. They also assist onlinebuyers through Manheim Simulcast, OVE.com,and other remarketing channels.
Seller on the Block
When vehicles are personally represented by aseller, there is a positive sense created in the lanes
that the seller is standing behind their vehicles. Ifconsignors cannot attend a sale where they areselling vehicles, the auction locations dealerrepresentative can be asked to stand in on theblock. It is helpful if the sellers establish a realisticfloor price on their vehicles so that the dealer
representative knows the minimum price aseller will take.
6 Auction HAndbook
INSIDER TIP!Successful SellersStand on the BlockIf sellers are on the block when their
vehicles are in the lane, the vehiclesusually bring more money. Buyerscan converse with the seller and gainassurance on the condition of avehicle. Plus, the seller can adjustthe floor price to better reflect theactual bidding environment and
readily authorize the auctioneer toaccept a bid from the floor.
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Electronic Vehicle Condition Report
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For effective results in the auction process, it is criticalfor a seller to set a realistic floor price (see FloorPrices, next page). Several factors come into playin determining appropriate price expectations,including the vehicles condition and color, andthe demand for the particular product at that time.Once the sellers expectations are determined, aseller may set a floor price for the vehicle. During
the auction, the floor price is a key determinant ofwhether the vehicle will be sold or become an ifsale or a no sale.
Condition
First impressions really do matter. Buyers willtake into account the condition of the paint, tires,interior, and other aspects of a vehicle. Otheritems to consider are the make, model, year, andodometer reading of the vehicle that is being sold,along with the general condition of the vehicle.
Also important are the number and type ofadd-on features.
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Set Realistic Floor PricesSellers who consistently set floor prices
that are not met by the bidders will soonfind no one bidding on their vehicles,as they consider participation a wasteof time.
Integrity Selling Pays OffProperly and fully disclosing thecondition of a vehicle gives buyersconfidence and will, in the long run,gain a positive reputation for the sellerand his or her vehicles. Buyers willseek out these sellers and regularlypurchase their inventory.
INSIDER TIPS!
Pricing Consigned Vehicles
Sellers Checklist Reserve run times Post cars on operating locations
Web site before sale formaximum exposure
Do cosmetic and mechanicalreconditioning to increasenumber of buyers and bids
Be honest about condition Set realistic floor price Be on the block when your cars run Become a regular participant at
an auction to develop a goodreputation and strong followingamong buyers
INSIDER TIP!
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Color
Premium colors will usually bring a premium price.A popular color can sell a vehicle for $1,000 higherthan that same vehicle with a less popular color.
Demand
Volume levels can affect pricing. An excessivenumber of a certain make or model can lowerprices, while a scarcity can raise the bids. Manyconsignors check the run list and confer with theauctioneer for assistance. To determine marketdemand at previous sales and the resulting prices,market reports from the auction location canbe obtained from the staff (see Auction MarketReports, page 34).
Floor Prices
The majority of vehicles go through the lanes witha floor price the asking price of the vehicle. Toeliminate or change the floor price, the consignorshould contact the auctioneer or auction dealerrepresentative. Auctioneers prefer to have an estab-lished floor price, as it helps focus the biddingprocess. If the bidding does not reach the floor price,the seller standing on the block can indicate to the
auctioneer that they will take the last bid and forgothe floor price.
No Sales
No sales occur when the bidding in the lanedoes not reach the floor price of the seller. Whileconsignors have the option of no-selling their
vehicles, usually the vehicles will not appreciate invalue, and it is worth their considering the costs ofholding inventory longer and possibly selling laterfor even less. Usually a vehicle brings the best pricethe first time across the block.
If a consignor has any vehicles that have not sold,they can ask to put them through the lanes againthat day, store the vehicles until the next sale, offerthem for sale online, or arrange for the vehicles to
leave the auction site.
If Sales
If sales occur when the floor price of the seller hasnot been met, but a potential buyer wants to makean offer on the unit after the car has left the lanes. Inthese circumstances, a buyer advises the auction staffof the bid, which will be relayed to the seller.
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Seek AdviceSellers often confer with theauctioneer and location personnelas to what they think a vehicle mightbring. Their experience and feel forthe auction environment can behelpful in establishing a vehiclesrealistic floor price.
INSIDER TIP!
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Following a sale, the auction location seeks toensure the completion of the transaction is abeneficial one for the seller. In this effort, operatinglocations provide title and payment guaranteesand serve as an objective arbitrator, if required.
Title Guarantees
Trained staff will facilitate the transfer of the titleto the buyer.
Payment Guarantees
The auction is a neutral trading floor that guaranteesthe consignor will get their money from the winningbidder. The auction location pays the consignorfor their vehicles when the title is turned in, even ifthe buyer has not yet paid. The consignor is notresponsible for collecting the money, nor do theyhave the risk of taking bad checks.
Arbitration
Arbitration protects both the seller and buyer. Buyerscan request arbitration. However, if a buyerscomplaint is not open to arbitration, the buyerstill owns the vehicle, and the seller does nothave to take time dealing with the complaintor negotiating with the buyer (see ArbitrationServices, page 19).
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Services for Sellers After a Sale
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Q. Does a consignor need to consigna minimum number of vehicles?
No.
Q. How does a consignor correctinformation that is wrong on theinvoice?
Prior to the invoice being printed, corrections canbe made by contacting an operating locationspersonnel. After the invoice is printed, theconsignor can correct facts by contacting theirdealer representative.
Q. What if a consignor does not havea title for a certain vehicle?
Vehicles that do not have the title at the operatinglocation run in the lanes with a blue light, meaningtitle absent. The seller has a limited amount oftime to submit the title to the auction for processing.Many times there is an additional fee for absent titles.
Q. What if a buyer is from another state?
On-site title specialists are aware of the title require-ments in all 50 states and can handle the transaction.
Q. What if a buyer needs export services?
Manheim can arrange for the vehicles to be shipped
anywhere in the world.
Q. If a vehicle doesnt sell, is there a feecharged?
Generally, fees vary depending on auction policies.
Q. Should a dealer expect to selleverything he consigns?
Yes. As long as the dealer has set a reasonable floorprice, the vehicles should sell.
FAQFrequentlyAsked Questions
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chaaii f h mak 72
evaain ti 75
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ConditionVehicle condition usually trumps all other factors indetermining the price a vehicle will bring. Thats whymany sellers do extensive reconditioning on theirvehicles before they enter the lanes. A vehicle thathas been washed and detailed; has had its dings,scratches and dents repaired; and has been cleanedinside will bring a higher price. A vehicles condition
is described in an electronic condition report (ECR),when available. This report is available onlinefor most vehicles sold by institutional sellers.A summary of the overall vehicle condition iscontained in the National Auto Auction VehicleCondition Grading Scale. This 0 to 5 gradingscale summarizes the ECR.
MileageVehicle mileage is precisely quantifiable, and is key indetermining the value of a vehicle.
Options
The same used vehicle can be sold for hundreds tothousands more dollars depending on the options
and equipment. Items such as a hybrid, V6 vs. V8,four-wheel drive vs. two-wheel drive, and hard topvs. convertible can impact the value of a vehicle.
Color
Conservative, mainstream colors usually fare wellat auction sales. Popular-color vehicles can sell for$1,000 higher than the same vehicle with a less
desirable color. According to the NationalAssociation of Fleet Resale Dealers, good colorsare typically silver, white, red, and tan while thedifficult colors are typically purple, yellow andblack. Of course, different models are affecteddifferently. The bright yellow cute-ute can be aneye-catcher, while that same color on a traditionalluxury car can be a tough sell.
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Many factors need to be considered when determiningthe value of a vehicle. Condition, mileage, options, color,and market conditions are among the most important.
Characteristics of the Vehicle
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VIN
Vehicle Identification Numbers (serial numbers) are stamped on every vehicle by the manufacturer. Theyare the primary identification code in the industry and can be found on dashboards and inside car doors.
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XHGBH41J11t aratr: t
try w
t ar wa a
1, 4 or 5 usA
2 caaa
3 Mxo
6 Atraa
9 Braz
J Japa
k sot
kora
l Tawa
s uk
V Fra
W GrmayY sw
Z itay
9t aratr:vaat tVin a bgatrz by t
afatrr art ffrf t Vin tatt
2 - 8t aratr: prtrat f v, tfbra, , by ty, g z a typ
What information is
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contained in a VIN?
7
M N 10918610t aratr:
yar f t v
A 1980
B 1981
c 1982d 1983
e 1984
F 1985
a trg
Y 2000
1 2001
2 2002
3 2003
4 2004
5 20056 2006
7 2007
8 2008
11t aratr:
tfat f
pat at w
v wa
afatr
12t - 17t aratr: v prtbr
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Price Factor by Vehicle Class
While broad movements in market pricing may bequantified, there are individual models within eachclass that move in the opposite direction. Whileprice movement does reflect pure demand, there isoften much more than this single factor at play.
cpat V.Average auction sale pricesfor compact cars can be related to fuel prices and
any new vehicle incentives placed on the category.Compact cars also exhibit a wider seasonal swingin prices than do mid-sized cars. These swings aredirectly related to the consignment and purchaseactivity of dealers who desire these units duringthe spring selling season and the early tax-refundseason.
m-sz V. Due to the large number ofcompetitive units in this category, seasonal pricefluctuations are much smaller than in other markets.
lxry. A large increase in household wealth, plusa strong tendency for buyers to move upscale,provides a solid market for these cars. Moreover,buyers of these cars are less affected by economicdownturns. However, swings in equity and real
estate values as well as changes in off-lease volumescan move wholesale prices.
sprty. This class of car, like the convertibles thatare an important part of the segment, thrive onthe spring market. With the retail spring marketcoming earlier and earlier in the calendar year,dealers have become more aggressive buyers ofthese units earlier in the year.
Va. Minivans and full-size vans have comprisedone of the weaker segments of the used vehiclemarket. This is directly related to the record sumsof incentive money that were applied to the newvehicle side of this segment and the growingvolume entering the wholesale market.
suV. SUV prices have been relatively depressed.
The used SUVs coming back to auction mostrecently consist of a much more upscale mix of units vehicles that sold new at top dollar. Accordingly,the flat to lower average used SUV price hides what,in fact, has been a disappointing market. Add tothat fuel economy decisions, and its understandablewhy the category has been under pressure.
Pp. Used pickups have shown pricedepression. Here again, a changing mix of units
also needs to be considered when tracking pricing.Many of the used pickup units coming back morerecently are upscale models with four doors andluxury packages.
SeasonalityUsed unit sales peak in spring and summer months,often being twice as high as in the fall and winter.
Used vehicle prices decline most rapidly aroundthe time of new model introductions. Statisticallyspeaking, in the aggregate, November and Decemberare the weakest months for used vehicle prices.March is the strongest. Since 1995, however, Februaryand March prices, have shown some strengthening,while September and October prices have weakened.This could well be because of an earlier flow ofindividual income tax refunds, due to electronic
tax refunds, which serve to accelerate the arrival oftraditionally higher spring pricing.
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Characteristics of the Market
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Regional Differences
Different parts of the country tend to have differingvehicle inventories. The weather, income levels,gasoline prices, and other factors can all influencethe number of certain makes and models andeven the abundance or absence of certain colorsand features.
ConvertiblesMore in the South,particularly Florida
Luxury SedansMore in the
Northeast and California
CollectiblesMany in Florida
White CarsMore in
Warm-Weather States
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Overall Volume
The sheer number of vehicles available can affectthe final price a buyer will pay. Exciting, totallyredesigned new vehicles continue to enter themarketplace at a record pace. The result is thatboth new and used vehicle marketplaces arebecoming high-volume/low-price arenas.
Nevertheless, within this volume expansion
environment, buyers are finding that the numberof off-lease vehicles is lower than before. This trendis reversing, however, and this should mean greaterwholesale volume of good used vehicles.
Model Introductions
Manufacturers have become more flexible and haveintroduced new models in shorter cycles. As a result,new models will have shorter life cycles, and thenumber of niche vehicles will multiply. All this meansthat buyers need to be more knowledgeable thanever before and evaluate a vehicle in the context ofrapidly changing model lineups.
Sticker Price ComparisonsNew cars have been sold in the past with lavishincentives, so it is a mistake to gauge a used vehiclesvalue against the sticker price. Rather, one shouldconsider the actual transaction price. A used vehiclesability to maintain some percentage of the originaltransaction price is little changed.
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Evaluation TipsBelow is a series of appraisal considerations that can be helpful when evaluating a vehicle:Conditions to Look For... May Indicate
Interior
exptoay rty or wor commra or arpoo ag
ca rar at commra ag
Bro at coo amag
Odometer
not rgtrg May b ot
low mag ompar to oto Oomtr rt
hg mag ompar to oto Goo ar, gway rvg
c w rvg Ba ab
Fra tr o oor Oomtr rpar
Gauges
low o prr Ba g or pmp
low arg Ba votag rgator
lgt ot worg Faty gag; or ot to trob
Trim
Mg Mor or major oo
Rparab amag Mor oo
irrparab amag Major oo
door Prvo boy amag
Hood
impropr oprato Boy or fram twt
Pat mmat Rpat v/pob oo
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Conditions to Look For... May Indicate
Doors
Bg sprg boy
coo amag
Rog roa amag
Windows
Wow oprato sprg mam
Bg Wor mamsppg spp off t tra
Tires
smoot Poor mata
cpp Tow or tow ot
Wor g Agmt
Mmat Poor mata
Glass
Bro May b ovr by ra
cra
cpp
srat
door
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Conditions to Look For... May Indicate
Trunk Area
Mg par tr
Wor par tr hg mag
Mmat par commra ag
Lights
l ra Rpar v
l mg Rpar vlamp ot worg Ba wt or wrg probm
Bumper
svr amag Fram amag
Mmat pat Prvo amag
Pg Prvo amag
Rockers
Rt o ff pat or oor srfa rt, foo v
Radio
do ot pay F, ba wr, faty oto
stat Faty wrg
O par pay
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Conditions to Look For... May Indicate
Sheet Metal
Fw t a rat
Wavy pa Pror rpar
Paint
Ovra fag Poor mata
Pat of v fag Prvo patg
cpsrat
Pg Prvo patg
ev of rpar
Radiator
Rt or wt tra coggg from at-a
damag coo
O m ooat cra boRt by watr pmp Faty watr pmp or ba gat
Transmission
low f v laag of a o pa
Brt m Ba tramo
Watr f Foo amag
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Conditions to Look For... May Indicate
Engine
Rog lay vav
lo wt or roar Ba xat mafo, mffr or tapp
sow tg o Vav tra probm
Fat tg o lowr g probm
eg r wt t gag wt bra o Wor t
Wt mo w frt tartg Bow a gat
B mo Wor pto, rg or vav g
Ba mo R ga mxtr
Bow-by Brt vav or rg
Oil
Watr bbb or tray cra bo
Brow o Bow a gat
sg eg war
drty o Poor mata
Engine Compartment
sg of rt rpar wor Prvo maa rpar
Pat ovrpray coo amag
havy battry orroo Faty votag rgator
cra wrg Poor mata
79
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Conditions to Look For... May Indicate
Mechanical
strg w b w trg Ba trg ra
O rp Ba gat
Grg o w tartg Wor tartr gar or fyw tt
har tart Ba battry or mor g ovra
cattrg o at ow Bay wor g, oo pto, pto p
Grg at frot of g Wor tmg gar or watr pmp
Vbrato Bt rv aft or oo vra
eg vbrato Bro motor pport
Jmp ot of gar Wor tramo gar or ag
War o v roa Frot ot of or bt fram
Bra pa to foor la ytm
Bra rft o brag Wor frot- bra
emrgy bra w ot o v Wor rar bra
Bra mta to mta Wor g, or rotor
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Advances in technology provide auction personneland customers with quick, accurate and moreconvenient ways to conduct business. In addition,aggregated information from some of thesesystems provides critical decision-making toolsfor auction participants.
Technology at the Live Auction
Operating facilities invest heavily in hardware,software, and systems to provide the mosteffective transaction environment. Some ofthese areas include:
mafra. Each location has mainframecomputers that track the millions of transactionssurrounding an auction sale, which include allthe information related to vehicle, titles, prices,histories and much more. Auction chainstypically network their various operations toimprove customer service and expand marketingopportunities for consignors and buyers.
AtAccess. AuctionACCESS is a nationaldealer database that allows dealers to register once
at participating NAAA auction facilities, enablingthem to receive a card which gives them access to allother participating AuctionACCESS auctions inNorth America (see Identification Cards, page 30).
sf-srv At k. Kiosks are used byregistered dealers with auction-supplied identi-fication cards that allow them to receive bidderbadges, run lists, block summaries, and other
valuable information about the sale, includingvehicle searches.
Todays live auction makes use of technology in myriad ways.
In addition, a host of Internet services are available, from
Manheim Simulcast to 24/7 online buying and selling.
Technology Overview
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etr ct Rprt (ecR). Thesevehicle description reports are available online
and can be printed out at the operating location.The reports summarize the overall condition ofthe vehicle using a standard 0 to 5 grading scale.
dpay sr.At many auction locations,display screens are available to allow customersto track the status of vehicles running throughthe lanes, as well as garner information about
titles, arbitration, and post-sale inspectionswithout leaving the lanes. Messages forauction participants can also be displayedon these screens.
ha Tgy. Handheld computersallow personnel to record information aboutvehicles from any place on the lot. The informa-tion from the handhelds is transmitted wirelessly
to the mainframe computers to update records
there in real time. This process allows customers toask personnel with a handheld about any aspect of
a vehicle, anywhere on the premises, without havingto log on to a personal computer.
etr B. Electronic blocks, also referredto as paperless blocks, are used by block clerksand other auction site personnel to enter buyerinformation and print the invoices for vehicles thathave sold. This system allows the seller, who may
be on the block, to modify announcements aboutthe vehicle while the car is in the lane. Block clerkscan also enter if sales at the block, making theminstantly available to front office personnel, therebystreamlining a potential if sale. In addition,by entering the buyer information directly intothe computer, the buyer and seller can bothexpect faster service when checking out at thefront office.
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The importance of the Internet continues to grow.There are more opportunities to simplify theretrieval of meaningful information, to sell 24/7,to view inventory online, and to buy from remotelocations. Remarketing professionals are embracingnew technologies and using Internet sites to advancethe profitability of their used vehicle businesses.
ma.. This service gives Manheimcustomers access to a wide range of Manheimservices. Remarketers can find the latest ManheimMarket Report (MMR), locate the nearest auctionlocation, learn about Manheim Simulcast, reviewManheims Used Vehicle Value Index, set up andmanage their own account, and much more.
ma mart Rprt (mmR). This on