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.
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 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.