Dealers get comfortable with online car auctions

Franchised dealers are getting comfortable buying used vehicles at online auctions.

“Franchised dealers embrace the Internet a lot more than independent dealers do,” says Robert Rauschenberg, managing director for Auction Broadcasting Co.

Online auctions are expanding, but cyberspace bidding and selling are in their infancy.

“Internet auctions are a bit dicey because it's early in the game,” Hal Logan, Manheim Auction's senior marketing vice president, tells the Auto Remarketing Forum Series.

He and Rauschenberg say dealers are getting more Internet-savvy.

“Earlier, because a dealer didn't see a car in person, he'd offer $9,000 rather than $10,000,” says Rauschenberg of online buying trends.

Don Meadows, as president of Auto Auction Services Corp., has spearheaded online auto auctioning for dealers.

But he says, “One of the areas where the Internet let us down is the lack of personalization.”

Hogan says Manheim sold 135,000 vehicles on line with a total value of $2 billion last year.

“Those are nice numbers, but small compared to overall auction sales,” he adds.

Still, Manheim in 1996 sold only 62 cars online with a value of $146,000.

Hogan says 30,000 dealers have access to Manheim's online auction, “so it's reaching critical mass.” The goal, he says, is 24/7 availability.

Online auctions will grow, especially as dealers become accustomed to them, says Greg Smith, CEO of Ford Credit, which uses auctions to remarket off-lease vehicles.

“Dealers have a lot of confidence about what a Manheim says about a vehicle being sold online,” says Smith. “In 99% of the cases, the dealers get what they thought they'd be getting.”