Lenders Redesign Online Auction Programs

Online or in-lane — that is the choice many lenders are pondering when it comes to remarketing vehicles.

For decades, brick-and-mortar auctions dominated vehicle-resale strategies. Lenders would gather as many dealers as they could at their weekly or monthly sales to maximize returns on off-lease vehicles, fleet and rental units, and repossessions. Dealers would get to the auction early to touch and feel — and even test-drive — the cars they were considering.

But there are drawbacks to those physical auctions. Sales, often limited to once a week, are generally attended only by dealers in the vicinity. Plus transportation costs and reconditioning expenses eat into lenders’ net returns.

Enter the online component to vehicle remarketing, which started as an auction simulcast. Lenders could sell vehicles to dealers who weren’t present at the physical auction, broadening their bidder base.

In the past few years, though, web-based remarketing capabilities have mushroomed. With lenders able to mix and match online and in-lane strategies, finance companies and captives are revisiting remarketing policies, making changes and testing new methods to maximize returns.

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Tags: auction, in-lane, online, remarketing

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Comment by Jeff Martin on March 18, 2010 at 12:40pm: The recent survey conducted by CUNA (largest trade organization for Credit Unions's) indicated that because of service issues with the auctions 56% of CU's surveyed despite the fact that auctions are 12 - 18 % higher in returns, use other channels, retail, wholesaler or even repossessor none of which drive competitive bidding due to the number of those bidding. Most auctions are built to serve large remarketing organizations. FI's unless a large indirect lender have a difficult time getting attention for a small number of units they would liquidate. Most large regional auctions have in our experience have hundreds and sometime up to two thousand bidders that fly in, drive in and simulcast (internet). For the bidders its all about where the inventory is. From our experience as a large remarketer the best place to liquidate and a cost effective way to liquidate inventory including prudent transportation costs and a detail are the large regional auctions. We are not fans of reconditioning other than a detail, dealers can do cosmetic/mechanical more cost effectively, its difficult to recoup that investment for FI's. An FI can market via a online liquidation service but its still about the numbers of bidders, confidence in the product being bought and eyeballs on the units, our experience is that large regional dealer auctions are still the place to do that.

Comment by Ken Owensby on March 23, 2010 at 3:28pm: CoPart pioneered online auctions for salvage vehicles and baded on the numbers I've seen, they increaded incoming bids significantly by opening it up to foreign bidders. They are now looking to expand the auction particiation below the dealer level. Looks like vehicle disposition is changing fast.