Manheim, the auto finance industry’s hub for dealer auction sales, is shuttering its physical auction lanes through April 3 due to the coronavirus outbreak, the company announced today. Dealer buyers and sellers will not be allowed to enter the physical auction buildings or lanes, which will be closed for digital only bidding.
“This has the potential to move our digital sales volumes considerably,” Zach Hallowell, vice president of Manheim Digital Marketplace, told Auto Finance News.
With the pandemic casting a shadow of uncertainty over the industry, Manheim has already seen a spike in dealers logging on to the company’s online auction platform.
“We had more than 81,000 unique dealers log on to our website on Sunday,” Hallowell said, adding that number is “higher than normal.” In fact, Hallowell is confident that more than 50% of Manheim’s auction sales will come from simulcast buyers and sellers.
“More dealers will be making sure they are familiar with the tools that it’s going to take to run their business in this unprecedented time,” he said. Manheim has been working on dealer adoption for its digital only simulcast auction platform during the last couple of years, with the platform funneling 30% of auction sales in 2019.
Additionally, as dealers who typically look to Manheim’s physical auction platform to stock up their inventory shift to simulcast only platforms, the company has waived the simulcast fee for dealers using the platform.
“We reduced the premiums that are charged for the simulcast transactions,” Hallowell said. “When we deal with a purchase via simulcast, there’s typically a fee for those transactions. We’ve waived that completely so that there’s no difference in what they would pay online versus physical.”
While Manheim may feel an impact as it doesn’t receive its typical profit per dealer purchase, it’s the “right thing to do,” Hallowell said. “Whether there is an impact to our financials by waiving those fees, we want to be here for dealers for the long term. We want to show that we are in it with them through this challenging period.”
Via simulcasting, Manheim typically averages 12 bids per car and sees thousands of cars come and go on the platform daily. However, to keep bidding “vibrant” online, Hallowell said, Manheim has added the number of views each car receives to the simulcasting platform.
“Dealers get a sense for the number of bids versus the number of lookers, and it gives you that sense of the equivalent of those busy physical lanes,” he explained. “When you go to a physical auction, you see how many dealers are standing there and how many are raising their hand to get a sense of any given car how much market interest there is.”
Moving forward, Manheim is working on a new forecast for used-vehicle values, soon to be released by chief economist Jonathan Smoke, Hallowell noted. “We will go through a period where everyone takes a pause to try to figure out what direction the market is going,” he said.
Previously, Manheim reported the used vehicle SAAR in February would clock in at 21.2 million.