By Katherine McDowell
Advances in computerization are changing every aspect of the car business, and auctions are no exception. Joe Neiman of ACV Auctions, speaking at the NABD BHPH Conference this year in Orlando, related the way in which his online auction business is changing the way dealers by pre-owned stock, and outlining the advantages of internet auctions. With the constant influx of technology into all areas of the automotive industry, and information age standards fueling expectations of wider availability and quicker transactions, it is important to understand how internet auctions such as ACV may increase dealerships’ growth.
Traditionally, car auctions had to be help on-site, meaning that attending required arranging travel—and sometimes losing an entire day away from the office—and auctions could only be held, at most, once a week as a result. Having a physical location means that auctioneers have to pay overhead on the space, and pay to warehouse the vehicle. That cost is passed on to the dealerships. A physical auction also requires attendees to sit through presentations of vehicles irrelevant or uninteresting to them before getting a chance to bid on what they need.
Neiman explained some of the ways in which online auctions with ACV counteract these concerns. Joe Neiman himself has been selling cars for years—first as a teenager selling vehicles from his parents’ driveway, and later online via eBay—but ACV Auctions, despite its success, is a relatively young company. Since June 2015, it has been a game changer for BHPH dealers and Pre-Owned Sales Managers alike. With their easy-to-use app, available for smartphones or desktops, ACV offers another option for stocking pre-owned lots, and it is one which has thus far been a huge success.
Using an online marketplace for auctions allows dealers to expand their reach—the average distance for an ACV auction vehicle to travel is 400 miles—while remaining in their office. This web-based format also makes vehicles easier to sort. Dealers can set criteria related to make, model, price, and more, and only see vehicles relevant to them. Whenever a vehicle fitting the criteria becomes available, the dealer receives a notification on his or her phone. The vehicle information and photos can be reviewed, and the dealer can then decide whether to bid for that particular auto when it comes up for auction.
The wait is usually not a long one. Negating the need for travel means that auctions can be held far more often—usually six or seven days a week—which in turn means that online auctions are always ahead of physical ones. Better still, because sold vehicles can be shipped directly from source to buyer, there is no need for warehousing costs. The average fee attached to a car sold at a physical auction is $800; reducing costs by removing storage and overhead means that ACV can offer much lower fees to its customers. In fact, ACV is about 66% more cost effective than traditional auctions!
Of course, some dealers may be concerned about buying auction vehicles without first examining them in person, but Neimann assured his audience that ACV Auctions works hard to be fair, honest, and transparent. Vehicles undergo a thorough inspection, and are posted with a condition report so complete that Neiman reported some of his customers now use it as a model for their own reports. Furthermore, each vehicle posting includes dozens of high-resolution photographs from every angle. (Northern-born Neiman, familiar with the rust damage road salt and ice can cause, ensures that there are even four images of each vehicle’s undercarriage.)
In further interest of fairness, Neiman explained that his company’s app comes with no commitments. Any dealer who doesn’t like the software or the auctions can delete the app at any time.
“We haven’t had many people do that, though,” Neiman added with a smile.
With such minimized risk, access to vehicles across a far wider geographic area, and lower costs, it’s no wonder ACV Auctions has grown by leaps and bounds since 2015. As more and more dealerships recognize the advantages of online auctions, Neiman’s company is likely to continue its success. Such platforms, in fact, are likely the future of vehicle auctions, and as they grow in popularity, it may become increasingly harder for physical auctions to keep up.
Special thanks to Joe Neiman of ACV Auctions.