Incoming NAAA President Focuses on Safety Featured

By Jeffrey Bellant November 12, 2018

Chad Bailey, president of Akron Auto Auction, sees increasing safety at the auctions and attracting technicians as major challenges for the auctions. He recently took some time to speak with Used Car News about his past and the industry’s future.

 

UCN: Tell us about your background and how you got into the auto auction business.

Bailey: It’s funny because – indirectly – I am a third-generation owner-operator. We’ve been around 45 years, but this wasn’t a family plan. My grandfather started the auction with partners. Then his son, my uncle Jeff, took it over. I went to Miami of Ohio and then got my master’s degree at UWF (University of West Florida). When I finished and didn’t have a job, I moved back into my parents’ basement back in Canton. At the time, my uncle was just looking for some help. I didn’t have a job, so I worked during the days at the auction. I would bartend at night at my other uncle’s restaurant. So there wasn’t a succession plan. I had no desire or clue.

I started doing more and more at the auction and saw the opportunities there. My uncle had two daughters who weren’t involved in the business. (At that time) I had a gotten a phone call from the Hilton in Las Vegas, asking if I wanted to take over its marketing department. But I like (the auction business) and it’s family, so I told my uncle “Let’s talk about making this long term and making a career out of this.” So he said, “Let’s sit down and figure this out.” The rest is history. It’s good because the only thing I could make as a bartender was a vodka and cranberry.

So I started taking on more responsibility. A year or two later I became a general manager, then a minority partner and then majority shareholder

My uncle actually lives in Scottsdale, Ariz., so it’ll be neat. He’ll actually be able to be there at the convention for me. So it’s kind of coincidental that (I’ll begin) my presidency where he lives. So it’s going to be great.

 

UCN: What are the biggest challenges that you have faced as an independent auction operator over the years?

Bailey: The challenge (in this business) is when you’re just looking at talent and trying to find quality people. It’s trying to find people who just want to be involved. People talk about shortages in this industry, like technicians. It’s difficult to find people who just want to roll up their sleeves. This industry isn’t easy. It’s fast-paced. You do what you got to do. Some days you get slammed and have to be there all day.

I just want people that I can trust and are hardworking that can get it. I can teach you the business. We’re not splitting the atom or doing neurosurgery. To me, I just want those core values in someone and I can teach you the rest.

To find them, I’ve always been a big fan of referrals. If you’re a quality person, I like to believe that you surround yourself with quality people.

Technology is another challenge. (The auction chains) have R&D and departments that are dedicated just to technology. We don’t necessarily have that. So the challenge is just making sure that we’re staying up to date. We talk with other independents and ask whether there are areas where we can collaborate so that we don’t have to reinvent the wheel individually.

 

UCN: We keep hearing from dealers and from some auctions that cars are hard to find. What’s happening?

Bailey: The common theme you keep hearing is “There aren’t good cars. I can’t find a good car.” But in the past, with franchise dealers, any car they took in trade, they didn’t mess with it. Now a lot of them have economy lots or budget lots. They realize that some of these trades are good cars and if they put it through their service departments, it might only cost $800 to get it ready. They can make a lot more margin than they can on a new car. So these cars that used to come to me immediately, are now sitting on their lot for 30 to 90 days. We might be getting them, but the process may take longer. But I’m hearing from the banks that we deal with is that we will see more cars come off-lease in 2019 and 2020.

 

UCN: What might be the effect of tariffs on the used car industry?

Bailey: You can look at it in one of two ways. If someone says there will be a 25 percent tariff, for example, I have a hard time believing that Mercedes is going to take its $100,000 S-class car and mark it up to $125,000. I don’t see that happening. But on the other hand, you might have a (car buyer) who thinks, “Oh, that car is more than I’d thought it would be,” and might start looking at it in the used-car market. You could have a large influx of potentially a new segment of used-car buyers. On the flip side, that’s one trade a dealer now isn’t taking in. So it could have an adverse effect, if the perception is the car costs too much.

 

UCN: What are other top issues that currently concern NAAA? Are there any issues that you think are important but you don’t see being discussed enough?

Bailey: One of the things we’ve talked about before is safety. We’re up to 36,000 employees within the industry that are now Safe T. Sam certified. One of the other larger chains is getting their software portal hooked up so they can get all their employees trained and that could add another 16,000. By year’s end, or shortly after, you may have 50,000 employees that have been trained on safety in the lanes.

It’s important. Because I may run 55,000 cars in my auction in a year, for example, and if I had only one accident out of 55,000, you’d say, “Wow, that’s great.” But that one accident could be catastrophic on so many levels.

We’ve had plenty of scares. With independents, especially, with fewer funds and resources, that might not have always been at the top of their priorities. Now, at our auction, we’re 100 percent safety certified, every one of my employees. We have safety meetings monthly and we watch safety videos. Our insurance company provides various things as well.

Dealers are creatures of habit, but we’ve made changes so that you’re not popping the hood, you’re not opening those doors or sticking your head in the window. From the dealer’s perspective, you would have thought the world was coming to an end, but once you explain it to them, (they understand). It’s been a challenge.

The other issue is what we talked about in terms of a shortage of technicians. We’ve just had a tough time finding some of those people. When I was that age, I was told to go to college to get a degree, so people didn’t get into the automotive technician field.

Now I have new-car dealers telling me they’d pay technicians more than if they went to college and became a banker. But people just don’t believe it. I know dealers who will pay them $40 an hour – they just can’t find them. It’s tough in the auction business, because I don’t need them 40 or 50 hours a week.

 

UCN: The economy is booming, but with that comes rising interest rates and some tightening in the credit market. How do you see the industry handling this and how long can this boom continue?

Bailey: Typically, for us in the auction, July and August is the doldrums. But this year we’ve seen great conversion rates and great numbers. Hopefully, it’s a trend. I was just meeting with one of our economists and a banker and they were saying they’ve been told that 2020 is when you will see a recession coming. The way I look at it, when I come to work, I see plenty of cars driving up and down the road.

We still have to keep doing our job and getting those accounts.

 

UCN: It seems like dealers and auctions are continuing to take advantage of the benefits of technology. What’s your impression on this? Any specific trends you see affecting the auction industry in the near future?

Bailey: The digital component is what I’m thinking. The days are long gone when we’d pick up a car on a Sunday, run it on Monday and if it didn’t sell, well we’d try it again next week. People want their cars up for sale and marketed 24/7. Being able to have accurate condition reports that truly reflect the car is huge. Again, that goes back to training.

Our customers are asking for that. It’s more than fancy airbrushed pictures. The more you’re able to train your staff and going to classes and learning (is crucial). The NAAA has auction standards training and different sessions and you’re able to go to auctions quarterly and learn different things.

 

UCN: As you take the reins of the NAAA in November, what are some of the goals or priorities that you would most like to accomplish?

Bailey: I’ve always been someone to lead by example. This past summer I went to auctioneers school so I could become an auctioneer.

I want to be able to say that at my auction I can do everything. If I can become president of the association, anyone can.

I just learned to get involved. So my big thing is being able to empower these good minds we have in the industry to help better this association.

There are so many people that need to get involved. There are many great minds in the auction business. I want to continue to empower people who are passionate about this business – whether it’s building up relationships with other auctions, technology, or arbitration.

Whatever your passion is, bring it, because we want you here.

 

Last modified on Monday, 12 November 2018 23:31