Auction Exec: Stop Running Cars Through Lanes

By Jeffery Bellant October 23, 2019

 

 

 

INDIANAPOLIS – An auto auction leader’s appeal for the industry to stop running cars through physical lanes in the cause of safety drew mixed responses from other auction leaders.

KAR Global CEO Jim Hallett made his argument during a speech as he was inducted into the National Auto Auction Association’s Hall of Fame at the group’s recent annual convention here.

“That’s the challenge I want to leave you with today,” he said. “Let’s stop running cars all together. I mean that in two words: all together.”

He conceded that others wouldn’t agree with him and independents were first to push back.

NAAA President Laura Taylor addressed the issue during her inaugural address at the convention.

“Let me be clear,” she said, as Hallett sat in the audience. “The brick-and-mortar auto auctions are not going away.”

Jeff Barber, owner of State Line Auto Auction in New York, also responded during a panel discussion at the convention.

“I don’t want to come across as anti-technology,” he said. “They talk about brick-and-mortar and that’s kind of like mentioning a horse and buggy.”

He said suggesting physical auctions are “old-fashioned” is unfair, since the first car sold via simulcast was at his independent auction.

“We took it and ran with it,” he said.

Barber added that once digital entities start growing, they start looking to physical auctions.

“Now what are they looking for? They’re looking for parking lots,” Barber said. An urban developer told Barber that several people each year approach the developer wanting to start an auto auction, so physical auctions are still in demand.

Grace Huang of Cox Automotive – Manheim’s parent company – discussed the issue during a media event and tour of Manheim Detroit a week after the convention.

The president of Cox Automotive Inventory Solutions said Manheim continues to move in a digital direction.

“We’d love to see all the cars be transacted 100 percent digitally,” Huang said. “That doesn’t mean that the car isn’t actually here (at the physical sale). It’s just transacted digitally.”

Huang and Hallett agreed that digital sales don’t differ from the amount a consignor gets on the physical block. She said this is crucial for the company’s consignors.

“You get the same amount of money,” she said.

Manheim continues to invest in technology, including its Manheim Express app, which was demonstrated at the Manheim Detroit event.

Huang said digital sales continue to grow, making up about half of all Manheim sales in one form or another.

In fact, Manheim Tucson has been an all-digital sale since May.

Huang said dealers are still coming to the auction in Tucson; cars are just not running through lanes. Dealers can see vehicles in the auction’s four virtual lanes (screens) from one vantage point, so they don’t have to run back and forth between physical lanes.

By year’s end, Huang said another Manheim auction in the Western region will go all digital.

She said it will take time for Manheim to shift entirely and wouldn’t put a time frame on it.

Huang said she “would love to see it happen in five years,” but the evolution would be dependent on getting dealers comfortable with the process.

For Hallett, the safety issue has been personal – going back to his first auction.

“Not long after opening my first auction in Ottawa, Canada, an accident occurred at my auction that nearly killed my best childhood friend,” he said. “It was devastating for me personally and professionally.”

Hallett said the friend lived but is now disabled after being run over at the sale.

That incident “fueled my obsession for safety,” he said, citing the creation six years ago of the Safe T. Sam program that has helped lower the injury rate at his sales. More than 80 percent of NAAA members have now been certified in the program.

To make his point, Hallett cited the salvage industry, where cars are sold without moving them through the lanes.

“Moving cars isn’t a necessity,” he said. “It’s really just a habit and one we need to break.”

More than 54 percent of KAR vehicles last year were sold through online methods, Hallett said, adding that KAR has 10 commercial consignors, one fleet and one dealer group that don’t run cars across the block.

Safety has always been an industry issue, but an accident in Boston at the former Lynnway Auto Auction in 2017 – which left five people dead – put a bigger spotlight on it.

Hallett said the industry should take the lead on the issue, before lawmakers do it for them.

“I know there are people in the industry and in the room who don’t share my opinion,” he said. “However, I believe if we don’t do it ourselves, it’s only a matter of time before it gets legislated and (we’ll) be told to do it. Then we will have no choice.”

Later that day, during a tour of the new offices of KAR Global in nearby Carmel, Ind., Hallett was asked when ADESA might have an all-digital sale.

“I hope it’s soon,” he said.

 

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Last modified on Wednesday, 23 October 2019 13:23

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