Five Questions: Bill Shenk and Manheim's Karen Braddy

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Bill Shenk, owner of Destination Powersports and the man behind Dealer Lab, is interested in getting some preowned units into his store — and he’s full of questions. Manheim Specialty Auctions general manager Karen Braddy has been enlisted to provide answers.

BILL SHENK: What is the average auction sale price after the buy fee and average shipping costs are calculated?
KAREN BRADDY: Auction sale price varies based on year, make, model, mileage and condition. However, the auction environment is ideal because it provides a trusted marketplace where bidding is based on current market conditions resulting in true market value.

Most auctions have a graduated buy fee schedule based on the purchase price of the unit to ensure participation is affordable for dealers. Below are a few examples from Manheim Specialty’s buy fee schedule:

A unit purchased for $3,500 has a buy fee of $170
A unit purchased for $5,000 has a buy fee of $190
A unit purchased for $8,000 has a buy fee of $200
A unit purchased for $14,000 has a buy fee of $300.

Separate from what is paid to the auction, dealers need to consider transportation costs. Many dealers have their own means of transporting units, but if a dealer needs assistance, the auction can help establish a relationship with someone in its network of transporters. Rates are consistent from month to month, so dealers can factor in this pricing prior to buying the unit. For reference, transportation from Daytona Beach, Fla., to Punta Gorda, Fla., (approximately 200 miles) costs about $150 per motorcycle and $200 per ATV.


SHENK: What’s the average final-sale cost compared to published values in national value guides?
BRADDY: Final sale costs can vary, so I strongly encourage dealers to do their homework prior to attending a sale. Everyone needs to know what units are popular in their marketplace and what those units are selling for at auction as a percentage of NADA values. Dealers should then review online listings for that type of inventory. There are several tools available, such as condition reports, seller disclosures and images, to help buyers review damages. Once a dealer finds a unit of interest, it’s critical to work out the pricing before arriving at the sale. We find that this homework removes some of the emotion or guesswork when bidding at the auction. My mantra is to not only do this research, but to stick to it.

Manheim Specialty also publishes various metrics each month to assist our buyers and sellers in understanding the current market conditions. We offer Monthly Market Reports comprised of pricing data about all units sold at Manheim Specialty Auctions during the prior month, and we track our sales performance against the Clean Trade-In/Wholesale NADA values. A summary can be found on our company blog.


SHENK: What are the options for transportation to deliver the purchased units to my dealership? How do I find a transporter, and how are the transportation costs calculated so I can be close on final cost estimates during the bidding process?
BRADDY: Auctions have a wide network of independent transportation partners. Dealers are also welcome to make arrangements with their preferred transporters or dealer-employed drivers. Many auctions have a dedicated specialty manager or transportation coordinator to assist dealers with post-sale transportation needs.

Manheim Specialty also aggregates and consolidates motorcycle and powersports units at designated auction locations to increase the volume of inventory available for purchase. As a result, dealers attend sales at fewer locations; this means the transportation distance and rates are predictable each time. While transportation is a variable that needs to be worked out by the buying dealer, it is not a major obstacle in purchasing units.

In addition to transportation, most auctions provide a host of ancillary services ranging from full service reconditioning such as detail and mechanical repair to inventory management and floor planning.


SHENK: Many dealers, including myself, don’t have the cash available for new or used inventory, so we use flooring options to secure new units. What are my flooring options for used?
BRADDY: While cash is always welcome, auctions accept many forms of payment. Manheim Specialty will accept payment from any of the floor plan options from OEM used wholesale floor planning; Manheim Financial Services (MAFS), GE Money, Automotive Finance Corp. (AFC) and Dealer Services Corp. (DSC), and dealership local banking relationships.

If dealers choose to floor-plan through MAFS, financing is available for 100 percent of auction purchase price with extended terms of up to 120 days for motorcycles and ATVs.


SHENK: Traveling 500-plus miles to attend an auction is very expensive. How do I buy online without undue risk?
BRADDY: I always recommend for dealers to have some experience purchasing at a live auction prior to participating online, and this experience should include building a relationship with the specialty staff at the auction. To reduce risk when purchasing online, dealers should thoroughly review inventory listings, photos and condition reports prior to bidding.

Any questions during this process can be directed to the specialty staff at the auction with whom you have already built a rapport.

Once a dealer is ready to buy online, there are two main options if you’re shopping with Manheim Specialty. Simulcast allows dealers to participate in a live sale via the Internet. Bids can be placed in real-time while the unit is being auctioned on the block or via proxy bid where an automated system bids on your behalf based on limits you set. Units purchased this way incur an additional $50 online fee.

[There’s also] Online Vehicle Exchange or OVE.com, which is a 24/7 bid or buy now wholesale marketplace. OVE.com offers buyers the ability to see, compare and purchase units either in a “Buy Now” or online bid environment. Auctions guarantee negotiable title for the buyer and payment for the seller — even online. Today, more than 40 percent of motorcycles and powersports sold at Manheim Specialty locations are sold via Simulcast or OVE.com. The data proves that many dealers are confident purchasing used inventory online.

EDITOR’S NOTE: Manheim Specialty Auctions is a sponsor of the DealerLAB editorial initiative in Dealernews and the Shop Talk LAB Community on www.dealernews.com.

This story originally appeared in the Dealernews October 2011 issue.