Going, Going, Gone

While National Powersports Auctions is the claimed giant in the powersports auction market, there are some other houses that are doing business at a steady clip.

Two of them are Manheim Specialty Auctions — a division of the auto auction giant that specializes in powersports, boats and RVs — and Eastern PowerSports Auction, a company based in the Northeast.

Like NPA, both businesses are reporting big gains in the used bike auction market. Also like NPA, the two auction houses have contracts with financial institutions like HSBC, Harley-Davidson Financial Services, BMW Financial Services, GE Money and a host of small and regional lenders.

All the auctions feature a mixture of inventory on consignment from financial institutions and dealerships, including repo units that are technically consigned by the finance companies.

In commenting on these efforts, a representative from Manheim cited industry estimates that say 51 percent of the 13,400 retail outlets are focusing on used vehicle sales and service, while 13 percent of sales at new vehicle outlets are for pre-owned units.

We talked to both auction houses about the used market, the auction business and how dealers can best get involved.

Answering our questions were:

Karen Braddy, who manages the specialty auctions arm of Manheim Auctions
Jim Knight, national account manager of Eastern PowerSports Auction

DEALERNEWS: How has your company's auction volume changed over the last four years (or so)?
BRADDY: In 2007 we saw a 66 percent increase in offered motorcycles and a 283 percent increase in offered powersports. I don't want to share actual numbers, but I will tell you that we grew 86 percent over 2006, and we expect to see at least a 30 percent increase in 2008.

KNIGHT: We had our first auction in April of 2004 and offered 800 units. I can't share all of the specifics, but we are currently offering 450 to 500 units a month.

What trends have you seen in the pre-owned bike market?
BRADDY: We are seeing a shift in the market to more pre-owned units. 2007 was the first year (according to the MIC) where the number of used retail outlets was greater than the number of new retail outlets. We are seeing more units being brought to auctions.

KNIGHT: We have seen a huge increase in demand for used products. Dealers that traditionally have tried to sell three new units to each one used are changing their business model to 2-to-1, or even 1-to-1, new to used because of the potential for increased F&I and PG&A sales with used.

How can dealers benefit from the used-bike market?
BRADDY: Dealers benefit from used bikes because no two bikes are the same. Retail buyers who can't afford a new bike today may be able to afford a used one. A dealer needs to have a wide range of product available to satisfy their customers. Dealers with an aged inventory can find a large group of potential buyers at auction, and dealers looking to add to their used-bike inventory can find a good mix of products to buy.

KNIGHT: Our dealers are telling us that they can't get enough used products. They benefit from used by offering good products at a greatly discounted price over new. Potential customers are still in the market, but they are being a bit more conservative with how they spend their money, and used fits the bill. There is also a greater back-end potential with used. It's easier to sell an extended warranty and service contract to the consumer buying a bike that is no longer covered by the factory warranty.

How can a dealer best educate himself on the auction business and on consigning motorcycles?
BRADDY: The best way is to attend one. The staff at Manheim auctions regularly hosts dealer tours and will help educate new dealers on how to use auctions to maximize their used-product profits. Each location has a specialty sales manager whose job it is to be sure a dealer understands how the auction works and to help them with the process from the point of consignment to the point of sale. We value our dealers and pride ourselves on our customer service, guaranteeing titles and checks, and providing neutral arbitration services whenever necessary.

KNIGHT: I encourage dealers to attend, or at least view the results of, all the active powersports auctions to see where the market is at the moment. EPA makes sales results available both online and via a monthly mailer. Review prices in NADA and Black Book, and in local classifieds, and accurately track your store's used margins. For consigning motorcycles, we'll help the customer determine what he can expect the bike to sell for at auction and how he can best remarket his bike.

What changes have you seen in the volume of sales for any particular brand?
BRADDY: In 2007, our top makes were Arctic Cat, Harley-Davidson, Honda, Kawasaki, Suzuki and Yamaha.
KNIGHT: We are seeing dramatically increased volume across the board, largely due to the fact that, with the exception of GE Money, we have only recently started relationships with the large volume lenders (i.e., Harley-Davidson Financial Services and HSBC).

  • Manheim Specialty Auctions holds motorcycle and general powersports auctions in six states, and hosts auctions for boats and RVs in several others. For information call (800) 777-2053.

  • Eastern PowerSports Auction is based in East Windsor, Conn., and operates two auctions a month. For more information contact national account manager Jim Knight at 860-292-7576 or at jknight@saa.com.