Manheim continues to grow

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This story originally appeared in the Dealernews August 2010 issue.

Only five years old but receiving a major assist from its 65-year-old parent, Manheim Specialty Auctions has grown into the powersports industry’s second-largest wholesale marketplace. The company estimates that in 2009, it sold about 20 percent of the motorcycles and powersports units offered at auction, up from 15 percent the year before. It now has 12 locations nationwide and is preparing to fill its only geographical gap by opening a Seattle site. Earlier this year, it celebrated expansions in Indianapolis (now 40,000 sq. ft) and Daytona Beach (45,000 sq. ft.).

Manheim doesn’t divulge sales figures, but says that between 2006 and 2009, the number of motorcycle buyers grew 24 percent. Buyers of powersports units (off-road vehicles, snowmobiles and PWC) grew 243 percent. During the same period, the number of motorcycles and powersports units sold rose by about 35 percent and 22 percent, respectively.

About half those units are being bought online, up greatly from Manheim Specialty’s first years (see graph on page 40). “Motorcycle dealers are very online-savvy,” says Karen Braddy, general manager of the division. “They do e-commerce all the time.” In comparison, she adds, only 20 percent of automotive sales are Internet-based.

Braddy describes Manheim as “virtual lot” for dealers. “It’s like a location where they don’t have to pay the overhead, they don’t have to pay the rent, but they can go on and see this sea of motorcycles available and decide which ones they want to purchase for their customers.”

ONLINE OPTIONS

Dealers buy online two ways. Manheim Simulcast lets them participate in physical auctions via real-time audio and video. Dealers can use proxy bidding in which the computer bids for them up to a set amount. When dealers buy this way, they pay an extra fee. With all Manheim auctions, the company charges both the buyer and seller a fee determined on a graduated scale based on the sale price. Most fees range between 2 percent and 4 percent, the company says.

The second option is Online Vehicle Exchange (OVE.com), Manheim’s version of eBay with features like proxy bidding and immediate purchases. OVE.com offers units 24/7, but on the Thursday after the third Wednesday of every month, during a virtual event called Thursday Thunder, Manheim ensures that all available motorcycles and powersports units are listed. Dealers can also shop inventory from all sources — auction presales, OVE.com or Simulcast — by using the PowerSearch function at www.manheim.com. At its larger locations, Manheim recently began offering a small number of salvaged units, usually sold the same day as the regular auction. Previewing inventory through PowerSearch is the easiest way to locate these items.

Dealers also sell on OVE.com. Sell fees are the same as those for live auctions. Dealers can list units that reside either at their stores or an auction site. As with live auctions, Manheim provides free arbitration services for disputes between buyers and sellers.

During the first five months of this year, 42 percent of motorcycles and powersports units offered for sale were dealer consignments. This percentage is down from 58 percent in 2008 due to the rise in repossessions and the fall in new-unit sales.

GET YOUR AUCTION EDUCATION

Braddy attributes the rise in online activity partly to Manheim’s education efforts. Last summer, the company revamped www.manheimspecialtyauctions.com. Click on “Dealer Resource Center” on the home page to access an easily readable digital version of Manheim’s 115-page “Auction Handbook.” You’ll also find white papers, the “Online Quick Start Guide,” and even a series of well-done videos hosted by Braddy.

A color-coded calendar of upcoming auctions shows which ones will sell motorcycles and powersports units, RVs, boats or a combination thereof. Note that ambiguous green “Multiple Sales” listings require you to mouse over them to discover the unit types.

Dealers browsing the site will see a plug for Manheim Automotive Financial Services, which finances select motorcycles and off-road units. “MAFS was established in 1992 to serve the independent dealer who didn’t have another resource other than his bank,” Braddy explains. The finance division is signing up new dealers aggressively, she adds.

Overall, Braddy says roughly 40 percent of dealers pay via a check or draft to their bank. About 10 percent of deals are financed through MAFS. GE Capital handles most of the others, though Manheim has relationships with most flooring companies and all OEM lenders.

The website contains conflicting information as to which locations sell motorcycles and powersports units, so we asked for a clarification. Using the company’s format of “Manheim” followed by a varying geographical indicator (see the site for exact addresses), they are Manheim Indianapolis, Minneapolis, Daytona Beach, Statesville, Milwaukee, Missouri, Dallas-Fort Worth, New York, Southern California, Nashville, Tucson and Pensacola, with Seattle on its way. The website also doesn’t specify general fees, or the fees for things such as condition reports, photos, reconditioning (for which about 10 percent of dealers opt), and battery and key replacement.

The popularity of the site has grown. Comparing last August through December with the first five months of this year, Braddy says the number of visitors is up 84 percent, and they’re spending 30 percent more time. Manheim registration is accomplished through AuctionAccess, a third-party service that lets dealers register once to attend auctions held by multiple companies. Eastern Powersport Auctions, for example, uses the service. Manheim estimates that about half of unit-selling powersports dealers are already registered. Once on board, dealers don’t pay anything to peruse the presale lists, or access Manheim’s monthly Specialty Market Reports.

Braddy argues that dealers should register for this data alone. “If I were a motorcycle dealer,” she says, “I’d want a varied portfolio for my remarketing. I’d want access at Manheim, access at NPA, access at Eastern Powersport. I’d want to know that I could retail some units, wholesale others.”

Related:

Diving into pre-owned with NPA

Firsthand account on secondhand sales

A boutique approach to used bikes

Pre-owned profits: The survey