Auction opportunities growing across U.S.
December 22, 2008
Filed under Uncategorized
By Neil Pascale
The Northwest this year will experience something large parts of the nation have in recent months: more opportunities to use the wholesale market.
National Powersport Auctions (NPA) is expecting to open a new facility in Portland, Ore., in the third quarter of 2009, says Justyn Amstutz, NPA’s executive vice president of sales and marketing. That opening will mark the latest in a string of new auction opportunities for dealers across the nation. At least eight auction sites have opened or have been significantly enhanced throughout the United States in the past two years. Plus, companies like Eastern PowerSports have increased the number of powersports auctions available on a monthly basis.
The availability of the wholesale market to a wider number of dealerships could further increase in 2009, says Karen Braddy, general manager of specialty sales for Manheim. “We are always looking for opportunities to grow the business depending on market opportunities and customer demand,” she said. “We are currently experiencing tremendous growth in Indianapolis, Minneapolis, Daytona as well as our Lakeland, Fla., location.”
NPA is actually opening at least two new U.S. facilities in 2009, including a new and larger site in San Diego. That site, a 150,000-square-foot building on 20 acres, is expected to open in March. The company is looking for something of a similar size in Portland, Ore., with an opening slated for the third quarter of 2009. These moves follow last year’s opening of a new facility in Cincinnati.
“Cincinnati has been exceptional for us,” Amstutz said. “Our intent with Cincinnati was to fill a void on both sides of our business. From the institutional side, we wanted to decrease transportation and logistical costs anywhere from the upper Midwest to the Northeastern regions. Historically that product had been shipped to either Atlanta or to Dallas and with that facility in Ohio, it obviously decreases the transportation and logistical times for the sellers.
“Same thing for the buyers. Although we’ve got the cheapest transportation rates out there, whether they are shipping it from Florida to Minnesota or from Cincinnati to Minnesota, there’s always that timetable involved. So when a buyer buys out of Cincinnati from Minnesota vs. Atlanta, he picks up a couple of days in transportation time. So logistically and demographically it made a lot of sense for us.”
Manheim has opened three sites since 2007 — in Southern California (Fontana, Calif.), Nashville and Pensacola, Fla. — plus acquired an auction facility in Indianapolis.
“We are lucky to have brick and mortar locations in pretty much all of the major metropolitan markets for our car business,” Braddy said, “so it’s not hard for us to react quickly to strong market conditions and be in a really good position to meet customer demand by adding a motorcycle/powersports location in an area that shows a clear need.”
How much more expansion occurs in the U.S. market could be affected by the amount of available wholesale vehicles, Amstutz notes. “The number of vehicles from an institutional perspective have not increased that greatly,” he said. “I think there will be a lot of attempts to continue into this space, but the market share is only so large.”
Braddy noted one trait common to the auto industry is already having an effect on the powersports wholesale market.
“In the case of cars, we see them sell over and over through auction as they age and pass from dealer to dealer,” she said. “We are beginning to see the same thing on the specialty side, more so with the motorcycle product.”
Beyond the vehicle inventory, educating the powersports dealer network on the value of the preowned business remains another key to expansion in the wholesale market.
“Ninety percent of what we’re doing today is still educating the powersports dealer that preowned is a good thing and it doesn’t detract from the new powersports sales number,” Amstutz said. “It’s an added value.”