CARY, N.C. -

Editor's Note: This is Part II of a three-part series on how the auto auction industry was impacted by and responded to the destructive winter storm that hit the central U.S. in mid-February. This piece examines the strategies of independent auto auctions. 

Part I looked at ADESA's use of technology to facilitate remote sales allowed it to carry on without much interruption. Part III will explore the strategy at Manheim.

Tim Bowers remembers what he wrote in an email sent to auction consignors during the winter storms that brought much of the Heartland, particularly Texas, to a standstill last month.

“(Hurricane) Harvey didn’t shut me down; (during) Hurricane Harvey, we had a sale that week … we never stopped selling cars when COVID hit us,” said Bowers, who is the president and general manager at Houston Auto Auction.

“But a daggum ice storm sure did do it to us,” he said. “It got us good.”

In Houston and elsewhere in Texas — particularly in areas along the coast — they’re used to handling natural disasters like hurricanes. But nothing like the bitter cold that hit the Lone Star State in mid-February, amid the winter storm that was knocked out power and heating and busted water pipes.

“Hell, dealing with it in our personal lives was bad enough. I was 58 hours at my house without power and when it was 14 degrees here on Tuesday night, it got down to 40 degrees in my house,” Bowers said in the Feb. 22 interview, referring to the prior week.

“And we were just trying to figure out a way to, you know, get another blanket and stay warm,” he said. “We’re not used to this here in Texas. It’s 72 degrees today and I’m wearing shorts.

“So, 14 degrees, they can have that weather back, whoever sent it to us, I can tell you that.”

He’s not alone. In fact, the entire state might be in agreement with Bowers on that.

Bowers is also not alone among independent auto auctions, large and small, that had to navigate power outages, icy roads and below-freezing conditions and determine if sales could happen safely, and how.

While business is back on track and humming along in the auction industry now, Auto Remarketing connected with several of these independent auctions the week after the storms to gauge their impact and see how they adapted

Storm impact

From a business standpoint, the biggest issue for Houston Auto Auction was the power outages. Bowers estimated the power was not consistently back on at the auction until Friday of that week (Feb. 19). Its sale days are on Wednesdays.

Bowers had initially pushed the sale back to the Friday of that week, but ended up having to cancel anyway, mainly because it wasn’t possible for employees to get to the auction.

“A lot of my employees live on the north side of Houston, and they were dealing with broken pipes and couldn’t get on the road because of ice,” Bowers said. 

He was able to get into the facility himself on that Thursday (Feb. 18), but “I just decided, I’m not going to pressure my people. Logistically, it’s almost impossible to throw a sale together at the last minute, and then cram it down both consignors' and buyers' throats and hope that it’s a success. 

“We don’t need to go through the motions, right? If we’re going do a sale, we need to make sure it’s successful,” he said.

The icy roads also prevented transporters from picking up vehicles, further complicating the ability to host a sale.

“It just wasn’t going to happen. So, it really put a crimp in everything,” Bowers said. “And of course, employees’ health and safety is the most important thing. We can sell cars any time.”

Ashley Dietze is the owner of the W Walker Auction Group, whose San Antonio Auto Auction canceled its Feb. 16 sale and closed its offices amid snow and ice. Later that week, the area was dealing with rolling power outages and no access to water.

Still, the San Antonio auction managed to put together a two-lane, digital-only sale that Thursday (Feb. 18), which Dietze said had a 60% conversion rate on the small number of vehicles up for sale.

However, the group’s Corpus Christi Auto Auction was not able to hold its sale that week, as much of the staff had no power or water and dealing with the same rolling blackouts and other issues as San Antonio. Plus, that auction does not have the same backup power source as the San Antonio auction, Dietze said, so losing power during a sale there would have been far worse.

The San Antonio auction installed the backup generator a few years ago and also is next to a hospital, she said. Being on the same grid as that hospital meant they weren’t likely to see the same kind of blackouts found elsewhere in the areas.

Without the backup generator, Dietze said, losing power during a sale at that auction “would have impacted us quite a bit more.”

America’s Auto Auction is headquartered in Dallas and six of its 23 locations are in Texas.  It had to cancel every sale in Texas the week of Feb. 15-19 — the first time this has ever happened, said senior vice president John Swofford.

“For the most part, the roads weren’t the big problem in the Metroplex and Dallas-Fort Worth and down in Houston. Roads were more of a problem in Austin, because of the ice they had,” Swofford said. 

“If it hadn’t been for the power outages and water outages, I think we all could have carried on business without it. But we had sites without power,” he said. “We had employees without power, we had customers without power. And so, it just kind of brought commerce to a standstill in the entire state. And we were a victim of that.”

Like America’s Auto Auction, XLerate Group has national footprint, including several auctions and mobile auctions in Texas.

They deal with all kinds of inclement phenomena, in markets stretching from Southern California to Pennsylvania down to Florida.

“But this particular one was a deep-reaching cold snap with some bad weather,” said Pat Dudash, senior vice president of sales at XLerate.

He said its Texas sales “fared fairly well from a cancellation standpoint.” Its two mobile sales in Austin were canceled, as the two dealership properties where those sales are hosted were closed. XLerate’s Lubbock location was particularly challenged with ice, Dudash said.

“And the ice is very unpredictable. So, you’re looking at the radar and you’re trying to dissect which way it’s going to move and what the precipitation is going to be like, but you can’t predict how bad it’s going to be from the ice standpoint,” he said.

“And once the ice came, with their sale being on a Wednesday, and the way the storm came through, they had limited pickups and only locally. So, they weren’t going to the outer cities of Abilene and Midland, Odessa, etc., where we’re typically going for a lot of commercial vehicles,” Dudash said of that week. “They were just staying locally with commercial and dealer vehicles on Monday. And then no pickups at all Tuesday or Wednesday.”

Online sales provide a lift

Like many auctions who have had to lean more heavily on digital during the pandemic, the online sales practices that the W Walker Auction Group has taken up during COVID-19 helped during the winter storm.  

“Just having gone through COVID and having to do so many digital-only sales and really kind of tweaking that entire system with condition reports and things like that, it helped us be better prepared for something like this,” Dietze said.

“Granted, like Tim (Bowers at Houston) said, we’ve been through hurricanes, we’ve been through other things, but when it comes to ice and cold, you can’t run your shops, detail shops are down, it really cripples you,” she said.

Like Dietze’s group and others, XLerate became more accustomed to online sales during COVID-19, and that certainly came in handy during the winter storm in Texas.

“Well, we got plenty of practice during the pandemic, although the state of Texas was not one that was critically impacted for an extensive amount of period where we had to close and had no dealers in the lanes.  But we did for a period,” Dudash said.

During the pandemic, some dealers got used to buying online, he said. They might browse vehicles on site the day before and then buy from home on sale day.

“Well, they sure did when the weather got this cold, too. And specifically, in Lubbock, we couldn’t drive the vehicles through the lane because of safety issues with ice …,” Dudash said.

So, he said, that sale “was online in the sense that they couldn’t drive through the lane because of the ice out in the parking lot. Some dealers did attend and stayed within the auction lanes and just bid against the people online in the lane. 

“What we learned during the pandemic enabled us at all of our auctions in Texas to move on safely by orchestrating more buyers online and our percentages and online sales more than tripled last week,” Dudash said, referring to Feb. 15-19.

America’s Auto Auction took a different approach, deciding against hosting online sales for its Texas auctions the week of Feb. 15.

“And the main reason we didn’t is just because commerce was brought to a stop in the state. And we’re in the spring market, it’s a strong market,” Swofford said. “And the sellers were like, ‘You know what? We’d rather wait until next week. We’re not going to short-sell anything this week. The market is strong. We need to wait for people to be back doing business.’

“While we had the technology to pull it off and we had the manpower to pull it off, we didn’t feel there was a strong enough appetite for business (that) week,” he said.

Emergency preparedness

As unpredictable as such storms and their aftermath can be, auctions do often rely on emergency playbooks to respond to these kinds of disasters.

There are a lot of moving parts, literally and figuratively.

Auctions must consider employee/customer safety, protecting the assets and facilities and consider the logistics of holding a sale itself.

At America’s, its Houston location and “any of the auctions down along the Gulf Coast have a hurricane preparedness plan,” Swofford said, “which works just as well for an ice storm coming or a snow storm coming in, where we have the group text messages going out.

“We have conference lines dedicated to us, where everyone can stay in contact with the managers and the employees. And keeping the facilities secure is No. 1 — securing all of the inventory,” he said.

“And then limiting access to the dealers, until we feel the facility is safe,” Swofford said. “And we had to shut the facility down in Austin and Houston because of all the ice that was on the lot … it just wasn’t safe to let anybody walk around on our lot.”

Swofford gave special thanks to America’s employees at its locations in the storm’s wake, for their response to the natural disaster, taking care to move vehicles and protect assets.

“We owe it all to our employees at the locations,” he said. “It’s just the dedication that they had, and the sense of responsibility they had to take care of customers’ property was amazing.”

Swofford later pointed out that America’s runs 24-hour security at its locations, which is exceedingly more complicated during an event like this.

“And in the city of Buda where our Austin location is located, there was nothing open. There was one convenience store open. There were no restaurants open, no drive-throughs, nothing. And so, just trying to keep security on property and keep them fed, with water and things like that, became difficult,” Swofford said. “We do have generators at all of our locations, but it’s really to operate a sale, not so much to run an entire building. So, trying to overcome the logistics of all of that took a little bit of effort on the GMs’ part.”

At XLerate, much like other auction groups with a diverse geographical footprint, the natural disaster one of its facilities deals with differs by location.

While its auctions in Wisconsin or Michigan might be dealing with sub-zero weather, its Florida, Georgia and South Carolina locations face the threat of hurricanes.

With commercial vehicles at those locations, the sellers require updates on the status of their consignment during such times of natural disaster, so XLerate have developed a program for that, Dudash said.

“We have the safety of our employees and we have the safety of our dealers. So, storms that you can track — which are hurricanes and these big snowstorms or freezing weather that’s coming through — we’re on the phone with our operators early on in the process,” Dudash said.

“And we have a certain amount of steps that we go through: communication with our general managers, they’re communicating with their staffs and their people. And talking to local state and municipalities of what’s happening,” he said.  

Dudash brings up the example of XLerate’s Charleston, S.C. auction. That area, a coastal one at that, has a lot of bridges, and those are often shut down during weather events.

“It’s going to cut off our employees’ availability to either leave and get home or to leave their home and come back to work. So, there’s a lot of discussions. We’re doing conference calls with our corporate staff, myself and sales,” Dudash said. “And the operators themselves and what are they communicating or hearing from locally that can help all steer and make a decision together.”

Stay tuned for Part III of this series.