CARY, N.C. -

For a moment, remember back to high school, where you may have had a science fair project to complete.

It probably took some experimentation to find out a solution and learn what worked, and what didn’t.

That’s not too different than the task that has faced auto auctions in recent weeks, says National Auto Auction Association chief executive Frank Hackett.  

Auctions were forced to go all digital at the outset of the pandemic, and while the industry’s two largest chains remain in simulcast-only mode, many independents have since reopened in-person, in-lane sales.

Interviews with numerous corporate and independent auto auction leaders across the industry reveal a cautious decision-making process that often drills down to intricate details of determining whether or not — and how — to safely resume in-person auction sales.

“This has been kind of a science project,” Hackett, the NAAA CEO, said in an interview on May 18.

“I think at this point people are trying to figure out what they're going to do and have used it as a time to experiment with more simulcast versus in-lane, because they've been forced to use simulcast,” Hackett said.

But he questions whether simulcast-only sales are fast enough to meet dealer demand and says the industry will eventually move back toward in-person sales.

“I think that this has been a good time for all of us to really experiment with what people have wanted to experiment with,” Hackett said. “But at some point, I think when we look at speed, we’re going to come back to brick-and-mortar sales because of speed and time and volumes.

“And I think just the overall excitement, I think people are going to miss that,” he said.

Hackett sees the approaches being different across the industry as auction locations and auction companies continue to experiment. But he doesn’t see this being the end of the traditional brick-and-mortar sale.

In fact, this month has marked the start of several independent auctions restarting in-person sales, with many putting safety and social-distance measures in place.

Minimizing touch points, exposure

Motley’s Richmond Auto Auction held simulcast-only sales for eight weeks, before restarting its first in-lane sale in mid-May, said general manager Wyatt Carter.

The sale was RSVP-only, and the Virginia auction reduced its capacity by more than 50%.

The auction has restricted access to where dealers are not allowed in the building, instead setting up remote check-in stations at the front of the building where dealers, remaining outside, can pick up bidder badges, day passes and so forth, Carter said.

It’s designed to keep attendees socially distant, as well.

“We felt like enclosed spaces was probably one of the biggest risks we’d be running,” Carter said. “We don’t feel comfortable at this point bringing more people in the building, even if it is legal” so as to not expose its employees.

Once dealers check in, they are allowed access to the yard and the lanes, where there are social-distance marks and stations available for hand sanitization, Carter said. The auction is also requiring face masks.

In an example of just how granular Richmond’s approach has been, it is allowing only one use of a pen before it has to be sanitized, eliminating another potential touch point.

“So, we’re really trying to keep down the touches and keep people spread out and safe,” Carter said.

Common sense, communication, collaboration

And when it comes down to enforcing and implementing such measures, a lot of it boils down to common sense, says Justin Brown, general manager at Missouri Auto Auction, which resumed in-lane sales earlier this month after eight weeks of online-only.

For example, at Missouri, instead of meeting with all 30-40 drivers at once, Brown individually meets with smaller group of drivers, who are appropriately spaced apart at the top of each of the auction’s four lanes, while others wait outside. Vehicles are also locked when they are being driven through the lane.

Brown also emphasized how important it has been to properly communicate with dealer customers during the pandemic to explain the auction’s protocols, including those around site visits to preview inventory.

“That’s just setting the expectation of your customer before they get here and not (having) a big surprise … As long as you communicate and set the expectation, they (have been) pretty good with it,” Brown said.

And he would later point out, “even in normal times, good communication goes a long way.”

So does relationship building and sharing of best practices with peers.

At Corpus Christi Auto Auction, in-person sales resumed in a limited capacity on May 1, the same day the state of Texas opened back up.

General manager Hunter Dunn was able to get advice from state and local law enforcement, thanks to relationships the auction had built, having previously allowed Texas state troopers, the Nueces County Sheriff’s Department and Corpus Christi Police Department to train at the auction.

“So, I reached out to all three of them and asked them what we could do, what we should be doing, what we shouldn’t be doing,” Dunn said.

“I took the advice from all three of them, and I explained to them what we were interested in doing,” he said. “And obviously, they’re not the ones that could give me the OK or not. But after they reviewed everything, they said, ‘Hey, there's no reason why you guys can't move forward.’”

Corpus Christi AA has put a number of precautions and measures in place, such as cleaning logs, “thoroughly” cleaning high-touch areas several times each day, closing the cafeteria/food service and limiting attendance

The auction also reached out to dealers and asked that they not bring additional parties to the auction, like their drivers or transporters.

Dunn also said the auction is thankful to be in the ServNet Auction Group, where it has gleaned best practices.

(Missouri Auto Auction is also a member of ServNet).

“ServNet has been instrumental, giving us information on how to handle the situation and steps and procedures to opening back up full time,” Dunn said. “To have that group and that leadership at our disposal has been great.”

‘Proceeding with vigilance and caution’

Speaking of ServNet, that auction group shared an update on May 18, detailing several ServNet members who began holding live sales earlier in the month and the various safety protocols its members had put in place.

For example, steps like realigning traffic flows, utilizing Plexiglass sneeze guards, attendance limits, social-distancing floor marking, training personnel on adjustments and gathering masks, gloves and pens, ServNet said in the update.

As of that May 18 update, 12 of the 22 ServNet auctions were holding live sales this month, with at three more planning to do early next month. All of ServNet’s members were holding regular online auction sales.  

“ServNet auctions have maintained a strong presence in the market since the onset of the COVID-19 pandemic, holding online-only sale events,” ServNet executive director John Brasher said in a news release.  “But we are delighted to report that many of our member auctions are going live, meeting buyers mask-to-mask if not face-to-face, in the auction arena, and recording excellent sale results.”

Of course, that excitement comes with caution and the aforementioned preparation. ServNet members are not rushing in, Brasher said. 

“As eager as ServNet auctions are to return to live sales, they are all proceeding with vigilance and caution,” he said.  “All auctions in the group are going to great measures to protect their customers and employees, holding extensive meetings, drafting safety plans and working with local law enforcement and health agencies to ensure that auctions are held safely and responsibly.”

3 factors for ADESA to re-open

The decisions regarding in-person, in-lane sales have been different at ADESA and Manheim, the two largest corporate auction chains.  

ADESA continues to operate simulcast-only at most of its locations, with no vehicles running through the lanes.  The auction company is not currently operating in-person live auction sales.

(In its latest update, ADESA has simulcast-only sales at all of its U.S. and Canadian locations, with the exception of its two auctions in Massachusetts. Both of those are Simulcast+ sales, which uses an automated digital auctioneers).

Most ADESA locations are allowing buying inventory previews (by appointment only), though some are not.

A full auction-by-auction rundown can be found here:
https://www.adesa.com/covid19/

In an interview on May 12, leadership of parent company KAR Global was asked what the ideal scenario would have to be for ADESA to re-open a traditional, physical, in-person sale.

KAR chief executive officer Jim Hallett had boiled it down to three key priorities, in order: First priority is employee safety above all else. Second is adhering to local and state laws, which vary wildly.

“We’re going to stay legal,” Hallett said in the May 12 interview. “We are not going to violate, and we’re not going to try to look for a loophole to try and prove that we’re an essential business.”

Third, he said, “we’re going to listen to our customers. And we’re going to see what our customers want and how they want to be serviced.”

When the time comes for that to happen, “it remains our goal to have the safest environment in the industry, which means we would like to run fewer cars through the block,” said KAR chief financial officer Eric Loughmiller in that same interview.

Hallett added: “Even before COVID (hit), I’m on the record from last year of saying that we’ve got to make this safer … we continue to push safety in the lanes. We don’t believe we should be running cars through the lane.

“And so, during this COVID period, there’s been no cars running through the lanes. And we’ve proven and demonstrated that we haven’t lost anything as a result of that. We may have gained things that we don’t know about,” Hallett said. “And our hope would be that we don’t run any cars through our lanes as we return to whatever form of auction we return to, whether it be simulcast, Simulcast+ or physical lanes, that we don’t run the car through the lane.”

Latest from Manheim

Manheim also continues to operate in an all-digital sale environment, running Simulcast-only sales as allowed by local and state directives.

In an update Wednesday, Manheim president Grace Huang said that, “with our lots at full capacity, Manheim locations have begun providing access for clients to preview inventory on a limited basis. To date, two-thirds of our locations are participating with expanded viewing days and times while maintaining strict safety and compliance protocols.”

Thirteen auctions are also using Manheim’s LotVision wireless tracking technology, with the goal of making that 26 by the end of the year, she said. 

“We fully appreciate that our move to an all-digital auction operation has been a significant adjustment for clients, from buying on Simulcast and paying for vehicles online to using our Remote Seller tool to rep vehicles,” Huang said in the update.

“We also realize that we can do even more to provide the vehicle information necessary to instill buyer confidence through our condition reports and imaging. In response, Manheim is accelerating our investment in these areas with plans to roll out key enhancements in the coming months,” she said. “Additionally, working closely with our clients, we are exploring other ways to continue improving the digital auction experience.     

“As companies across the country and within our own industry begin to reopen, we are seeing varying methods for returning to business. At Manheim, our approach is guided by CDC guidelines; informed by Cox Automotive’s pandemic data; and driven by our core values to always do the right thing for our team members, clients and communities,” Huang said.  

“As state and local directives allow, we will continue to adjust our operations to make it more convenient for our clients to conduct business. Should further COVID-19-related developments alter our plans, we will adapt accordingly.”

Alan Lang, divisional vice president at Manheim, said in an interview earlier this month that one of the key pieces in decision-making when it comes to in-person sales, “is how and when will we be comfortable with allowing dealers to go shoulder-to-shoulder in the lanes.”

He added: “For right now, until we start to see massive testing occur in specific marketplaces and across various regions, a treatment, some of the vaccines that are in the works, it’s going to be a period of time.

“It doesn't mean that we're not going to look at, and we are looking at, options to allow bidding, but that would be on a limited basis,” Lang said. 

“We're certainly evaluating and looking at some of the safety protocol options through Kenny’s team to (evaluate) how can we allow enough dealers in the lane that it makes sense, where they’re not violating social distancing recommendations by the health experts,” he said, referring to Kenny Jones, who is the senior director of environmental, health and safety at Cox Automotive and participated in the interview, as well.

“It’s something we're looking at daily. We’re looking at our facilities, we're seeing if it's possible to do that in a safe manner,” Lang said. “I think the timing is going to really be predicated on what we're seeing with the data and what we're physically able to do within the facilities.”

Manheim also would need to consider, “what's the number of people that can come into the lanes where, where they can physically provide distancing, what kind of barriers may we need in the lanes to allow them to come in and still be able to bid and respect that social spacing, what kind of protections such as a sneeze guards, plexiglass guards around the blocks to protect the auctioneers, block clerks, etc.,” Jones said.

Jones emphasized the importance of, “making sure all those are in place and available and making sure that the data supports that location being able to do that and handle that.”

The analytics team at Cox Automotive, led by chief economist Jonathan Smoke, has built a database dissecting the pandemic level in every U.S. county, Jones said in a separate interview for the Auto Remarketing Podcast.

The company then makes subsequent decisions based on Smoke’s model detailing the condition of the specific municipality and surrounding area where a business would operate.

The model considers such conditions as hospital beds available, fatalities, cases/new cases, etc. There are four levels of decreasing seriousness: red, orange, yellow and blue, Jones said. (He emphasized that blue is still a pandemic level and that it doesn’t mean “back to business as usual.”)

“Jonathan’s model is really the big factor in those decisions. We obviously have to go with the government mandate, but we follow those individual locations based on that data model that Jonathan built,” Jones said.

Though he was explaining the decision-making process from a Cox Automotive enterprise-level viewpoint, the same sentiment would be behind deciding whether or not to open specific in-person physical auction sales.

When it comes time to potentially open physical in-person Manheim sales, such decisions would be made on a market-by-market, auction-by-auction basis, Jones confirmed.

“We’ll base (the decisions to re-open) on that data that Jonathan’s providing us and then each one of the pandemic levels, whatever the needs are for that market and what pandemic level they are,” Jones said.

“We’ll put the appropriate safety protocols in place so that people can safely re-enter the Manheim auctions and follow the appropriate protocol for that market,” he said. “We’re not going to try to make Omaha, Neb., comply to New York City rules. We’ll make sure it’s Omaha, Neb., rules.”