Ever wonder where used cars on Arizona's dealer lots come from? This is where
If you have bought a used car or truck in Arizona over the past couple decades, or traded one back to a dealer, there's a good chance it was brought to an auction lot, inspected, cleaned and possibly reconditioned, then sold.
There's little glitz to these auto auctions. The vehicles are ordinary, not rare. They aren't showcased in gleaming condition. There's no audience of celebrities and upscale collectors glued to the action, programs in hand and trophy girlfriends or boyfriends at their sides.
This marketplace is boisterous and chaotic, with horns honking, a dozen auctioneers chanting in competition and buyers milling around cars as they idle six or seven deep, awaiting their brief turn — 15 to 20 seconds — in the limelight.
If you have bought a used car or truck in Arizona over the past couple decades, or traded one back to a dealer, there's a good chance it was brought to one of these auction lots, inspected, cleaned and possibly reconditioned, then sold.
A unit of Cox Enterprises — the same company that supplies cable-TV services in Arizona — is a major player in vehicle auctions locally.
Unlike the Barrett-Jackson, Russo and Steele and other rare-car auctions for which the Valley is known, the year-round sales conducted by Cox and a few competitors are of far greater importance to transportation needs throughout the state.
Auctions keep the supply of used autos moving throughout the state — about 3,500 vehicles changed hands one day recently at a Cox facility in Tolleson.
"We facilitate the movement of vehicles between different owners," said Patrick Brennan, senior vice president for Cox Automotive. "When cars get put back in the marketplace, that's when we get involved."
Cox Automotive isn't nearly as well known as Cox Communications, the cable-TV and digital subsidiary of Cox Enterprises, a privately held, family-run giant headquartered in Atlanta. Cox Communications employs more than 3,100 people in Arizona, compared to 580 in the auto unit.
Cox Automotive consists of its Manheim auction division (named after the east Pennsylvania town where it started) along with Autotrader, Kelley Blue Book and more than a dozen other businesses.
Cox Enterprises also has a third but smaller division focused around newspapers, broadcast stations and digital operations, but the media business doesn't have a significant Arizona presence.
Cox's Manheim unit claims to be the largest used-vehicle auctioneer in North America and the world. It's a key player in the $760 billion U.S. used-vehicle industry:
- Nationally, used cars and trucks are sold by dealers ranging from giant franchises to small independent firms operating at garages or converted gasoline stations. About 40 million used vehicles are sold each year, many by private parties.
- Compared to the nearly 17 million new cars and trucks sold each year, nearly 280 million used vehicles are on American roads. Used vehicles are about 11.5 years old on average.
- Roughly 1.8 million vehicles are repossessed each year and typically wind up on auction lots. About twice that many auto loans are seriously delinquent, with borrowers 90 or more days behind on payments.
Keeping vehicles moving
Manheim nationally generates about $3 billion of Cox Automotive's $7 billion in revenue, offers about 8 million vehicles for sale at auction, performs 4 million vehicle inspections and employs 18,000 people of Cox Automotive's 34,000 total.
Manheim expects to auction around 175,000 cars and trucks in Arizona this year at lots in Tolleson, Tucson and Phoenix, just south of Sky Harbor International Airport.
Most, but not all, vehicles come from Arizona and remain in the state following sale.
The Tolleson facility is the company's biggest in Arizona, with vehicles passing through 12 lanes simultaneously on auction days, which are conducted two or three times a week. Auctions aren't open to the general public. The Phoenix and Tucson facilities have four lanes each.
Manheim doesn't take ownership of cars but generates fee revenue from both buyers and sellers. On a $15,000 vehicle, the company might earn $400 in combined fees, said Brennan. Auto prices at auction can range from around $1,000 to six figures on occasion, averaging around $13,000.
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Customers include dealers wanting to buy cars and trucks, as well as rental-car companies, manufacturers, leasing firms and finance companies seeking to unload them.
Along with cars and trucks, the company's auctioneers move motorcycles, boats and recreational vehicles, with RVs being a specialty of the Tucson operation.
In conjunction with its auction services, Manheim also reconditions vehicles, supplies vehicle-condition reports, helps dealers manage inventory and provides dealer financing.
Among workers at the auction yards are low- and medium-risk female inmates from the Perryville prison in Goodyear. They earn money washing and cleaning vehicles but don't perform other reconditioning tasks such as minor mechanical and body work and cosmetic touch-ups.
A directory of the National Auto Auction Association lists six such businesses in Arizona, three of which are Manheim operations.The others are ADESA Phoenix, Dealers Auto Auction of the Southwest and Metro Auto Auction of Phoenix.
Manheim also has a logistics unit in Gilbert that will relocate this summer to a building near Sky Harbor International Airport. Logistics involves the rapid movement of vehicles to and from auction clients and is increasingly technology-driven.
Part of the rationale for the move of the logistics unit to near Sky Harbor includes a desire to be closer to Arizona State University and its stream of new graduates, said Brennan. The company is hiring people for jobs in customer service, technology, business development and other areas.
"Arizona is an extremely important state for us," he said.
The wholesale used-car business formerly was highly local and hands-on, but today dealers can and do shop remotely from around the nation. Some follow the action on simulcasts or closed-circuit TV broadcasts.
Dealers who show up in person as buyers still account for about 60 percent of sales, while remote digital sales make up the other 40 percent. Even in-person buyers can and do pull up vehicle-specific information on their cell phones.
"In the old days, guys would walk around with Blue Book in hand and kick the tires," said J.D. Daniels, general manager of Manheim's Phoenix unit. "They don't do that anymore."
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