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Auto Auction Goes Big Business

November 9, 1987

DENVER (AP) _ State-of-the-art mass auction centers are becoming as central to America’s used-car businesses as the ubiquitous Main Street car lot.

Trend leader General Electric Co. recently opened the Denver Auto Auction, its latest auto auction outlet. The sleek auction operation can display 5,000 vehicles and keep six auctioneers talking at the same time.

″General Electric intends to change the image of local auctions,″ said Donald B. Fowler, vice president for sales and marketing of GE Credit Auto Auctions.

The concept of auto auctions is simple: Dealers can get rid of vehicles they don’t want or need, and they can acquire those they do.

For example, four-wheel-drive vehicles in Rocky Mountain states bring a premium, while tow cars and Cadillacs are popular in Texas and Oklahoma. An Oklahoma dealer may bring a truckload of Jeeps and Broncos to sell and take home Lincolns and Coupe de Villes.

The National Auto Auction Association has nearly 300 members, but some experts believe GE Auto Auction and two other strong rivals will have cornered half the business by next year.

GE’s $10 million Denver operation, which draws about 3,400 registered auto dealers from 44 states, is among the largest in the nation with 68 acres and six lanes for simultaneous auctions.

Pam Tawater, dealer relations manager in Denver, said that at the grand opening of the operation’s new plant east of Denver nearly 2,500 cars were consigned and more than 1,100 were sold.

Special events and holidays have produced up-and-down volume so far, she said, but ″we want to get to running 2,500 on average consigned and selling at least 50 percent of those units (weekly).″

Auctions in Chicago and San Bernardino, Calif., offer 11 and 12 auction lanes, with the California facility handling about 3,000 vehicles weekly. Fowler said there are others that will push San Bernardino to keep its No. 1 volume ranking.

GE purchased the old Denver Auto Auction, a regional facility selling some 350 cars weekly, in 1985. It was one of GE’s early acquisitions. By the end of 1988, there could be 22 or 23 GE auction centers, said Fowler.

Corporate fleet vehicles, factory vehicles that cannot be sold as new, rental units and lease return cars all go on the sale block at the Denver Auto Auction. Many have only a few thousand miles, and some factory test vehicles have only a few hundred miles.

The cost of auctioning a car, in addition to repairs or cleaning, follows a sliding scale based on the car’s price. For example, a $6,500 car costs $140 to auction.

Denver’s 66,000-square-foot facility recently offered vehicles ranging from 1987 Corvettes to 1959 Thunderbirds to dump trucks.

″Anything that makes money″ is what Sidney, Mont., auto dealer Dick Tadolini comes to the Denver Auto Auction to track down. He purchased three right away at a recent sale, and was hoping to end up with four or five.

The used car manager at Suss Pontiac in the Denver area, Paul Melberg, said his lot gets plenty of top-of-the-line trade-ins, but he also needs lower-end models that can retail in the $3,500-$4,000 range. He usually buys five or six.

Ron Watts, who has auto shops in Billings and Columbus, Mont., said he has been buying ″all kinds of pickups, Fords and Chevies″ for years at the auction. He especially likes to snap up four-wheel-drive vehicles.

Cars arrive in Denver on car transport trucks or rail cars. They are checked in at a six-lane terminal where technicians read serial numbers and describe each car’s condition, color and options into a headset. Using that information, computer operators prepare the invoice for each vehicle.

From there, if the car is ready to be sold, it lines up for a quick drive- through, usually taking less than a minute, to be auctioned. If it needs cleaning or repairs, a 27,000-square-foot building and staff are ready.

″(They) can put a car together,″ Tawater said, with full mechanical, body work and wash operations. The seller is charged for the services, but as the auction advertises, ″Remember - nice clean cars get a lot more attention.″

When an auction is in full swing, the auction floor cacophony is surprisingly easy to understand, despite six auctioneers selling six vehicles at once.

Blue books of wholesale market prices adorn nearly every pocket. Only dealers are allowed to bid because, officials said, the goal is to reach the dealers themselves, not the retail market.

″We want to make it easier for the dealers to do business here,″ said Fowler. Too many auto dealers, he said, still view their used-car lots as expenses rather than income-producers.

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