By on June 29, 2017

used cars used car lot

People aren’t buying nearly as many new cars these days, but at least one aspect of the vehicular marketplace is still thriving — auto auctions. Nearly 18 million vehicles were eligible for the auction block in 2016.

While not all of those 18 million vehicles were sold, they still pushed the business beyond the $100 billion mark and made 2016 the best year on record, continuing five years of industry growth.

Thanks largely to swollen used car inventories, 2017 looks to continue that trend. Volume for 2016 was up 2 percent over the year before and has continued to creep upward at the start of 2017. 

The number of actual and “projected” used vehicles sold at National Auto Auction Association member sites, which accounts for hundreds of domestic and international auction locations, was up 5 percent at 9.8 million units in January.

“The 2016 results are very encouraging,” NAAA chief executive officer Frank Hackett said in an official statement. “The survey results show the strength and depth of a mature industry that has demonstrated its resiliency.

“I’m confident we’ll continue to be a vital and growing part of our nation’s economy as we look forward to celebrating the auto auction industry’s 80th anniversary in 2018,” Hackett says.

Yet in a recent survey conducted by the NAAA, much of that success seems to come as a result of increased repossessions and off-lease vehicles nobody wanted to buy. In fact, finance and fleet vehicles accounted for 40 percent of the total volume of auctioned cars — a 5-percent increase from the previous record year. Considering that domestic fleet sales and production have been trending downward over the last few years, it’s safe to assume the majority of the increase was not dependent upon them.

The remaining sources for auctioned vehicles actually decreased in volume. Dealer consignment vehicles were down from down from 57 percent to 52. Automaker sales also decreased, comprising less than 7 percent of the total auction volume.

While only 252 of the 342 NAAA member auctions participated in the survey, the group claims it’s representative of the industry as a whole. The data also provides some fundamental statistics on the typical NAAA member auction. On average, they have eight lanes, 137 employees, and a payroll of $4.2 million. Mean annual charity donations accounted for $26,000, per location.

Auctioneers are keenly aware of the changing environment of the automotive industry and claim it’s one of the reasons they’ve begun keeping closer tabs on it.

“As key participants in the automotive industry, NAAA members have taken notice of the many changes that are sweeping that industry today, from the rise of mobility services such as Lyft to the impending launch of autonomous vehicles,” the association said of the surveys.

“Accordingly, NAAA — as the pre-eminent voice of the auto auction industry — has concluded that it is in the best interests of its members to provide them with objective and informed research into how these and other changes might affect their future prospects,” it continued. “Armed with such research, members will be better equipped to revise and update their business plans.”

In the short term, the auction business doesn’t seem particularly rattled. Even though new vehicle volume is expected to drop noticeably in 2017, used vehicles should remain plentiful. “If you look at the history of the survey going back 20 years, you see steady growth,” Hackett explained. “I’m confident in what I’m hearing in terms of volume in the industry currently and from our members that we’ll continue to see our industry grow.”

[Source: Automotive News] [Image: Steve Snodgrass/Flickr (CC BY 2.0)]

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