I went inside the giant used-car auction where dealers bet on America's next car
I went inside a giant used-car auction, where dealers are already betting on what drivers will want next.
I visited one of the largest used-car auctions in the United States, Manheim New Jersey, where 4,500 vehicles are sold each week. The lot, sprawling across 17 in-person and seven online auction lanes, is a barometer for the health of the auto industry. Currently, hybrids are a hot trend, and the demand for electric vehicles is tied to gas prices. Auctioneers at Manheim New Jersey chant rapidly, "Nine-and-three! Nine-nine! Nine-and-three!" to signal the vehicles coming through.
My visit revealed a flurry of dealer names, vehicle models, and rapid bids. From worn-out Honda Civics to recently leased BMW X7s, dozens of cars moved through the auction lanes each day. The 350-acre lot, owned by Cox Automotive, typically handles around 4,500 vehicles weekly. Each vehicle is essentially a bet on what customers will want in the next few weeks, with dealers betting several thousand dollars on each car.
Manheim handles over 7 million vehicles annually across its 80 locations. The company employs about 1,500 auto specialists to repair and recondition the used cars before they go up for auction. As vehicles arrive, they undergo a series of checks, including body inspections and photography, to determine their suitability for auction. Some cars may require detailed repairs or replacements, while others are sold "as-is."
The auction data provides valuable insights into market trends. With gas prices rising, there's been a surge in demand for hybrids, which typically move through the auction process in about 25 days. Interest in electric vehicles is also correlated with gas prices, with Manheim noting that EV sales spike alongside rising fuel costs. Used-vehicle retail prices have increased by 4% through October, while non-EV vehicles with above 40 mpg have seen a 9.9% rise in wholesale value since January.
Despite the potential for technology to replace auctioneers, Manheim maintains that human auctioneers are essential for turning sales into a personal challenge for dealers. While online sales have grown, particularly during the pandemic, about 70% of Manheim's sales still come from physical auctions. The auctioneer's role remains critical in creating a unique and engaging experience for dealers.
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