Auction executive: ‘Let's stop killing people in our lanes'

INDIANAPOLIS — The CEO of one of the largest vehicle auction companies in the world said cars should no longer physically run through lanes.

KAR Global CEO Jim Hallett, who had just been given the National Auto Auction Association's Hall of Fame Award, told an industry audience last week that not long after opening his first auction in Ottawa, he watched one of his best childhood friends nearly get killed in a vehicle accident. "It was devastating for me personally and professionally," Hallett said. "How did this happen? What could I have done differently? Those are questions that have stayed with me throughout my career."

Hallett noted several safety initiatives that have taken place throughout the auction industry. But he also said the industry averages one fatality every 18 months.

"So as I see it, no matter how much we train, no matter how we innovate, auctions will never be as safe as they could be," he said, adding, "Unless we stopped running cars. And that's really the challenge that I want to leave you with today. Auctions, consigners, dealers, all of us. Let's stop running cars altogether."

Some auction leaders have argued that the rate of injury and death at car dealerships is on par, if not greater, than that of auctions.

But Hallett, noting a high-profile accident at a Massachusetts auction in 2017 when five people were killed and nine others injured, said the wholesale sector should get ahead of the curve anyway, lest it be forced to take action later.

"I know there are people in the industry and in the room who don't share my opinion," Hallett said. "However, I believe that if we don't do it ourselves, it's only a matter of time before it gets legislated, and we're going to be told to do it. And then we will have no choice."

Hallett highlighted several commercial customers who have agreed to do completely digital auctions with KAR's ADESA: Acura, Audi, BMW, Enterprise, Honda, Kia, Lexus, Prime Motor Group, Toyota and Volkswagen. He said Ford planned to pilot its first virtual sale with KAR in Boston last week.

At multiple Manheim locations, BMW Financial Services, Subaru Motors Finance, Toyota Financial Services, American Honda Finance Corp., Volkswagen Credit Inc., GM Financial and Mercedes-Benz Financial Services are all running "digital blocks," or lanes that show vehicles on large screens via simulcast, the company said.

Hallett punctuated the end of his acceptance speech with, "To be real blunt, let's stop killing people in our lanes."

At the NAAA annual convention some attendees from independent auctions who asked not to be named said they disagreed that cars and trucks should no longer be driven through the lanes. Running vehicles through lanes is a necessary part of having an efficient and thorough auction, they said.

Jeff Barber, who owns the independent State Line Auto Auction in Waverly, N.Y., said on a panel last week that he agreed "wholeheartedly" that safety should be a priority, and agreed with Hallett that the government shouldn't get involved. But he added, "I don't really want to listen to a competitor tell me what to do. But that being said, we're all trying to do the same thing because nobody wants to get anybody hurt."

Barber's State Line is the largest independent auction in New York, according to NAAA, running an average of 1,200 vehicles through eight lanes every Friday. Barber was given NAAA's Industry Pioneer Award last week, for innovations such as being the first to run a simulcast auction in 1995.

Asked if customers want physical cars to continue running through the auction, Barber told Automotive News, "Many customers do."

"If customers want them to run through, we'd do that. If they don't want them to run through, we'll honor those wishes," he said. "So we can do it either way."

There is no doubt that the digitization of wholesale auctions is growing. KAR's ADESA sold 54 percent of its vehicles to online buyers in 2018. Manheim, the other large player in vehicle wholesale, sold 48 percent of its vehicles to online buyers in September, company officials said.

And both companies have been testing auctions without vehicles running in their lanes. This year, ADESA officially launched VirtuaLane, which functions the same as a typical auction lane, except vehicles are shown on 65-inch screens. The virtual lanes run side-by-side with physical ones. The company plans to have it at about 30 locations by the end of this year.

In May, Manheim launched a completely digital auction at its Tucson, Ariz., site. The purely digital auctions have seen no negative effect on sales or arbitration rates, said Zach Hallowell, the company's vice president of digital. Across Manheim, about 20 percent of all auction lanes are now "digital blocks," Hallowell said.

The two wholesale giants have also been developing and growing tools for auction customers to do business where and when they want to, such as Manheim Express and ADESA's TradeRev mobile wholesaling platforms. Manheim is still doing mobile physical auctions, too, Hallowell noted.

"We don't think of it as digital or physical," Hallowell said. "It's the digitization of the auction."