Changes in the automotive supply chain have affected all aspects of the industry. Auctions need to partner with a dependable logistics provider to weather the upcoming tight transport disruption.
Prior to the pandemic, the automotive industry wholesaled approximately 16.6m vehicles in 2019. However, 2020 and 2021 have been a very different story. Due to the chip shortage, car manufacturers have produced less vehicles. The decrease in new vehicle inventory has affected the volume of used vehicles going through the wholesale and retail channels.
Lower wholesale volumes have affected logistics providers in the short term but there is a bubble developing. Commercial fleets and personal vehicles are reaching record age. Many will rush to dispose of their aging assets as soon as possible.
This surge will coincide with car manufacturers increasing their production and shipping demands. The abundance will create a very tight transport market. It is important for auctions to partner with a reliable logistics provider. They will need the support through the high demand transport cycle approaching.
Fleets are reacting to the delays from OEMs by keeping their vehicles longer. The general rule is for sedans to be cycled at 36 months or 75,000 miles. However, many fleet management companies are updating their vehicle replacement plans to accommodate for the vehicle shortage. Fleets are maintaining existing vehicles, trying to make them not only last longer but become more efficient.
Dealers hurt by the high prices of used cars at auctions are trying to expand inventory. They are retaining off-lease vehicles and expanding the pool of trade-ins. Off-lease vehicles are either being repurchased by consumers or by dealers skipping the wholesale channel.
Even financial institutions are sending less vehicles to auctions. Since the COVID related government subsidies, they are regularly seeing lower defaults on vehicle loans. Without the regular defaults on loans, there’s a notable reduction in repossession volumes. As a result a lower volume of vehicles are heading to the auctions.
A recent article in the Wall Street Journal pointed out that the average age of vehicles on the road increased last year. The average age is now at a record high of 12.1 years. High prices and improved quality prompt owners to hold on to their cars much longer.
The chip shortage will fade eventually and markets will find an equilibrium. When that happens, many expect a rush by consumers and commercial businesses to dispose of the aging assets. Combine that rush with the overall shift of new vehicle purchases leaning towards electric vehicles. This “re-stabilization” will probably cause the scale to tip the other way.
Auctions need a dependable vehicle logistics partner to weather the upcoming storm.
The independent car auctions work with a very broad base of automotive clients. Fleet management companies, car dealerships, financial institutions, and rental car companies are all interested parties for independent car auctions. Unlike independent auctions, large auctions such as Manheim and ADESA have in-house transport companies to support their vehicle transport needs.
With the rising tide, independent car auctions need to establish a partnership with a logistics provider before the wholesale volumes increase. When the rush occurs, everyone will be scrambling to ship vehicles. It’s important to build strong working relationships now to be prepared with a trusted partner.
It is crucial to partner with a logistics provider that understands the transport process for remarketing. Remarketing logistics is a specialized task depending on many factors. Everything from a pickup from a repossession yard or picking up a fleet vehicle from an individual’s home. Auctions should take the following capabilities into consideration when partnering with a logistics provider.
Repo Transportation Expertise
Picking up at the repossession yard demands several points of engagement. Repo companies require well outlined processes, detailed communication, and a clear understanding of the needed equipment to extract the vehicle assets.
Many vehicles on repo lots are inoperable and need special equipment. To add to the difficulty, many locations are small and cannot accommodate large transporters. Additionally, most repo yards require at least 24-hour appointment scheduling and one hour notice call. A logistics provider needs to be very organized and have clear communication to be a good partner for a repo company.
Fleet Transportation Expertise
Picking up fleet vehicles from individuals’ homes also requires precision and orchestration to satisfy all stakeholders. Clear communication, timely updates and safety measures are important when working with individuals in possession of fleet vehicles. The logistics provider needs access to technology that enables clear communication flow.
Dealer (Wholesale) Transportation Expertise
Dealers would always rather retail units on their lots but once units start to age they rely on the wholesale channel. The dealer would prefer to keep vehicles on the lot until the last moment before the auction day. The logistics provider has to offer speed and flexibility to support dealers with their wholesale units.
Each stakeholder in the wholesale process has different requirements and it is important for a logistics provider to meet those demands. The following are important considerations when looking into a logistics provider for the auctions:
- Local transporter relationships
- Ability to handle operable and inoperable vehicles
- Ability to handle transport from residential areas
- Flexibility & speed to adapt to demands of multiple stakeholders with different needs
- Coverage of large geographic area
- Ability to handle single units or full loads
- Importance to meet tight deadlines
- Provide competitive pricing
- Offer condition reports
- Technology to streamline communication and visibility
Carpool Logistics is an experienced and dependable partner for the independent auctions. We have partnered with many auctions and understand the requirements and expectations for various remarketing stakeholders. Our logistics experts leverage local transporter partnerships and technology to optimize vehicle shipments.
Working with multiple auctions allows us to bundle vehicle shipments. These existing relationships enable us to offer competitive pricing and reduce the total shipping timeframe. Carpool Logistics\’ digital platform provides vehicle pooling, route optimization and status visibility for our auction partners.
Learn more about Carpool Logistics here.