BRITISH EXECUTIVE Michael Richardson, who retired recently as head of US auction company ADT Automotive, once referred to auto auctions as the laxative of the auto industry.
What Richardson meant was that auctions do a great job of moving large numbers of used cars and thus keeping the industry healthy. Auctions have flourished in the USA and UK because rental car companies, auto finance companies, manufacturers and dealers have used them to dispose of large quantities of used cars as efficiently as possible.
Auctions act as mercantile agents, bringing buyers and sellers together in maximum numbers. The theory is that by doing so, they promote used car values and help maintain a healthy price structure for both new and used cars.
In recent years, auctions have expanded into distribution, reconditioning and financing of used cars. In America, auctions are working as partners with manufacturers in developing used-car certification programs.
The auction industry has worked hard on its image. For example, the industry has backed tougher laws to punish those who tamper with odometers in both the UK and USA.