As it turns 10, Openlane is on pace for record year
Arlena Sawyers
Automotive News
July 20, 2009
Online remarketer Openlane Inc. is no longer the new kid on the auction block. It celebrated its 10th anniversary this month with a sales pace that promises to set a record for the company this year.
Openlane CEO Daniel Farrar says the wholesale auto auction company sold 200,000 vehicles in the first six months of 2009 and expects to exceed last year's sales of more than 330,000 by year end.
Farrar declined to predict a sales figure for this year. But citing a 2008 study by the Boston Consulting Group that predicts online sales will grow from 1.7 million transactions in 2008 to 3 million in 2013, Farrar says Openlane is poised for growth.
"It sounds trite, but the record results are largely due to the support and relationships we've had with both consigners and dealers over the years," Farrar says.
The downturn in new-car sales is creating a tighter supply of used vehicles because of fewer trade-ins and retired rental vehicles returning to the market. At the same time, used-vehicle demand is increasing.
Top 5 online
The leaders in online wholesale auto auctions, ranked by 2008 market share
1. Manheim: 37%
2. GMAC SmartAuction: 26%
3. Openlane: 13%
4. ADESA Auctions: 9%
5. Enterprise Rent-A-Car: 9%
Source: Boston Consulting Group
Online simplicity
Those market dynamics coupled with the simplicity of buying and selling vehicles online is helping boost Openlane's sales, Farrar says.
"You're seeing more used-car activity, and a lot of that is taking place online," he says.
But even with its ability to increase its sales in a downturn, Openlane has a long way to go to reach Manheim, the nation's largest auction company. Manheim, which owns both traditional auctions and online auction properties, handled nearly 10 million vehicles in 2008.
Manheim held 37 percent of the online wholesale auto auction market in 2008, according to the Boston Consulting Group study. GMAC Financial Service's SmartAuction came in at No. 2 with 26 percent of the market. Openlane was No. 3 with 13 percent. ADESA Auctions and Enterprise Rent-A-Car tied at 9 percent each.
Openlane, of Menlo Park, Calif., does not operate physical auctions. But it offers services typically found at physical auctions, such as title processing, vehicle condition reports, vehicle transportation and arbitration.
Openlane manages remarketing programs for auto companies, captive finance companies, daily rental companies and others. Its customers include American Honda Finance, Audi Financial Services, Chrysler Financial and Volkswagen Credit.
About 25,000 franchise and independent dealers are registered on Openlane. About half of them purchased at least one vehicle in 2008. On average, dealers pay about $250 to buy a vehicle and $125 to sell one.
Saving time
Mark Clifton, general sales manager of DCH Freehold Toyota in Freehold, N.J., says he has been buying vehicles on Openlane since 2004 and typically buys 10 to 15 a month on the remarketing channel.
Clifton says that the vehicle photos, descriptions and condition reports are accurate and that buying used-vehicle inventory online saves dealerships time and money.
"Now you're cutting costs and running lean and mean because of the economy," Clifton says. "You can't afford to have a manager out of the building two or three times a week. This helps."
Openlane's first decade includes a series of mergers and name changes.
In 1999, it started as Autodaq Corp. In 2002, it acquired AutoTradeCenter.com Inc. and took the name AutoTradeCenter Inc. In 2006, it merged with Onlane Group Inc., of Toronto, to become ATC-Onlane Inc. The company changed its name to Openlane in 2008.
