Wednesday, Nov. 20, 2013, 03:07 PM UPDATED 8:00 AMBy Auto Remarketing Staff
Wednesday afternoon, Manheim announced a partnership with subprime credit used-car dealer DriveTime to form Go Auto Exchange, a new separate and independent wholesale auction company focused on independent dealers and the low-end vehicle segment.
The first locations for Go Auto Exchange will be rolled out this year in Atlanta and Phoenix, with more to come in 2014.
Serving as president of Go Auto Exchange will be Tim Janego, who most recently served as Manheim Regional Vice President for the East Region.
Janego will work closely with teams from Manheim and DriveTime to have the new locations open by the end of the year.
“Tim’s extensive background in the wholesale auction industry made him a perfect fit to lead this exciting new business,” said Manheim senior vice president and chief financial officer Joe Luppino.
“Go Auto Exchange will benefit from Tim’s deep operational experience in running wholesale auctions and from DriveTime’s inventory and deep knowledge of this growing market segment.”
Go Auto Exchange and its locations will operate independently from Manheim and DriveTime locations.
Headquarters will be in Atlanta, with more locations coming in early 2014.
“As Manheim’s business today focuses on serving many different customers, Go Auto Exchange’s focus will be exclusively on the low-end vehicle segment in local markets,” said Janego. “Our highly-targeted approach allows us to concentrate solely on growing this segment, while allowing us to aggressively compete.”
Go Auto Exchanges intends on bringing in a “combination of auction pros and industry experts” to lead its locations, and will partner with NextGear Capital to offer vehicle financing options to independent dealers.
More details will emerge in the weeks ahead, the company said.
“We’ve been a long-time Manheim customer, and this new arrangement with them is a result of our close collaboration and identifying what our mutual customers need and want to succeed,” said DriveTime chairman Ernie Garcia.
“Manheim’s success with wholesale auto auctions and our deep knowledge of the low-end vehicle market and independent dealers is a perfect match.”
More on DriveTime & Its Subprime Success
As reported earlier this year in Auto Remarketing, DriveTime has proven to be an example of how much the subprime auto finance market has bounced back since the deepest point of the last recession.
The company often caters to deep subprime customers as buyers attached to contracts with a rating of A+ had an average credit score of 556, according to its 2012 annual report filed with the Securities and Exchange Commission.
DriveTime retailed more than 10,000 additional vehicles last year than it did in 2009 (59,930 versus 49,500).
“The competition continues to be very strong with open access to credit, especially in the subprime sector,” Sauder said in April when DriveTime hosted a conference call after its annual report release.
“I think you can see that in reading numerous articles out there that subprime auto finance is back very strong. The market is turning even more favorable,” Sauder went on to say.
The company is announcing its third-quarter 2013 results today and is hosting a conference call this morning to discuss the results in more detail.
In the second quarter, DriveTime’s revenue came in at $364.8 million, and its dealerships turned 17,357 vehicles. DriveTime’s originations increased 22.8 percent year-over-year to $279.2 million during the second quarter.