CARY, N.C. -

To say there’s a lot of data to be harnessed in an industry that moves tens of millions of vehicles (quite literally and figuratively) would be a major understatement.

And as you might imagine, the data in the wholesale auto auction industry goes far beyond prices and the number of vehicles sold.

That’s where the folks at AutoIMS come into play. The firm recently launched its AutoIMS Industry View,  a new quarterly report that it describes as a “compendium of metrics and insights featured in the AutoIMS Sales Scorecard reflecting the entire U.S. AutoIMS footprint — a vast majority of the commercial sales volumes at wholesale, physical auto auctions in the U.S.”

Auto Remarketing connected with Joe Miller, vice president of client experience at AutoIMS, to gather some insights behind the numbers included in this debut report.

We began with a look at how auction conversion rates are faring.

‘Taking every car they can get their hands on’

The conversion rate, measured as the percentage of vehicles sold on a day in which they were offered, was at 70.90% in the first quarter, according to AutoIMS. That beats year-ago figures of 65.39%.

The AutoIMS data also shows a linear month-by-month progression of conversion rates since January 2020. As you might expect, the trough came in April 2020, when rates fell just below 40%. They then climbed steeply over the next few months, reaching an apex of more than 75% in July 2020.

Conversion rates tapered back down toward the 60-70% range in the back half of the year, before climbing again to start 2021.

Asked about the year-over-year jump in Q1, Miller said: “I think it’s all the market dynamics we’re seeing with supply and demand. That’s probably one of the least surprising metrics, although it’s still shocking to view it year-over-year … Dealers are taking every car they can get their hands on. And repos have been slow to return.

“The replacement cycle’s different, the chip shortage — all of the talking points are at play in that number,” he said. “If one of our clients has the car to sell, they’re selling it, at a much higher rate than normal.”

Sales volumes & sale prices

Another slide in the AutoIMS data shows the year-over-year percent change in sales volume. The most recent month in the chart (March) shows approximately a 20% hike.

That’s more of a reflection of volumes having gone “in the tank last year at this time,” Miller said, rather than a sign of volume explosion this year.

He expects that when second quarter 2021 numbers come in, there will likely be a leveling off in terms of the percentage gain, as the market got back to more of a baseline in June 2020.

Next up, AutoIMS looks at the average sale price. In Q1 2021, the average auction sale price was $14,340.92. That’s up from $12,723.18 in the first quarter of last year.

From a linear, month-by-month perspective, the sale price chart looks very similar to the conversion rate chart.

Average sale prices hit a low point in April 2020, falling below $11,000, before rebounding through mid-summer and approaching $16,000 in July. Prices fell in the back half of the year, plateauing just above $13,000 to close 2020.

And then in Q1 2021, they began to rise again. That’s normal, Miller said, but the increase in Q1 of this year was stronger than usual.

“It’s interesting. Because what you’re seeing there in January and February is pretty typical,” Miller said. “But (there’s) definitely a more accelerated curve this year than normal. You would expect that average sale price, average model year, to be above, but no it’s quite a bit higher than previous years.”

Miller said that a year ago, lower-end cars were more of the “hot commodity,” and that demand for these lower-price cars impacted the mix and thus, the sale price.

“People really needed A-to-B transportation. And the higher-end cars, with a lot of people staying home, working from home, that kind of thing, (there was) less need for those,” he said.

There was financial uncertainty and less of a desire among consumers to replace their vehicles in early 2020.

“And that’s where we saw fewer of those assets being sold. So that is completely role-reversed this year,” Miller said.

Those buyers that were sitting on the sidelines at this time last year now want to go buy new vehicles. But a fly in the ointment is the chip shortage impacting new-car availability. With some of those turning to late-model and/or certified pre-owned vehicle, that impacts the supply-and-demand on the used-car side.

A lot of the volume in the AutoIMS data are those late-model, off-lease cars, Miller said.

“If you can get (one), the getting’s good … those cars are hot,” he said. “Not to mention, just the overall vehicle values are up.”

Just look at the various wholesale value indices, which are hitting record high after record high. As Miller points out, “even the lower-end cars are more expensive.”

Making the grade

The AutoIMS report also looked at average vehicle grades (based on final condition report grade at time of sale) and average damage estimate (from the final CR when the vehicle was sold).

In the first quarter of 2021, the average vehicle grade was 3.07, compared to 3.24 in Q1 2020.

The average damage estimate in Q1 2021 was $1,686.67, down from $1,692.75 a year ago.

It may seem head-scratching that the average grade would go down when the damage was also down. But linearly speaking, grades have been tracking down month-over-month since last summer. And average damage estimates have been tracking upward month-over-month during the same time frame.

So, that particular correlation would make sense. But why the lower grades this year, particularly given the higher prices?

For one, Miller said, there’s a lot of innovation in the condition report and inspections space. And greater transparency is “taking off,” he said.

The industry is getting better at capturing vehicle photos and the imaging technology is improving, “and then every week I feel like I hear about a new artificial intelligence provider to take those pictures and figure out what the damage is on the car,” he said.

“People are getting smarter about capturing the damage. Lower throughput through the auctions, so lower volume lets the condition report writers spend more time on each car, maybe. You can go deeper,” he said.

The shift to online plays a role as well.

“You’re selling more cars online; you have to be transparent to be successful in that market. And I think that’s just all bearing out now,” Miller said. “We’re not trying to hide things. We’re trying to avoid the arbitration.”

Days to deliver, days to sell

Next up, AutoIMS shared the “Assigned to Secured” metric that looks at the average days from assignment to auction check-in. The data notes that this measure only includes units that have an assigned date for pick-up or drop-off.

In the first quarter of last year, the average time it took to go from assigned to secured was 8.4 days. That has dropped to 4.2 days in Q1 2021.

“On the assigned-to-secured, that’s the transportation. I’m a commercial consignor that has a car to sell at auction: how long does it take to get there?” Miller explained.

While January and February of 2020 numbers “seem a little high,” the escalation in this metric in the first half of last year — when it rose to above 9 days by spring before declining in the second half of the year — can be explained by a “number of factors,” Miller said.

During the height of the pandemic, “you get into employee shortages and all sorts of issues (in) getting the car delivered. That makes sense through June,” Miller said.

“For it to come back down this year to 4 days also makes a lot more sense, because you’ve got people that are able to get back out there.”

The next metric is the “Secured to Sold,” which measures the average days from auction check-in to sale.

“And that requires a lot more people. That’s all the people on the ground at the auction and all the consignor representation, the people who need to make decisions about that car along the way,” Miller said.

Average days for secured-to-sold was at 28.6 in Q1 of this year, down from 30.4 days a year ago. That number spiked last spring above 45 days, then has come down ever since.

The “tons of uncertainty” in March and April of 2020 and then the temporary layoffs/furloughs in the auction industry led to that upswing, Miller said.

Hopefully, there would not be a repeat of that swing this year, he said.

“The other thing that should drive that number down is that there’s just fewer cars and ton of demand,” Miller said. “I’m not surprised that the curve is lower in Q1 already, by close to two full days, but I wouldn’t be surprised if it got driven down further.”