|At a glance|
Fleets that have changed their remarketing methods were seeking:
More and more fleets are trying out new ways to remarket vehicles. Government Fleet’s 2013 survey of remarketing trends showed 18% of respondents had changed their remarketing methods in the past year, and about half of these are trying out online remarketing.
Reasons for changing remarketing methods differ, ranging from seeking higher returns to reducing staff time spent on the process. Numerous companies offer the service, allowing fleets to find a solution that fits their specific needs. Fleet managers who have successfully changed their remarketing methods explain their reasons and results.
Statesville: Selling Very Old Units
The City of Statesville, N.C., moved from a contracted local auctioneer to an online auction company in 2004 after the purchasing director began looking for a better return for the sale of the city’s surplus items. Of course, fleet vehicles constitute a large portion of asset value. Thomas Mahala, fleet manager, explained that the city keeps vehicles longer than other fleets. With a rolling stock count of 470 units, the city sells on average about 10 units per year.
The age and condition of the vehicles may be one reason why the city wasn’t getting great returns using the local auction method. “I’ve been here since 1980, so I can remember auctions from that point forward. You didn’t get anything from what you sold,” he said.
As a comparison, Mahala said he went from getting half the value of what the asset was worth to a price between wholesale and retail on GovDeals, the company he uses now. He uses Kelley Blue Book’s estimates for the retail price and also to determine a reserve. If the final bid doesn’t meet the reserve, which doesn’t happen often, Mahala can choose to let it go if it is close and not a high-value vehicle, or he can post it again.
Mahala works with the city’s purchasing agent to get vehicles sold. He gives her the information she needs, such as the list of vehicles and any pertinent information such as vehicle problems. She takes the pictures and sends to GovDeals for posting. If the buyer has any technical questions, she directs them back to the fleet department before posting the response on the website.
What Mahala likes about online remarketing sites is that auctions can take place at any time. “You don’t have to save all your surplus items [to sell] at one time,” he said. “You can sell it as you are finished with it.”
Dakota County: Higher Returns, Lower Commission
Dakota County in Minnesota uses a local online auction company to sell its fleet surplus units. Kevin Schlangen, fleet manager, said before this, the county ran its own live auctions, partnering with local cities and municipalities so they could also sell their vehicles.
“The amount of manpower and time and results just weren’t very good,” he said.
In 2007, with the retirement of the finance staff who handled the auctions, Schlangen began looking for other opportunities. The county worked with a couple of local live auction houses with successful results — returns were better, and staff time investment was reduced significantly since staff only had to drop off the vehicle at the auction house.
“Even though we paid a higher commission, it was still less than what it was costing for us to run our own internal auction when you add in the fact that you got less per item and all the staff time,” Schlangen said.
However, when Schlangen started hearing about online auction companies, he was interested. In an effort to reduce staff workload, increase revenue of sales, and ease the paperwork process, he researched and got quotes from various auction companies. The county preferred to stay local, and it finally settled on Midwest Regional Clearinghouse, based in a nearby city.
Schlangen said he’s getting higher returns and paying a lower commission — 5% of sale price, with a $25 minimum. He attributes the 15-25% higher sales prices (compared to local live auction) to a national marketplace and smart posting practices, especially since government fleets may be selling more than one type of vehicle at a time.
“Let’s pick on a Crown Victoria. All of us would throw our stuff together and sell at our own personal auction. You may be selling 10 Crown Vics,” he said. “How many people who showed up for that live auction really wanted a Crown Vic, and how much do you think — by the time you get to the tenth Crown Vic — you are getting for it?”
In contrast, the company the county uses now will stagger the listing of similar vehicles rather than posting them all when they are dropped off.
On average, the county sells 80 units per year and sells about once per month. Fleet employees handle decommissioning, cleaning, removing special equipment, graphics, and exempt license plates, and drop off the vehicle with the title. Schlangen sets the reserve price based on research of what vehicles sell for at other auction sites as well as Kelley Blue Book.
About a week later, the fleet gets the check with commission deducted.
“You just always have to explore your options,” he said about vehicle remarketing. “You have to keep looking around. There are so many resources to remarket obsolete assets.”
Sacramento: Devote Less Staff Time
The City of Sacramento, Calif., began using an online auction service in January 2012. Previously, the city used a large surplus auction company to sell its vehicles, then transitioned to the State of California surplus auctions.
Keith Leech, fleet manager, said the reason he’s so happy with Property Room is because he saves significantly on staff time since the company, partnered with Copart, will send out a tow truck to take away the surplus vehicle, store it, post it, and sell it.
“It’s like a valet service. I’ve got one person, when they’re ready to go, she just sends the list to the guy at Copart, and they take care of everything,” Leech said. “If we had the excess staff to spend the time doing a lot of the work ourselves, we might be able to get a little more money out of it, but frankly, we have to look at what remaining staff we have left and where they can provide the greatest value — and that’s not in auctioning off old vehicles that are past their useful life.”
The city sells about 150-200 vehicles per year and since it has started, it has sold $1.5 million worth of vehicles. Leech said returns are the same or higher with the online auction company, where vehicles can be sold internationally.
After a successful effort to sell an excess armored vehicle to another law enforcement agency, Leech said he’s looking into selling fully upfitted Crown Victoria police interceptors to other law enforcement agencies in the international marketplace. This will mean staff won’t have to strip the vehicle of equipment (just the decals), the city might get a better return, and the vehicles will be able to benefit other law enforcement agencies worldwide that can’t afford brand new police units.
Boston: From Scrap Sales to Thousands
Prior to 2011, the City of Boston sold all its surplus vehicles for scrap for $375 each. When Jim McGonagle, director of Central Fleet Management, came on board, he saw the potential for increased revenue and worked with the city’s Procurement and Records division to put out a bid for online remarketing. Municibid won the contract to sell the vehicles.
Through the partnership with the company, fleet employees take pictures and send in a vehicle description, which the company posts. The vehicle stays in the city lot, and fleet staff field questions. While the staff is doing most of the work, McGonagle says it doesn’t take them very much time. Two staff members are the go-to people for auctions, and they take five to 10 photos and usually answer a few questions per vehicle. The best part is the city is not paying any commission — the buyer pays the 5%.
McGonagle admits that the vehicles are old and not high quality, but in the three years the city has used the company, it has made $440,000 off the vehicles in comparison to the $188,000 it would have gotten at the scrap yard selling 500 units. The biggest vehicles, of course, get the best returns — a couple of months ago, the city sold a loader that hadn’t been used in two years for $15,000. Compared to $375, that’s a huge difference.
While McGonagle has been happy with the service, he’s now looking to get the vehicles off the city lot and is in the process of reviewing bids for this service.
Madison: Heavy Vehicles Get Great Return
The City of Madison, Wis., began using online remarketing for its heavy equipment eight years ago, moving away from its previous methods of sealed bids, local auctions, and trading in. “I didn’t think we were getting a very good return. I wanted to try something different,” said Bill Vanden Brook, CEM, fleet services superintendent.
Vanden Brook says IronPlanet provides an inspector who will come to the city lot where the vehicle is stored and kick the tires, take photos, and conduct an oil analysis. That, in addition to the maintenance history Vanden Brook provides, helps provide a lot of information to the buyer.
Having a trained inspector can help provide a very detailed listing. In fact, a recently sold loader had 103 photos posted, with multiple photos showing the general appearance, control station, engine, drivetrain, hydraulics, chassis, and pins and bushings. The company’s sales also come with IronClad Assurance Protection to protect buyers if the item is not in the condition stated in the online inspection report.
The city chose the company by conducting a test — Vanden Brook sold three tractors through the company and three via an onsite live auction. The bids with IronPlanet were 15-25% higher. He consistently monitors the trade-in value equipment, and he says the city always gets at least 10% more than that via the online auction.
He uses the company for larger trucks and off-road equipment and sells about 10 heavy units per year. For the light-duty vehicles that sell for less, Vanden Brook prefers the local, live auction.
“There’s an expense that’s involved in listing with Iron Planet where I won’t get that return on smaller vehicles,” he explained.
Clermont County: Another Perspective
Jennifer Morgan, administrative support coordinator, Fleet Management Department, Clermont County, Ohio, says while the county is currently using online auctions, she’d prefer to bring back the annual local auction house.
She said the return for the online auction was a little higher than what the on-site auction was, but with no administrative help, she doesn’t have the time and is falling behind on selling them. The county auctions off 20-30 vehicles per year, and Morgan’s staff consists of just herself and three technicians.
“It was a lot less labor intensive to just have one a year, get them all together, and have an auctioneer come in rather than just having to constantly sell vehicles [online],” she said. The downside she sees to an annual local auction is the storage space to keep the vehicles.
The solution? The county will be provide her with administrative help for the auctions.