Wholesaler Moves 10,000 Vehicles at Manheim Sale

By Peter A. Salinas

His head pivots like a robotic bobblehead, but with purpose. His mustached face points downward pouring over his run list as the bidding starts. His head shakes left to right as the auctioneer works the dealers in the lanes. Though high on the auction block, his face may never peer out into the lane. As bidding approaches his floor, the east-west movement slows. If the floor is met, the head starts moving quickly in a north-south direction — first to his left then to his right covering the lane. As the radiator hose slams down, his head gives one last southward plunge. He writes notes on the run list, flicks the butt of a Kool Mild out the lane door and it’s on to the next vehicle.
The process is repeated perhaps 200 to 300 times three Thursdays a month by Kevin Esch, owner of Kevin’s Marys-ville Auto Sales of Roseville, Mich., at Manheim’s Metro Detroit Auto Auction in Flatrock, Mich.
Esch is one of the only independent used-vehicle wholesalers to have his own lane at a Manheim auction. Earlier this month he reached a milestone — Kevin’s Marysville sold its 10,000th vehicle. It took this mega-wholesaler just 27 months.
“Dealer Sales Manager Jim DiMando told me if I started bringing in 100 vehicles a week, I could use his office, and it’s just grown from there,” Esch said.
Esch runs nearly 700 vehicles a month, all new-car dealer trade-ins, and does all he can to maintain a 70 percent sales rate. DiMando said he’s averaging 450 sales a month. Over the past year, he’s sold to more than 800 unique buyers.
“Guys like Kevin are rare,” said Joe Maltese, Metro Detroit’s general manager. “He has a loyal following, and he’s really a leader in the auto industry here. There’s not a service we provide that he doesn’t utilize, and it’s working for him, the dealers and for us.”
The auction treats Kevin’s Marysville like a major fleet client. He has his own lane with a fixed start time.
Auction representative Lisa Karczynski, who helps with check-in, titling, logistics and serves as a liaison to auction management. Esch refers to her as “my right hand.”
In addition, the auction provides marketing services such as telemarketing, blast faxes, and giveaways like vacations, big screen televisions and, in the case of his 10,000th sold vehicle celebration, $2,500 in cash. The sale also coincided with the first Kevin’s Marysville sale run on Manheim’s Simulcast. The first 50 vehicles of his 275-vehicle sale were offered on the Internet.
Esch also makes use of all the usual auction services like detailing, transportation, mechanical and body and paint shop work. One of the most beneficial services, Esch said, was the implementation of a 30-day dealer float two years ago on vehicles purchased in his lane to qualified customers.
“It’s rare they would offer a service like that to an independent,” Esch said. “We’re very proud of our relationship with Metro Detroit.”
Esch, 47, has been in the used-vehicle industry since 1984 when he worked as a used-car manager at a Michigan franchise dealership. He worked with an independent dealership in 1992 in Marysville, Mich., in the state’s Thumb area.
“That’s how a lot of guys knew me when I started wholesaling was ‘Kevin from Marysville,’ so when we moved to Roseville, we kept the name,” he said.
Directly, Esch’s retail and wholesale operations employ four, including two salesmen, a business operations manager, and his wife, Sherri, who work out of his large retail operation, which keeps about 80 vehicles in inventory. The busy highway near one of southeastern Michigan’s major retail areas gets more than 1,000 vehicles per hour driving by.
He also has four full-time buyers, who scour some 70 new-car dealerships in the southern half of Michigan’s lower peninsula and northern Ohio. Esch is also one of the buyers. He is the sole Kevin’s Marysville auction rep on the block.
Indirectly, Esch’s business employs dozen’s of people in the area. He not only utilizes the auction’s services, he has two mechanic shops and two body and paint shops that work exclusively for him. He also keeps a nearby Belle Tire store busy.
“For recon, including my mechanic, body, detail and tire work, I’m writing checks for about $100,000 a month,” Esch said. “The welfare of a lot of people depends on us. When we slow down, people get worried.”
Since Esch only deals in new-car dealer trade-ins, the majority of his vehicles are late-model vehicles, and he gravitates to the highlines. He begins each run with high-end vehicles, like Cadillac Escalades, Infinitis, high-end Silverado and F150 pickups and the occasional $100,000 2004 Mercedes-Benz SL55.
“We’ll start out the sale with the highline inventory and work our way down to the $1,000 Saturn, but most of the vehicles are late-model stuff,” Esch said.
He attributes his success to reputation, both with who he buys from and who he sells to.
“When I go to a new-car store these people know I’m going to give them a fair price — the best price I can give,” Esch said.
He added that he attempts to buy everything the dealer has.
“If a dealer offers me 20 cars, I try to buy all 20. Some I’ll make out on, some I’ll lose a bit on, and some I’ll break even on. The dealer knows, however, that all his trades are gone, and that he got a fair price.”
Esch said his cell phone goes off six days a week, from 8:30 a.m. to 9 p.m., as used-car managers from across the region check with him about the value of the trade they’re looking at, and whether or not they can put together a new- or used-car deal for a customer.
“I give them a buy figure and then they know if the deal will work,” he said. “They also know I’ll come and pick up the car.”
Competition and tactics among wholesalers in this business is legendary, and Esch said he’s more than familiar with them.
“I do my best to put blinders on and focus on my customers,” Esch said. “I am able to pay my
dealers a little more because I’m working in volume. I work on a smaller profit margin, because of the bigger volume. My sellers like that, and so do my buy-
Jeff Benson, owner of Quality Automobiles in Wayne, Mich., said he buys in the Kevin’s Marysville lane because “the guy stands behind what he sells and the recon is superb.”
Benson was the lucky buyer of the 10,000th vehicle and walked away with the $2,500.
“When I buy a car from Kevin, my recon cost is under $200,” Benson said. “That’s a third of what it costs me sometimes. He’s honest and fair and his integrity is impeccable. That’s not always said of wholesalers.”
Benson probably gave him the highest compliment any dealer can give a wholesaler.
“It’s like buying a car from someone inside your own family,” he said. “If he’s missed something, he’s going to make it right.”
Esch said it’s not unusual for him to spend several hours after the auction going through “heat deals” with his customers.
“Heat deals are just make goods,” he said. “If a car was supposed to have power windows and locks and it doesn’t, we make it right. We don’t steal from anyone. Now it may mean a little heat on one of my buyers for not listing the vehicle correctly, but we all get through it.”
Esch said he meets with his buyers at 8 a.m. at the auction on sale day. They go over every car on paper, and on the lot, if necessary. They determine what it has on it, what they have into it, what’s been repaired or replaced, and what they feel it’s worth.
“Those meetings are important and we never miss one,” he said.
Maintaining his 70 percent-plus sales rate is very important to him.
“I’ve honed that head bob over time,” he said. “When a dealer sees my head start to nod yes, they know someone is going to own it. That’s why a dealer comes to the auction to buy cars.”
Esch will also work dealers after the car rolls out of the lanes. If he has $8,000 into a car and the bidding ended at $7,500, he’ll try to get a couple of hundred more out of the last bidder. If a deal can be struck, he does business.
“Kevin is an honest wholesaler,” said Joe Brannan, owner of Truck Town in Flat Rock, Mich. “If there are problems, he takes care of them.
“His vehicles are always clean and in good condition, and as advertised. I probably buy 50 to 60 vehicles from him a month.”
Maltese said Esch is helping dealers succeed because of his knowledge of the marketplace.
“They know his prices are fair and he stands behind his vehicles,” Maltese said. “Kevin knows the auction stands behind him.”
Esch said he hopes to grow his retail business in coming months, perhaps double his retail sales in 18 months. As for his wholesale operation, he plans on building Simulcast sales.
“It really expands our reach,” he said. “The incentives on new-cars really hurt our business locally, be-cause we sell so much late-model product.
“Because of that, we get a lot of dealers from out of state buying at our sale. Because of our reputation now, we get franchise dealers buying in our lanes. If dealers learn about our quality and the integrity of our operation, they will be willing to buy over the Internet.”


Franchise Certified Used Car Stores Go it Alone

By Ted Craig

A number of dealers across the country are finding success with stand-alone certified pre-owned operations.
Often these specialty stores are the result of a successful dealer who has moved from a smaller facility in an older neighborhood to a newer area.
This was the case for Bavarian Motor Village, which moved its BMW franchise store from the center ring city of Eastpointe, Mich., to the more upscale Shelby Township. Bavarian had a database of 7,000 customers, many in the vicinity of the old store, and the owners wanted to retain them and their referrals.
“A lot of people touched this facility,” said Wayne Youngblood, Bavarian’s general manager. “We really wanted to continue to service the Eastside.”
It was decided to keep parts and service at the one-acre facility after moving to the new six-acre site, and to use the lot for certified BMW sales.
This was the same decision the owners of California-based Elk Grove To-yota made when they moved their store from nearby Florin. The old facility became the Toyota Certified Store on Florin Road.
“The best thing is maintaining 34 years of business,” said Kevin Eely, the store’s manager.
Unlike the landlocked Bavarian store, Florin Road sits on eight acres, enough to accommodate 150 units, with monthly sales of 100 units.
In both cases, the stores were moving to communities with different demographics, even though they’re only a few miles apart.
“It’s two very separate communities,” Eely said.
The older stores were in better locations for used-car sales.
“It’s great that all our focus is on certified pre-owned,” Youngblood said. “Customers know what they get when they come here.”
Not only is the sales staff at Bavarian dedicated to certified, so are the technicians. They are all trained in the certification process and only use factory parts.
“You end up with as close to a perfect product as possible,” Youngblood said.
Eely sees a different attitude from his staff than at a traditional store.
“They have a greater sense of pride than a standard used-car depart-
ment at a franchise dealership,” he said.
Both Bavarian and Florin sell a small percentage of non-certified units, including other makes, but a majority of sales are certified units.
This is the second certified-only store Eely has worked at. He was at the Roseville Toyota certified stand-alone before coming to Florin.
Toyota dealers have been adding certified standalone stores since 1997, said Norm Olson, marketing operations manager for the used-vehicle operations department of Toyota Motor Sales U.S.A.
“It’s like another little dealership,” Olson said.
Before a dealer can open a certified-only store, it has to be approved by Toyota’s dealer development department. More dealers have been sending requests to this department as they find themselves with excess facilities and a growing demand for certified vehicles.
The facility excess is a result of building a frenzy among franchise dealers as they upgrade facilities to meet manufacturer de-mands.
“Facility enhancements are a big issue right now,” Olson said.
It takes more than just opening a certified-only store to make it successful. A dealer needs to put the right resources into it.
“A real big commitment from the owner was to advertise (Florin) as a stand-alone facility,” Eely said.
The store has been advertised in all the traditional media, including a full-page ad in the Sacramento Bee.
A stand-alone facility is like the best of both worlds, Eely said. He runs it like an independent, but has Toyota’s reputation to support him.
The idea is so appealing, Olson said he’s even had some non-Toyota dealers ask him how they can get a Toyota Certified franchise. The answer, of course, is first they have to a get a Toyota franchise.

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