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The buying and selling of used RVs through the nation’s established used vehicle auction services is an emerging trend.
“The auction service is probably the fastest growing part of the RV industry,” contends Mark Pugliese, general manager of Manheim’s Tucson Auto Auction & RV Sale, one of the leading players in the West.
“It’s in its baby stage, but it will become amazingly larger,” Pugliese predicted. “It will probably double in the next two years. It’s going really well and everybody seems to be grasping it. As soon as they get in contact with it, they’re all over it.”
Indeed, it’s growing at every U.S. outfit involved, we’re told. Besides Manheim, Brasher’s and ADESA Inc. are participating in this RV auction upswing. With some 3,000 RVs sold at auction in 2005, Brasher’s Northwest Auto Auction in Eugene, Ore., claims to be the biggest RV auction service on the West Coast.
Brasher’s did some research in the early 1990s and found that RVs were treated as “second-class citizens at auto auctions,” Lisa Larkin, general manager, reports. “Nobody was marketing or taking care of them very well,” she said. “We decided to provide the same kind of service our other accounts were receiving.”
As a result of this attention to detail and handling the RV business with some TLC, Brasher’s Northwest is drawing customers from Utah, Idaho, Nevada, Colorado, California, Washington, Oregon, Montana, and Canada. Brasher’s runs two auctions a month devoted to RVs at its Eugene site. The major one, the second Wednesday of each month, averages 100 to 125 repo units and 60 to 100 dealer-consigned units. Bank repos represent 65-70% of the sales, but dealer consignments are growing, Larkin said. While virtually every repo unit is sold, about 60% of all dealer consigned units are sold, she estimated.
In the last two years, Brasher’s has added the RV auctions to its “Online Ringman” Internet service, giving buyers from around the country a chance to bid on line.
Tucson Auto Auction, a unit of Manheim, started its regular auction of RVs about three years ago. Today, the service averages 150 RV offerings a month. It isn’t the oldest RV auction service in the business but it’s grown to be one of the largest, by Pugliese’s reckoning, and it’s just one of 20 Manheim specialty outlets.
Manheim, headquartered in Atlanta, is the world’s leading provider of automotive remarketing services. In 2005, Manheim sold more than 5 million used units. The RV portion was approximately 7,000 units for more than $300 million.
Yet, it’s only a fraction of the RV potential, according to Karen Braddy, director of specialty, highline and heavy trucks product management for Manheim. She said Manheim expects to increase its RV auction business by 40% this year, as banks, which constitute 80% of their sellers, become familiar nationwide with the service.
Pugliese’s service in Tucson is Manheim’s largest RV auction and offers an exclusive RV auction the third Friday of every month. About two-thirds of his monthly sales volume comes from dealers, with the balance coming through bank repos. He figures as dealers warm to the idea of selling their excess used inventory at auction, the sales volume will only grow.
At one of his recent auctions, Pugliese offered 177 units for sale: 100 were Class A motorhomes, in the 1994 to 2002 range; 35 were fifth-wheel trailers, again in the 1995 to 2004 range; and the rest were travel trailers. The Class A motorhomes and fifth-wheels bring “close to wholesale book value,” while the travel trailers will bring “110% of wholesale book value,” he maintains.
The auctions also tend to level the playing field.
“This business is growing because when you offer units to, say, 130 buyers, you have a buyer base that will set the market for you,” he said.
The RV auctions also help dealers “get all the money they can for their units,” he said. It removes the human error on the part of wholesalers and the dealership’s sales manager, he added.
“We’ve sold $3.5 million in one day worth of RVs,” Pugliese said. Still, he added, “I think the RV industry as a whole is a little naïve about what’s going on in the auction world. There are a lot of franchise dealers that don’t know about this. In the old days, wholesalers would go around to lots and make offers on trades. Now they’re sending them to auctions where all the RV dealers can go and buy what they need, just like the car business.”
ADESA sells RVs at a dozen auction sites, including one in Plainfield, Ind., managed by Dave Emerson. He’s one of the new kids on the block as his auction has been offering an exclusive RV auction for just a year. It’s held the second Tuesday of each month.
“We average about 100 RVs for that sale, ranging from small popups to $200,000 motorhomes,” he said. About 60 to 70% of the offerings are sold, he said, adding that the average price across the board is about $20,000. Annual RV sales from that auction site are in the neighborhood of $12 million.
“It sounds good to us,” he said, but added that “we’re new to this, we’re in uncharted territory.”