Indianapolis-based auto auction company opens Long Island location

Long Island Business News, Aug 29, 2003 by Nick Anastasi

Until recently, Mark Calisi, president of the Eagle Auto Mall in Riverhead, regularly drove 300 miles to Manheim, Pa., to attend wholesale auto auctions where he bought and sold cars for his dealership.

Transporting cars to and from auctions held in a rural area near Harrisburg cost him significant time and money, but it was a requirement for doing business. So Calisi, like nearly every other dealer on Long Island, bit the bullet and paid the price to attend.

Enter ADESA Long Island, an arm of an Indianapolis-based auto auction company that opened its first location on Long Island earlier this year in Yaphank.

It's been the greatest thing since sliced bread, said Calisi, who said he's saving 90 percent on travel-related expenses since switching to the ADESA auction in Yaphank. I'm there every Tuesday.

ADESA, an acronym for Auto Dealers Exchange Services of America, is a subsidiary of Duluth, Minn.-based Allete Inc., a New York Stock Exchange company.

It is the second largest wholesale business-to-business auto auction company in the country behind Atlanta-based Manheim Auctions, which was founded at the Pennsylvania auction site in 1945. Adesa now has 54 auction sites around the country, while Manheim has about 115.

Both Adesa and Manheim remarket vehicles for wholesale consignors - car dealers, manufacturers, rental car operators, fleet/lease companies or financial institutions. Buyers of the vehicles must be a licensed franchisee or independent auto dealers. The general public isn't invited.

With its opening, Adesa joins fellow auction firm Copart in the Brookhaven region. But the two are not direct competitors because Copart auctions off salvage autos supplied primarily by insurance companies, mainly to licensed dismantlers, rebuilders and used vehicle dealers. Adesa, on the other hand, is primarily involved with cars from dealerships and financial institutions.

Adesa holds several auctions each week, and dealerships have been responding enthusiastically, according to Adesa Long Island General Manager Todd Darr.

It's just been a tremendous opening, Darr said. Turnout was better than expected. The first day we had 350 cars and 350 dealers.

Darr said some 1,000 dealerships had registered with Adesa LI as of this month - about twice what the company was shooting for when it opened.

Adesa had been investigating the Long Island market for more than five years. It was drawn to the area because of the density of auto dealerships here.

Darr said Adesa identified 1,500 registered auto dealers on Long Island and in New York City's five boroughs. That's all within a 100- mile radius. To reach similar numbers elsewhere in the country, he said, the circles can grow as large as 500 miles.

Manheim officials said they had no intention of establishing a Long Island location. They declined to say why, although they noted that they already run auctions in Clifton Park, N.Y., just north of Albany, and three locations in New Jersey.

Long Island's demographics appear to be paying off for Adesa. Mark Schienberg, president of the Whitestone-based Greater New York Automobile Dealers Association, said that of the 61 counties in New York, the Nassau-Suffolk region has the most new car dealerships and sell the most cars in the state.

It's a captive audience [for Adesa], Schienberg said, noting the addition of the auction will go a long way in helping dealers move product and provide solid used cars for the buying public.

Adesa's location involves two parcels, one of 30 acres and the other 17 acres. Both feature a 35,000-square-foot facility. The one at the intersection of Horseblock Road and County Road 101 is used for reconditioning vehicles, while the other site to the north is used for the auctions and offices.

Darr said the complex has 140 full- and part-time employees who are capable of processing 250 vehicles a week for auction.

According to Adesa's Global Vehicle Remarketing report, there were 43 million used cars sold in the United States last year, compared to only 16 million new cars. The buying and selling of those used cars has become a $350 billion a year industry.

Currently, most of the vehicles auctioned by Adesa are lease returns, although that is expected to shift to trade-ins in the wake of Sept. 11.

Following the terrorist attacks, auto manufacturers began offering zero percent financing to lure new car consumers, sparking a sharp increase in auto purchases. Darr said he expects to see many of those cars as consumers begin trading them in for new models over the next three years.

Adesa Long Island is working with Ford Motor Credit Corp., Chase Automotive Finance and World Omni. It is also working to establish relationships with GMAC and AmeriCredit.

For example, if a car leased by FMCC comes back to a dealer and the dealer chooses not to buy the car, FMCC can forward the vehicle to Adesa, which then reconditions the car and auctions it on behalf of Ford.

Darr noted that Ford had encouraged Adesa to make the move to Long Island. Ford said that if we locate here, it would support us, he said.