How The Auto Auction Business Is A Subsidiary Of Media Giant Cox Enterprises

How The Auto Auction Business Is A Subsidiary Of Media Giant Cox Enterprises

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I work for Cox Automotive, which is a subsidiary of media giant Cox Enterprises. Cox Automotive is comprised of numerous companies that primarily service the retail and wholesale automotive industries. Most people have heard of Auto Trader and Kelley Blue Book, we also have 20 other companies that the average consumer is not as familiar with. I work for Manheim Auto Auction, which was established in 1945 as a wholesale vehicle auction (Manheim, n.d.). We have 92 auction locations in North America, and another 30 more around the world. Manheim has sold over 100 million cars since 1945 and currently register just under 7 million cars annually (Manheim, n.d.). The auto auction business is strictly a service related business, and could be categorized as a part of the used vehicle industry. The vehicles themselves are sold on consignment, and the auction facilitates the sale of vehicles between wholesalers and car dealers. We provide a wide range of services from repairing cars, processing titles, guaranteeing the collection of funds, and many other items. Manheim controls just over 50 percent of the auto auction market (Sawyers, 2015). The second largest company is KAR subsidiary Adesa which controls 21 percent of the market. Auctions play an important role in the used vehicle market. In 2010, 51% of used vehicles inventories originated from auction purchases (Sawyers, 2015).
According to Michael Porter, there are five factors that should be used when analyzing the potential profitability of a business inside a specific industry (Parnell, 2014). Porter’s five factors include: the intensity of rivalry among incumbents; the threat of new competitors; the threat of substitute products; the bargaining power of the buyers; and the bargaini...

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...tly, Manheim does not face a large number of competitors which does limit the bargaining power of the consumer slightly. There are a few other avenues available to wholesaler buyers in the used automotive marketplace, however overall buyers fees between these options are fairly consistent. Finally, the bargaining power of sellers does play an important role in the profitability of this industry. There are a number of automotive dealerships that utilize the services of an auto auction, however the largest customers of our auction are our commercial and fleet-lease customers. Customers such as Ford Motor Credit Company, Toyota Financial Services, and Capital One provide an increasingly large portion of our overall vehicle inventory. The seller’s bargaining power with our company and industry allow for them to control many of the terms and conditions of their contracts.

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