What looks like NASA’s mission-control center is actually the world’s biggest, most high-tech car auction.
With 19 auction centers across Japan, state-of-the-art satellite hook-ups and prodigious turnover, Used Car Systems Solutions (USS) is redefining the future of car auctions.
It was established 27 years ago by visionary car enthusiast and company chairman Futoshi Hattori, who says, “I’m always trying to find the right balance and best prices between the buyers and the sellers. It’s a real challenge.”
Every Thursday, on the Tokyo Site complex near Noda City in Chiba Prefecture, between 15,000 and 20,000 vehicles go under the hammer — or would, if they had a hammer. There are no auctioneers either; nor do cars drive in an out of view as you might expect at an auction. Buyers join in the bidding on site, via satellite or over the Internet.
Tokyo Site is by far the biggest of its kind in Japan, covering an area the size of 11 Tokyo Domes. It’s a colossal operation in every sense of the word. In the 12 months from April 2006 to March 2007, USS successfully sold more than 1.5 million vehicles, generating sales of around $7.7 billion. That means they sold more than six out of every 10 cars entered for auction.
To locate potential buys, bidders must wander around this expanse, which may seem like a daunting task. But in typical Japanese fashion, a super-efficient shuttle system of minivans ferries dealers around the car parks giving them just enough time to check out the hottest buys. Before entering the main building, I shuttled around the car parks with them. There were Rolls-Royce Silver Spirits sitting next to V12 Toyota Centurys, Mazda MX-5s behind Rover MGFs, and Honda Odysseys blocking Nissan Serenas.
For more than 10 years, Tokyo dealer Takayuki Masuda has bought between 10 and 15 cars a week here. The average price might be a little higher than at other auction centers but, he says, “That’s only because this place attracts the largest volume and best-quality used cars. And this high-tech system is quick and no-nonsense. I can’t argue with that. The overall quality is simply outstanding.”
It’s not only the Japanese who flock to USS, which holds a commanding 30 percent national market share. Over the past three years, the number of foreign buyers has grown steadily, especially from countries such as Russia, the United Arab Emirates, Chile, New Zealand and Kazakhstan. In 2006 alone, Russian dealers bought and took home more than 390,000 vehicles, a 50 percent increase on 2005, while Chilean buyers shipped more than 60,000 cars home across the Pacific.
Dealer Trevor Lee from Tauranga, New Zealand, makes the 10,000-km trip to USS every couple of months, taking home between 10 and 15 cars each time. “If you can’t get what you want here, you can’t get it anywhere,” he says.
So how does USS’s auction work? There are no private buyers. All auction participants are dealers, brokers or exporters and must show their USS membership card for every transaction.
In huge theaters fitted with up to 800 TV monitors, and bidding buttons at every seat, breakneck auction fever is the order of the day. Each vehicle is displayed briefly on the screens before bidding begins.
Yasushi Yamamoto is one of the biggest suppliers of used cars to the auction. He works for Rabbit Co., which runs Japan’s largest chain of used-car dealerships, with 500 outlets. He has the franchise for four of Tokyo’s biggest centers and handpicks about 300 vehicles to supply to USS each week. “I’ll buy anything from a Ferrari to a Civic, and I’m happy if I sell 200.”
USS’s Hattori says cars start arriving a couple of days before the auction. “Our car parks reach fever pitch at sunrise on Thursdays, when more than 3,000 potential buyers flood in.”
He would like buyers to have more time to evaluate cars, but with so many to sell in one day, “We must get started by 10 a.m.”
In the same way as you or I might buy reserved tickets for a concert, the vast majority of buyers have reserved seats in the bidding halls. Each pair of cinema-style seats has twin monitors and joysticks; each buyer gets a copy of the week’s car list with lot numbers and basic specifications. The buyer inserts his membership card and is then ready to bid.
Bidding for each car starts at a preset minimum price. With eyes glued to the screens, dealers frantically flick away at their joysticks, increasing their bids. While the flicking continues, so does the bidding.
When bids drop to one a second, a red light flashes a warning that a sale is imminent. If no more bids are made within 3 seconds, the red light stops and another light indicates a sale has been made. The average time from start to sale: 15 seconds.
I watched a dealer bid on a Subaru Legacy, one of Japan’s most popular models, starting at ¥2.16 million then securing it for ¥2.32 million. The bidding took an agonizing 33 seconds.
Drained by the intensity of the moment, he smiled and said, “That makes me happy and will make my boss happy too. Now I have to wait half an hour or so for my next target car to come up, a Celsior (Lexus LS400).”
Throughout Japan, a further 6,000 buyers join the frenzy on monitor and joystick setups leased from USS for around ¥50,000 a month. Via satellite, they compete with on-site bidders in real time and account for 30 percent of sales.
As the thirst for more high-quality, reasonably priced used cars increases, particularly as average incomes rise in Russia, China and India, USS can expect even greater overseas attention while it maintains the lion’s share of the domestic market.
For more information on Used Car Systems Solutions in English, visit www.ussnet.co.jp/eng/index.html Peter Lyon is a 20-year veteran motor journalist who covers the Japanese automotive industry for more than a dozen publications worldwide.