The auto auction is used by auto dealers to sell cars at wholesale. Sellers include new car dealers who have taken in a surplus of used cars as trade-ins. Sometimes they drop a surplus of new models on the auction.

Buyers include used car dealers who cannot get enough used cars from their newer car sales and out-of-town dealers acquiring cars for shipment.

And, like stock market traders who buy a block of stock and sell it hours or days later, some auto dealers buy for speculation, hop­ing that the used car market will firm up so they can sell the cars back at a profit.

Like the stock market, the auto auction has a rigid set of rules. Only dealers who are registered and in good standing can buy and sell. When a dealer raises his hand to bid on a car, he is committed. There is no reconsideration or backing off.

TRADING AT the auction is rough with some of the sharpest traders in the country-used car dealers-bumping heads.

At a typical auction, all the cars to be auctioned are lined up in an open lot that could be taken for any parking lot at a busy suburban shopping center. The only differ­ence is that each car has a tag flanging from the rear-view mirror with the year and model number of the car and a sale number in­dicating the order in which the car will he auctioned.

Dealers inspect the cars in the lot, taking notes. There isn't time once the auction begins.

As the auction begins, the cars arc driven into a huge garage that is open at both ends. The trunk lid of each car is open so bidders can see whether there's a spare tire and check the cleanliness of the trunk.

As cars approach the auctioneer's stand, dealers step forward to ex­amine the upholstery and condi­tion of the trunk. Some follow the ear until it comes in front of the auctioneer for bidding.

Here the fun begins.

The Auctioneer sings out a description of the car and calls for prices. If the price is too low, the car is passed.

"I say 10, who will give me 10," the auctioneer chants.

"I got 10-20, who's got 10-30, Boy this is a beau. Automatic transmission and full power. I got 10-40. Let's get 10-50."

The bidding continues until the auctioneer feels he can get no more. Then the car goes to the last bidder.   It  usually   takes   approximately 45 seconds to dispose of a car.

One of the largest auto auctions in the nation is Arena Auto Auc­tion in Chicago. Operated by Jim­my Franks and James Cotton, Arena is one of the auctions in the country that specializes in fleet cars.

Franks told Automotive Fleet that he sells between 30 to 40 fleet cars per week out of a total volume of approximately 650 cars.

Arena's customers include Lease Plan-Lee Fleet, Automotive Rent­als, General Auto Rentals, Serv­ice Leasing Corp., Emkay Leasing and Industrial Leasing. In all, the company auctions cars for more than 20 major fleets.

According to Franks, lease cars usually bring "top dollar" at the auction because they generally are in good mechanical condition. Any-necessary bodywork can usually be done before the car is put on the block.

IN FACT, Arena operates a special reconditioning service for fleet customers. They will do anything from a simple cleanup to de­tailed bodywork and mechanical repairs.

"It's up to the customer," Cotton said. "When we get a sell order we will perform any work the custom­er requests." All mechanical work is performed at cost, he added.

While Arena will do whatever reconditioning work the fleet user requests, it is a strong advocate of full reconditioning.

"We've found beyond a doubt that you get back $2 for every $1 put into reconditioning," Franks said.

Generally, Arena operates for its fleet customers within a 600 mile radius of Chicago. There is a flat mileage fee for picking up cars and delivering them to Chicago. The company has picked up cars as far away as 1,000 miles as a result of soft market conditions. Also, be­cause of the company's dealer net­work, it is able to sell cars direct­ly to dealers throughout the coun­try.

Unlike dealer cars that go through the auction, fleet cars aren't assessed a fee if they aren't sold. The cars are held over a week and put on the block at the next auction. Franks says most cars are disposed of in 30 days.

FRANKS SAID that fleet users could get more money for their cars if they would use seat covers and floor mats.

"It is surprising how few fleet cars have seat covers and mats," Franks said. "All they would have to do is remove them when the car is sold and they would have a good clean vehicle."

And, while he might be trying to promote his own best interests, Franks feels that more fleet users should use the auction method to dispose of their cars.

"We've had surveys that show we can get $75 to $200 more for the fleet user than he can get in the field. In fact, we have one customer who says that one year we saved him $31,000."