LAS VEGAS – Ed Russell of Minnesota Power spoke at the Conference of Automotive Remarketing (CAR) in Las Vegas, with the topic "How Public Utilities Found Happiness in the Used Vehicle Business." Minnesota Power, in developing from a regional company to a national company, bought 80 percent of Adesa Corp. in 1995, and purchased the remaining 20 percent in 1996. They are the second-lowest-cost power company in the U.S.
Minnesota Power entered into the auto business because it runs in cycles and has unregulated growth, giving them continuing profits. In addition, Adesa needed cash in order to grow. The automotive group made up 13 percent of Minnesota Power’s revenue in 1996, and in 1999 that number had risen to 29 percent.
Minnesota Power also owns Automotive Finance Corp. (AFC), which can finance any dealer anywhere in the country. AFC started with 12 auction locations, and now they have 33, as well as 84 loan offices. Minnesota Power improved aspects of these companies. For example, Adesa did not have employee benefits in the past, which it now does provide. Minnesota Power also has in its automotive group Great Rigs, its transport company. It has 150 carriers with 13 hubs across the country. They also are involved in the salvage business in Canada.
What Minnesota Power has gotten from Adesa and AFC is help and strategy in automotive marketing. Also, it learned that to be successful in the automotive business, "virtual must marry the real" – the Internet must mirror what happens at the actual dealerships. Russell also mentioned that Adesa is opposed to the merger of Manheim Auctions and ADT Automotive. Manheim currently has 60 sites and ADT has approximately 30. That merger would reduce competition and customer choices. Manheim will control 75 percent of the industry’s captive sales, and customers have the most to lose, he said.
