(FORTUNE Magazine) – It's auction day at the National Auto Dealers Exchange (NADE) in Bordentown, N.J. Each Wednesday, some 5,000 used cars go on the block. Car dealers stream in and out of a vast 18-lane auction area. They wear jeans, leather, turbans; they speak English, Russian, Yiddish, Chinese; they smoke, they eat, they schmooze, they shove. An electric-blue Corvette rolls in. In the minute or so that the car sits in its auction lane, the dealers caress it, peer under its hood. They bid in a frenzy of hand signals, rustling paperwork, and noise. "Sold!" the auctioneers cry, swatting their podiums with homemade gavels cut from red rubber hoses.

Surveying this scene, it's hard to imagine that much has changed at NADE since 1955, when dealers first began flocking here to buy and sell used cars. But in fact, NADE is also an e-commerce business--used-car dealers, exhaust fumes, and all. It's "clicks and mortar," carried to a sometimes surreal extreme.

NADE's corporate owner, Manheim Auctions (owned in turn by giant Cox Enterprises), is the largest operator of wholesale used-auto auctions in the world, with estimated 1999 revenues of $1.4 billion. The Atlanta company auctions about $38 billion of used cars for its customers every year, and a small but growing number of these sales--$625 million last year--occur in online "CyberLots" and "CyberAuctions." The dollar value of the online business has tripled in each of the past two years. Manheim also hauls in about $10 million a year selling assorted Internet services, including inventory control tools for dealers and auto-sales data.

Having an e-business has enabled Manheim not only to offer wholesale auctions for dealers online but also to move into online auctions and sales to consumers. The company is negotiating to expand its retail options through auctions on eBay.

Manheim's budding e-business is very much entwined with its traditional auctions--necessarily so, since 90% of the used-car dealers the company targets come to auctions like NADE. The juxtaposition can seem strange at times. For example, just before a car rolls into the physical auction frenzy, it's photographed by high-resolution digital cameras for use in online sales and auctions (which take place separately). And Manheim, which gets a fee for each car it auctions, tries to get dealers at the live auction to use its AutoTrader online service to resell the car to their retail customers. Again, it relies on old-economy assets: It slips a sign-up form into the dealers' paperwork.

NADE even has a cybercafe of sorts--the Tech Center, a clutch of seven Internet terminals just off the auction floor. This is where the company pushes offerings like Manheim Online, an Internet portal for used-car dealers, priced at $50 a month, that provides access to CyberAuctions and CyberLots, pricing and auction information, and the like.

The Tech Center doesn't get many visitors in the morning, when the auction is really busy, but things pick up as the day wears on. Around lunchtime a bewildered-looking fellow comes by and asks, "Do you offer lessons?" Another dealer sits at a screen and attempts, unsuccessfully, to buy a car off a CyberLot. Several people use the terminals to check their stocks and their e-mail. It's all fine by Manheim. "Eventually they'll ask about Manheim Online," says NADE technology manager Anne Fritz. In fact, 95% of Manheim's online subscriptions are sold at auction facilities.

No one thinks the traditional auction will fade away. Manheim doesn't expect online auctions to ever represent more than 20% of its business. Even dealers who buy online acknowledge they'll purchase only certain kinds of cars there--such as low-mileage models that are coming off lease and still have the original warranty. "The number of cars we buy online will increase," says Bill Cariss, vice president of Holman Enterprises, which runs 18 dealerships in New Jersey and Florida. "But I don't see it becoming 30%, 40%, 50%. We like to look at the car, walk around the car, and so on." Manheim knows where Cariss is coming from. Those auction lanes at NADE could well keep buzzing for another 45 years.