Some Trends Worth Watching
The previous article in this space attempted to provide some insight into the year ahead in the Canadian wholesale marketplace, with commentary from ALG, Foss National Leasing and Go Auto officials. Each one offered a unique perspective on the market over the next twelve months and we will look forward to seeing how things evolve. In addition to what we learned from these three individuals, there will be a few other interesting things to watch for in remarketing in 2011.
I think it is safe to suggest that we all have a little fatigue with respect to information about the financial ‘crisis’ and subsequent credit ‘crunch’ that has monopolized our thoughts and actions over the past few years. Thankfully, here in Canada, the impact was not as severe as it was south of the border. As we have previously noted, the used-car market had found some price strength in the latter part of 2010, and the end result was that, three years after the recession began, the ADESA Canada Used Vehicle Price Index had recovered back to the level of late 2007, though it certainly was not a smooth ride.
Dealer-facing services
While we are unsure about what will happen with prices in the wholesale market, we are somewhat more confident commenting about what we see happening in the remarketing arena for dealers in the coming months. We do expect to see a continuation in the evolution of dealer-facing services, something that began a couple of years ago but seems to be picking up speed more recently. While our market has its unique elements, it is also sometimes helpful to turn our attention south of the border to gain insight into what trends may make their presence felt in Canada at some point in the future.
An area that seems to get a lot of attention is that of partnerships being formed (or, in some cases, actual acquisitions) to help bridge some of the gaps that dealers face in managing their used-vehicle business. As technology has made it possible for very powerful software tools to be deployed cost-effectively to even the smallest of dealerships, there has been a massive proliferation of companies devising, developing and selling products and services that were not even contemplated a handful of years ago. The benefit, of course, is that dealers are now able to access numerous applications to make their business better.
At the end of the day, most dealers are looking for a simpler way to manage their used vehicle inventory, from acquisition via trade-ins or wholesale purchase, through to retail marketing with both traditional and new media channels, to disposition in wholesale channels like the auctions. While there are several great technical options for each of these functions, the challenge has been that disparate applications do not often work together and it can be an onerous task using multiple tools effectively.
Compatibility and integration
South of the border we have seen examples of moves that could lay the groundwork for making previously distinct tools work more cohesively together. AAX and vAuto, two of the leading inventory management software platforms, have been acquired by DealerTrack and AutoTrader.com (U.S.), respectively, seemingly in moves that were designed to give dealers the benefits from tighter integration of functions that are critical to the successful operation of used-vehicle departments.
It will be interesting to watch how things continue to unfold in the U.S., as well as here in Canada as products like this gain more traction within our dealer body.
As the adoption of such tools evolves in Canada, we would expect to see great interest in functions that help dealers remarket certain units in the wholesale space. Aging inventory or fresh trades that cannot easily be sold retail are prime candidates for consignment to auction. In the past, this would have meant physically moving the vehicle to
an auto auction facility. However, as the inventory management tools mature and the opportunities for integration with other applications are embraced, it is natural to expect that the volume of dealer consignment vehicles being offered seamlessly on internet platforms will increase.
That is not to say that everything is moving online – far from it, in fact. As 2011 progresses, we also expect to see continued focus on creating robust markets for dealer consignment units at physical auction. One of the trends that commenced in the wake of the introduction of Ontario’s MVDA legislation in 2010 is the increased use of vehicle history reports for dealer consignment units being offered for sale in the lanes. A number of auctions have commenced a practice where lanes are being dedicated to dealer units that are being offered with a vehicle history report. As disclosure practices improve, it is likely that the confidence levels of buyers will also improve, thus resulting in a more effective marketplace for dealer consignment units.
So, we have a few things to watch for in the months ahead. Looks like 2011 will be another year of change and opportunity for all of us.
