Angus Tai, General Manager, Downtown Acura & Honda Downtown
How digital tools are changing the auction game and dealer priorities
Integration, efficiency and transparency are foundational pillars for success in the automotive remarketing business.
But the critical role of logistics, quick delivery and accuracy in sourcing the right vehicles turn these pillars from a set of broad strategic criteria into the indispensable prongs behind an effective vehicle sourcing strategy.
Tools of the trade
In its quest to resolve what it considers the biggest issues facing dealers today — i.e. which units to acquire; where to find them; where to pay for them and, of course, the perennial question: how much? — Cox Automotive recently launched a new merchandising model that tracks real-time shopper engagement through the lens of supply/demand and the dealer experience of selling the vehicles, says Jack Sulymka, Director, Marketing & Corporate Communications, Cox Automotive Canada.
“Our brands work together; they are fully integrated, which helps out at the end of the day with the dealer who manages vehicle purchases from the auction,” says Sulymka.
“Instead of just buying on feel and hoping they can eventually sell, the dealers are trying to use the data to know where they’re going to sell the cars, prior to even buying them,” says Brendan Reardon, Director of Outside Sales for VinSolutions, Cox Automotive’s chief CRM brand.
VinSolutions plays a key role in integrating a used car department with Xtime, Cox’s service scheduler, as well as vAuto, an additional brand “specific to the optimization of the used vehicle inventory,” says Reardon.
The CRM system has been in the U.S. for nine years, in Canada for four, and has recently been combined with Cox’s Manheim Auction service.
Manheim has achieved double-digit growth in digital remarketing transactions, according to the company’s 2017 Used Car Marketing Report. “Our clients are experiencing record-setting sales rates — averaging 70 per cent — with mobile auctions,” states the report.
“VinSolutions is the hub of connecting and providing an integrated solution to our client,” explains Sulymka.
Reardon says that the software allows dealers to recognize whether people have actually come to the dealership looking for a particular vehicle, which saves time and the cost of vehicle storage.
Additionally, vAuto’s Provision used-car software suite employs market data to assist the dealer in accurately determining hot moving vehicles in their market so they may be able to make an informed purchase decision at the auction, says Sulymka.
Change of plans
Improved technology, its increasing affordability and the constant availability of consumer-related information have created a highly-informed customer with almost omnipresent awareness of vehicle and pricing details.
This significant shift along the goods-services-sales continuum coupled with advancements in online auction tools, is changing the way some dealerships deal with used cars and their role in generating business.
“In the last 18 months, we have converted ourselves from ‘phase one’ where we used to be the seller, to ‘phase two’ where we purchase the used cars,” says Angus Tai, General Manager at Toronto’s Downtown Acura & Honda Downtown, owned by AWIN since 2012.
Tai explains that he has replaced the “traditional model” where a used car manager decides on both buying and selling, with a “strong team of dedicated purchasers” who work exclusively on buying cars from ADESA, other auction purveyors as well as Honda Financial Services.
Along with the digitally-informed shopper, U.S.-based used car auction purchasers are leveraging the weak loonie to their advantage, making purchases more difficult to keep in the Canadian market.
Tai says these two factors have turned the remarketing arena into a market-based reality, one where a dealer can no longer count on gross profit per unit sold, but must instead buy wholesale to succeed and grow one’s customer base.
“We are heavily involved with TradeRev; it’s a brilliant product that is revolutionary in terms of allowing auctions to happen online,” says Tai. “It allows you to put the vehicle on the auction block right away; then there are enough purchasers within the TradeRev forum, that they will bid on the vehicle right away.”
Despite the concept of online auctions not being new — in 2002, Cox Auto pioneered Simulcast for live auction participation — Tai says he appreciates TradeRev’s ability to make the process happen in its day-to-day operations.
Three years ago, Honda Downtown was using TradeRev to wholesale vehicles; now, it’s using the app to buy vehicles.
“We save time, energy, a lot of hassles and are able to look at all the vehicles and get them in for 35-45 day turns, as we enter phase two,” he says.
In 2016, Tai’s team hit a new benchmark of used to new sales with a 0.8:1 ratio.
“Used car potential, in my opinion, depends on inventory, not having the best sales managers,” he adds.
Making the connection
In April, TradeRev and ADESA struck a partnership deal, turning the homegrown online auction facilitator into the sole mobile tool of more than 120 dealership groups, including AWIN and Dilawri, and ADESA into these dealer groups’ exclusive physical auction partner.
The news followed on the heels of a KAR Auction Services announcement that it was adding $15 million to its TradeRev investment — KAR owns a 50 per cent stake in TradeRev through its ADESA business unit.
“There are multiple connection points between ADESA and TradeRev,” says TradeRev CEO, Mark Endras.
“But the integration most people use is the one that connects us with their auction management system, where with one click of a button, TradeRev calls their APIs (application programming interface) and provisions the process of moving a vehicle from a dealer’s lot, to a physical lot, to running it.”
Once that process is completed, the TradeRev and ADESA platforms provide updates, explains Endras, who launched his first software firm in 1999 and is also Senior Vice-President of his family’s business, Endras Auto Group.
“Basically what we’ve done, because of the technology, is that we now offer dealers remarketing processes that were initially only offered to the OEMs,” says Endras.
How efficiently one conducts retail transactions is the most important factor when looking to turn one’s inventory quickly, says Endras. “It’s not just about price discovery — it’s inventory discovery and matching real time consumer demand with real time inventory availability.”
The concept, says Endras, is to increase the velocity of the retail cycle.
The technology is enabling TradeRev to help dealers meet consumers’ demands for shorter-term contracts by making it possible for them to get rid of those cars and at the same time, find vehicles for the customers, he explains.
“There are those that really like the technology but use it as a supplement to the wholesale process; so for those people we created a standard version of the product with no subscription model.”
TradeRev also offers its subscription-based “Pro” version where the company gives performance rebates to dealers if they reach a certain volume level.
“Everything going mobile has created more efficiencies,” says Endras. “But what we’re seeing in the next wave now, is the proliferation of all this dealer warehousing, machine learning and AI, that are powering not only price discovery, but the best prices to sell vehicles at.”
Last month, TradeRev launched Upcoming, a feature that allows dealers to set proxy bids on vehicles they have researched, 24 hours before the auction goes live. The feature, said Endras, allows dealers to “set it and forget it” so they can spend their time with their customers on the showroom floor.
Advanced condition reports
On May 1, J.D. Power Valuation Services (formerly known as NADA Used Car Guide) announced that it had inked a deal with ClearVin to integrate NADA Values with ClearVin’s vehicle history reports.
“This gives dealers credible information to source vehicles at the right price,” says ClearVin CEO, Yury Strachuk.
“It becomes easy to see what type of margin any car can bring since both retail and trade-in values are included in every ClearVin report a dealer can get.”
Although many people still favour kicking the tires when “feeling out” a prospective purchase, Sulymka says that consumers can “buy with confidence” based on Cox Auto’s condition reports.
In conjunction with providing an online visual tour of the vehicle, Cox provides the reports before the vehicles are run at the auction — they include prior accidents, types of damage and other details.
“Each vehicle goes through the Electronic Vehicle Imagery System process (EVIS): it’s 360 degrees, high depth, interior/exterior, all angles — it allows someone purchasing online to zoom in and see the condition of the vehicle,” says Sulymka.
The condition report also applies to vehicles that don’t sell their first-time around, and is available through OVE, a 24/7 online inventory purchasing forum.
High-tech change
From an automotive software solutions company that combines the insights of its CRM system and service scheduling with auction-purchasing specific software, to the incorporation of a vehicle history provider’s reports with the conclusions of a leading valuation services provider, the remarketing sector is undergoing major changes.
The integration of the auction business is happening holus bolus — and it’s happening as fast as the technological change that are driving it.
And much like the marketing and customer retention facets within automotive, the fusion of integration, efficiency and transparency are forming exclusive partnerships that marshall the power of digital in the palm of the consumer’s hand.
