The growth trajectory of TradeRev, starting from Canada, has spread throughout that country and into the South, East Coast and North Central areas of the U.S.
It has hopped the pond to offer white-label services in the United Kingdom, with discussions ongoing to launch in mainland Europe.
In mid-March, it secured up to $15 million in credit from KAR Auction Services, which is a backer of the smartphone-based auction company. That investment is primarily being used to foster the continued rollout of the product in additional U.S. markets.
In April, TradeRev announced a series of exclusive relationships with some of Canada’s largest dealer groups: Dilawri Group of Companies, AWIN Group, The Humberview Group, Open Road Automotive Group, Weins Canada and The MIERINS Automotive Group.
And now consignors are using TradeRev, a product initially geared toward the dealer-to-dealer space.
“What really drove us was a dealer need to create more transparency on their business end but also for the consumers,” TradeRev chief executive officer Mark Endras said in a phone interview last month.
“Ultimately, retail sales and the change in the business was driving us to initially innovate on this product. And I feel that that is the same thing that’s really driving the OEMs and the consignors to find more avenues to dispose of their lease returns in their portfolio of cars, but not only that, to see what’s the next step for them in this space and how they’re innovating.”
Endras co-founded the company with Wade Chia, Jae Pak and James Tani in 2009, and all four remain in senior leadership positions.
KAR acquired a 50-percent stake in TradeRev in August 2014.
So, what attracted TradeRev to KAR?
“First of all there’s some Canadian roots in there. So that was nice,” he said with a laugh. “But all joking aside, we were at a point in our growth where we were growing, we were profitable; but at same time, being successful in a market brings in competition.
“And there were small competitors starting to appear. There was word of bigger dealers, bigger competitors possibly coming into the space. And never operating out of fear, but wanting to grow quicker, we thought, ‘Well, this is perfect timing for us.’”
Endras counted KAR’s large presence and expertise in Canada as a big plus, and saw TradeRev as a great partner to that.
“And then in the U.S., where we were basically non-existent, they offered a great way to get into that market,” he said.
TradeRev found that through its success in digital with OPENLANE, KAR was “a very forward-looking company,” Endras said.
“And then we just really hit it off with the executive team and they shared our vision,” he said. “Jim (Hallett, KAR CEO) was very, very honest with me, and say, ‘Hey, listen, we’ll let you run this. You guys are the innovators. You keep going. We just want to help you.’
“And that kind of freedom is what we’re really looking for, because we’ve got a great vision for the company and we wanted a partner that was going to share that vision.”
Driving interest in digital
Both the retail and wholesale auto industries have seen growth in digital-based transactions, and KAR is no stranger to that. Endras said growth on the wholesale side is driven by the efficiency of digital platforms, which allows for quicker price discovery, decision-making and selling times.
“People want to be more efficient and find ways to shorten that cycle,” he said. “Because it all equates to more money.”
Of course, TradeRev finds itself in a spot, co-existing with — and, really, mutually complementing — the physical auctions of ADESA.
“We believe that physical auctions will exist for a long time. What they do and the capacity of how they integrate with these mobile marketplaces varies from market to market. But really it’s just another venue to sell a vehicle. And it’s another iteration and another set of buyers that can look at that car,” he said.
“So, some buyers are not on mobile devices. That’s just the truth. Not yet, at least. And some prefer to buy on certain channels and have certain behaviors, so I think the key is to provide a remarketing stream that enables a seller to have as many options as available in as short of a parked time as possible,” Endras said.
“And we think that that partnership with TradeRev and ADESA provides that, because with our technology, you can launch a car in an hour, decide did I get enough (or) did I not get enough; if I didn’t, move that to a physical auction, all within the app.”
He points out that as markets grow, so does the need for cars to be housed for reconditioning and post-sale services, all of which is brick-and-mortar.
“So, as much as you do on a device, you will still need that post-sale part that most people don’t talk about, that we’re very proficient at because of this relationship, again, with ADESA and all the operational experience that they have,” Endras said.
Relationship with DRIVIN
Another company TradeRev is now connected to is DRIVIN, which operates in a similar space as TradeRev.
On April 19 — six days after Auto Remarketing’s respective interviews with Endras and Hallett — KAR announced it had acquired Chicago-based DRIVIN in a $43 million stock purchase transaction.
Shortly after the purchase was announced, Auto Remarketing caught up with KAR chief operating officer Don Gottwald and DRIVIN chief executive officer and co-founder Kayne Grau by phone
Asked if there was any overlap between the services of DRIVIN and TradeRev, the execs acknowledged there is some, but it’s more of a “complementary” environment.
“Their original operating model, if you will, at DRIVIN is definitely a dealer-to-dealer-facing capability. I would say they are more complementary than overlapping,” Gottwald said. “There are multiple options to serve that space and the different segments of customers that have different needs. And they’ve taken two very, very different approaches to making that dealer-to-dealer transaction more efficient.
“So, we do believe over time, they will be very complementary,” Gottwald said. “But I think of TradeRev more as a transactional marketplace, and DRIVIN as a data science organization. And certainly the combination of those in the KAR platform is exciting.”
Grau added: “I think we can complement a lot of different solutions that they have. I think we were out in front on certain things that it’s ultimately going to just expedite the process. And I think that we can be nimble; we can take advantage of a lot of the assets that we have here in house and be able to get them integrated very, very quickly into the KAR ecosystem.”