Auto Remarketing has launched a new series this year called “Consignor Connection,” in which we catch up with a leading remarketing executive at a different consignor each month. In a Q-and-A format, we will talk to him or her about best practices, auction industry trends and more. The series debuts with Tom O'Connor, senior manager of remarketing at Mercedes-Benz Financial Services.

Auto Remarketing: With the wholesale volumes that are coming back for Mercedes-Benz Financial Services, how are you helping dealers retail these vehicles and what role has your MBonDemand platform played?

Tom O’Connor: Technology is playing a more significant role in helping us successfully pair pre-owned vehicles with new owners. Dealers are optimizing their efficiencies today, and many prefer to purchase pre-owned inventory without leaving the dealership. It’s far more efficient for them to shop available pre-owned inventory online, where they can see vehicles across multiple auction locations and sellers. Because of this, we are seeing a substantial shift from the traditional auction to online sales channels.

MBonDemand, Mercedes-Benz Financial Services’ online sales platform, gives all dealers 24/7 access to all available vehicles with a broad range of specs without ever having to leave their office. This is a significant advantage over attending a typical live auction, where only a small portion of our inventory is offered. MBonDemand also allows us to offer vehicles as soon as they become available for sale and enables our buyers to source inventory as they identify a need. With the traditional auction model, if a dealer sold a unit over the weekend, he or she may have to wait until our next lane sale to purchase a replacement vehicle, which could be days or weeks away. With MBonDemand, they can fill their inventory needs immediately.

We have also supported our Mercedes-Benz franchised dealers with improvements to the certified pre-owned warranty, which includes an unlimited mileage warranty. We have three certified pre-owned sales events planned for 2015 that will include pre-paid maintenance, a value our dealers can pass onto the customer. We also have some incentive opportunities planned for non-franchised dealers in 2015 as well.

AR: On an industry-wide level … how will the increase in volume, particularly off-lease units, impact the auction industry in 2015?

TO: While the number of transactions is increasing for our auction partners, consignors across the board will expect service levels to remain high. “Days to sell” will remain a top priority, so we will expect quick transportation and fast, high-quality reconditioning. As a consignor, increased volume makes these things become exponentially more important. Faster and more precise condition reports will be critical. As more and more cars are being sold online, we need to provide the most accurate vehicle descriptions possible to ensure our buyers are getting exactly what they are looking for.

No matter which platform a vehicle sells on, we rely heavily on our auction partners. They help us to facilitate vehicle movement, storage and reconditioning, and they know that meeting increasing requirements will require a great deal of focus. It is evident to us that our auction partners recognize this demand and they are already making adjustments. I expect in 2015 we will continue to see the implementation of technology to streamline the buying process, as well as the day- to-day operations.

AR: How does Mercedes-Benz Financial Services strike a balance when it comes to choosing how your cars are sold, be it auction sales, online sales, open/closed sales, etc.?

TO: We have placed a great deal of emphasis on our online platform, MBonDemand, because we are seeing more and more of our buyers migrating to this channel. We believe this is the future of the auction industry because of the efficiencies for sellers and buyers and the ability to match inventory needs with available inventory in real time.

That being said, we don’t anticipate moving to 100 percent online sales in the near future. We realize there will always be a portion of our vehicles that sell in traditional auction lanes. Our goal is to offer an array of purchasing options so that every dealer has a variety of choices when doing business with Mercedes-Benz Financial Services. However, we are encouraging buyers who might prefer the traditional auction to utilize MBonDemand to fill inventory between auction sales.

AR: What are some of the biggest challenges (and opportunities) in the auction market for consignors like MBFS going into 2015?

TO: We know that the auction lanes will remain very competitive, and our goal is to set ourselves apart. Mercedes-Benz Financial Services is working hard to ensure we are first on the dealers list with quality products that have been reconditioned and are ready for sale. After the sale, we stand behind our product with exceptional service and a 14-day arbitration policy, which is significantly better than the industry standard. We want to ensure our buyers are happy with their purchase.

Another key opportunity is staying tapped into what the retail customer is looking for and providing our dealers with the tools to meet those expectations. The average customer spends several hours shopping online before they ever step foot into a dealership to make a purchase. To meet the growing expectations of these educated consumers, dealers must be agile and competitive. As a result some dealers are shifting to a high-volume, quick turn sales model, as opposed to the lower-volume, high-profit per unit model in the past. With dealers selling pre-owned vehicles faster than ever before, immediate access to available inventory is critical. It’s our goal to continue to ensure that MBonDemand gives them a competitive advantage.

Editor's Note: This story can be found in the January print and digital editions of Auto Remarketing, our on-site NADA Convetnion & Expo issue. The issue also includes two features with incoming NADA chairman Bill Fox and a pre-owned guide to the convention.