Recently, someone asked me why our seller revenue streams seem to be going down on a RPU (revenue per unit) to RPU basis, year-to-year, not even factoring in normal inflationary factors.

My knee-jerk reaction was to say that we had benefited from hardware and software enhancements, which have increased productivity and thus lowered costs; as opposed to the whole truth, that price had become a sales tool that was devaluing our products and our service in search of fleeting growth in market share.

Anyone who heard the simplistic answer would probably have laughed internally if they had any knowledge of the business, because investment in technology is expensive and requires a different employee skill set.

Uploading data from CRs, images, etc., are extremely more labor-intensive than just parking the vehicles and driving them through the sale.

Also, even though we have a sliding scale of revenue streams based on sale price, the truth of the matter is that it does not cost any more or any less to sell a new car versus and old car at auction, unless you factor in mandated consignor marketing and promotional costs.

So now we have devalued our products and services, by discounting and rebating on the consigning side to gain share while trying to increase fees on the buying side to make up for the revenue compression.

The interesting parts of that dynamic are:

— Is no one factoring in the backside costs and the dropping purchase price?
— Are customers expecting increased service with lowered fees?
— Are exclusive one-auction-only contracts on compressed fees maximizing a vehicles exposure and driving the highest prices in competitive bidding?

Let's face it, the industry has allowed itself to be under-valued and then compounds the problem by trying to drive returns back to prior-year levels by going for increased share at those revenue streams, using price as a marketing tool versus service and product value.

At one time, I think we called that working more and making less, but compensating for it with volume; some have called it an anti-competitive market model.

No matter what, the devaluation will take years to correct; let’s hope we start soon!

Edtior's Note: Jim DesRochers is vice president at Dealers Auto Auction of the Southwest. As with any contributed content, the opinions expressed in this and other editorial columns are solely that of the author’s and do not necessarily reflect those of Auto Remarketing or its parent company.