More than six months after Superstorm Sandy hit, KAR Auction Services chief executive officer Jim Hallett said the company is closer to purging its system and balance sheet of thousands of damaged vehicles.

During Thursday’s conference call with investment analysts, Hallett reiterated what the company reported in its first-quarter financial statement — the backlog of inventory at Insurance Auto Auctions is up by more than 10 percent. KAR pinpointed specifics of what Sandy did to its performance in a report Auto Remarketing filed here.

“The good news is Sandy is getting behind us,” Hallett said on Thursday. “We’ve only got a few thousand Sandy cars left to sell. And perhaps the better news is we have healthy supply of total-loss vehicles from collisions this year.

“I hope I’m done talking with Sandy in future conference calls,” he continued.

Analysts drilled deeper into the ramifications of what the volume of vehicles did not only to KAR’s performance, but how it positioned the destroyed units that have come to Insurance Auto Auctions because of the harsh winter much of the U.S. has endured.

“The buildup of inventory at IAA reflects the fact that’s been a fairly severe winter throughout the United States, and these collision cars are waiting ready to be sold,” KAR executive vice president and chief financial officer Eric Loughmiller said.

“It’s safe to say you can only sell so many cars in a day or a week in a location,” Loughmiller continued. “If you were selling Sandy cars, you could not possibly be selling the same number (of collision cars) because there just isn’t the physical capacity for the buyers to consume them and move them in their network all in the same day.”

Later in the call, Loughmiller elaborated about Sandy’s impact in relation to the salvage units typically sent to IAA, vehicles that usually are sold within 75 to 90 days from being assigned to KAR’s subsidiary.

“Let me correct a perception: The insurance industry isn’t holding back cars,” Loughmiller said. “They’re selling them as fast as they can. But there’s a reality. They had Sandy cars, and they had collision cars.

“There was clearly an emphasis in moving the Sandy cars as fast as they could,” he continued. “The reason being is you really want people to understand that’s a flood car and from a salt-water flood. If you mix them up with everything else, it really might confuse the buyer base because they might value the cars differently. It’s not that they’re holding them up. It’s that the market only has so much capacity each day in each location.

“It’s been a spring as well that’s been a little volatile. Not just Sandy, there’s been hail damage, all kinds of floods. It’s been quite a year already, and here we are only in the early part of May,” Loughmiller went on to say, referencing how snow was still falling in the Midwest and Rockies this week.

Older Units Coming to Salvage Auction, Too

Experian Automotive pointed out that the average age of vehicles still in operation came in at 10.4 years in the fourth quarter. With that statistic in mind, analysts wondered if KAR is also seeing more volume in its salvage business via units that no longer can be retailed because of their age and wear.

“There is an aging car out there that we’ve spoken about many times,” Hallett said. “We have had some of our customers sell some of their low-end, what I would call push-pull-drag sleds, in the salvage venue versus selling them in a whole-car venue.

“I think that’s one of the things I would point out is KAR is really the only company that’s in a position to do that because we do have such a strong whole-car offering and a strong salvage offering that we can really give the customer the choice of selling in either venue. And we do have some customers who do take advantage of that on some of their lower end vehicles,” he continued.

Excitement for ADESA.com

Late last month, the company launched a revamped version of ADESA.com. Auto Remarketing published the details here.

During Thursday’s call, Hallett took a moment to highlight what the website can do for KAR going forward.

“Previously views of the inventory were somewhat fragmented. Some were on ADESA. Some were on OPENLANE. Now buyers can view all of the inventory on a single website,” Hallett said.

“I’m truly excited about the power of ADESA.com. I believe it’s going to have a positive impact on the customer experience both for the buyer and the seller,” he continued.

The KAR boss emphasized the company got to this point through an 18-month integration that was “well-orchestrated, well-planned and executed at a very high level.”

Hallett went on to say, “I can say of all the acquisitions I’ve been involved with and all of the integrations I’ve been involved with, this was the most highly planned, orchestrated and executed integration. It’s going to serve us very, very well as we go into the second quarter.”

Arrival of Off-Lease Volume

In another part of Thursday’s call, an analyst wondered if ADESA might see less off-lease volume if grounding dealers keep the units for their pre-owned inventory. Hallett refuted that notion and explained why.

“We continue to see increased volumes,” he said. “One of the things we’ve been doing well over the past year as we prepared for 2013 is we’ve met with our commercial sellers. We checked in with them to see what their anticipated volumes are. There have been no significant changes with our commercial customers in the way they plan to resell their cars in 2013 and going forward.”

Hallett also responded to the prospect that extra off-lease volume might take away the pricing strength of off-rental units. He positioned his answer by reflecting back on how off-lease volume has been tight for the past couple of years.

“These lease cars are now going to be able to get to dealers who haven’t been able to get to them before,” Hallett said. “Many of these vehicles were being sold in maybe a closed environment or in an online environment where many of the independent dealers didn’t have access to this kind of inventory.

“Now as more dealers get more access to inventory, I think it will drive the prices of those cars up a little higher and it will be a little bit more competitive,” he continued.

“Could that have an impact on some the other vehicles in the lanes? Possibly, but I don’t believe it will be significant,” Hallett concluded.

Nick Zulovich can be reached at nzulovich@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.