The multiplatform system initiative is not only the hottest topic in the remarketing industry right now, but it’s also perhaps the most complex, with an onion’s worth of layers involving handfuls of providers, players, participants and perspectives.

Auto Remarketing has been following this story closely and sought out several directly involved and others willing to share their perspective on MPS for their insight on the matter.

‘We Will Continue’

“One message we want to leave with you, clearly, is that this is not dead,” Manheim North America president Janet Barnard told Auto Remarketing near the start of a March 4 interview.

 “And because our customers are pushing all of us to make progress here, we will continue,” she continued. “We’ve known all along that it would be difficult to get everyone to agree, and as long as there are more than one of us talking and making progress, then we’ll continue to do that.”

Barnard, as one may expect, was referring to the multiplatform system initiative (MPS) in a follow-up interview with Auto Remarketing, after news in late February that ADESA and ServNet were withdrawing from the currently proposed project. Manheim is remaining part of the MPS project.

Barnard was speaking to Auto Remarketing prior to the antitrust filing with the Department of Justice that was announced Thursday by Manheim, which was joined in the DOJ filing by fellow industry participants WTG Global (Whann Technology Group), BSC America Inc. and Columbus Fair Auto Auction.

Barnard had said in the March 4 interview that one of the next moves in the MPS project was the DOJ filing.

When it comes to the antitrust concerns that have been raised regarding MPS, she said in that interview, “we absolutely have none of those and will continue to do all that the coalition has been doing to ensure that this is very pro-competitive and open to all. And the filing is the next step in that.” 

Barnard continued:  “The other thing that we’re doing from a practical standpoint — and I won’t get into specifics with it — but we are continuing to pilot live transactions, in a pilot mode with other industry partners, and we’re getting ready to do that, on the heels of testing this out in the fourth quarter of 2014, where we actually were able to move transactions through the Hub among some of the industry people that were working on this.

“So, that broader pilot with more live transactions is going to be undertaken very soon. So from our viewpoint, nothing has changed,” Barnard continued, adding that the “progression and the building and the conversations that has taken place in the past is going to continue.

“Apparently, it will be comprised of a different group than we were dealing with, but that’s OK, too. As long as there’s forward progress, we’re happy to be working with some industry partners to provide what our customers are asking for," she said.

Later offering some additional context to that pilot testing, Barnard added: “We have the capability to move the transactions. We have a commitment from two significant customers that have consented to participate with us and another industry partner to move those transactions. I can’t name them today, but we’ll putting out a more comprehensive announcement about that very soon.

“But there are not only auction partners that have agreed to participate in the pilot, but also customers (sellers) that have agreed to participate in the pilot. So, this is the next step in making it come to life.”

More Context on Legal Issues

In a Feb. 23 statement, ADESA said it “believes the proposed MPS structure and its associated economic and governance model poses antitrust risks by raising new barriers to entry for smaller industry players, reducing competition among the auctions and increasing costs for sellers, buyers and ultimately retail consumers.”

Keith Whann — founder of Whann Technology Group, which put out its own statement on the overall MPS matter in late February and later talked with Auto Remarketing on March 5 — also shared some thoughts regarding the legal issues.

Although he does not actively practice law anymore, Whann has 29 years of auto and legal experience, which he began as an assistant Ohio attorney general and the founder of the law firm Whann & Associates. Today, in addition to his technology group, Whann is also the co-owner and chief executive officer of the Columbus Fair Auto Auction as well as holding the same titles at Group 3 Auctions and its subsidiary, AWG Remarketing.    

“When you say the legal issues, you can go really a couple of different directions. The one people are talking about is some sort of potential antitrust issue. And I really don’t see that being the case, given the fact that you’ve got others with marketplaces who have chosen not to participate, and you have a situation here where there’s a couple of big companies. And obviously, we (Whann Tech) are not a very large company, we don’t have all the resources in the world, and we’ve been able to construct something,” Whann said, referring to his company’s specific product.

“Typically, when you start to talk about antitrust, you’re looking at barriers of entry into the marketplace and one being able to use their size or influence over some of the others to their disadvantage,” Whann said. “I don’t know that that exists here. But by the same token, any time you have people doing things together in concert like this that makes up a large part of the market, I think it’s advisable to be able to go to the regulator and ask a question and let them opine on that.

“With respect to other types of legal issues that you look at, this is vastly different than the retail world, so you’re not dealing with all of the typical laws, rules and regulations you would with the retail sales of motor vehicles. On the wholesale level you have business-to-business transactions.  For the most part, contract law is going to govern the relationship, in addition to all the laws related to the sale of motor vehicles. So really it’s not overly complicated.”

Looking forward, Whann also shared other potential legal discussions to be had when it comes to this project.  

“If there is something on the horizon that comes in, if you’re asking, ‘Keith, what may be the next thing we’re thinking about on this level?,’ it would obviously be a lot of the discussion about recalls and what’s happening with the sale of a vehicle with an open recall at a retail level and to what extent that begins to back up and become an issue at the wholesale level,” Whann said.

But Whann would also note the preparations being made on that front: “And, quite candidly, we’ve built some things into our marketplace with some of the tools there that when someone is viewing a vehicle they’re going to be able to see what recalls are on a particular vehicle, or at least the most recent one.

“You get into some challenges with open recalls, because that’s not information that is publicly available to the folks that aren’t franchise dealers of that particular line make, in most cases,” he continued. “But that’s one of the things where you do the best you can as a marketplace to bring in relevant information to buyers and sellers of the vehicle so they can make an informed decision on a purchase.”

Addressing Cost Issues

In its Feb. 23 statement referenced earlier, ADESA also discussed the cost of the proposed MPS, saying: “As currently structured, the proposed MPS would subject market participants to heightened technology requirements and expenditures.”

In an interview with Auto Remarketing (also on Feb. 23), Peter Kelly — president of the company’s Digital Services Group — provided additional perspective to those concerns: “First of all, after two years in and millions of dollars invested and working diligently with many of the industry partners here, we hadn’t been able to get all the parties to agree to a final MPS structure. So, that still remained an open item.”

He added:  “The technology costs are very high — much higher than we forecasted going in — and just appear to be continuing on that upward trajectory. And ultimately those costs would have to be borne by participants, and ultimately, buyers and sellers.”

During the March 4 interview, Barnard addressed the technology cost issues that have been raised.

She indicated that “much of the technology investment that was needed has already been done, ironically, in part made by ADESA, part by Manheim. And so, yes there will be some amount of operating costs with this third-party Hub that’s been created to support it ongoing. And there hasn’t been any agreement on what that cost might look like.

“The last proposal, prior to (the February) announcement was somewhere in the range of $4,000 a year per auction, which even for a small auction, doesn’t seem unreasonable to us. And that’s ongoing support of the system; that’s not start-up costs, which really have already largely been invested. Because, as I said, the Hub works.

“So, anyone who already operates on an online platform, be it theirs or licensed from someone else … can connect into this Hub today.”

Manheim would later clarify that the $4,000 auction fee is not an annual fee. The company said that it is “an amount that was proposed as annual dues for the first year. After that, the board would set the annual fees at an amount required to recoup the cost of operating MPS.”

Ally Offers Official Comments on Multiplatform Bidding

Prior to Manheim’s announcement on Thursday, Ally provided these comments to Auto Remarketing on multiplatform bidding and MPS, in general: “Ally is committed to the industry and our dealer customers, and SmartAuction will continue to deliver the value our dealers have come to rely upon. Our position on multiplatform bidding has been consistent. 

“Ally is not supportive of multiplatform bidding for similar reasons that have recently been shared by others in the market place. However, Ally welcomes industry innovation that improves the value proposition and experience for our dealers and consignors,” the company added. “We continue to support internet auction platform cross-listing technology that is proven and being executed in the marketplace today. Cross-listing technology allows dealers and consignors the flexibility and choice of who and where they want to transact business.”

Thoughts from ServNet

When there’s an industry-wide, collaborative initiative — like the multiplatform system initiative that began taking shape two-and-a-half years ago — ServNet chief executive officer Pierre Pons says he wants to make sure ServNet’s members have a seat at the table.

Pons spoke with Auto Remarketing on March 4.

He said that since each of the 32 members of the group is an independent business, the decision to accept such a program is ultimately up to that individual auction itself — Pons said ServNet’s job is to provide them the opportunity to take advantage of such a program in the first place.

“If there’s going to be an industry-wide initiative, ServNet is going to be there,” Pons said,

When ADESA announced that it was withdrawing from the MPS initiative on Feb. 23, Pons said it didn’t change ServNet’s position in terms of being for or against the MPS initiative, in general — however, he added, “it was hard for me to see it as an industry-wide initiative” without ADESA being a part of it.

Thus, ServNet’s decision to withdraw from the MPS initiative later that week was centered on the organization’s stance that the project was no longer an industry-wide initiative.

Pons emphasized that he agrees with the line of thinking that MPS is what the customer wants.

But he acknowledged there are some dynamics that are unique to independents. For one, he said, one of the biggest challenges is getting everyone on the same page, technologically speaking.

Typically, independent auctions would use a third-party technology provider, versus in-house/corporately owned technology.  In an independent auction group like ServNet, there could be several different outside providers being used by different members.

So, that — along with other factors — can complicate matters in making decisions regarding MPS for his organization.

However, Pons emphasized that if the MPS were to move forward as what he describes as an industrywide project, then “we’re standing right outside the meeting room.”

IARA Issues Statement on MPS

The International Automotive Remarketers Alliance issued its own statement on the multiplatform system initiative, providing the following to Auto Remarketing shortly before 11:20 a.m. (EST) Thursday morning:

“In light of recent announcements, the Executive Committee of IARA has issued a statement to reinforce its position on MPS. The International Automotive Remarketers Alliance is committed to seeking a multiplatform solution that allows cross bidding,” IARA said.

“Seeing the benefits to both sellers and buyers, IARA believes that the development and implementation of such a project is inevitable. IARA would prefer to see an auction-lead, industry-wide solution. The Alliance is open to working with its industry partners in coming days to identify specific objections and corresponding solutions to move the project forward.”

IARA is meeting next week as part of the 2015 CAR Conference.