When KAR Global spun off its Insurance Auto Auction business this year, that was about 35% to 40% of its total business.
“We’ve become a much smaller company,” said Jim Hallett, who is chairman and chief executive officer of KAR Global.
“We have to continue to look for ways to take costs out of this business and become more efficient in the way that we do business,” Hallett said.
Hallett made those comments during a phone interview with Auto Remarketing. The interview took place soon after KAR’s third-quarter 2019 earnings call on Nov. 6.
In a news release accompanying the earnings report, Hallett said the company experienced growth across its businesses in the third quarter, but he noted that volume and margin pressures “drove consolidated results lower than anticipated.”
During the earnings call, Hallett said the company is challenging all of its legacy operating processes, “especially in the ADESA physical auctions.”
The company sees its businesses transforming the physical auctions with the adoption of VirtuaLane, a live, in-lane auction technology that creates a virtual marketplace for customers at its physical auction locations.
Other transformation includes greater use of digital auction offerings and the need to reduce cycle times to meet commercial customers’ goals, Hallett said during the earnings call. The company must reduce its direct cost of delivering those services, he said.
The KAR earnings results showed some positive news, with KAR executive vice president and chief financial officer Eric Loughmiller reporting that its CarsOnTheWeb product is performing as expected. Hallett reported that the company’s AFC business performed in line with expectations.
Also during the earnings call, Hallett noted that most of the company’s growth came through its ancillary services. That could continue in the fourth quarter. Hallett said during the earnings call that the fourth quarter is always a strong one for his company in the area of ancillary services, which include areas such as reconditioning, condition reports, inspections, and transportation logistics.
“And this year should be no exception,” Hallett said.
Asked to expand on that during the phone interview with Auto Remarketing, Hallett noted that the fourth quarter of 2016 was strong in the area of leases. December 2016 showed the most lease originations in history, he said.
Many of those vehicles should arrive back in the wholesale market during the fourth quarter of this year, and those vehicles will use ancillary services the most, Hallett said.
“We have a very large share of commercial business,” Hallett said.
He continued, “We offer all the off-lease programs, the upstream programs. When those vehicles aren’t sold in an upstream format or online format, they then make their way to physical actions. As they make the way to physical action, that’s when we get a chance.”
Hallett often says that when a car does not sell upstream, there is a reason. Usually, that reason is price or condition, he said.
“And so, as they make the way to physical actions, that’s when we get to do the work,” he said.
In his November conversation with Auto Remarketing, Hallett said his company’s revenue per car sold at physical auction was in the area of $900 over the past month. He added that his company typically sees very high revenue per unit for ancillary services in the fourth quarter because historically that would be a lower-volume quarter.
But he said OEMs also do a lot of work on vehicles during that period in preparation for the season, which he said begins around the middle to end of January and runs through the spring.
Hallett said 30 KAR auctions now have VirtuaLane capability and that the number would “keep marching” higher.
Loughmiller also participated in the phone call with Auto Remarketing and said commercial consignors have been very receptive to using VirtuaLane. Dealers, however, have not been as easy to convince, he said.
Hallett added that a virtual auction and not running cars across the block for safety reasons is a description of “kind of the auction of the future.”
He said safety is a core value for any company, adding that commercial sellers understand the need to create a safe environment for employees and customers.
“And so, they get it right away, and they want to be supportive,” Hallett said.
Asked to expand on areas in which the company is looking to improve efficiency at the physical auctions, Hallett answered, “The first one is VirtuaLane, not running these cars across the block.”
He expanded on that by noting that his company’s contract labor on sale day is about $35 million to $40 million annually. He provided a scenario in which the average sale brings in about 100 drivers per week.
“Well, if you multiply that by 75 auctions, that becomes a fairly significant number,” he said.
He provided another scenario in which an auction was able to eliminate one lane.
“In each auction, there’s a team, including an auctioneer and their ring men and administrative assistants, and … lane captains,” he said. Eliminating one lane at all 75 auctions would mean “a big number” in the area of savings, he said.
Loughmiller added, “We’re reimagining how we run these legacy physical actions and (asking) how do we become safer? And how do we become more efficient and do a better job for the customer than what we’ve been doing in the past?”
Cross-training the TradeRev and ADESA sales teams to provide one point of contact for dealers is another area of efficiency in which the company is focused.
Hallett explained that a KAR physical sales representative might visit a dealer on a Monday, a TradeRev representative might visit that same dealer rep the next day, and then another KAR representative might visit that same dealer to sell a different product on Wednesday.
“What would you say to that sales team?” Hallett said.
“You’d say, ‘Are you all with the same company?’” Hallett continued. “Why can't I just have one person come in here and be really efficient with my time and represent all of your products and all of your services, whether it be digital, or whether it be physical, whether it be transport, whether it be inspection, whether it be finance?” Hallett added, “I think that becomes the winning solution and the winning combination in the industry.”
As IAA works to enhance its business model and move further into the digital space, the company is focused on introducing technology and innovation that “[drive] our industry forward while positively transforming the customer experience,” said IAA chief executive officer and president John Kett.
“AuctionNow is a prime example of how we can add more value to the auction process,” Kett said in a news release. “Our AuctionNow platform has performed exceptionally well in Canada and we are excited to now be using this technology in all of our U.S. auctions.”
Global vehicle marketplace IAA on Wednesday introduced IAA AuctionNow in the United States. The company says that with the new, proprietary AuctionNow interface, buyers can create their own customizable bidding experience. IAA says that can result in additional flexibility and control and add more value to the auction process.
IAA developed the AuctionNow platform, which it says gives the company full autonomy to continuously enhance the bidding experience based on customer feedback and recommendations.
The platform has been in use throughout the company’s Canadian operations since 2016. The new platform, which IAA says has consistently received positive customer reviews and feedback, replaces the legacy I-bid LIVE platform.
Improved auction monitoring options are among the highlights of the new platform’s enhanced bidding and buying experience. Buyers can now view and participate in up to 12 auction lanes through the same view. At the same time, they can also use enhanced search features to find vehicles quickly, according to IAA.
New bidding features are another highlight. By skipping to a higher bid using the new “jump bid” option, buyers can now speed up the bidding.
Other highlights include:
— Enhanced visual and audio signaling. That ensures the buyers know when their vehicles of interest are scheduled to cross the block. That helps them never miss a buying opportunity, IAA said.
— Enhanced auction reminders. Notifications help buyers not miss an auction by better managing their time and priority bids.
— Augmented viewing functionality. Buyers and sellers can now gain access to the same screen views with different control functions. Both also have a choice of screen size for viewing.
— Expanded vehicle details. They are now available on the Run List and Product Details directly within the AuctionNow bidding platform.
— Seamless audio experience. Now, buyers have audio within the iOS and Android IAA Buyer apps.
Auto Remarketing’s Best Auctions to Work For, presented by CARS Recon, is a free workplace study for the auto-auction industry that recognizes the best auto auctions to work for on an unranked basis.
It is designed and intended for individual physical auction locations and digital auctions, as well.
Digital auction honorees are designated as such. It is absolutely free for both physical and digital auctions to participate.
Winners are recognized both in the Nov. 1 edition of Auto Remarketing and at a Nov. 14 breakfast during the National Remarketing Conference segment of Used Car Week, which is being held Nov. 11-15 at Red Rock in Las Vegas.
Auto Remarketing, teaming with the Best Companies Group (BCG) in Pennsylvania, underwrites the study. The study is managed by BCG, and the data is analyzed 100% by the staff at BCG. Best Companies Group directly administers all surveys and manages and analyzes all data and information that is gathered.
The Best Companies Group assesses the data from the group of auctions choosing to participate and develops metrics and standards based on that data to determine which auctions are named to the list of Best Auto Auctions to Work For.
This is the fourth year of Best Auto Auctions to Work For program. We encourage all auto auctions, physical and online, to take advantage of this great workplace study opportunity and participate in 2020.
Stay tuned early next year when we open up registration for the 2020 project. Thank you to all who participated this year, and congratulations to those recognized in this year’s study.
Without further ado, here are the 2019 Best Auto Auctions to Work For, listed in alphabetical order:
Auctions in Motion
DAA East Tennessee
DAA of Huntsville
Dealers Auto Auction of the Southwest
FastLane Auto Exchange
Greenville Auto Auction
IAA Miami North
IAA North Hollywood
Louisiana’s 1st Choice Auto Auction
Manheim Central Florida
Manheim Northstar Minnesota
Manheim Texas Hobby
Music City Auto Auction of Nashville
Orlando Longwood Auto Auction
For in-depth benchmark data sets, graphics as well as insights and best practices from managers at Best Auto Auctions to Work For locations, see the Nov. 1 issue of Auto Remarketing.
After discussions and negotiations that spanned “several years,” Columbus Fair Auto Auction (CFAA) became part of the XLerate Group on Friday afternoon.
During a phone conversation with Auto Remarketing just a couple of hours after the acquisition closed, XLerate chief executive officer Cam Hitchcock conveyed a message to customers of CFAA, an auction that’s been operating near the Ohio capital for more than 60 years.
“Their service team isn’t changing,” Hitchcock said. “The same individuals who have taken care of them for many years at Columbus Fair will continue to take care of them going forward on the commercial consignor side and the dealer side. I would expect more of the same, superior customer service and a commitment to excellence.”
Columbus Fair joins XLerate’s established group of auctions, which have physical and satellite sale operations in California, Florida, Georgia, Illinois, Michigan, New Mexico, Pennsylvania, South Carolina, Texas and Wisconsin. Hitchcock pointed out the acquisition diversifies the group’s portfolio more than just geographically.
“We’re always excited when we acquire very high-quality sales,” Hitchcock said. “Columbus Fair has some relationships with certain consignors that the other XLerate auctions don’t have, and conversely, XLerate has relationships with certain consignors that Columbus Fair doesn’t have. We are looking to grow Columbus Fair as well as the other existing sales. Columbus Fair is just a phenomenal addition in that regard.”
And that addition arrived on Friday afternoon following what Hitchcock said took “several years” of dialogue.
Hitchcock recapped in a news release that CFAA was started by Bill Jacobs, Alexis Jacobs' father, in 1958. She has run the sale since her father’s death in 1982.
“CFAA is an iconic independent sale with an impeccable reputation and consistently superior customer service,” Hitchcock said in that news release. “These attributes are a great fit with XLerate’s operating philosophy and track record of acquiring sales with strong brand equity.
“It is an honor that Alexis and Greg Levi have entrusted us to carry forward the Jacobs’ legacy at CFAA,” Hitchcock continued, “This acquisition bolsters XLerate’s presence in the critical Midwestern market and our capabilities to service large fleet/lease and financial institution customers.
“We are excited that Greg Levi and his team will join XLerate’s highly talented management group. XLerate’s team will benefit from Greg’s deep experience in consignor compliance and digitally-enabled sales platforms,” Hitchcock went on to say.
As mentioned, CFAA has been in continuous operation since 1958 and features financial institution, fleet/lease and dealer consignment sales each Wednesday at its Obetz, Ohio, location. The auction operates an 11-lane arena, reconditioning facility, body shop, and mechanical shop situated on approximately 154 acres.
“Joining the XLerate group is the right choice for CFAA’s customers and employees,” CFAA principal owner Alexis Jacobs said. “We identified a cultural match that felt comfortable for both our employees and our customers. The support and resources that the XLerate offers to its auction family were key factors in my decision to sell to XLerate.
“My auction family is excited to join a high-quality, high-integrity group of operators who share our commitment to providing superior customer experience and a powerful commitment to the communities where they operate,” Jacobs went on to say.
ServNet auction owners gathered for their fall business meeting earlier this month in Dallas, and in the process decided on the leader who will be its president for the next two years.
Taking on the role of president is Bruce Beam, general manager of Dealers Auto Auction of Oklahoma City. Beam succeeds Eric Autenrieth of Carolina and Indiana Auto Auctions, who moves to the post of chairman of the board.
Beam shared his leadership agenda for the next two years, noting an immediate goal to ensure a seamless transition in ServNet’s executive leadership. John Brasher and Robert Sullivan take over as executive director and administrative director, respectively, following Pierre Pons’ decision to step down as the group’s chief executive officer at the end of the year.
“Pierre and his team at TPC Management have worked tirelessly to fortify ServNet as an organization and to strengthen ServNet’s position in the industry,” Beam said in a newsletter distributed by ServNet.
“With John and Bob’s experience in the industry, we’re looking forward to maintaining our brand and the reputation that ServNet has always enjoyed, building on our previous traditions and events, and expanding our presence in the West,” Beam continued.
High on Beam’s objectives for the group will be a strong focus on the dealer community during his term as ServNet’s President.
“Every week thousands of dealers buy vehicles at ServNet auctions,” Beam said. “I want to make sure that those customers realize how important they are to us, and to know that when they buy a vehicle from a ServNet auction, they have the benefit of our entire network of auctions.
“In today’s remarketing world, auto dealers are sourcing their inventory nationally in ever-increasing numbers. Within the ServNet community, no matter how far away the selling auction is, there’s a ServNet auction near to stand behind the transaction,” Beam continued. “An online transaction at a ServNet auction goes far beyond the computer technology that makes nationally sourcing and purchasing possible.
“It’s important that our dealers know that ServNet’s owners work together, so that following the sale, the customer receives the follow-up and support from their local ServNet auction, working with the people they have known for years and do business with on a regular basis,” he went on to say.
“The beauty of purchasing a vehicle anywhere within ServNet’s national network of auctions is that an online transaction can be made with confidence, with the benefits offered by a dealer’s local ServNet auction,” Beam added. “Within the ServNet community, no matter how far away the selling auction is, there’s a ServNet auction near you to stand behind the transaction.”
In a competitive marketplace, Beam also emphasized that strong customer relationships and superior service remain the key to success.
“We’re seeing a lot of consolidation in the industry, and technology is improving and changing at light speed,” he said. “While ServNet auctions continue to be at the forefront of the industry in terms of the tools and technology, we remain firmly committed to our customers, continually striving to work harder, do more, and offer better services.
“As independent auctions, we have a tremendous advantage: we can make decisions and implement them immediately,” Beam continued. “Our focus has always been and will continue to be on nourishing strong personal relationships with our customers. Those relationships, which in many cases go back years, even generations with franchise and independent auto dealers, have made ServNet auctions consistent leaders in the marketplace and will continue to set our auctions apart from the competition.
“A dealer can buy a vehicle anywhere, but when it comes to experience, dependability and a full range of services, there’s only one choice: a ServNet auction,” Beam went on to say. “With 22 ServNet auction locations nationwide a dealer can be secure knowing that there’s a ServNet auction nearby to help, no matter where they buy. From coast to coast, ServNet has you covered.”
The National Auto Auction Association elected a vice president for the 2019-2020 term, choosing R. Charles Nichols for the post.
Nichols, who is the president of BSC America Auction Group and general manager of Bel Air Auto Auction, was installed into the VP role at the NAAA Convention earlier this month.
“Charles brings to this office a tremendous amount of knowledge and experience, not just in operating and expanding an auction business, but also in the importance of building strategic partnerships in the industry and the value of establishing a strong legislative advocacy presence at the state and national levels,” NAAA chief executive officer Frank Hackett said in a news release.
“He is well respected by his colleagues and has a great reputation throughout the industry,” Hackett said. “We’re happy to have him follow in the footsteps of his father, who served as NAAA president in 2002.”
Nichols has served on various NAAA committees and its board of directors during his career, including time as Eastern Chapter president. He has been the vice president, president and chairman of the ServNet Auction Group and was its designated board member for AutoIMS.
Nichols joined his family’s auction in 1983. His parents, Ray and Elaine, along with a partner, bought Bel Air Auto Auction in 1980, then the Nichols family acquired full ownership in 1993.
It is the flagship location of BSC America Auction Group. Nichols is the president of that group; his sister Michelle Nichols-Neff is executive vice president; Ray Nichols is the chairman.
Richmond Auto Auction founder and chief executive officer Mark Motley says now is “a great time in the history of the company.”
“The service our staff offers every day is incredible,” Motley said in a news release. “Successful events such as this one is a direct result of their hard work and dedication.”
Motley was talking about Richmond Auto Auction’s 29th Anniversary Sale and Classics and Exotics Auction, which was the largest sale in the history of the company. The auction was founded in 1990.
The event took place in September and featured more than 900 vehicles, 600 registered dealers in attendance and a nearly 70% conversion rate.
As part of the anniversary event, the auction gave away $22,500 in cash to the dealers.
“It was great to see the turnout from both our consignors and our dealers,” said general manager Wyatt Carter.
Operating on 35 acres of land, Motley’s Richmond Auto offers the ability to run seven simultaneous lanes, full reconditioning and mechanical facilities, in-house body shop, enhanced vehicle imaging, in-house transportation, AutoIMS aynd full integrated online capabilities.
IAA is increasing the capacity of its Davenport, Iowa, branch, a move that IAA chief executive officer and president John Kett said was done to provide additional space “to meet market demand in this region.”
The company said that with the investment, the branch’s inventory space increases by more than 20%.
“The Midwest is our home market, and we will continue to make strategic investments to further our leadership position in the area,” Kett said in a news release.
The IAA Davenport branch is one of two IAA branches in Iowa.
“We look forward to the additional resources this investment will bring to our customers,” IAA senior vice president, U.S. branch operations Scott Guenther said.
For a listing of preview days and sales days at the branch, visit www.iaai.com.