DealerSocket chief executive officer Jonathan Ord described it as “very humbling” to have a conversation with employees last week when the technology company announced its fourth major acquisition since the beginning of the year.
Ord made that statement since DealerSocket has gone from an idea sprouted in a garage with fellow founder Brad Perry to the point where the company is making acquisitions costing more than $50 million.
The latest move came last week through a definitive agreement under which DealerSocket will acquire Dealertrack’s Inventory+ business in an all-cash transaction for approximately $55 million.
Under the terms of the agreement, Dealertrack’s Inventory+ suite of inventory management solutions, including its AAX product in the U.S. and Canada, as well as its eCarlist websites, will be acquired by DealerSocket.
This development arrived after DealerSocket added DealerFire, FEX DMS and AutoStar Solutions to its dealer technology portfolio to enhance its marketing theme of, “We are automotive.”
Ord touched why DealerSocket added these Dealertrack assets when he addressed dealer clients hours after the acquisition announcement when the company hosted its User Summit in San Diego.
“One of the main criteria to acquiring companies is that we acquire teams and product lines that think the same way we do and can integrate well into our culture,” Ord said during his closing address posted online here.
“To our customers, to our employees, we are so ready for the future. We are so excited about the next step in changing the world,” he continued.
DealerSocket’s employee and customer count jumped via the latest acquisition, which is expected to be completed by the end of the third quarter. The company added 209 employees who worked with Dealertrack to run the inventory tool.
“We’ve been watching that business for a long period of time,” said Ord, adding that a current DealerSocket executive helped to develop the AAX product before it became a part of the Dealertrack portfolio several years ago.
“Dealertrack had the asset and did a bunch of good things with it. It’s a great value proposition for us and for our customers. We look forward to integrating that inventory management functionality,” he continued.
Ord said the deal brings 3,388 dealer customers into the DealerSocket family, as well.
“Some of that is overlap with our current customer base, but much of it is green field and white space where we can help all of those customers use better CRM, website and inventory technologies,” he said.
Ord spent the remainder of his time on stage at the DealerSocket event thanking dealer customers for attending in hopes each one received more skills and resources to improve their businesses.
“Go back to your stores and be a change agent,” Ord said.
Group 1 Automotive’s second quarter, from the perspective of used vehicles retailed in the United States, was solid.
Overall unit sales were up 18.2 percent. Revenue and gross profit were up on an overall used-vehicle retail basis, as well.
But there was at least one retail used-vehicle metric that the dealer group’s president and chief executive officer, Earl J. Hesterberg, was not satisfied – the gross margins. Looking at worldwide data for the second quarter, used-vehicle retail sales gross margin percentages were down from 7.9 percent in 2014 to 6.8 percent this year. There was a similar result in the U.S., where margins by the same metric were down from 8.2 percent to 7 percent.
“I’m not exactly sure how you should model it, but I do think it was one of our weaker areas of performance in the quarter,” Hesterberg said. “I don’t think we did a good job. We’ve had 23 days to work on this so we spent a lot of time on it and my impression is that with the improved availability of used vehicles, that we bought a little heavy and also that in some of our oil-challenged markets that there may have been a little bit of shift from new to used, and I think we had too many cars for the quarter.”
Hesterberg noted that although the margins aren’t where he’d like them to be, he was still satisfied with his dealers’ ability to offload vehicles in a timely nature.
“You’ll note from our inventory level – 32 days’ supply – we don’t hold onto these things,” Hesterberg said. “We have a discipline that encourages our people to liquidate these things one way or another and keep our inventory in mind. So we retailed far too many cars at a low margin during the quarter compared to what we should normally do. But it leverages our F&I business, it gives us money to the bottom line, and you can see that we have some pretty powerful throughput.
“That’s something that we’re going to work to move up a bit,” he continued. “I’ve learned not to forecast margins because I’m not very good at that. The market dictates a lot of that. So I think we can do a better job there. I wasn’t particularly impressed with our margin result. I was impressed with our volume result.”
For more details on Group 1’s U.S. used-vehicle results reported on Friday, check them out here.
Reconditioning: for a dealership in the preowned space, it is arguably one of the more complex processes between the acquisition of a vehicle and its retail sale.
Whom am I targeting with the sale of this vehicle? What needs to be fixed? What is worth fixing? These are all important questions — questions you may already know how to answer.
For many of our readers that are involved in the reconditioning process, they know how to identify and solve the necessary issues to prepare a vehicle for sale. But one issue, no matter how long you've been in the game, could still be quite challenging: how do I do this quicker?
Auto Remarketing reached out to several dealerships throughout the nation to get a variety of different viewpoints on the topic of reconditioning.
Although they face a host of varying issues due to their very different geographical locations, everything they do boils down to getting their newly acquired inventory prepped and ready for sale as soon as possible.
But before you focus in on a process, it's good to identify the end goal. For Harry Haber, the used-car manager at Capistrano Volkswagen in San Juan Capistrano, Calif., the goal is what has become an increasingly common expectation of used-vehicle shoppers: a trouble-free vehicle.
"From our standpoint, how we look at the reconditioning process is to look at the end-experience of the customer," Haber said. "What is the customer going to get? The customer wants to get a non-problem type of car. The dealership wants a non-hassle type of experience after the sale."
The situation works both ways: a happy customer leads to more referrals and less strain on the sales and service department relationship.
And that all begins with a vehicle that not only runs well, but also looks the part.
"Most customers who approach a car on the lot or online make a judgement about that vehicle in about three seconds," said Blain Marston, the general manager of the CARite store in Monroe, Mich. "This judgement may be conscious or subconscious, but the customer generally decides very quickly whether he or she wants to look at the vehicle in more detail.
"It's the old line, 'You only get one chance to make a good first impression.' With that in mind, we do not place vehicles on the lot or online unless those vehicles are ready to make that very important first impression — serviced, ready and completely reconditioned," Marston said.
Getting to the point of making a quick turn on a vehicle's reconditioning takes time to master. That's one reason dealers like Haber are constantly attending conventions such as the those hosted by the National Automobile Dealers Association, which he says he attends to check out new offerings from various companies to see if they'll help streamline his business.
"I look at efficiencies: what the new efficiencies are, what software programs are out there to make your systems more efficient, how to better the experience both for our customers internally and our customers outside," he said.
Haber says his average reconditioning turnaround time, many years ago, was 21 days. After some work with various dealership technologies and hosting numerous meetings with his reconditioning staff, they managed to whittle the time down to seven days.
"The key is communication," Haber said. "Using a system like Kanban Flow is a good system. Because then everybody's on the pace with where the cars are … Everybody knows where the cars are and in what stage."
Haber said he realizes that software can help keep track of the innumerable issues that can come up during the recon process, helping to cope with the inevitable human error involved.
"What happens a lot of times is, if it's not in front of someone, it gets forgotten, for whatever reason," Haber said. "We're people, we forget things."
The main reason Haber chose to use a business software program like Kanban Flow, which can be accessed for free, is its adaptability.
"It's easy to use, and you can use it on any device," Haber said. "That's the big draw. You can use it on desktop or on mobile."
But the seven-day turn is not where Capistrano VW stopped. According to Haber, their current average turnaround, including weekends, is four days — and that's despite the presence of additional processes in the reconditioning process due to state legislation such as California's smog requirements. He says this was achieved by streamlining the work-approval process during the reconditioning phase.
"It's self-authorizing," Haber said. "We were sitting at seven days, and we couldn't get it down below seven days. We found out if we self-authorize, it's a little quicker. Now what we do is we bill everything based on cents per mile.
"So, based on the car, year and mileage on the car, we use cents to mile for actual cost. But cents per mile is self-authorizing — so if a car has 10,000 miles, that's $500. So if they (technicians) spend over $500, then the service department eats it (the additional cost). If they spend less than $500, service department keeps it."
Of course, the example above varies based on the type of vehicle. Marston uses a similar system at CARite.
"We have a stated inspection process and allow a standard flat-rate fee for the initial inspection that is based on the type of vehicle being inspected," Marston said. "Clearly, a four-wheel drive diesel is going to require a different inspection than a small, simple compact car. If the reconditioning required falls within stated guidelines, it is an 'auto approve.' Anything outside of the standard requires management approval.
"We all do inspection write-ups online so that we can easily and rapidly communicate via email, which minimizes downtime for the tech involved because we can easily monitor labor and part costs."
Frank Fuzy, the co-owner of Century Motors of South Florida in Pompano Beach, Fla., has been in the business for 31 years, 15 years of which he spent reconditioning vehicles for the wholesale industry.
Four years ago, he and his wife purchased a certified center to assist in the reconditioning process at their own dealership. To Fuzy, it's all about the turn time.
"It's time and money," Fuzy said. "It takes time. I've got nine lifts in my building, and if I've got four cars sitting on a lift all day waiting for parts, it's a dead day — we're not getting the turn. You need the turn. My goal is to try to order all parts the first day the car gets in."
Here's where it can get tricky. For an independent dealer or an individual franchise, access to parts can be limited. Haber provided an example that occurs all too often when an off-make vehicle finds its way to his store, presenting what he says is the biggest challenge he has in the reconditioning business: preparing off-make vehicles for sale that they don't carry parts for.
"The parts department is dealing with a lot of cars," Haber said. "The tech's going, 'Oh, I can't believe it, I've got a Toyota in, we're a Volkswagen store.' And obviously we don't have this part because we don't carry those parts. Then they have to be ordered. When is the order going to come in?"
Utilizing partnerships with outside vendors to address issues that aren't always handled in-house, like paintless dent repair, is a must for a quick turnaround. Establishing relationships with neighboring franchises can be a good idea, as well, considering the nature of the recall business today.
"I've got relationships with many, but I'm still at the mercy of how busy their service centers are," Fuzy said. "It's frustrating. It takes time and effort." But for issues other than recalls, which an independent dealer could have repaired with his own mechanical staff, Fuzy has found that most of the time, the hardest part is acquiring the parts for the various vehicles that find their way to their lots. Fuzy, who aims at ordering all necessary parts the first day a vehicle is on site, has learned where he can save money without cutting corners.
"eBay has been our best friend," Fuzy said. "I can buy a $60 blend door actuator for a Lexus when it's $360 at the dealer. And they're brand new parts."
One possible drawback from that situation, however, is waiting for items to ship — which isn't always an option. This is where Fuzy utilizes what he calls a "second inspection," where he fixes the less immediate issues with a vehicle.
"Sometimes we have the ability to let it sit there for four days; sometimes we need it right away," Fuzy said. "It just depends on the emergency of is the car sold? Is the customer flying in in one day? Or do I have a week for shipping? So that plays an important part also in the final reconditioning. We'll recondition the major stuff first, then as we sell them it goes back through a second inspection."
In the fast-paced environment of recon, establishing and maintaining efficient repairs can be challenging. Even with the aid of technology and a well-trained staff, nothing can replace a good leader who holds a solid grasp on what's going on.
"You need to know mechanical, basically, if you're going to do reconditioning and have a service center," Fuzy said. "You've got to know what's going on. You've got to be the boss."
This story appears in the July 1 edition of Auto Remarketing, which focuses on reconditioning strategies for dealers.
Auction Edge and vAuto finalized a partnership on Monday to enable integration of EDGE Pipeline and EDGE Simulcast with vAuto Genius Labs’ AuctionGenius.
The companies highlighted the partnership enables wholesale buyers to use AuctionGenius as they prepare for and participate in live physical and online sales at independent auctions across the country.
EDGE Pipeline can provide wholesale buyers access to more than 100 independent auctions across the country, allowing them to search inventory across multiple auctions and enter live simulcast sales.
With this integration, AuctionGenius dealers can now use EDGE Pipeline to help them be more effective and efficient researching and preparing for online and physical auctions. The integration also can allow buyers to see all of the critical information they need to make an informed decision while participating in a live sale.
Additionally, the AuctionGenius mobile application for iOS and Android will now display run lists and inventory details for inventory at Auction Edge partner auctions.
“Our partnership with Auction Edge continues our mission to give dealers all the information they need to more easily evaluate and purchase vehicles from the widest array of wholesale auctions,” said Randy Kobat, vAuto vice president and general manager.
“The fact is, today’s highly competitive market requires dealers to go further to find the right wholesale vehicles,” Kobat continued. “Combining the power of AuctionGenius with the breadth of independent inventory available through EDGE Pipeline is a huge win for wholesale buyers.”
Auction Edge president Scott Finkle added, “It makes perfect sense to work together with AuctionGenius. In the end, we are both looking to empower dealers with all the tools and information they need to make informed buying decisions at auctions.”
Dealers can use AuctionGenius’ “heads-up” display, which can combine vehicle condition and valuation information from top industry sources, to evaluate and purchase wholesale vehicles instantly via live and online auctions.
In addition to EDGE Pipeline's network of independent auctions, AuctionGenius integrates with the nation’s largest wholesale auction marketplaces, including Manheim, ADESA, SmartAuction and other independent auctions.
Record360, a new property inspection and asset condition reporting dashboard and mobile app, hit the market earlier this month.
The new tool, designed by former rental industry executives, is designed to simplify and automate the way companies manage asset condition reporting, as well as give consumers peace-of-mind they won’t be charged for damage they didn’t cause on rental vehicles and other equipment.
The company said the tool was launched with a variety of industries in mind, such as equipment rentals, property management, dealerships, auto/body shops, transportation and more.
“Billions are lost each year in damages missed during the exchange of property, vehicles and equipment, while countless damage disputes impact relationships, customer satisfaction, and cause negative press. Asset condition and claims management processes dependent on paper or low-fidelity digital reporting are clearly outdated and Revenue 360 fills the gap with a modern solution,” said Shane Skinner, Record360 chief executive officer.
Record360 is available for iOS v7.0+, and on Samsung Tab 4, Samsung Tab Pro, Google Nexus Tablet, and most Android 4.4+ devices, with Samsung Galaxy S support coming soon, the company reported.
For users, Record360 provides time-stamped, geo-tagged record of property at the time of exchange, and condition reports are accessible from a tablet or smartphone.
From the mobile app, users can capture video, images, and highlights, as well as make any necessary notes, to track the condition of vehicle.
The company listed a few key features of the new product:
- Customizable for a variety of business applications, processes, and industries
- Manage all users and locations with a single web dashboard for real-time transparency
- Simple to implement in single or multiple locations, easy to train additional staff
- Multiple data points available for reporting, analysis, and workflow efficiencies
- Custom notes/set up one-tap using your own terms/language for damage and flaws
- Accurate VIN scanning, automatically capturing extended vehicle specifications
And the company has already some big names in the industry on board, such as Zipcar and Penske Jaguar Land Rover.
Todd Primo, service manager, Penske Jaguar Land Rover Cerritos, said, “We have been using Record360 to document customer vehicles and virtually eliminated the problem of customers claiming damage while their vehicles are in for repair, and are seeing real savings in damage claims. Record360 has become an integral part of our process and is appreciated by both our staff and our customers.”
Dealertrack Technologies has released a new Inventory+ Mobile app that replaces its existing TrueTarget Mobile app and includes upgraded functionality and design.
The new app features analytics, appraising, pricing and merchandising functionality and has been redesigned to improve the workflow.
Additionally, it provides dealers with new capabilities to source and trade vehicles — among those is an improved functionality allowing dealer groups to access multiple stores through the app.
The tool is now available in the Apple App Store and will soon be available for Android devices.
“Our Inventory+ solution has been an integral part of driving operational efficiencies and transforming businesses for many dealers across the country," said Robert Granados, senior vice president and general manager of inventory at Dealertrack.
"This new mobile app, coupled with the power of our Inventory+ analytics and robust capabilities, will help dealers better manage their inventory, further streamline their operations and sell more cars,” he added.
“With the Inventory+ Mobile app, dealership teams have the power to make quicker and smarter inventory decisions directly from their mobile device."
Auto Remarketing caught up with Granados on Thursday to discuss the Inventory+ Mobile app in more detail.
The TrueTarget Mobile app, he said, was more task-oriented when it came to inventory management. With the Inventory+ Mobile app, Dealertrack wanted to take the components of the “inventory management ecosystem” and bring more of them to mobile.
More of the roles of dealership personnel and their respective tasks are becoming mobile, Granados said, so the inventory app they use should be mobile, as well.
Instead of just using the app to conduct inventory tasks, users can now also use it to gain the understanding, insights and information that trigger those inventory actions.
In other words, the app can be used not just for perform tasks related to inventory, but also aid in the decision-making process itself.
As multi-platform sales remain a hot-button topic among dealers and auction execs alike, Liquid Motors continues to see increased interest in its Multi-Listing Wholesale Remarketing Service.
In fact, the company reported record growth for the tool that serves commercial accounts, auto auctions and dealerships.
Over the past two months, Liquid Motors’ customers have listed almost 100,000 vehicles which resulted in close to 25,000 sales.
Michael Daseke, president and chief executive officer of Liquid Motors, commented on the growth: "We are very pleased with the volume and sales results the past few months. Commercial accounts have outpaced the growth of other segments the past year but we are seeing strong growth in the auto auction and dealer segments as well."
The company’s One-Click Wholesale Remarketing Service gives commercial accounts the option to market their upstream vehicles on major marketplaces as well as on their own websites.
And dealers can use the same tool to list their aged vehicles for retail and wholesale, simultaneously.
Daseke also shared the company will be launching new marketplaces in the new year.
"We will be launching support for multiple new marketplaces over the coming months which should further improve the sales results for our customers due to additional exposure." Daseke said. "Further, we expect a big uptick in dealer listings over the next 12 months with the expected impact of increasing used-vehicle supply on dealer inventories and because of new strategic relationships."
Multi-platform selling is getting off the ground, no doubt about it, and that’s why speakers and panelists at this week’s Used Car Week conferences in Las Vegas will be touching on this very topic.
In fact, at the National Remarketing Conference later this week, the issue will be discussed in depth.
On Wednesday, Nov. 12 at 3 p.m., Eric Widmer, vice president at Alliance Inspection Management, will discuss the issue in a presentation titled, “Multiplatform Selling: What the Data is Telling Us.”
And on Thursday, Nov. 13 at 10:30 a.m., a panel lead by Joe Overby, Auto Remarketing editor, will focus on multi- and cross-platform buying and selling.
Video marketing provider Flick Fusion has announced the release of InstaVid, an automated video-production service. For dealers with video-producing needs, InstaVid is designed to instantly create and distribute video of dealer inventory.
Brian Cox, the president and chief executive officer of Flick Fusion, commented on the swift nature of the tool.
“InstaVid helps dealers move metal faster,” Cox said. “Within hours of a vehicle arriving on a lot, dealers can have videos of that vehicle all over the Internet, generating immediate video SEO. Why wait days to market your inventory when you can begin to attract video views and website visitors instantly?”
The program automatically generates a stock-photo video when a VIN is entered into a dealer’s DMS, featuring a professional voice-over and dealership-specific advertising specials via banners. Each video is VIN-specific, and keywords are added prior to being uploaded to YouTube and other third-party inventory listings.
Dealer photos and videos, once uploaded into inventory feeds, will automatically be update to the videos by InstaVid and replace stock photos. If a dealer decides not to update the photos, the stock photos will remain with the video as long as the vehicle is on the lot.
As part of a strategic partnership between the two companies, CDK Global announced that its clients will have exclusive access to the NewCar IQ new-car pricing and inventory management tool from Pearl Technology Holdings.
CDK said in its announcement of the product’s launch that it can help dealers “understand, apply and syndicate manufacturer incentives to their designated online retail pricing sites, determine the most profitable portfolio of vehicles for their store, and forecast sales results.”
And earlier this month, NewCar IQ won the 2014 DrivingSales Innovation Cup Award for “Most Innovative Dealership Solution of 2014” during the DrivingSales Executive Summit in Las Vegas.
“Each year the Innovation Cup Award identifies the dealership solutions that are destined to push our industry forward — and by those who understand what our industry needs the most, its progressive auto dealers,” DrivingSales founder and chief executive officer Jared Hamilton said in an award announcement. “We congratulate NewCar IQ for winning the 2014 Innovation Cup Award in a tough competition among an excellent field of solutions.”
Bruce Thompson, CEO and founder of Pearl Technology Holdings, added: “We are thrilled to have won this year’s DrivingSales Innovation Cup, especially when you look at the other fantastic vendors that were in the competition.”
In the press release announcing the launch of NewCar IQ, CDK listed these as specific areas where the technology can help:
- Determine and syndicate all applicable OEM incentives into a new vehicle’s pricing.
- Provide stocking recommendations (down to the trim and color) based on a dealership’s inventory, historical data and market data.
- Enable a complete view of selected competitor’s inventory — down to the trim level and turn times.
- Price one vehicle, a group of vehicles, or an entire inventory in seconds, syndicating the price to a retailer’s CDK Dealer Management System and websites (including CDK and third-party sites).
- Identify the vehicles that will begin to carry interest or fall out of an OEM’s grace period.
- Monitor one location or all-store inventories.
- Offer customizable reporting.
Additionally, outside of pricing and inventory management features, dealers can also tap into merchandising tools, floor plan credit management, customizable reporting, forecasting, enterprise reporting and competitor analysis. There are also both single-store and enterprise views for the dealer to aid them in decision-making.
“Today, automotive retailers are challenged with synthesizing and applying all of the data available to them,” said Bob Karp, CDK Global’s president of retail solutions, North America. “NewCar IQ presents the most compelling new car inventory information to help our clients complete tasks and gain insights, so they can make the best decisions, quickly.”
During its third-quarter conference call, Sonic Automotive highlighted several all-time records, including those set for new retail unit sales, pre-owned gross profit and third quarter total gross profit.
When asked if something was happening to separate Sonic from the pack during its strong quarter and used-vehicle sales increase of about 5 percent on the same-store side, Scott Smith, the company’s president and chief strategic officer, attributed the steady increase to his dealers’ consistent inventory levels, which have traditionally been light.
“I just think that with the great inventory management, our systems are running on a traditionally, versus the rest of the world, light day supply of 25-27 days,” Smith said. “If you go back and look at our performance, we just haven’t had those inventory pressures that caused those kind of adjustments. You’ve got to remember there are 42-45 million used cars sold every year and what makes a group go up and down, or a dealer go up and down, is just getting their inventory out of whack. We just haven’t had that kind of pressure here in a while.”
And, according to Smith, he doesn’t think they will face that kind of pressure again, due to his faith in Sonic’s digital inventory management systems. Smith also believes the sales will retain their consistency for the foreseeable future.
“I think the used-car business is pretty solid,” Smith said. “Our volume is decent. We sold 90 cars per rooftop, and we want to be at 100, but it wasn’t too bad. Our gross was good. Over $1,500 for us; that’s the highest it’s been in a while.”
When asked if they should be keeping higher inventory levels going into the coming months to drive sales, Jeff Dyke, Sonic’s executive vice president of operations, seemed to think that going into the winter months light is the way to go.
“You never want to have a heavy inventory coming out of July, August, September time frame,” Dyke said. “All the dealers start selling their cars in October, November and December, all the mom-and-pops and single dealership owners are clearing up inventory. You can see some of the bigger dealership groups doing that now, it’s a great time for us to buy. So you’ll see us push our inventory levels up in the fourth quarter.”
While remaining conservative with its inventory, and also continuing to test the waters with its EchoPark and One Sonic-One Experience, Smith remains optimistic, even hinting at further group growth.
“It wouldn’t surprise us at all that a couple more dealerships enter the Sonic family here in ’15,” Smith said. “That’s both from an acquisition and an add-point perspective.”
