Here’s a statistic from Mercedes-Benz Financial Services to consider when thinking about how times have changed in the wholesale market.
The fourth quarter of 2014 marked the first time that Mercedes-Benz Financial sales through its MBonDemand online wholesale portal have exceeded its sales in the auction lanes, said Sherry Keltner, the manager of online sales and marketing at Mercedes Benz Financial Services.
While MBonDemand had only been on the market for around two years at the time of the interview, this point hammers home the notion of how much the wholesale market has changed, even in recent months.
And further changes to online remarketing may be on the way.
“We absolutely expect that more of it (remarketing) will move online. In fact, we’re already seeing a substantial shift from traditional auction to online sales channels,” Keltner said in an early January interview with Auto Remarketing.
“It’s really just because that’s a far more efficient way for our dealers to shop for available pre-owned inventory, where they can see vehicles across multiple auction locations and sellers. Because of that, we see that shift continuing,” she added.
And here’s another shift: the business model for the dealerships, themselves. They’re responding to more widespread information available to the retail customer, who’s now researching online for many hours before arriving at the store.
“They’re very educated consumers, and to meet those expectations of these educated customers, dealers are having to become extremely competitive,” Keltner said. “As a result, many of them are shifting to a high-volume, quick-turn sales model, as opposed to the lower-volume, high-profit-per-unit model we’ve seen in the past.”
And with such quick turns on those pre-owned cars, having immediate access to inventory is a big plus for dealers.
‘Spreading Those Spokes Out Further’
In discussing how the evolution and marriage of both online/technological and physical wholesale environments is impacting inventory acquisition, Mike Williams used the term “hub-and-spoke” to describe the activity that might be found at the dealership level.
“It’s really a hub-and-spoke moment. You’ve got one guy making decisions — the principal or the used-car manager — and he could be contending with three different people that are spotting at three different auctions for him,” said Williams, who is vice president of mobile and direct sales at Black Book. “He’s got a buyer that’s running around his region trying to get cars — all of these different things, and he’s trying to juggle all of them.”
Williams, who was talking with Auto Remarketing during an interview at the NADA Convention & Expo this winter, said that in light of this, the use of “multi-screening” by dealerships will become more common when they set out to buy cars.
It’s also important to bear in mind the dealer, in terms of time-efficiency and maximizing profitability.
“So, now what you see is them reaching out, spreading those spokes out further. We used to say 300 miles maybe five years ago. That was the reach of most big ones that were embracing technology. At this point, it’s probably 500, 600 miles,” he said. “Regionality is really coming into play.”
Williams added that “you start to see micro-cells of dealer interaction and networking that become this kind of trade network or the sharing of inventory.
“None of these things are new,” he continued. “They’ve all been around for five years. But what’s happened is, it’s been embraced more and more because of the need constantly to improve that efficiency.
“When cars were really in demand, I think that really drove it much faster; but now that there’s a glut, they can be pickier; they can look for the better deal.”
Aiming to Provide Best Physical Venue, Online Auction & Technology
When it comes to the more widespread use of technology in the wholesale space, here’s some food for thought.
“We’re really a technology company that sells cars,” says KAR Auction Services chief executive officer Jim Hallett.
Speaking to Auto Remarketing in late February, Hallett said it’s key for his company to continue providing tech-based solutions for its customers, grow and support KAR’s existing technologies and hone in on acquiring new solutions that will continue to boost the buyer and seller experience.
He also touched on KAR’s approach when it comes to buyer and seller decision-making in terms of channel selection, be it physical, online and so forth.
“I don’t feel that, as a company, KAR should ever try to steer a car in one direction or another,” Hallett said. “I believe that we should provide the best physical venue. We should provide the best online venue. We should support it with the best technologies, and we should let the customer and the market decide how the car gets sold.”
Later in the interview, Hallett further emphasized the balance and importance for each of the various remarketing channels when he said this: “We don’t believe brick-and-mortar is dead, either. And we still believe that there is opportunity for brick-and-mortar auctions to be acquired.
“Brick-and-mortar gives you more than just physical sales and ancillary services,” he continued. “We think brick-and-mortar, furthermore, supports our online buying initiatives. So when you go into a new market, you not only get the physical presence, but you also get that buyer base that then supports your online offerings, as well.
“So, it’s a real focus on both online and physical,” Hallett added, “again, letting the customers decide how they want to sell those cars.”
In an effort to get dealer units seen in as many places as possible, Dealertrack Technologies introduced new-vehicle pricing and multiplatform listing tools for its Inventory+ solution on Monday to help dealers better manage new-model and wholesale inventory.
The company explained the new Multiplatform Listing tool can allow dealers to launch wholesale vehicles on all major online auctions — at the same time — from one platform. When a vehicle is sold on one of the auction sites, the Dealertrack tool can work seamlessly to remove the unit from all auction platforms, protecting dealers from double selling inventory and incurring associated fines and penalties.
Dealertrack indicated this tool also can deliver integrated access to wholesale books and transactional values to assist in pricing vehicles to a specific market and maximizing profitability.
“These new inventory management tools expand the capabilities of our Inventory+ solution to help dealers better manage their inventory, further streamline their operations and be more competitive,” said Robert Granados, senior vice president and general manager of inventory at Dealertrack.
“Speed to market, accuracy and efficiency are key components in automotive retailing, and the combination of these new tools and the powerful Inventory+ solution provide exactly that,” Granados continued.
The company went on to mention Dealertrack’s Inventory+ New Car Pricing tool can enable dealers to more efficiently price new models using all of the latest manufacturers' incentives and rebates, as well as competitive market data.
In addition, this tool can support making pricing changes in bulk down to the vehicle’s model and trim levels, reducing the typical repricing process by days. New-vehicle pricing updates can also be instantly synchronized with the dealer's website inventory listings.
Dealertrack Inventory+ is an innovative and comprehensive inventory management solution that can deliver a comprehensive view of data insight and analytics with rich mobile and workflow capabilities for dealers.
For more information about Dealertrack’s Inventory+ and these new tools, visit www.dealertrack.com/inventory+.
There’s a new 24-7 subscription-based wholesale network and national online auto marketplace that aims to bring wholesale, retail and auction channels together.
On Tuesday, MyWurld Inc. launched AutoWurld, which is designed to “centralize the auto retail, wholesale and auction sales channels into one online destination,” says AutoWurld founder and chief executive officer Troy Mack.
“Our national network features more than 700 dealers looking to buy and sell both new and used vehicles,” said Mack. “Our mission is to centralize the auto retail, wholesale and auction sales channels into one online destination to increase dealer revenue and profitability, while saving time and eliminating per-unit fees.
“We are focused on growing our dealer base, adding more third-party vendor products and boosting our brand recognition across the wholesale, retail, auction and consumer markets.”
In its news release, the company said AutoWurld is designed to provide dealers and wholesalers a more simple way to list and sell cars, in addition to giving them a real-time view of inventory to purchase.
The site offers unlimited retail listings and wholesale transactions, while providing volume-priced products and flat monthly memberships, the company said.
Dealers are also given access to third-party sales support services, like inspections, financing, transportation, warranties, insurance and aftermarket products.
For more information, visit www.autowurld.com.
In response to developments surrounding the industry’s multiplatform system initiative, Whann Technology Group provided a letter to Auto Remarketing and others in the industry to outline its position on the matter.
This is just the latest in a series of announcements on MPS that started on Feb. 23, when ADESA announced that it decided not to participate in the remarketing industry’s currently proposed multiplatform system initiative.
The next day, Manheim sent a message to Auto Remarketing reiterating its position to maintain a commitment to the wholesale market project.
ServNet announced Wednesday afternoon that it has also decided not to participate in the remarketing industry’s currently proposed MPS.
Below is the text from the letter authored by Keith Whann, founder of Whann Technology Group, that was provided to Auto Remarketing on Monday evening:
Over the past week, there has been a great deal of discussion about the multi-platform selling project ("MPS") after various parties shared their respective views. After some careful deliberation, we felt that in order to avoid confusion and provide clarity, it was necessary to share the Whann Technology Group (''WTG") perspective on this initiative.
We would like to thank Manheim and ADESA, the other parties in addition to WTG with a marketplace participating in the MPS Project. All of us have individually invested large amounts of time, effort and money on MPS and we appreciate the collective effort in bringing MPS to where it is today.
We want to begin by unequivocally saying we will continue to represent the interests of auctions, consignors, dealers and the industry as a whole and remain committed to working toward the establishment of an MPS that would link together and allow bidding across virtual auction marketplaces.
Some have said the technology costs associated with participating in MPS are high and that ultimately those costs would have to be borne by participants, buyers and sellers alike. With WTG Global, this is not the case. We treat the MPS as a natural extension of our marketplace. With WTG Global constructed as a marketplace of marketplaces, this allows each auction to have control of their customer's experience and maintain that local auction feel, yet have the reach to be able to sell vehicles worldwide.
We believe that MPS, when combined with mobile technology for image capture and condition report generation and the right marketplace structure, would put more eyes on more cars. This technology exists today and would allow consignors to offer vehicles for sale immediately when grounded, where they sit, and dealers access to view and purchase inventory without adding unnecessary cost to the process. MPS would also create a more efficient virtual auction marketplace that allows the user to have the easiest most productive experience regardless of where they do business.
Such a system also removes barriers of entry for individual auctions and remarketers and delivers the type of efficiencies in the marketplace that our customers and partners have been seeking.
The WTG investment on technology initiatives facing our industry has been and continues to be significant, but we consider it to be both a necessary and worthwhile investment. We have made the expenditure so consignors and individual auctions do not have to do so. An auction can have access to the MPS through WTG Global simply by using our API to push inventory from its management system to the auction's microsite within our marketplace. This is all done at no upfront cost to the auction.
We hope this provides you with an understanding of how WTG Global works with MPS and our position on this important initiative.
Keith Whann, Founder
Whann Technology Group
In the latest development to this story, ServNet announced Wednesday afternoon that it has also decided not to participate in the remarketing industry’s currently proposed Multiplatform Bidding System initiative (MPS).
ServNet president Patty Stanley said in the company’s statement: “ServNet’s Board has spent countless hours over the past two years working with major industry partners attempting to evaluate and develop a Multiplatform System that would benefit all parties involved. In light of recent developments, technology challenges and antitrust concerns, ServNet has likewise concluded it would not be prudent to further pursue this initiative.”
“We agree with ADESA that, as currently structured, the proposed MPS would erode competition,” continued Stanley. “It would also subject market participants to increased technology requirements and expenditures that exceed the potential benefit to our customers and our individual auctions.”
Stanley added: “ServNet committed to the MPS initiative with the goal of participating in a system that both included and benefitted the entire industry. ADESA’s decision to withdraw has caused ServNet’s Board of Directors to conclude that it could no longer support it at this time.
“ServNet auctions currently have the ability to post cars on any and all platforms and will continue to do so, thus providing the maximum exposure for our customers’ inventory. We plan to preserve that autonomy going forward as we pursue every opportunity to collaborate with industry counterparts to develop equitable solutions that benefit us all,” she added. “ServNet is firmly committed to our industry and to the technology that will help the industry continue to grow and thrive.”
This follows Monday’s news from ADESA, which announced it was withdrawing from the MPS initiative.
Manheim released a statement Tuesday reiterating its position to maintain a commitment to the wholesale market project.
ADESA announced Monday evening that it has decided not to participate in the remarketing industry’s currently proposed multiplatform system initiative.
ADESA said in a statement: “The company has worked for nearly two years with major industry partners and invested several million dollars in attempting to evaluate and develop an MPS that would benefit both sellers and buyers. Unfortunately, in light of the current competitive landscape, technology challenges and expected antitrust issues, ADESA has concluded it would not be prudent to further pursue this initiative.”
It added: “As currently structured, the proposed MPS would subject market participants to heightened technology requirements and expenditures. ADESA also 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.”
Auto Remarketing spoke with Peter Kelly — president of the company’s Digital Services Group — for additional background and insight on the decision.
“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 said.
“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,” Kelly continued.
“We were concerned that the MPS platform, as it was structured and the associated costs related to it, was creating some additional antitrust risks — raising costs for new participants to come into the industry, having a lessening effect on competition and creating that antitrust risk that would involve us in more costs and potential use of litigation down the line. And as we reflected on it,” he added, “the benefits commensurate with these costs and risks weren’t purely identified. We just felt that we had to make a decision, focus our technology investments on other areas where we believe there’s a higher and more impactful customer benefit in the near term.”
In the company’s statement, ADESA chief executive officer and president Stéphane St-Hilaire said: “We are committed to investing our resources to the benefit of our customers. As we have publicly stated, we are focused on enhancing technologies for our customers, expanding our geographic footprint and increasing our online buyer network, which supports both physical and online sales.”
Kelly emphasized as much in his discussion with Auto Remarketing, and he would go on to make this additional point about where KAR stands in regards to industry initiatives, in general.
“Notwithstanding this particular decision relating to MPS — I kind of view that as an industry initiative that we were just not able to get to finality on with certain industry participants — we remain very committed to industrywide initiatives, in general,” Kelly said.
“We’re involved in many of them, whether it’s the NAAA, IARA, AutoIMS, AuctionNet, AutoGrade, AuctionACCESS. So, we’re very committed to the industry and to industrywide initiatives that bring real and tangible value to the customer,” he added. “We just weren’t able to get there on this particular initiative.”
There are likely to be hefty volumes of off-lease cars pouring into wholesale markets this year, and a new program announced Tuesday by ADESA is designed to foster greater confidence among dealers when they buy these cars online.
ADESA Assurance is a buyer protection program that gives buying dealers a no-questions-asked return guarantee on selected one-owner, off-lease vehicles sold on ADESA DealerBlock — which is the company’s online marketplace that dealers can use 24-7 for accessing bid-now events or buy-now cars from national consignors.
When they buy cars that are eligible for this program, dealers simply pay $30 and they receive the 30-day guarantee. Should the dealer wish to return the car, ADESA said it will pick the vehicle up from the dealership’s lot.
“ADESA Assurance means customers can bid with confidence, knowing they’ll have no regrets about their purchases,” said ADESA chief executive officer and president Stéphane St-Hilaire. “With this added protection, dealers who have been hesitant about online buying can feel assured that they’ll have the option to easily return a vehicle — without question.”
The program is only being offered on purchases from now through March 31. The vehicles must be selected one-owner, off-lease vehicles sold through the open sale on ADESA DealerBlock in order to be eligible for the guarantee.
“ADESA.com is truly an exclusive opportunity for customers to get first pick at fresh off-lease inventory, because many of our sellers offer their cars in the open sale on ADESA DealerBlock before assignment to an auction,” said St-Hilaire.
“And since we operate in excess of 90 percent of all private-label programs in both Canada and the U.S., there are more than 10,000 quality, CPO-eligible vehicles offered on DealerBlock weekly,” he added.
To access eligible inventory or to learn more, dealers can visit ADESA.com/off-lease or contact ADESA Customer Connection at [email protected] or 888-526-7326.
Manheim announced today during the NADA Convention and Expo in San Francisco it has created a new wholesale-to-retail vehicle solution for dealers, as well as revealing a new partnership with Hendrick Automotive Group to create a multi-lane auction operation in North Carolina.
The new wholesale-to-retail vehicle solution, which the company said was created with dealer input, allows customers to select from six modular services that support their end-to-end remarketing activities. These include vehicle inventory identification, acquisition, inspection and reconditioning, merchandising and transportation.
“As used vehicle retail operations become a larger part of a dealership’s business mix, handling the many time-consuming activities associated with this process may pull focus from selling,” said Janet Barnard, Manheim North America president. “With Manheim’s new wholesale-to-retail solution, dealers can secure a variety of remarketing options via a single provider, making every aspect of the used vehicle retail process easier.”
The aforementioned approach was beta tested for almost a year at Manheim Denver with success, and takes advantage of Cox Automotive’s market intelligence and historical sales performance knowledge, as well as Manheim’s physical and digital channels.
The new wholesale-to-retail vehicle solution will be expanding at Manheim Denver and will be offered later this year at additional Manheim locations.
Using the new wholesale-to-retail solution, Manheim said dealers will benefit from the following:
- Identify the vehicle types that will perform well for their location
- Order vehicle inventory efficiently
- Secure all-in-one pricing with reconditioning and delivery
- Manheim facilitates providing lot space as increased volume is needed
- Units ready for sale at time of delivery, saving floor plan costs
- Augments current retail reconditioning, allowing more units to be frontline ready faster
- Inventory management techniques and merchandising, from acquisition to digital formats
Manheim’s New Partnership With Hendrick Automotive Group
In other news coming out of the auction giant at the NADA convention, Manheim also announced it has partnered with Hendrick Automotive Group to create a multi-lane auction operation in North Carolina.
In an effort to create a more efficient way for the dealer group to source and remarket vehicles from their 26 dealerships in Charlotte, Manheim established Manheim Charlotte, an onsite auction operation at a Hendrick Automotive Group dealership in Concord, N.C.
The facility is a four-lane retrofitted operation that opened earlier this month.
The company explained it takes advantage of Manheim technology and staffing such as Simulcast, auctioneers, auction block support and full-time employees.
This is the second auction operation that Manheim has created for Hendrick Automotive Group; the first one opened last year in Charleston, S.C.
“When we look for better ways to source more used cars and create more efficient remarketing strategies, we look to Manheim,” said Chris Little, Hendrick Automotive Group’s vice president of variable operations. “Our deep collaboration and partnership is generating the type of solutions we need to grow and better compete.”
Manheim Charlotte — formerly Hendrick Chrysler Dodge Jeep RAM of Concord, which has moved to Hendrick Auto Mall Concord — hosts weekly Wednesday sales that are open to registered dealers.
Manheim Charlotte held its first grand opening sale on Jan.7 with quite a turnout. The sales was attended by nearly 600 dealers who bought 86 percent of the 508 vehicles offered for sale.
“When a key customer such as Hendrick Automotive shares its future vision and business goals with us, it allows us to explore a variety of new and different possibilities,” said Susie Heins, Manheim’s vice president of dealer sales. “Manheim Charlotte is the direct result of how deep collaboration between our companies can deliver win-win results.”
Auto Remarketing has launched a new series this year called “Consignor Connection,” in which we catch up with a leading remarketing executive at a different consignor each month. In a Q-and-A format, we will talk to him or her about best practices, auction industry trends and more. The series debuts with Tom O'Connor, senior manager of remarketing at Mercedes-Benz Financial Services.
Auto Remarketing: With the wholesale volumes that are coming back for Mercedes-Benz Financial Services, how are you helping dealers retail these vehicles and what role has your MBonDemand platform played?
Tom O’Connor: Technology is playing a more significant role in helping us successfully pair pre-owned vehicles with new owners. Dealers are optimizing their efficiencies today, and many prefer to purchase pre-owned inventory without leaving the dealership. It’s far more efficient for them to shop available pre-owned inventory online, where they can see vehicles across multiple auction locations and sellers. Because of this, we are seeing a substantial shift from the traditional auction to online sales channels.
MBonDemand, Mercedes-Benz Financial Services’ online sales platform, gives all dealers 24/7 access to all available vehicles with a broad range of specs without ever having to leave their office. This is a significant advantage over attending a typical live auction, where only a small portion of our inventory is offered. MBonDemand also allows us to offer vehicles as soon as they become available for sale and enables our buyers to source inventory as they identify a need. With the traditional auction model, if a dealer sold a unit over the weekend, he or she may have to wait until our next lane sale to purchase a replacement vehicle, which could be days or weeks away. With MBonDemand, they can fill their inventory needs immediately.
We have also supported our Mercedes-Benz franchised dealers with improvements to the certified pre-owned warranty, which includes an unlimited mileage warranty. We have three certified pre-owned sales events planned for 2015 that will include pre-paid maintenance, a value our dealers can pass onto the customer. We also have some incentive opportunities planned for non-franchised dealers in 2015 as well.
AR: On an industry-wide level … how will the increase in volume, particularly off-lease units, impact the auction industry in 2015?
TO: While the number of transactions is increasing for our auction partners, consignors across the board will expect service levels to remain high. “Days to sell” will remain a top priority, so we will expect quick transportation and fast, high-quality reconditioning. As a consignor, increased volume makes these things become exponentially more important. Faster and more precise condition reports will be critical. As more and more cars are being sold online, we need to provide the most accurate vehicle descriptions possible to ensure our buyers are getting exactly what they are looking for.
No matter which platform a vehicle sells on, we rely heavily on our auction partners. They help us to facilitate vehicle movement, storage and reconditioning, and they know that meeting increasing requirements will require a great deal of focus. It is evident to us that our auction partners recognize this demand and they are already making adjustments. I expect in 2015 we will continue to see the implementation of technology to streamline the buying process, as well as the day- to-day operations.
AR: How does Mercedes-Benz Financial Services strike a balance when it comes to choosing how your cars are sold, be it auction sales, online sales, open/closed sales, etc.?
TO: We have placed a great deal of emphasis on our online platform, MBonDemand, because we are seeing more and more of our buyers migrating to this channel. We believe this is the future of the auction industry because of the efficiencies for sellers and buyers and the ability to match inventory needs with available inventory in real time.
That being said, we don’t anticipate moving to 100 percent online sales in the near future. We realize there will always be a portion of our vehicles that sell in traditional auction lanes. Our goal is to offer an array of purchasing options so that every dealer has a variety of choices when doing business with Mercedes-Benz Financial Services. However, we are encouraging buyers who might prefer the traditional auction to utilize MBonDemand to fill inventory between auction sales.
AR: What are some of the biggest challenges (and opportunities) in the auction market for consignors like MBFS going into 2015?
TO: We know that the auction lanes will remain very competitive, and our goal is to set ourselves apart. Mercedes-Benz Financial Services is working hard to ensure we are first on the dealers list with quality products that have been reconditioned and are ready for sale. After the sale, we stand behind our product with exceptional service and a 14-day arbitration policy, which is significantly better than the industry standard. We want to ensure our buyers are happy with their purchase.
Another key opportunity is staying tapped into what the retail customer is looking for and providing our dealers with the tools to meet those expectations. The average customer spends several hours shopping online before they ever step foot into a dealership to make a purchase. To meet the growing expectations of these educated consumers, dealers must be agile and competitive. As a result some dealers are shifting to a high-volume, quick turn sales model, as opposed to the lower-volume, high-profit per unit model in the past. With dealers selling pre-owned vehicles faster than ever before, immediate access to available inventory is critical. It’s our goal to continue to ensure that MBonDemand gives them a competitive advantage.
Editor's Note: This story can be found in the January print and digital editions of Auto Remarketing, our on-site NADA Convetnion & Expo issue. The issue also includes two features with incoming NADA chairman Bill Fox and a pre-owned guide to the convention.
DealersLink announced Monday that it plans to launch its new live auction platform at the NADA Convention in San Francisco.
Named AuctionLink, the company plans to debut the auction tool during the convention, which runs from Jan. 23 to Jan. 25.
Coined as the “nation’s most advanced live online auction platform” by DealersLink, AuctionLink helps dealers to buy and sell upstream units before being available at brick-and-mortar auctions. The service will run every Tuesday online, available to all DealersLink members.
Several features of the tool, according to the company, include:
- No buying or selling fees
- Live, real-time bidding
- Upstream inventory
- All listed vehicles are booked out with condition reports
- Automated bidding — can set max bids if unable to attend live auction
“We pioneered the first dealer direct platform in 2005,” said Mike Goicoechea, DealersLink’s chief executive officer. “Now we are excited to launch the most efficient and robust auction platform. What a difference a decade makes.”
