Consumers today don’t think twice about opening an app on their smart phone, clicking a few buttons and ordering everything from a ride-share to a flat-screen TV. The digital era is transforming every part of our economy, and its impact on the wholesale vehicle marketplace is taking hold like never before.
Last year, digital buyers accounted for more than 2 million used-vehicle purchases at Manheim. That represented 43 percent of all vehicles sold that year, and we think the shift to digital will only accelerate. Yes, you read it right. Manheim, a company with more than 78 physical auctions, envisions a day, possibly even this year, when more than half of all wholesale vehicle transactions will be made through digital channels.
Let me paint a picture of what the auction of the future will look like. Set aside your current image of vehicles rolling down physical lanes within a large auction facility.
Instead, think of an experience more like Amazon where the storefront is entirely digital — a virtual marketplace where a large variety of products and services are available 24/7 with a few simple clicks.
In the auction of the future, dealers will enter this omni-channel digital experience for all of their inventory needs — buying, selling, financing, logistics — for luxury brands and economy cars.
They’ll have access to a broad range of vehicles through the digital marketplace. Some auctions will be open to all dealers and sell vehicles of all types. Others will be private sales reserved for specific brands and their dealers. Within this same digital marketplace, dealers will have easy access to supporting services, like floor planning, titling and shipment scheduling.
The digital marketplace will be accessible through any device that can access the internet, but increasingly, the point of entry will be an app on a smartphone. These devices, now in the hands of more than 3 billion users globally (according to research firm Newzoo), have become indispensable, and just like the retail marketplace, they’re putting wholesale digital commerce into hyperdrive. Inventory listed on Manheim Express, a mobile app launched last year, already attracts more than 139,000 unique buyers every month.
Along with the shift to mobile, the digital auction of the future will be personalized. Just like interactions on Amazon and Netflix, the experience will be different for each client. It will be customized based on whether you’re buying or selling.
It will use artificial intelligence (AI) to learn from past transactions and serve up inventory recommendations that best match specific interests and business goals. This will mean less time searching through listings and more time focused on the vehicles that matter most to your customers.
The digital marketplace of the future also will rival and eventually surpass the in-person experience in providing an up-close look at vehicles. Revolutionary 360-degree imaging is now being used by a small number of dealers to let potential buyers see vehicles from every possible angle, but we’re just scratching the surface of this technology.
In the near-future, AI and machine learning will automatically detect damage, tag vehicle features and upload model specs. It will be like having an expert assistant helping inspect and log every detail of the vehicle — all using the cameras and processing power contained in today’s smartphones.
Behind the scenes, another important advancement will unlock more profit potential as data becomes more connected through the digital marketplace. Analytics will be integrated into the buying and selling experience to help dealers make faster, more informed decisions. Vast amounts of data will be fed into these analytic tools to provide real-time guidance on vehicle values, the impact of holding inventory and whether reconditioning is a good investment.
I know what you’re thinking. These are a lot of changes to take in, but the payoff will be worth it. This shift to digital will create a more efficient marketplace that saves buyers and sellers time and money. No more loading up vehicles and driving to a physical auction. Sell the car where it sits. Better yet, buy it from where you’re sitting — whether that’s your dealership, a coffee shop or anywhere else that is convenient for you.
The end result will be a more profitable, flexible and seamless experience. The auction of the future, reinvented in the digital world, will give dealers more time, more choices, more convenience and, ideally, more money from wholesale transactions. That’s the kind of change we all can embrace!
Nick Peluso is president of Manheim Digital Marketplaces for Cox Automotive.