You’re a publicly traded company that owns the second-largest auto auction chain in the country.
Your portfolio also includes a suite of dealer- and auction-based technology and digital offerings that certainly enhance the brick-and-mortar experience or could be considered an alternative to it.
So, what do you do?
You make acquisitions and investments in both.
Push the physical auction growth through moves like the ADESA business unit building a location in the nation’s third-largest metropolitan area (ADESA Chicago is set to open this fall) or its purchase of the Sanford Auto Dealer Exchange.
Push the digital and technology growth with the launch of Data Science Solutions Group or ramping up the U.S. rollout of TradeRev.
That’s been part of the strategy at KAR Auction Services, which has been just as busy buying or opening physical auctions recently as it has investing on the digital and technology side.
That includes everything from acquiring a stake in TradeRev — an online provider of dealer-to-dealer auctions — to perhaps its crown jewel investment on the brick-and-mortar side: buying all eight Brasher’s Auto Auctions.
At the NADA Convention & Expo, Auto Remarketing caught up with Peter Kelly, president of the KAR Digital Services Group and KAR’s chief technology officer.
He spoke highly of the Brasher’s purchase, saying the auctions have “stood the test of time.”
KAR also recognizes that online buying “is becoming more and more important,” he said, so a brick-and-mortar purchase like the Brasher’s one gives KAR the opportunity to leverage physical auction opportunities into online opportunities, as well.
This is part of a “two-pronged strategy” at KAR.
“Acquire great physical assets, but leverage that into an online world, as well,” Kelly said.
That begs the question: how does one KAR property keep from cannibalizing the other?
Keith Crerar, recently named executive vice president for TradeRev in the United States, offered some perspective on this from TradeRev’s vantage point. Crerar’s background with KAR also includes roles with ADESA.
“And that’s the big question,” Crerar said of the cannibalization point. “How do we work together? What are the synergies between the two?
“ADESA’s a dominant player in the dealer space. We consign and sell a large volume of cars for dealers across the U.S.,” he added.
“There’s a large volume of dealers that we don’t do business with. So I think my strategy looks like this: when the science tells us to go to a specific city, we look at that city and say, ‘Ok, what major dealer groups in this city do we have a small market share that we do business with?’ And then we go do the auction, we say ‘Look, tell us the background on why this dealer group is doing business at one of the competitors or with a wholesaler or a bid-sheet sale versus using your in-lane services.”
Crerar said that since he began in his current position, he has had auction general managers approach him about using TradeRev as “a way in the door” to some of the “mid-major” 10- to 15-store dealership groups that work with TradeRev and are helmed by younger people.
“And they’re interested in technology, and we’ve never had an offering like this,” Crerar said, referring to TradeRev’s new “end-to-end” solution.
So, in a very real sense, ADESA and TradeRev can work together.
“KAR has never had an offering that goes this far into a retail transaction, ever … At the moment when the customer is test-driving the new car, we can step in and help. We can be a value-add to the used-car manager, the GM and the owner, all at once,” Crerar said.
“We launch a live appraisal auction, and if we can’t fetch the money in that 60-minute cycle, we relaunch the car later that day,” he added.
If the deal can’t be done or generate the money the used-car manager wants, the car goes to ADESA DealerBlock, then ADESA LiveBlock.
“So, you’ve got three real technology-oriented options for us to fit in great with the dealer, all the way up to the time that customer test drives the vehicle,” he adds.
Crerar later added this point, which sheds more light on how a physical auction company and a tech company work together in a mutually beneficial fashion.
“We really want to highlight the ADESA technology to complement the TradeRev technology.”