ServNet chief executive Pierre Pons is tired of hearing online auction companies referred to as “disrupters.”
He believes independent auction technologies such as Auction Edge, and the independents’ embrace of technologies such as OPENLANE and DealShield, show that the traditional auction companies can be strong competitors with the technology “disrupters.”
“We are every bit as disruptive in our own industry, and that’s what keeps it going,” Pons said. “The independents and ServNet are at the cutting edge of everything that is technology-related.”
ServNet continues to keep an eye on the disrupters, writes ServNet president Eric Autenrieth in the network’s Mid-Year Report. But ServNet is not looking avoid those channels. Instead, it wants to use those tools to strengthen its online capabilities.
“We can sell (a vehicle) in lane, we can sell it online before the sale, we can sell it online after the sale, and we can … sell the vehicles while they’re sitting on the dealer’s lots. So we’re looking at it as an opportunity to expand our coverage of what services we do offer,” Autenrieth said in a phone interview. “We’re trying to stay on the front cutting line of what’s happening in the industry.”
Autenrieth writes in the Mid-Year Report that he is proud of what ServNet owners do to ensure their voices are heard and “to battle the disruptors in our business to make sure that the lane presence remains strong in the remarketing industry.”
Autenrieth and Pons expanded on some of the report’s key points, and they along with Independent Auction Group (IAG) executive director Lynn Weaver discussed additional current and future challenges and opportunities for independents.
Disrupters and ‘physicality’
Pons agrees with Autenrieth on the importance of the physical auction, touting activities such as Bel Air Auto Auction opening a 185-acre site in Bel Air, Md., last year.
“I think this is conducive to the rest of the independent auction community, to stay up to date on the ‘physicalness’ that we need, because at the end of the day, it’s a 3,000-pound piece of metal that requires about a 6- to-8-foot by 20-foot parking space,” Pons said. “Vehicles have to be moved, they have to be shined up pretty, they have to be marketed and displayed, and you have to park them somewhere.”
Dealers, rental car companies, leasing companies and banks still need vehicle transport, he added.
“There is a physicality to this,” Pons said. “There is a requirement to have boots on the ground, to have drivers in vehicles moving them around, and nobody has embraced that better. We haven’t lost track of upstream and technology, but … you need dirt, and our independents and our ServNet owners are good at that.”
The Internet players are looking to partner with the independents, because the independents have land. The vehicle still must be picked up and checked in, with pictures taken somewhere. “It doesn’t all happen in cyberspace,” Pons said.
Technology is a top-of-mind issue for Weaver. He also mentioned the disrupters and noted that if they are not currently affecting the independent auctions, everyone is hearing about and thinking about them. Those disrupters probably have more impact on the larger auctions.
The smaller auctions can probably ride out the trend because of their strong personal relationships with dealers, Weaver said, but the “whole technology feel” is a top issue for the industry. He said industry members are asking, “Where do we go, what do we do next, and how do we pay for it? Is the market shrinking; is the market going to grow if I invest in technology?”
Weaver describes compliance as “another huge area” that has grown to where it can dictate whether or not an auction gets business in some cases. Auctions must be computer compliance-literate and Consumer Financial Protection Bureau (CFPB)–compliant if they are doing any commercial business. That can include following regulations on tasks such as paper shredding and document storage.
“Every client that comes in may have a little twist on that, so if you’re an auction doing that kind of business, you almost have to have a compliance officer, or the GM and owner have to be pretty CFPB-savvy to play in that arena,” Weaver said.
Future looks bright
But conversations with Weaver, Autenrieth and Pons reveal that they see a strong future ahead for their industry. The ServNet Mid-Year Report reflects that, starting with its title, “Mid-Year Report Reveals Strong Market and Thriving Sales Environment at ServNet Auctions.” Autenrieth notes in the report that tax time “took hold early and never stopped, with the dip we generally expect to see following the refund checks not really materializing this year.”
Competition is challenging for capturing dealer business, but Pons said ServNet auctions have done well in that area. Events Pons described as “gargantuan promotion sales” have generated strong interest. He mentioned DAA Northwest’s Rock & Roll sale in July, which the Mid-Year Report also highlighted. Pons noted the sale’s “record-setting performance” of running 5,500 vehicles over two days, and he also mentioned the Guitars & Cars sale in Kansas City this past August, which he said achieved a record-setting performance as well.
“We try to offset within the ServNet group — some of this lull in the marketplace, lower lease returns and stagnant dealer trades — by big promotion sales that bring people our way, and that’s something that differentiates us, not only from the two big chains, but from the other independents,” Pons said.
He added that as ServNet prepares for one of its two yearly meetings this coming October, he sees confidence among other industry members and optimism “around the capabilities and services we’re able to provide our dealer and our commercial accounts.” Weaver shares the optimism, noting that he expected some downturns, but the market has remained strong during tax season, spring, summer, and now heading into fall. “It’s still rolling right along,” he said. “That’s still very good and positive stuff for us.”