{"id":4501,"date":"2020-02-29T18:47:47","date_gmt":"2020-02-29T17:47:47","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=4501"},"modified":"2020-02-29T18:47:47","modified_gmt":"2020-02-29T17:47:47","slug":"4501","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/02\/29\/4501\/","title":{"rendered":"Online Remarketing is Growing and Low-Priced Cars are Benefiting"},"content":{"rendered":"

Online Remarketing is Growing and Low-Priced Cars are Benefiting<\/strong><\/h3>\n

In 2019 48% of sales at Manheim were digital, up from 44% in 2018 and 40% in 2017. In December 2019, 52% of all sales originated from a digital channel and through early January over 50% of sales were digital.\u00a0<\/b><\/p>\n

Online remarketing has been a growing trend for the past few years and it promises to continue. As more remarketers are selling and buying wholesale vehicles online, some new trends have emerged.<\/p>\n

For the past several years online sales have accounted for an increasingly larger share of overall sales at auctions.<\/p>\n

More recently, improvements to online vehicle representation through things such as better vehicle imaging and more in-depth condition reports have helped drive growth in online sales.<\/p>\n

The continued development of new online tools, platforms, and apps have also made the buying and selling experience more convenient. Apart from convenience, buyers and sellers are finding efficiencies and costs savings by moving more of their remarketing efforts online.<\/p>\n

\u00a0Automotive Fleet recently spoke to representatives of two of the largest players in the wholesale space KAR Global and Manheim to talk about some of these trends, along with others that they have seen in the online remarketing space.<\/p>\n

\u201cYou\u2019re starting to see sellers be more motivated to sell cars as quickly as possible. They\u2019re looking for velocity and if you think about velocity, the best way to increase that velocity is most likely to sell cars online,\u201d said Jason Ferreri, executive vice president of online services for ADESA.<\/p>\n

Both KAR and Manheim have seen year-over-year growth in online sales over the past several years.<\/p>\n

As of the third quarter of 2019, the latest available quarter for financial data, online sales accounted for 59% of all transactions for the KAR Global family of companies, up from 38% in 2014. OPENLANE has driven much of that growth for KAR.<\/p>\n

In 2019, 48% of sales at Manheim were digital, up from 44% in 2018 and 40% in 2017. In December 2019 52% of all sales originated from a digital channel and through early January over 50% of sales were digital.<\/p>\n

Low-Priced Cars Selling Better Online<\/h5>\n
\"Zach
Zach Hallowell,
\nManheim<\/figcaption><\/figure>\n

Both Zach Hallowell, VP Manheim Digital and Ferreri indicated that lower-priced vehicles have benefited from improvements in the online wholesale space.<\/p>\n

 <\/p>\n

 <\/p>\n

\"Jason
Jason Ferreri,
\nADESA<\/figcaption><\/figure>\n

\u201cAll the efforts in improving vehicle representation and instilling more confidence in the buyers has led to KAR seeing the average price point of vehicles selling online move down,\u201d said Ferreri. \u201cThis means that people are becoming more and more comfortable buying a lower-dollar vehicle. That\u2019s been great, it shows that it\u2019s not just the $15,000 to $20,000 car that sells online. We can sell a $6,000 car online all day long.\u201d<\/p>\n

Manheim saw this same trend in 2019 when Manheim Tucson became its first auction to go all digital.<\/p>\n

\u201cManheim Tucson opened our eyes to the possibilities of cars that you wouldn\u2019t naturally think would sell digitally, can sell digitally,\u201d said Hallowell. \u201cMost of the cars sold at Manheim Tucson are valued at less than $5,000 and are sold as-is, and we\u2019ve been able to sell that digitally.\u201d<\/p>\n

Several factors such as safety and buyer feedback led to Tucson\u2019s shift to all-digital and so far, the auction\u2019s performance has been encouraging, noted Hallowell.<\/p>\n

The company saw no drop in performance, and in fact, saw a slight up-tick in the values the auction generated.<\/p>\n

With the success of its Tucson location, Manheim is now evaluating other locations that it can move toward all-digital.<\/p>\n

\u201cArbitration rates haven\u2019t gotten any higher either,\u201d said Hallowell. \u201cI think that\u2019s attributable to the great work that we do around imaging cars, writing condition reports, standing behind our cars. We\u2019ve been able to give buyers confidence that they can continue to buy cars in a slightly different format but with the same confidence that\u2019s been at Manheim.<\/p>\n

Ferreri noted that KAR has always been able to sell higher-priced off-lease vehicles online, but now that vehicles are being represented better online, and buyers are feeling more confident that the vehicle they see onscreen will match their expectations, it\u2019s opening the door to all sorts of vehicles selling better online.<\/p>\n

\u201cEveryone can play in the sandbox, so to speak. It isn\u2019t just the off-lease car.\u00a0 Repossessions, fleet cars, dealer cars, it doesn\u2019t really matter what the source of the vehicle was. If represented properly and we instill confidence, we feel any car is eligible to be sold online,\u201d added Ferreri.<\/p>\n

At this point, KAR has about a dozen customers \u2014 from the commercial, fleet, and dealer segments \u2014 that don\u2019t run any cars across the block anymore. They are exclusively using VirtuaLane to sell their cars, noted Ferreri.<\/p>\n

On the buyer side, Ferreri noted that many buyers have stopped physically inspecting vehicles. They rely on the data and imaging that\u2019s available digitally.<\/p>\n

\u201cIt\u2019s funny, we don\u2019t see many folks walk the lot, even the buyers who show up to the physical auction on sale day and participate in the VirtuaLane sale,\u201d said Ferreri. \u201cThe report we get from a lot of our auctions is that a lot of those buyers who used to still go out the morning of or the day before to walk those cars, there\u2019s less and less of that occurring. They\u2019re relying more and more on what they see on the TV monitors and what they see on the assets in their hand.\u201d<\/p>\n

Making the Online Experience More Personal<\/h5>\n

The sentiment that Hallowell and Ferreri shared when it comes to the online remarketing is that personalization needs to become a bigger part of the experience.<\/p>\n

Amazon and the personalized recommendations that it offers was the example that they gave to explain what their respective companies are hoping to do.<\/p>\n

Similar to how Amazon recommends products based on your search history and on the products you purchase, both Manheim and KAR are aiming to offer a similar AI-powered recommendation feature to their online platforms.<\/p>\n

Manheim recently redesigned its main website, Manheim.com, to offer this sort of personalization.<\/p>\n

When users login to the site, it will now remember previous purchases, searches, and other data points. Then, based on those data points, it\u2019ll feed the user a set of recommended vehicles.<\/p>\n

\u201cPurchase history has the most direct expression of interest in the vehicle. If you bought the car and we see a pattern in your buying then our recommendations will lean more heavily toward that,\u201d said Hallowell.<\/p>\n

One example given was that if a user happens to buy a lot of domestic trucks, the system will recommend domestic trucks because it has identified a pattern in which those types of vehicles perform well for the user.<\/p>\n

If the user doesn\u2019t have a long purchase history with Manheim then the system will lean toward the user\u2019s searches. The system will learn from the user on a day-to-day basis based on the vehicles the user searches for. Essentially, every time the user interacts with the site, it\u2019ll be learning and dynamically respond, noted Hallowell.<\/p>\n

But it isn\u2019t just about the buyer, added Hallowell, Manheim has also put plenty of thought into improving the seller experience because in order to grow online sales, all channels need to be addressed. One of those improvements is bulk management for sellers, which allows simpler management of large number of vehicles.<\/p>\n

ADESA also added a personalization feature to its website and mobile app at the end of 2019 that is based on similar data points such as purchase history and things that are happening in the retail market.<\/p>\n

\u201cIt\u2019ll get smarter as it\u2019s used,\u201d said Ferreri. \u201cThe more you click on a vehicle that we\u2019re serving up to you, we go OK, great, we were doing the right thing. If you\u2019re not clicking on them, our algorithm needs to get better. It needs to get smarter. It means we\u2019re not serving up the right vehicle to you yet.\u201d<\/p>\n

Overall, the goal of these personalized recommendations is to increase the likelihood that a user will purchase a vehicle online. The thought process is that if the platform learns enough about a user that it\u2019s able to feed the user exactly the vehicles the user is interested in buying, it\u2019ll increase the rate at which the user buys vehicles online.<\/p>\n

What About Physical Auctions?<\/h5>\n
\"As
\n

As of the third quarter of 2019, the latest available quarter for financial data, online sales accounted for 59% of all transactions for the KAR Global family of companies, up from 38% in 2014. OPENLANE has driven much of that growth for KAR. Photo courtesy of ADESA.<\/em><\/p>\n<\/figcaption><\/figure>\n

\u00a0When it comes to the place that physical auctions will occupy as digital sales continue to account for a larger share of overall auction sales, the answer appears to be that it will occupy whatever space buyers determine that it should.<\/p>\n

Both Hallowell and Ferreri said that their companies aren\u2019t looking to upend physical sales or have goals to reach a certain percentage of digital versus physical sales. The shared sentiment was that if consignors, buyers, and sellers determine that a certain avenue is where they want to go, then they\u2019ll make sure to cater to that choice; whether it means that physical auctions play a smaller role, bigger role, or completely different role.<\/p>\n

\u201cWe want to have all channels available to both buyers and sellers and let them decide what makes the most sense for them,\u201d said Ferreri. \u201cWe don\u2019t have specific stated goals for volumes or percentages. There\u2019s certainly a commitment here at KAR to physical auctions and physical locations. Will auctions potentially look and feel different over the next five to 10 years? I think they will.\u201d<\/p>\n

Even if sales continue to move away from physical auctions, Ferreri noted, physical auctions will always offer a location for vehicle storage and reconditioning centers.<\/p>\n

\u201cFor us it\u2019s not about digital or physical, we\u2019re not saying that there\u2019s only one way to do this,\u201d said Hallowell. \u201cWe have the scale to support our sellers that need storage space and security or need a place to hold their repossessed vehicles until the notice of intent to sell has expired. The sellers that need reconditioning, inspection, detailing, and so on.\u201d<\/p>\n

Looking ahead, the rate of online sales growth looks like it\u2019s accelerating. Digital channels have become a bigger part of overall business, even outside of remarketing, so it\u2019s only logical that it\u2019ll continue to bleed into the remarketing space.<\/p>\n

\u201cWhen you think of data available from a vehicle, there are vehicles that are starting to update service history and diagnostics over the air, said Hallowell. \u201cWe can know how the car was built and get that data via data integration. It\u2019ll be up to us as remarketers to make all that information easily and efficiently accessible.\u201d<\/p>\n

by Eric Gandarilla<\/a><\/p>\n

Source: https:\/\/www.automotive-fleet.com\/<\/a><\/p>\n

FLEET MANAGEMENT AUDIT<\/h3>\n

Fleet management is the use of a set of vehicles in order to provide services to a third-party, or to perform a task for our organization, in the most efficient and productive manner with a determined level of service and cost.<\/p>\n

Fleet management activities are shown in the following graph 1:<\/p>\n

\"fleet<\/p>\n

Graph 1: fleet management activities<\/p>\n

The proposal audit analyses and assesses all fleet management activities shown in the graph 1, and its main goals are:<\/p>\n