Inventory “will be king” in new auto auction world
On the inventory side, a shortage of chips and the economic downturn ramping up demand for used cars were cited as the biggest challenges facing the industry, according to the Interview, which focused on KAR.
Meanwhile, the COVID-19 pandemic has expedited digitisation, with KAR having shifted from primarily a physical to digital auction company. In terms of regionality, the expert noted that pushing such a strategy in places like south Florida, where there are many smaller, physical auctions attended by independent buyers, will be more challenging. “Anywhere where you have rural America, you’re going to have some issues converting when they’re not close to the big physical auctions or they weren’t used to the digitisation that KAR was pushing on them in the first place.”
The specialist was also asked whether they expect KAR’s volumes to recover to 2019’s levels. In response, they were optimistic but candid: “I think their levels will go up. They have to. Firstly, they’re a publicly traded company. They’re being attacked on both sides of the coin right now, Manheim from one on the physical, ACV on the dealer-to-dealer front.”
Creating a single point of entry for users is the way forward for KAR, according to the specialist. They believe the company’s biggest play is leveraging its physical auction lots in a digital world.
On the topic of KAR’s competitors, ACV was said to be the best positioned over the next 2-3 years. “They’ve created a footprint right now with their IPO, with money coming in. Backlot is part of KAR’s environment right now. The problem I feel with KAR is internal culture.” When offering best- and worst-case scenarios for the company, the specialist expressed their concern that KAR will continue to operate in a siloed manner, fail to leverage its real estate, and fail to fully embrace digital solutions for its customers.
To access all the human insights in Third Bridge Forum’s KAR – physical-to-digital shift Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
For any enquiries, please contact email@example.com