Specialist
Former VP at KAR Auction Services Inc
Agenda
- Competitive dynamics between Copart (NASDAQ: CPRT), Adesa, Manheim, Insurance Auto Auctions (IAA; NYSE: IAA), and America's Auto Auction
- Impact of the novel coronavirus pandemic on volumes and pricing
- Payroll costs and front end operational changes
- Inventory management during US local downturns
- Digitally native auctions vs physical lots 6. Short- to medium-term outlook
Questions
1.
What is your high-level view of the automotive auction industry? What key trends and themes should we monitor, and how would you describe the operating environment?
2.
You mentioned supply and demand dynamics. Do you view a scenario where, as we start to ramp up out of this shutdown due to the coronavirus pandemic, there is pent-up demand in the industry? Why or why not?
3.
What cost controls can be implemented by the auction companies and how long do you expect those cost controls to be in place for?
4.
Could you estimate what share of the cost structure is labour and land for the big auction houses? What concessions on rent or lease payments do you think are realistically achievable first for the big auction houses?
5.
Do you have any insight into the rental car auction price fluctuation? What decline do you think there is there? Do you expect buyers of those cars to be less price sensitive?
6.
What are your thoughts on the glut of used cars that are piling up on the supply side, and how quickly do you think the market can clear them?
7.
I read a recent JD Power report that showed a 13% decrease in used car prices from the beginning of March through 5 April. From your perspective, could rental car residuals be worse than that, because that includes the premium that appears to be holding up a little better?
8.
What do you think it will take to get dealer buyers of used cars to come back to this market?
9.
You mentioned the shift from physical to digital auctions. Can you expand on that? How much of a shift do you expect towards the digital options and how much of this will be permanent?
10.
How worried do you think we should we be about the auction houses finding space for the car supply glut? How hard might it be to find extra space for these cars to be stored?
11.
How should we assess the margin differences between the digital auctions and the traditional legacy auctions? Do you think this has changed significantly as a result of the coronavirus crisis? Do you expect this to change as we ramp up back up in the recovery?
12.
Do the rental car companies have alternative disposal sources of cars as they try and de-fleet, as some of the physical auctions are closed?
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