August 2008, Automotive Fleet - Feature
How Technology Will Change Traditional Fleet Remarketing
By Jim Hallett
Transporting More Efficiently
Auctions transport a tremendous volume of vehicles. Yet, no one has less knowledge of what they are doing in the transport business than auctions. The auction industry has cars zigging and zagging everywhere across the nation, like ships passing in the night with no idea of the other guy’s cargo.
How do we as an industry take advantage of our massive size and figure out the efficiencies that would save us and our customers millions of dollars?
This dilemma is compounded with Internet sales where vehicles are transported an average of 500 miles compared to 200 miles in the traditional physical auction situation. What competitive advantage could there possibly be to not work with each other?
What I envision is the creation of one national Web site on which all transported vehicles are posted and all the national and independent carriers can build their own loads on their own time, coming and going quickly and efficiently.
We’ve created this fallacy or myth that there is a shortage of haulers and gasoline prices are putting them out of business. However, there is a lot of work, and gasoline could be affordable if we make it easy for the transporter.
Running a successful business is about making it easy for the customer. Again, to expand the electronic marketplace, we need to become more efficient in the transportation business. And, of course, this must be an industry initiative.
Standardizing Reports
Standardized condition reports (CR) involve training. Just as training dealers to understand five different condition reports would be unreasonable, we cannot expect CR writers to be proficient in completing multiple report versions. Customers must help us be more efficient and cost-effective with one condition report. Auctions — get over it and get on the same program.
Bottom line: auctions want to sell more cars electronically. Create confidence in the buyer with one simple, easy-to-read form and simple, consistent arbitration rules when questions arise. When it comes to arbitration, there can be no gray areas in the dealer’s mind. SmartAuction figured it out. If the car doesn’t match the condition report, bring it back — no arguments.
For Internet purchasing to really work, customers must be able to quickly and easily access online sales events and purchase vehicles. We must expand our buyer base by organizing dealer registration globally.
A few great examples are the salvage and heavy equipment auction industries. Copart and IAA have taken the lead in global moves throughout the rest of the world with the help of VB2 and Online Ringman technologies.
Currently, an excess of 25 percent of salvage units are sold and transported outside of North America. Why shouldn’t we expect that someone in Budapest would buy a whole car in Kansas City, the same as or similar to a rebuilder from Cairo buying a salvage unit in Sacramento?
These sales are even more attractive to foreign markets as the U.S. dollar continues to weaken against many world currencies.
Ritchie Brothers sells equipment worldwide. A single auction for example, might sell to buyers in Asia, Russia, China, South America, or the Middle East, all at the same time. Ritchie Brothers also uses Online Ringman as its technology of choice.
This industry has spent hundreds of millions of dollars and even with all those expenditures, new outside companies are seizing opportunities where we have failed to provide needed services.
These outside companies have not spent the extremely high capital dollars to invest in facilities. They’re still missing the piece that auction operators have with value-added service capabilities — real estate (bricks and mortar); reconditioning, mechanical, and body shops, and a trained/skilled workforce of title clerks, recon staff, CR writers, and inspection personnel. All aspects of the remarketing process must be committed to.
The salvage industry has evolved into two major players. The car industry has continued to consolidate. Salvage and car business have both gone global. Through this, a new word has been born, referred to as “coopetition” — cooperating with your competition while maintaining your competitiveness, distinct culture, and service capabilities.