CHICAGO — The use of the Internet for upstream remarketing activities and broadcast auctions continue to dominate auto remarketers' strategies in 2004, according to a new industry study conducted by Emercent Solutions with assistance from the International Automotive Remarketers Alliance (IARA). The findings, released on March 18, are derived from a survey of 35 auto industry executives representing 52 percent of the vehicles remarketed annually. Eighty-two percent of consignors indicated that the major change to their strategy from 2003 to 2004 was the increased focus on the use of the Internet as a channel. In 2004, consigners increased usage of online proprietary dealer auctions by 3 percent and broadcast auctions by 5 percent. Sales via traditional auctions decreased 6 percent in total. Remarketers' focus on technology will remain strong in 2005, as 87 percent of consignors perceive the biggest opportunity during the upcoming year is improving exposure through technology. "We are continuing to see a shift in the way vehicles are remarketed," said Julie Andersen, vice president of strategy and delivery for Emercent. "Consignors, looking to maximize profits, are increasing their upstream channel usage and also their use of broadcast auctions. It is all about exposure – and consignors are using technology to achieve this." Other noteworthy study findings include:
Channel trends predicted to continue in 2005: More than 70 percent of respondents predicted increases in sales to lessee, sale to grounding dealer, and broadcast auctions. This shift is predicted to come with a decrease in the use of traditional auctions.
Channel satisfaction varies and is anticipated to change. Fleet/lease organizations were most satisfied with traditional auctions, captives with direct sale to lessee, and banks with online proprietary auctions. Both banks and fleet lease organizations agreed that traditional auctions provided the most consistent value. Forty percent of consignors changed their response for next year – indicating they felt more consistency would come from online proprietary auctions.
Channel profitability not always highest upstream. All consigners agreed that sales to lessees resulted in the highest profit. Fleet/lease organizations ranked broadcast auctions as the second most profitable channel, and both banks and captive lenders ranked sale to the grounding dealer as the second most profitable. Neither captives nor banks perceive a significant difference in profitability between proprietary online auctions and broadcast auctions.
Consignors actively looking to improve performance with data analytics and benchmarking. Seventy-five percent of consignors indicated they could improve their effectiveness through better data analytics and 82 percent felt they could improve effectiveness through benchmark data.
Measuring effectiveness depends on who is measuring. When measuring remarketing effectiveness, captives and banks are focused on measuring net gain and loss and vehicle sale value. Fleets/lease measure sale value and turn time. Additionally, 92 percent of captives rely on corporate goals and internal data metrics to determine their effectiveness.
Improving profits, cutting costs. In 2005, 87 percent of consigners will keep their technology focus, including sales to customers, improved data insights and channel optimization, operational cost cutting through technology and partner alignment, and more partnership-oriented dealer sales.
The Emercent study built upon last year's upstream findings and was broadened to highlight trends in channel usage, vehicle volume, pricing, vehicle value, and challenges and opportunities remarketers face. Responses were collected from 19 captive lenders, 8 banks, and 8 fleet/lease organizations.
