WardsAuto: KAR Global All-in for Online Used-Vehicle Auctions

KAR Global plans to stick with 100% online auctions, with the company not planning to return to running cars down a physical auction lane once the pandemic is over, CEO Peter Kelly says.

Peter Kelly is the newly appointed CEO of KAR Global of Carmel, IN, a leading operator of digital marketplaces for wholesale used vehicles, including 74 ADESA (Auto Dealers Exchange Services of America) locations across North America.

Kelly has been with the auction firm, chiefly in technology roles, for roughly a decade, and he was company president from January 2019 until assuming his present position April 1.

Before that, he was president of digital services and former chief technology officer. Over the years, Kelly led the company’s gradual transition to 100% online auctions, a process that became absolute after mid-March last year, when the coronavirus shut down in-person auctions.

Kelly, 52, says KAR Global plans to stick with 100% online auctions, with the company not planning to return to running cars down a physical auction lane once the pandemic is over. He says dealers still can visit the company’s physical locations to see vehicles in person if they prefer, but even on-site, submitting bids is done electronically.

As CEO, Kelly succeeds Jim Hallett, 68, who remains with KAR Global as executive chairman and chairman of the board. Kelly originally joined KAR in 2011 through the company’s acquisition of online auction company Openlane, where he was co-founder, president and CEO.

KAR Global sold 3,062,000 vehicles in 2020, down 19% from 2019, the company said in its annual report.

The following are edited excerpts of a telephone interview with Kelly.

Wards: Can you briefly sketch out how the company is positioned, who your customers are?

Kelly: We’re in the business of wholesale auctions, selling over 3 million vehicles annually. On the seller side, we buy from commercial fleets, from the automotive companies, captive finance companies and other financial institutions, from rental companies and from dealers. On the buyer side, it’s all dealers. We also operate TradeRev in Canada and BacklotCars in the U.S. market, digital auction platforms to serve wholesale transactions between dealers.

Wards: Online auctions are nothing new, right?

Kelly: That business has been transitioning in an ever-more digital direction over many years. It’s been 20 years since I co-founded Openlane, which KAR acquired in 2011.

Wards: How much volume were you already doing online pre-COVID? Was it a majority?

Kelly: The year prior to COVID, 2019, it was 58%.

Wards: How much of a role did COVID play in going to 100% online?

Kelly: We were actually pushing it, investing in digital, for many years. COVID was a massive accelerator of that…it really amped up to a whole other level. We really embraced that. I don’t mean to say we saw it coming, of course. Initially, it was the need for safety. But we also saw opportunity.

Wards: Was the transition literally overnight?

Kelly: Pretty much overnight we moved the business to a 100% digital standpoint. Essentially that’s all the cars we’re selling now.

Wards: Can you put any numbers on how many dealers switched to online?

Kelly: In the last 12 months, there are about 25,000 new dealer registrations who are registered to purchase online.

Wards: Does that mean zero dealers on the premises?

Kelly: We still allow dealers on the premises. They can come and visit and check out the cars if they want. A lot of dealers want to see the cars and kick the tires. We recognize that and we welcome that. But we no longer run cars down lanes in the traditional format and have no plans to do so.

Wards: How is it going over with the dealers? Has it been a popular move?

Kelly: We are seeing strong conversion rates (that is, dealers are buying a high percentage of the vehicles offered). Now, some of that is a function of the market, and demand is high right now. But instead of coming to one of our auctions once a week, now they can maybe log in multiple days a week. And they’re looking for cars not just at that auction, but in regional auctions or maybe beyond. There’s more bidding and more activity.

Wards: What are some of the user benefits of digital auctions, besides eliminating the need to travel to the auction?

Kelly: For buyers there’s the convenience, the ability to attend more than one auction virtually, in the same amount of time. There’s selection, they can see a much broader range of selection.

Wards: How about the benefits on KAR’s side?

Kelly: On the seller side, there’s access to a broader, more liquid buyer base.

To view the original article, click here.