CARMEL, Ind. -

Although John Isgett acknowledged that his immediate reaction to ADESA agreeing to buy OPENLANE was one of “hesitation” because of potential wholesale price hikes, the South Carolina dealer said he believes the transaction can be beneficial to dealers.

“My initial reaction to the purchase is with hesitation as when a larger entity purchases an entity that is ‘making headway’ with sales, you begin to see the free market get smaller. Minimizing competitors typically raises prices,” said Isgett, president of Raceway Automotive Group, which consists of five stores throughout the Palmetto State.

“However, ADESA is a strong organization that appears to have good values. With the addition of OPENLANE, this will allow them to increase additional offerings to the dealer and become more competitive with Manheim, a bigger player in the market who needs a stronger, competitive opponent,” he continued.

In light of Monday’s announcement by KAR Auction Services, Auto Remarketing reached out to dealers like Isgett and consignors to gauge some industry reaction.

Among those who responded, the tone was fairly upbeat, though some concern about the Recovery Database Network/PAR North America’s relationship was expressed.

On the dealership side, Brian Benstock, a Honda and Acura dealer in Queens, N.Y., suggested that this kind of consolidation is the wave of the future for the industry, and he finds it to be a positive trend.

“ADESA runs a heck of an auction,” said Benstock, minority owner of Paragon Honda and the vice president and general manager of Paragon Acura.

“I think consolidation in our industry is going to continue, and I think it’s a good thing,” he added, noting that consistency is important in the wholesale market. “And I think this will help us with that.”

Chad Lemieux — corporate used-car director for the Conant Auto Retail Group, which includes 11 dealerships in California — said that an acquisition such as this one makes sense.

As the industry shifts away from the one-sale-a-week paradigm, ADESA adds another online tool that can provide it with a constant, daily revenue source.

“It’s sort of a naturalized progression for a company like ADESA to acquire an everyday resource for the remarketing income stream,” Lemieux said.

On the consignor’s side of the equation, responses appeared to be equally as positive.

“I think this will be great for both OPENLANE and ADESA. It speaks volumes for ADESA’s commitment to investing in technology,” said Michael Sanchez, manager of vehicle remarketing at Porsche Cars North America. “And it assures Porsche that OPENLANE is committed to strengthening its resources for long-term success.”

At Huntington National Bank, senior vice president and Huntington Auto Finance product line manager Scott McKim indicated that looking at the acquisition on a surface level, “it’s a good fit,” and he “applauds the deal.”

Huntington sells between 3,000 and 4,000 vehicles each year through ADESA and utilizes PAR North America to process 30 to 40 percent of its repossession assignments, he noted.

McKim, however, revealed he does have some concern about the integration of OPENLANE’s Recovery Database Network, as PAR works in the same repossession and recovery space.

McKim said that with Huntington being a company that utilizes these services, the lender finds that having them all integrated into KAR can be extremely beneficial for the industry. However, it is imperative that management uphold the level of independence for RDN, he stressed.

OPENLANE chief executive officer Peter Kelley addressed these issues in an open letter earlier this week, as reported by Auto Remarketing.

Meanwhile, at VW Credit, director of remarketing and auction Richard Howse said,  “I think this is a win-win situation. We have had a good business relationship over the years with both ADESA and OPENLANE, and this acquisition should complement each of their businesses.”

Mike Bystrom, vice president of remarketing operations for North America at Enterprise Holdings, offered his take as well, noting: “We have enjoyed productive working relationships with both ADESA and OPENLANE. We‘ll be interested to see how the acquisition enhances both operations.”

 Editor’s Note: For full details on the acquisition, click here. For Auto Remarketing’s most recent story on quarterly KAR results, click here.