DALLAS -

As the lines between the retail and wholesale car markets merge, blur and otherwise crisscross, auto auction companies are paying attention and readying themselves.

It’s certainly top of mind for the respective leaders of the three largest groups of auto auctions, who participated on a wide-ranging panel here at the National Auto Auction Association’s annual convention last week.

The discussion comes amid a time in the used-car space where many companies are no longer purely wholesale or purely retail.

Take CarLotz, for example, which was built on a “retail remarketing” model, where consignment from both retail and commercial clients is sold to retail customers. This notion of one foot in wholesale, one in retail was taken a step further this year when CarLotz and online auto retailer Shift announced a merger.

Traditionally retail-focused companies like Cars.com and CarGurus have entered the wholesale space throughout their acquisitions of Accu-Trade and CarOffer, respectively, while retail-facing CDK Global built its own wholesale-facing platform.

And within the auto auction landscape, specifically, it’s a topic of discussion and deep thought — even beyond Carvana’s blockbuster deal earlier this year to acquire the U.S. auction business of ADESA.

“We’ve had pretty significant conversations internally and with our investors (about) how do we cross the line?” said Cam Hitchcock, chief executive officer of the newly formed America’s Group, and a participant on the panel.

America’s has had an “ongoing discussion” on whether they should commit capital to such a venture, integrate titles and remarketing those vehicles, facilitating sales and so forth, Hitchcock said.

Blurring wholesale and retail does present challenges, though.

“When you start to inventory your own cars, it’s a little bit different deal. You look like a rock star if it’s 2021 and you don't look like a great rock star now, right?” Hitchcock said.

Over at ADESA, president John Hammer, who joined Hitchcock and Cox Automotive Inventory Solutions Group president Grace Huang on stage for the panel, said that the global automotive market has more of that wholesale-retail blurring than the U.S., but he expects to become more frequent in this market as well. 

And even beyond the ADESA U.S. auctions now under the umbrella of an online retailer, Carvana has blurred the wholesale-retail line through its Marketplace listings that includes “consignors that are selling for retail value on their site,” Hammer said.

“As we continue to growth that and we learn from that, i do think a lot of us will be chasing the retail dollar for wholesale at disposition,” Hammer said.

While Cox Automotive as a whole certainly has retail- and wholesale-facing properties — some of which are intertwined — Manheim is “not there” when it comes to crossing the line, but is prepared should that come to fruition, said Huang, whose inventory solutions group leadership includes Manheim.

Huang notes the growth of this hybrid model internationally, including the U.K., and said, “It's probably coming to the US, and we have to be ready for it. And when that time comes, we’ll be ready for it.”

In an interview with Auto Remarketing following the panel discussion, Huang said the merging of retail and wholesale lines has been a key driver in the increasing numbers of mergers and acquisitions in wholesale.

“When Carvana did the deal (to acquire ADESA's U.S. auctions), it actually made perfect sense. It makes a lot of sense. Players have to start really diversifying out of just being in one area of the value chain, and really broaden the scope so that you have more avenues to bring in inventory and/or serve the client base,” Huang said.

“For us, if we don't bring inventory in, but we're monetizing the dealer inventory a different way, whether it's through advertising or software or something else, that's fine by Cox Automotive,” she said. “Obviously, running Inventory Solutions and Manheim, I want the car. But for us, it's not the end-all be-all. It's to make sure that the inventory lands at the right place at the right price — wherever that happens to be.” 

And within Cox Automotive, there is some wholesale/retail overlap. For instance, the new Upside product connects Kelley Blue Book Instant Cash Offer with vAuto's Provision platform with Manheim.

“It creates an easy path … we make it profitable for a dealer to take a bet on a vehicle that they may not have purchased from the consumer,” Huang said.