CARY, N.C. -

Editor's Note: This is a special preview, available only to CMG Premium subscribers, of Auto Remarketing's "Beyond the Transaction" special supplementary issue.

Even in a wholesale auto industry that’s increasingly going digital, it’s never really quite as simple as “push a button, buy a car.”

Be it at a physical auction, through an online auction or any other form of wholesale transaction, there are many moving parts behind the scenes that facilitate the sale.

In the wholesale auto business, one of those crucial ancillary pieces is the inspection and condition report process.

And as more wholesale sales happen online, that process becomes even more important.

“Accurate inspections and condition reports are absolutely vital to the success of a digital marketplace. This isn’t about technology or features — ensuring our buyers receive exactly what they paid for is our goal,” said Srisu Subrahmanyam, who is chief operating officer at the ADESA auction chain, in an emailed Q&A.

“We are committed to giving our customers complete confidence when they sell and buy vehicles via any of our marketplaces,” he said. “In an increasingly digital environment, buyer confidence is strengthened through accurate and consistent condition reports.

“Our goal is to exceed the on-premise viewing experience for dealers and provide them with more information, imagery and data than they could gather from watching a car run through an auction lane. The addition of enhanced high-res undercarriage photos provides dealers a more in-depth view of the vehicles they are considering for purchase and will help them make more confident, predictable and data-informed decisions.”

In May, ADESA added several new CR capabilities, including the undercarriage imaging to which Subrahmanyam referred.

The company generates those photos through a new inspection technology platform it launched this year, allowing for high-quality and high-resolution imagery in condition reports.

“The undercarriage images allow us to showcase perspectives from the left side, right side, rear and front views that allow buyers to better assess a vehicle’s undercarriage for rust, any damaged structural components or leaks as well as exhaust, frame and rocker panel conditions,” Subrahmanyam said.

“If you’re watching a car drive through an auction lane, you wouldn’t typically have time to check for these items,” he said. “And unlike with video, buyers can enlarge and zoom-in on our high-res images to see close-up, highly specific undercarriage detail.”

Key investments in tech

One of the key cogs to the inspections space for ADESA has been its parent company KAR Global’s investment in and partnership with Ravin AI, a provider of automated, mobile and CCTV-based AI services in the vehicle inspection space.

The investment and partnership was announced in March.

“At KAR Global, one of our main goals is to provide our customers with the most accurate and actionable data to support smart, data-driven decisions … The partnership with Ravin AI in North America expands KAR’s inspection portfolio with mobile-based, data-driven artificial intelligence capabilities for damage detection and vehicle representation,” Subrahmanyam said.

“The partnership also fortifies the seamless flow of inspection information, data and images throughout the entire remarketing lifecycle for the company’s customers,” he added. “These tools will accelerate and enhance the vehicle inspection process, helping our customers make more informed selling and buying decisions and achieve better outcomes.”

Cox Automotive, parent company to the Manheim auction company, made a similar move in January, purchasing Fyusion — a company in the computer vision and vehicle imaging solutions space.

When it was announced, one goal of the deal was to expand the Manheim-Fyusion collaboration that began in 2018 — work that has centered on building imaging capabilities to help Manheim Express improve the wholesale vehicle listing process and make it simpler.

The companies have worked together for years to provide mobile imaging and condition capture tools within the Manheim Express app. The purchase expands upon that partnership.

“Anywhere a car can be imaged, we believe the new technologies that Cox Automotive and Fyusion create together will translate to big benefits for our clients across the auto industry,” Cox Automotive president Steve Rowley said in a news release when the acquisition was announced. “By bringing Fyusion into the Cox Automotive family, we will be able to deliver innovations to our clients faster and help fuel their continued success.”

Among those innovations are plans to build capabilities to improve vehicle inspections and provide more consistency and accuracy, Cox Automotive said.

“Cox Automotive’s commitment to giving clients every advantage through technology made our decision to join forces with them an easy one,” Fyusion chief executive and co-founder Radu Rusu said in a news release at the time of the purchase. “Combining our industry-leading imaging and AI expertise with Cox Automotive’s reach across the industry will bring game-changing innovations to dealers, commercial clients and consumers.”

In an interview with Auto Remarketing in early January, Rowley said: “Our dealers are looking for greater imaging for the wholesale environment and for resale. And when you have those condition reports, how do you make sure that the accuracy is at the highest level? How do you make sure that the confidence is at the highest level?

"How do you make sure that the objectivity of that is empirical? And so, we feel that this AI and computer visioning and the 360 overall visioning (services of Fyusion) gives us that.”

‘Digital marketplace sustained by broad physical infrastructure’

Though KAR and ADESA are no longer physically running vehicles through the auction lanes and remain largely digital enterprises, their operations certainly still rely on the “boots on the ground” performing tasks that keep the remarketing engine humming along — things like inspections and condition reports.

So, how is ADESA making sure that it has the right personnel to do inspections and condition reports? How does the company keep them properly trained?

“We believe the future of remarketing is a digital marketplace sustained by a broad physical infrastructure — and that certainly includes inspections. Our highly trained boots on the ground — our vehicle inspections specialists — receive rigorous, hands-on training on our new inspections/condition reports and process,”  Subrahmanyam said.

“We also ensure our specialists understand just how important these inspections are to our customers and their businesses. This isn’t a change in our model — we’ve had teams in the field both connected to and distanced from our physical locations,” he said. “And that team has been supporting inspections for the vast majority of lease returns across North America — no matter the geography or location, for many years.”

The move to digital, while in the works for years in the auction industry, shifted into high gear amid COVID-19

Over at Cox Automotive, while it is currently running in-lane sales at 57 of its Manheim auctions, 81% of Manheim’s sales last year were to digital buyers.  (With these in-lane/physical sales, Manheim is using some, but not all, lanes and it is running just select inventory down the lane, a spokesperson said.)

“For all of the challenges of COVID-19, one positive was how quickly it sped up technology innovation — and adoption — in wholesale,” Brad Burns, who is AVP of vehicle information at Manheim, wrote in a recent Op-Ed for Auto Remarketing. “ What would have taken the industry years to achieve, we achieved in weeks and months instead.

“One of the areas that got the most focus, at least for us at Manheim, was on the vehicle information front — everything from condition reports to images and beyond that gives buyers the information they need to make good purchase decisions.”

Burns moved into the newly created role of heading up vehicle information at Manheim in January. Prior to that, he was general manager at Manheim St. Pete, an auction whose clients are mostly smaller independent dealers relying more on physical auction sales, he said.

“Working shoulder-to-shoulder with them through the sudden transition to all-digital gave me so much valuable insight about what our clients truly need to not just buy digitally — but to prefer to buy that way. And it all comes back to giving them the same level of detail about vehicles online that they can get in person,” Burns said in the Op-Ed.

“The great thing about digital is that it can actually give dealers even more information — more efficiently — than they can get in a physical setting. But the industry still has a little way to go to get there,” he said. “They say that a picture is worth a thousand words, and improving imaging is the number one opportunity we have to give clients the added information they need.”

Burns said Manheim more than doubled the number of images in online CRs last year and also created an advisory panel as well as a condition report quality program. The latter features “extensive” inspector training and ramps up the CR auditing, he said.

A different type of vehicle

As much as the platforms through which vehicles are bought and sold have changed, so too have the vehicles themselves. Powertrains have evolved. Vehicles have greater connectivity and there is more data stored in cars. Cars are more technologically advanced.

All that can impact the inspections and CR piece of the puzzle.

“As vehicles become ever-more-connected and smart, evaluating overall condition has the potential to become that much more complex. That’s why we approach inspections and vehicle condition capture as a center of excellence and continuous improvement,” Subrahmanyam said.

“Training isn’t a once-and-done thing for our vehicle inspection specialists — and we’re not content to rest on what we, or the industry, have always done. The modern car has a lot of data and some of it needs to be handled before the asset changes hands,” he said.

“We play a key role in making sure data integrity and privacy is maintained in this value chain. There’s a lot more to a car than just the cosmetic condition — and we’re committed to working with our customers to quickly and accurately capture the details that are most relevant and meaningful to decisioning.”