CARY, N.C. -

Exactly seven months ago Friday, KAR Global announced all ADESA auction locations in the U.S. and Canada would temporarily, but immediately, move to simulcast-only amid the COVID-19 pandemic. 

Four days later, KAR would temporarily halt all ADESA physical auction operations, including simulcast, before gradually resuming some simulcast activities beginning in early April. 

Operations have been opening up more broadly ever since, with all ADESA locations providing ADESA Simulcast and DealerBlock sales, a company spokesperson confirmed, with all locations are also eligible for Simulcast+ sales.  Meantime, in-lane bidding allowed at most facilities, albeit with no vehicles running through the lane. 

“We're pretty much fully open for business,” KAR president Peter Kelly said earlier this month. 

Those early COVID announcements may seem like they were both eons ago and also just yesterday, but in any case, the auto auction business has been on quite a ride ever since.

Things have “come a long way,” ADESA president and KAR chief commercial officer John Hammer said when discussing how the past seven months have played out at ADESA.

Auto Remarketing caught up with Hammer and Kelly by phone to get a sense of where operations stand currently at ADESA and what may be in store for the auto auction business going forward.

Though it is not running vehicles through the lanes, ADESA resumed in-lane bidding at some auctions in mid-May and has continued to expand that availability, with 80% of its auctions now offering in-lane bidding, Hammer said.

Sellers are allowed to attend sales and represent cars on the block, and reconditioning services have returned “in some level” at all locations, he said.

Meantime, buyer previews are available at all ADESA locations, which has resonated with dealers.

“That seems to be the biggest thing that our customers really want, is just to get out and be able to look at the cars,” Hammer said.

Digital sales pick up

After coming in to kick the tires in person, many dealers will then bid remotely.

“We have some that are coming in and buying in the lanes. And then we have a whole lot more that are buying online,” Hammer said. “It's been interesting for us to watch.

“You have a lot of buyers that will come in — even on sale day — in the morning, and look at cars and then they'll go home and bid,” he said. “A relatively small percentage of cars are being bought by in-lane bidders and a much higher percentage are being bought by online bidders.”

If there’s one person who has been at the forefront of this intersection between online and in-lane wholesale, it’s Kelly, who more than 20 years ago co-founded OPENLANE — once a competitor to physical auctions — and now serves as president of the physical auction-rooted company that eventually acquired it.

One of the remarketing trends he’s watching going forward is the continued “digitization of our industry,” Kelly said.

“With a little bit of hindsight, our industry has been on a path towards increased innovation for many, many years,” Kelly said, pointing out the increase in digital wholesale and online transactions.

"That's just been going on for two decades now," Kelly said. "And I think COVID has really accelerated that — massively accelerated that."

Within KAR, Kelly has found that the, “increased adoption of our digital tools over the last six months has been phenomenal.”

New dealers are registering on ADESA.com, buying cars on ADESA Simulcast for the first time, registering for TradeRev in droves and pushing records on the OPENLANE platform, the KAR executives said.

"These are pretty massive trends and we're watching all of these really carefully," Kelly said.  "But I think it points to an ever-more digital future for our industry, more data-driven — a lot of the things we've talked about for many, many years.

“There's no question, this has been a real accelerator of that trend,” he said of COVID.

And within KAR’s TradeRev dealer-to-dealer online platform, “thousands of new dealers” have registered, Hammer said, as the online platform never shuttered during the pandemic and gave dealers a way to buy and sell remotely.

The company also eliminated sale fees on the platform in August.

"We've also taken steps to start integrating TradeRev into ADESA.com. So, dealers can go to ADESA.com and now see inventory on TradeRev,” Hammer said. “We're pulling together the buyer bases of those businesses to strengthen the pricing and conversions, and make it easier for buyers to find more inventory."

KAR has found that many dealers are finding opportunities in more than one of its platforms.

“They may have some inventory that does really well on one product or they like to send the inventory through both products. They might have a full-service approach, where they launch it on one and then if doesn’t sell, they sell it on the other,” Hammer said.

Flexibility, transparency a perk to online

Of course, the acceleration in digital goes beyond COVID’s impact, as Kelly alluded to. Hammer points out that a lot of the excitement about digital for both sellers and buyers is around flexibility and data transparency.

Previously, Hammer said, sellers were “really kind of anchored around an event, once a week. Now we can start thinking about things like launching a car at any time that we want to from really any location we want. So, they can sell from our auction, or they may have a marshaling yard or distribution center. And we can launch them together. The cars don't have to be all at one location, which will improve their outcomes.”

With digital sales, KAR can more effectively capture all bids, something that can be more challenging in the physical environment when you’re trying to monitor every wink, nod or hand-raise in the crowd. The bids are easier to collect and track for data purposes when they are digital, Hammer said.

"Once we're able to get that, the analytics of the business improves substantially. We know exactly what people are interested in. We know what they bought,” Hammer said.

“We also know what they didn’t get that they wanted to buy. And things start coming into play, like marketing direct to a second highest bidder or a third highest bidder; we can match a car that we have somewhere else to a car that they were clearly interested in,” he said. “And sellers then have the tools, with all this data at their hands, and with all of it digitized, they can make real-time, in-auction decisions … They can adjust on the fly, they can change reserves, they can change pricing. They can communicate to each individual buyer with chat and things like that.”

There are similar benefits for buyers in terms of convenience, Hammer said.

“Whether that's buying from home, buying from the office or we've had some that say they now buy from the beach,” he said.  

Again, instead of being tied to having to be present at one location at a specific time, they can buy anywhere. Not only that, they can buy from more locations, given them a broader geographical reach, he said.  

“And there's an element of transparency when it's digitized too,” Hammer said. “Not only do we know every bid that's out there, but every seller and every buyer has transparency into that as well. And we're hearing a lot of feedback from buyers that are saying, 'we love the transparency of knowing exactly who is bidding and we don’t feel like there's any funny business. We just see everything out in front of us.'"

Addition of BacklotCars 

KAR’s most recent major move in this space was its announcement in September that it reached a deal to buy online dealer-to-dealer wholesale platform BacklotCars. The company is limited in what it is able to say about the pending transaction, but Kelly did note KAR’s excitement about the deal and pointed out the company’s fast growth.

“Their volume's been growing fast. So, our goal really is to get the deal closed and then really support the growth of that business … we think it's going to be a very, very strong offering and a great fit within KAR family of companies,” Kelly said.

A recap of a KAR teleconference in September that explains more about the deal and the similarities and differences between BacklotCars and TradeRev can be found here.