Most investors don’t know it, but wholesaling used cars is a red-hot business. One discussion topic that often comes up at used-car industry conferences is this: the increased digitalization of the wholesale vehicle market, be it through third-party platforms or the online offerings of auction players. We believe the future is online, and over the last few years, the internet has changed how dealers interact with auctions. Companies like Winfooz are poised to disrupt the market on a larger scale.
We have seen franchised dealers becoming more comfortable with online. Some studies show that dealerships now access an online auction site on average twice a week, and they are becoming more comfortable buying used vehicles at online auctions. It’s early days for this new burgeoning industry, but Winfooz is set to lead the way when it comes to cyberspace auctions.
At this moment in time, digital auctions continue to grow. However, it remains to be seen how much of the industries overall volume will go online and as a result, how much that will pull sales away from physical auctions. Manheim, one of the largest competitors in the market estimate 40% of their cars sold in the last two years have been sold online. They state that approx 630,000 transactions were completed through “pre-digital channels”, an increase of 15% on the previous year.
While these figures show that online is the way to go, the fact of the matter is this – the industry needs an online specialist. In days gone past traditional industries like taxi services and hotel bookings dabbled in digital selling, that was until the real disruptors entered the market, namely Uber and Airbnb. Sure the old style companies aren’t sitting idly by waiting for the answers, the likes of Manheim and Adesa have dove headfirst into the digital world, but we feel we have done something a bit different. As we are a fully online solution, we have been able to work proactively rather than reactively to create the most customer-focused platform on the market, offering a fully integrated end-to-end service, including door-to-door delivery. If you want to see just how much we differ from traditional auctions, have a look at this short article.
The competition is fierce as more companies and dealers discover the value of online. Digital volume is up by 17% year on year, off-site transactions are up to 72% year to date, while it is estimated 39.5 million used vehicles will be sold, up from 39.3 million. In 2018, 10million was raised in online auction sales, and this figure is only expected to grow this year, in essence, digital auction volume will no doubt dominate the market.
Physical auctions are unlikely to disappear, but their role is shrinking, and over the next couple of years, this downward trend is expected to continue. With this in mind, dealers are more likely to focus on digital auctions to bolster their remarketing revenue streams. It’s unclear if this change will lead to a downsizing of physical auctions, we believe it will as online auction attendance is beginning to outpace that of physical auctions. The convenient, faster and less time-consuming nature of online auctions is only going to improve over time leaving traditional auctions in the past. How many people pick up the phone to call a taxi, book a hotel or even a concert ticket these days? Very few, so why would our industry be any different?
In an analysis released last month by Cox Automotive, the expect to see 16.6 million units to wholesale, up from 16.4 million last year. A steady increase but it gets fascinating when you see the breakdown:
- Commercial direct-to-consumer: 700,000 (same as 2018)
- Direct-to-dealer/dealer-to-dealer: 4.9 million (up from 4.7 million in 2018)
- Offsite/online: 1.4 million (up from 1.2 million in 2018, 1.0 million in 2017 and 900,000 in 2016).
We can see that dealer-to-dealer and online markets are increasing year on year. That online component is critical as the share of virtual auction attendees vs physical attendees has swapped. A big part of this has to do with the new entrants to the market, improvements in online vehicle descriptions and increased utilization of modern technology — for example, our innovative 360˚ imagining feature or our Instant chat service.
Besides, there is a stagnation in other types of used vehicles. Growth has tapered off in off-rental and fleet volumes. Rental car fleets are smaller, and repossessions are declining as the economy improves. This leaves dealers with fewer options available to them in the wholesale market, hence the need for a platform that can provide all of a dealers auction needs.
In addition, there is stagnation in other types of used vehicles. Growth has tapered off in off-rental and fleet volumes. Rental car fleets are smaller, and repossessions are declining as the economy improves. This leaves dealers with fewer options available to them in the wholesale market, hence the need for a platform that can provide all of a dealers auction needs.
We aren’t the only company noticing this change, Adesa is now being fuelled with TradeRev, a dealer-to-dealer sales platform and it’s now the company’s fastest growing venture.
Manheim, E-Block and AVC Auctions have all began switching gears to enter the digital space, but greater transparency, improved user experience and third-party inspection service that can give confidence to buyers was required. That’s where we come in.
Customers want things to be more convenient, faster and easier, especially in a world of shrinking margins. On any given day a dealer has the ability to register or login to the Winfooz marketplace, scan our inventory, bid and buy, all from the comfort of their home or office. We’ve said it before and will say it again, the future is online!
At this moment in time the physical auction lives on with thousands of vehicles pushed through auction houses on the daily, but nowadays it’s the mainly the onsite atmosphere keeping these alive.
The fact is online auto auctions are becoming more popular and the trend shows no sign of stopping. Platforms like ourselves are here to disrupt the market, leveraging innovative technology to revolutonize the auto remarketing industry.
10 years from now we will be sitting here saying “We told you so”
Have you tried Winfooz yet? When it comes to ease and simplicity, the Winfooz marketplace is streets ahead of physical auctions. It’s risk-free to join and getting set up is easy. To register, you can: