The Art of Acquiring Quality Used Cars with Robert Hollenshead, Brian Kramer and Chris Fell

In this ASOTU CON 2024 podcast, hosted by Joe Overby, Robert Hollenshead, Chris Fell, and Brian Kramer join the discussion to delve into used car acquisition strategies. The conversation explores the evolving landscape of used car auctions, the importance of appraising vehicles accurately, and the unique challenges and opportunities presented by electric vehicles (EVs) in the used car market.

The panel highlights the enduring relevance of auto auctions and the necessity of instant liquidity in the market. They also discuss how technology and transparency are transforming the appraisal process, making it more efficient and reliable for both dealers and customers. The session underscores the critical role of understanding market dynamics, leveraging digital tools, and maintaining transparency to succeed in used car acquisition.

0:00 Intro
0:49 The importance of purchase strategy in used car sales.
1:55 The evolving role of auto auctions in the used car market.
3:43 Appraising electric vehicles and understanding market dynamics.
5:19 The remarketing challenges for non-Tesla EVs.
6:42 The impact of price points on EV resale value.
7:02 Utilizing technology for efficient car appraisals.
8:11 Enhancing transparency in the appraisal process.
10:19 Leveraging service drive opportunities for used car acquisition.
11:44 The importance of acquiring cars directly from consumers.

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Transcript

Unknown: 0:00

you're listening to the asotu con sessions by Effectv live from asotu con 2024

Joe Overby: 0:09

My name is Joe over me, and I'm here on the asotu con podcast stage in collaboration with effect TV. And sitting across from me is Robert Hollenshead, Chris Fell and Brian Kramer. They're all part of the Accu trade team at cars Commerce Guys. Thank you all so much for oops. Thank you all so much for being here today. Thank you. Thank you absolutely. Well, so I want to, we're going to talk a little bit about used car acquisition, but I want to go back to something Kyle mentioned during a general session this morning. He said sales strategy is actually the purchase strategy. So how do you guys see that playing out in the used car market?

Robert Hollenshead: 0:48

Purchase strategy? Yeah,

Joe Overby: 0:49

so sales strategy is actually the purchase strategy. So essentially, you know, you you make your money at the time of purchase. How do you see that playing out used car market?

Robert Hollenshead: 1:00

Well, if you're talking about a trade in, it's obvious, you know, you've got an opportunity to make a profit on the car when you trade it correctly, right? If you aren't sure what you have, it's very difficult to trade it properly, right? Yeah.

Brian Kramer: 1:12

So I would add to that, if you're the best end user retail wise, it's going to be a lot easier to make you the best end user when it comes to acquisition. So if you know the exit strategy, or if you know if you're not the best end user, who that best, who that best end user is, then you're going to be able to acquire more vehicles, right?

Joe Overby: 1:34

Well, you know, obviously the for so many years, the way dealers acquire used cars was, was through auto auctions. And you know that that market has changed. It's become more digital, but it's still a big, big presence in wholesale. So how do you guys see the use the future of the used car auto auction?

Robert Hollenshead: 1:55

Well, I'm sure there's a whole bunch of people would think that it's like, got a limited future. I'm personally 100% in a different belief of that. I think as long as there's people breathing air, there's going to be car auctions. In other words, without a car auction, you don't have instant liquidity. Regardless of whether it's a digital circumstance or in lane circumstance, or whether it's all digital and simulcast, the volume has not gone down. It's not going to be going down anytime soon. Is the only place you're going to be able to find a check. Find a check instantly in the next 30 seconds. You follow me. More importantly, when cars are all aggregated in one place at one time, the probability you're going to find the cars that you want when you're wasting your time looking for cars is much higher. It's one main reasons why we use critical mass when we're selling cars on an auction block. We don't confuse people looking at f2 50s and Volkswagen diesel simultaneously. You want to look at a Mercedes Benz tomorrow morning. You're gonna look at 100 of them in one place at one time. If they're all getting sold, the probability that more eyeballs are looking at your car, you're gonna get a higher return. And if the buyers know they can trust to sell and every car is getting sold, you're gonna maintain their attention. Yeah, that's just a

Joe Overby: 3:02

fact well, and it speaks to just kind of the way people shop in general. I mean, that's why you see all these pop up marketplaces for, you know, vintage, good sales. They're all together in one place, because, you know, it's what

Robert Hollenshead: 3:13

we've been doing at the auction for many, many, many decades. You follow me, that ain't going away anytime soon, not, I can promise

Joe Overby: 3:19

you. Yeah. So you know, regardless of whether you're buying a car at an auction, or, you know, taking the trade in from consumer, or, you know, buying from from another dealer, you've got to appraise the car. So for an electric vehicle, how does that appraisal strategy differ? What are some of the unique implications and strategies involved with that.

Robert Hollenshead: 3:43

Once again, I think that's got a lot to do with if you're the best, or the perceived best end user of a car. If you're a Mercedes dealer right now, and I mean, these are stacked up on your lot, you think you're really looking to trade them cars for too much money right now. You're looking for another best end user someplace you can exhaust that car instantaneously to get it out of your inventory. You see what I'm saying to you, and I think if you that's one example. But if you look across the board the let's say we're going to sell 50 EVs tomorrow. We're not going to sell one of those EVs to the brand specific dealer. If it's a Ford EV, it's not one to four dealer. If it's a Audi e Tron is not going to an Audi dealer. That's where they came from. You see what I'm saying to you. So being a, let's call it a liquidator. In other words, somebody is in the business of remarketing those cars, right? We absorb them, put them together in a more logical place, where the dealer is happy to take our check because they need to make it disappear. They don't need more of them. When the new ones are stacking up, and they can't give them away. You follow me, and I think that's pretty much in a nutshell what it would be a dealer that doesn't have an exit strategy on EVs right now, I think they're even that's actually, if I'm not mistaken, the people that are using Accu trade, that's really the cars that we're actually picking off. Is a Volkswagen electric, something in San Francisco, some who knows what from, and it's a brand specific deal. It's coming from Volkswagen dealers, coming from an Audi dealer, because they don't have any interest in it, and they don't have a way to actually liquidate. So

Joe Overby: 5:16

So Brian, Chris, what are your thoughts on that?

Unknown: 5:19

Go ahead. Well,

Chris Fell: 5:20

you know, obviously, when I look at electric cars, I look at it this way. There's Tesla and there's the rest, right? Tesla sets the bar on the market. Lowers the price. Obviously, other other folks are forced to follow suit. Um,

Robert Hollenshead: 5:39

the one, they're sellable. Chrissy, they're absolutely we have 80 Teslas tomorrow to sell. They're all getting sold. You understand what I'm saying. But when you got a BMW, something, it's, it's a whole different ball game. Teslas are totally remarkable. So you can predict the price. You see what I'm saying, the only place you're ever going to find that out. To your first question, is that an auction? Yeah,

Joe Overby: 5:59

and the, I mean, if you'll get auction volume numbers for EVs, it's dominated by Tesla, right?

Chris Fell: 6:06

I want to add one thing Sure. You know, the other part of the EV thing is obviously price point. The more expensive they get. I mean, it gets very I mean, Tesla with their plaid and things like that, you start getting up over 100,000 you see it with the Hummers. You see it with the some of the Mercedes EVs, the BMWs, very difficult to sell, both in auction format and obviously retail. These programs, lease programs, are strong with the money back strong the federal money. And you know, if you could be in the car for four or 500 hours less a month and purchase in a used one and

Brian Kramer: 6:42

under $25,000 Yes, what's the what's it? 100%

Joe Overby: 6:50

so to shift gears a little bit, why? Where, I guess. How are dealers utilizing technology when it comes to appraising used cars.

Brian Kramer: 7:02

Well, I would say that they're not all using it the same way. I would say that some, a lot of dealers are leveraging it, leveraging it very well. I see dealers that have what we're going to be with, Joel Bassam, who's got, you know, 6070 sales. You know, associates that are appraising cars at scale, 230 today. But I also see a lot of Toyota dealerships that have 50 or more people appraising cars. So we see this transition of them leveraging, empowering the salespeople with with an app to do at least the first 80, 85% if not 100% of the of the appraisal in order to move the deal forward, to remove the friction from appraising the car. Because we see a lot of drop trades from when a lead was submitted on cars.com to when it actually transacted. And we think that a big reason of that friction is because of the amount of effort it takes in order to appraise a vehicle. So the easier you make it to appraise a car, faster to be able to then push it into whatever platform you want, at CRM you want to take it from there. But in order to appraise a car accurately, using their values that are accurate and they're guaranteed with a check. I think that's the key, is to be able to do that in three minutes or less. I don't know there's another solution that can do that. So

Robert Hollenshead: 8:11

just to add to that, and it's really, I think the most important part is about transparency. You see what I'm saying, inclusion of the people in the dealership, where they're actually included, the salesperson is actually included in where they have rational, fact based, premise based items in the appraisal. You understand the picture to dent the scratch, but if they're included in that, it makes it much easier to tell them, McGillicuddy why their car is worth, what it's worth. You understand, yeah, and McGillicuddy does not want to know. He's been in the business for 30 years. He knows what he's talking about. No, they want to see rationally, bing, bang, boom, bang, dupe. And therefore that's what it is. You see what I'm saying. So dealers that we actually have using it, not just in the sales floor, but in the in the service drive, there's no question that they're not forget their ROI the I would call it the transparency, not just with the consumer, but with the sales force as well. You see what I'm saying, Joe, if you ever been in a dealership and the salesperson goes, gives the used car managers to go praise my car, he's back there being best friends for life with the with the customer, they're almost they're almost relatives. You wear plaid, I wear plaid. You understand I'm saying we can be related. Let me go see what the used car manager is going to give us for your car. I'm sure it'll be a great number, comes back two seconds later, bounces out of the desk. Customer doesn't have anything other than a number. How do you rationalize that you understand? I'm saying quarter panels replaced the OBD says that it's you understand. All of a sudden, you got rational conversation. This is without any question or doubt, not just useful for the consumer, but for the salesperson, not to sit there, fumbling and bumbling what they're talking about, and then the communication with the sales desk, with the appraiser, you see what I'm saying to you, that whole thing is congruent, and it's the exact same thing happens when. Um, Brian, when you got dealerships doing 100 appraisals in a service drive, and they're picking off 100 100 cars a month that they otherwise picked up two a month, because we're actually using no transportation. We're talking about oxygen transportation fees. What are the no service drive? We already got the customer there,

Brian Kramer: 10:19

and those guys have low market day supply, low days on market. Joe.

Robert Hollenshead: 10:23

Joe, wait, you're missing this. And this car has pedigree. You ever hear the word pedigree, not a horse? I'm talking about a car. We know the VIN, we know the miles. We know that. We know when it was a well changed last we got the pictures from to six months ago, when a car was in for the oil change. So now, when you leverage that, when you acquire that unit, put them in a new car, because you can lease them, and no one for $700 less. Dollar, less than no payment, than a car, and I've got it in other words. Now, when you put that car after you put it back through, I won't change certified, but you can now tell the next Megillah Cuddy, we knew who. Voltage score knew it wasn't an Avis hurt sixth rental car that we put a pinstripe on. Now it's no longer a junk you understand? No, this car, we sold it new. Our neighbors sold it new. We pinched it out of the service drive. You see what I'm saying to you? It's not just a one pixel. It's many pixels that make up the picture of when you're asking a question about technology and how you leverage it and how you increase the transparency? Does that make sense? Deep amount.

Joe Overby: 11:22

Well, we've got just a just a minute left here in our conversation. So I wanted it to close on this. Why have why has acquiring used cars from consumers, the mcgillicuddys? Why is that become so important? How does the approach, you know, differ than acquiring a car from a dealer.

Robert Hollenshead: 11:44

You're serious with that question? Yeah, yeah. Okay, so when a car comes out of somebody's garage and that's where it's been parked for the last year and a half, right? Is that different than the one that was already at the auction three different times, and in other words, in the rug was fixed, and the other thing was saying, and you're going to sell out to your sister, or would you pick the one that you pinched from the consumer? You see that is, they don't touch that you didn't buy it yet, and they're wiping things. You understand it's a different pedigree of a vehicle. It makes it much easier. It doesn't smell like an old cigar. You understand it's different. It's like a different circumstance. It makes it much easier. It's like eating chicken salad, or what chicken Are we allowed to say it? But I know chicken poop ain't the same as chicken salad, right? And that's one that's been through the used car factory four times, as opposed to one that just popped out of the garage, by the way, with four sets of keys. You see what I'm saying. The one that's been through the used car factory never has more than one. Don't mean nothing until you try and make the delivery. Does it

Brian Kramer: 12:47

challenge? The challenge for dealers is, unless you're doing the whole active trade appraisal with the client present, walking around building a condition report, you're just looking at an average number of average then the dealers are a distinct disadvantage. They're putting too much into the cars that are, that are not that way, that have less pedigree, and they're putting not enough in the cars that have the right pedigrees. So that's it all. So

Robert Hollenshead: 13:10

you're missing the good ones and you're getting the bad ones. Yeah, it's kind of like a solid to the bottom type thing. You understand I'm saying, yeah, when you do that, you never have one for the 45 degree angle out on the point.

Joe Overby: 13:24

Well, guys, want to leave me there for today. Thank you all so much for joining us. Let's get these gentlemen a round of applause.

Unknown: 13:30

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