maximizing your reconditioning roi - iara...maximizing your reconditioning roi iara roundtable...
TRANSCRIPT
Maximizing Your Reconditioning ROIIARA Roundtable Discussion
Doug TurnerAmerica’s Auto Auction, Regional Manager
IARA Standards Committee Chair
Julie Picard,Manheim, RVP West
Kurt Madvig,ADESA, VP Auction Operations
Session Objectives
Provide an overview of the current state of reconditioning optimization in the remarketing industry
Discuss pain points related to optimizing reconditioning investments
Brainstorm solutions to maximize recon investments
• Highest ROI on:• Below average to average pre-recon grade
vehicles• Higher value vehicles
• Recommended Repair items:• Low cost items that improve cosmetic appearance:
– PDR, chip repair, wet sand buff and partial bumper repairs• Perform multiple items to increase grade by > 0.1
points
Source: Cox Automotive Consulting
Recon ROI
MMR% by Grade
Recon ROI Example:Move vehicle from
2.8 to 3.1; increase
MMR% by 2.7%
(+$351 on a $13k
vehicle)
Cost to increase 0.3
grade points = ~$172
ROI = $2.04 per $1.00
investment
Source: Cox Automotive Consulting
Recon opportunities in below average to average grade vehicles
Average Cost to Increase Grade
$85$121
$172$211
$257$289
$338$373
$401$366
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Assurance & Certification
6
Assurance products help sellers build buyer confidence, increase margins and protect their reputation
Assurance products provide a baseline of confidence and peace of mind.
W H E N B U Y I N G W H E N S E L L I N G
A lot of time I am purchasing these vehicles from a distance away so I want to make sure they are as advertised and if not I have some type of recourse.”
Drivetrain conditions and cold engine mechanical conditions cannot be determined during the auction or within couple of hours immediately after the auction for green light/ auction guarantee status.”
Because the sellers typically do not disclose many things wrong with the cars. You are forced to buy these products to protect yourself due to the auction having zero repercussions for the dealers that try to get away with cars with defects.”
The more info provided, the more potential online action you can get. People buying online are not buying units if they cannot see a condition report of some kind .
Because I want to sell something that will not come back to me and put my reputation at risk.”
They show the buyer you are confident in your sell and increase the selling price.”
Certification• Benefits
– Builds trust with buyers
– Brand value
• Costs & ROI
• Sale strategy
Assurance• Assurance Products
– Condition Reports – Primary assurance product for most buyers
– PSI & Return Guarantees– Secondary Products
• Core Drivers– Most buyers want to avoid arbitration and
use assurance products to do that– Most buyers believe that assurance
products are a critical part of the process… online or in-lane
Source: Cox Automotive Research & Market Intelligence
Small Group Activity• Elect a table leader to lead the dialogue at the table and
a scribe to capture key takeaways
• Groups will have 20 minute to discuss questions
• Afterwards, there will be a large group discussion and Q&A around the topics
Open Q&A