Consignors Weigh In: Technology is King in Remarketing Strategy:
Emercent Study Provides Industry Insights and Benchmarks
Chicago - March 14, 2005
The use of the Internet for upstream remarketing activities and broadcast auctions continue to dominate auto remarketers' strategies in 2004, according to a new industry survey conducted by Emercent Solutions with assistance from the International Automotive Remarketers Alliance (IARA). The findings are derived from a survey of 35 auto industry executives representing 52% of the vehicles remarketed annually.
Eighty-two percent of consignors indicated that the major change to their strategy from 2003 to 2004 was the increased focus on the use of the Internet as a channel. In 2004, consigners increased usage of online proprietary dealer auctions (branded, open and closed upstream dealer auctions) by 3% and broadcast auctions (internet broadcasted auctions from physical auction locations) by 5%. Sales via traditional auctions decreased 6% in total. Remarketers’ focus on technology will remain strong in 2005, as eighty-seven percent of consignors perceive the biggest opportunity during the upcoming year is improving exposure thru technology.
”We are continuing to see a shift in the way vehicles are remarketed," said Julie Andersen, vice president of strategy and delivery for Emercent. "Consignors, looking to maximize profits, are increasing their upstream channel usage and also their use of broadcast auctions. It is all about exposure – and consignors are using technology to achieve this."
Other noteworthy survey findings include:
- Channel trends predicted to continue in 2005. Over 70% of respondents predicted increases in sales to lessee, sale to grounding dealer, and broadcast auctions. This shift is predicted to come with a decrease in the use of traditional auctions.
- Channel satisfaction varies and is anticipated to change. Fleet/lease organizations were most satisfied with traditional auctions, captives with direct sale to lessee, and banks with online proprietary auctions. Both banks and fleet lease organizations agreed that traditional auctions provided the most consistent value. When asked to forecast next year's most consistent channel, 40% of consignors changed their response for next year – indicating they felt more consistency would come from online proprietary auctions.
- Channel profitability maximized through technology. All consigners agreed that sales to lessees resulted in the highest profit. Fleet/lease organizations ranked broadcast auctions as the second most profitable channel, and both banks and captive lenders ranked sale to the grounding dealer as the second most profitable. Neither captives nor banks perceive a significant difference in profitability between proprietary online auctions and broadcast auctions.
- Consignors actively looking to improve performance with data analytics and benchmarking. 75% of consignors indicated they could improve their effectiveness through better data analytics and 82% felt they could improve effectiveness through benchmark data.
- Measuring effectiveness depends on who is measuring. When measuring remarketing effectiveness, captives and banks are focused on measuring net gain and loss and vehicle sale value. Fleet/lease organizations measure sale value and turn time. Additionally, 92% of captives rely on corporate goals and internal data metrics to determine their effectiveness.
- Improving profits, cutting costs. In 2005, 87% of consigners will keep their technology focus, including sales to customers, improved data insights and channel optimization, operational cost cutting through technology and partner alignment and more partnership-oriented dealer sales.
“The study underlines the evolution of the remarketing industry and the need for sophisticated strategies and data analytics to make the right decisions -- at both the vehicle and the portfolio level,” Andersen said.
The Emercent study built upon last year’s upstream findings and was broadened to highlight trends in channel usage, vehicle volume, pricing, vehicle value, and challenges and opportunities remarketers face. Responses were collected from 19 captive lenders, 8 banks, and 8 fleet/lease organizations.
“We are very excited to share the study’s insights,” said Barclay Noble, president of Emercent. “These findings help deepen industry understanding for consignors and at the same time strengthen our strategic service offerings. By having a clear picture of where the industry is going, we are better able to help clients gain an advantage.”
View summary findings presented at CAR 2005 in a keynote given by Julie Andersen
About Emercent Solutions, LLC:
With a client list that includes the major captive automotive finance companies, Emercent Solutions serves as a premier consulting firm to the automotive lending industry. Emercent, a Chicago-based organization, provides software products, technical and business consulting services, and strategic solutions to its automotive finance clients. Emercent also works with value chain partners including auction, insurance, fleet and remarketing companies. With a special focus on remarketing, Emercent brings expertise, insight and experience to deliver results. More information on Emercent is available at www.emercent.com.
Press Contact:
Emercent Solutions
Phone: 312-267-0583
email: bnoble@emercent.com
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