Used-car drought relief? Next year
ADESA expects another shallow vehicle pool in '12
 | Hallett: Online project makes progress. |
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The tight supply of used vehicles promises to squeeze sales at ADESA Auctions Inc. again this year.
But the CEO of its parent, KAR Auction Services Inc., said he expects business to improve in 2013.
"I believe 2012 is the trough year and the steepest volume declines are behind us," CEO Jim Hallett said during the company's fourth-quarter conference call.
Auto auctions are trying to rebound from problems including a limited pool of used vehicles because of the recession and dealers selling more of their own trade-ins.
Hallett said that the integration of online auction company Openlane and ADESA's online venue, DealerBlock, is making progress. KAR bought Openlane in October 2011, and Openlane eventually will replace DealerBlock, he said. Openlane sold about 300,000 vehicles last year.
Vehicle volume at ADESA in 2011 dropped 7 percent from 2010, Hallett said, but he did not disclose the number of vehicles sold at the nation's second-largest vehicle auction. The percentage of vehicles offered at ADESA auctions that sold, called the conversion rate, dropped to 61 percent from 65 percent in 2010.
In the fourth quarter, Openlane sold about 50,000 vehicles, generating $16 million in revenues and a loss of "just under $100,000," KAR said.
Hallett said customers who sell vehicles on ADESA's DealerBlock channel or Openlane's platform can now access vehicles listed for sale on both using a single sign-on.
So-called closed auctions conducted by ADESA, open only to dealers representing specific brands, are being moved to the Openlane platform, Hallett said. The sales teams representing ADESA and Openlane have been integrated, Hallett added.
"We are now approaching our customers as one company with one voice," he said.
Hallett did not give a timetable to complete the integration of the online platforms. In November, he had said the process would take as long as 18 months.
One bright spot at ADESA is its dealer consignment segment, which grew 13 percent in 2011 to account for 42 percent of its business, Hallett said. The industry average is 53 percent, so Hallett said he has room to grow.
With fewer off-lease and retired rental-fleet vehicles coming to auctions, auction companies have increasingly turned to vehicles on consignment from dealers to fill their lanes.
ADESA's 2011 revenues fell 5 percent to $1.02 billion. Gross profits fell 6 percent to $435.1 million.
You can reach Arlena Sawyers at asawyers@crain.com.
