Online tools streamline trade-in appraisal process for dealerships, buyers

For decades, the first negotiation at a dealership was over the trade-in's value. And it wasn't just store vs. customer. Often, the debate pitted the salesman against the used-car manager.

A higher trade-in appraisal could save the deal, the new-car salesman knew. But overpay, and the used-car department could be stuck with an almost guaranteed loss on the vehicle. It was a debate fraught with subjectivity.

No more. At the 2018 NADA Show in Las Vegas last month, several vendors were demonstrating appraisal tools that promise to take the guesswork out of how much a dealership should offer for a trade-in. Here's a look at some of them.

KAR Auction Services Inc., the Carmel, Ind., parent of auction giant ADESA, liked this technology so much that after buying half of the Canadian company early in 2017, it bought the remainder before the end of the year.

TradeRev enables dealerships to wholesale vehicles to other dealerships via app almost instantly, bypassing traditional physical auctions. Dealership personnel use the app to scan the vehicle identification number, take multiple photos of the vehicle, even listen to its engine, and post the information online where other dealerships can use TradeRev to bid on the vehicle immediately.

TradeRev is available on most markets on the coasts and is gradually moving nationwide.

ADESA says 5 million dealership cars and trucks come to auction every year, but an additional 10 million don't, often going through wholesalers instead. It wants to use TradeRev to capture more of those 10 million by offering the selling dealership a larger online marketplace — which increases the odds of getting a higher price.

KAR Auction Services CEO Jim Hallett said TradeRev's value also can be seen in the trade-in appraisal process.

The dealership could know by the time the customer comes back from test driving a vehicle exactly how much the market says the trade-in is worth, Hallett said.

When the range of low and high prices offered on a trade-in could be as much as $2,000 to $3,000, and the potential profit on the new-vehicle sale is $1,000 or less, TradeRev "can validate within an hour the trade-in price you're giving, so the dealer knows the deal will be profitable," Hallett said.

You could be excused for thinking that this app, unveiled at the NADA Show and expected to go nationwide in July, was Manheim's counter to TradeRev. It also allows dealership personnel to scan the VIN and immediately get an estimate of the vehicle's value from the Manheim Market Report, as well as automaker build data, in many cases.

Then the dealership can decide whether to list the vehicle online with Manheim, order an inspection, consign it to a physical Manheim auction, or get a guaranteed price from Manheim for the vehicle, subject to the dealership buying it from the owner.

To set that guaranteed price, Manheim determines a minimum price and lists the vehicle on the Manheim Marketplace online. If it doesn't sell for that minimum within two business days, Manheim will buy it, which is how the dealership is guaranteed that amount in two days.

If the dealership chooses to list the vehicle online in hopes of a better price, the app allows a staffer to take photos of a vehicle, answer a few condition questions and post everything online. One cool feature: the ability to take 360-degree photos, using technology from the computer vision company Fyusion, and upload everything within three minutes. Bidders then can use smartphones to see the vehicle in the equivalent of a walk-around, while additional photos can zoom in on, say, a scratched front fender.

At the NADA Show, a 6-foot simulated iPhone at Manheim's booth allowed staffers to show passers-by how swiping on a smartphone works with Manheim Express.

Manheim says its main competitive advantage is that it immediately posts the vehicle to all Manheim online markets, drawing on the strength of the auction giant's huge buyer base.

Because dealerships can use Manheim Express with potential trade-ins, they know the minimum and can make a firm trade-in offer to the owner.

Several other vendors showed products that allow dealership staffers to walk through the sales process step by step, including evaluating a trade-in, with the customer.

For example, MAXDigital was quietly showing its Path to Purchase software, which should be launched by the end of July or earlier. ELEAD1ONE was demonstrating DealBuilder, a tool that can be used by either customers online or sales staff in the showroom to customize a sale or lease.

RouteOne invited six companies to show how, with RouteOne tools working in the background, they simplified the sales process for dealerships and consumers.

MAXDigital, eLead and RouteOne all said they could integrate their product with other companies' trade-in appraisal tools to come up with a solid dollar figure for a trade-in. MAXDigital mentioned Manheim and vAuto, while RouteOne specifically said they already could work with Kelley Blue Book, NADA Guides and Black Book. But the clear intent of all three was to use whatever tool or appraisal guide the dealership chooses.

One way or another, the trade-in appraisal is going to rely less on instincts, and more on data.