Right after the coronavirus pandemic shut down physical auctions throughout the U.S., Kia of Des Moines in Iowa bought a wholesale vehicle online.
The vehicle had a good condition rating, but the accompanying images did not quite tell its whole story, said General Manager Jason Clary.
"The little dent or scratch was just perfectly in the body line, and so instead of a $150 fix, that's an almost-$500 fix," Clary said. "And that's something that a used-car manager's going to catch at the auction, much easier than online."
Clary is among the dealers who would prefer that physical auctions come back sooner than later. Some already have, according to the National Auto Auction Association. But for the most part, auctions have switched to all-digital formats amid social-distancing measures, and all signs point to them staying mostly digital for the foreseeable future.
That means that condition reports, and the images supporting them, are more important than ever. Auction firms have invested millions of dollars — and continue to pour money — in 360-degree and high-resolution imaging and other features aimed at improving digital listings of wholesale inventory.
Many dealers have embraced new digital technology for wholesaling. They appreciate not being required to go to a physical auction and to be able to cast a wider net across multiple sales online.
Amid all the new innovation, a traditional part of the auction process might need to be tweaked: Arbitration.
Clary said even small discrepancies, such as that almost-$500 scratch, can add up and create a challenge for Kia of Des Moines to stay within its budget for reconditioning each vehicle. For the most part, he has been able to handle bigger problems on digital transactions through arbitration but has a harder time with the smaller ones like that scratch.
"Now, is that going to change with this new setup and doing more online?" he wondered aloud. "I think it's going to have to."