The safety benefits of not having 2-ton machines rolling through auction lanes are obvious, and safety has been the driving force behind ADESA's new VirtuaLane effort. But the company is noticing a few other perks as well.
Fun follows safety at VirtuaLane
"In the colder climates, this time of the year, the opportunity to be sitting inside and watching [an auction] is an upgrade from doors open, wind blowing through and, you know, the cold," ADESA President John Hammer said.
After testing the VirtuaLane concept in seven markets over the past two years, ADESA was set to announce Monday that it's launching at 20 sites, from Oregon to Orlando.
VirtuaLane is like a normal live vehicle auction, save for the vehicle itself. Instead of rolling through the lane, cars and trucks are shown on 65-inch monitors, which showcase details of the vehicles during bidding. There are ringmasters, carpet, bar stools and often food.
"We needed to make it a fun experience for the dealers, much like they have a fun experience when they're buying cars in the lane," Hammer said. "So [we're] creating that level of activity."
Customers can also physically check out the vehicles in person before bidding begins and have access to condition reports, photos and valuation tools.
The virtual lanes run concurrently with traditional ones. So if an auction site has 10 lanes, two or three lanes may be dedicated to VirtuaLane, Hammer said.
Bid for safety
KAR Auction Services’ ADESA is launching VirtuaLane at these 20 auction sites:
Kansas City, Mo.
Rio Linda, Calif.
Vancouver, British Columbia
The company has given VirtuaLane its own brand identity, with the same carpeting and furniture at each location. It started piloting the effort in 2017, but Hammer said it began to really be developed for expansion in September 2018.
"We haven't had to evolve very much from the pilot phase," he said, adding: "We spent a lot of time really thinking through the logistics, thinking through the equipment and building it out."
Hammer said he couldn't peg a specific monetary investment to the rollout. The company plans to add it to more locations this year, with the goal of having it at 30 sites by year end. VirtuaLane is being added primarily where larger ADESA commercial customers operate. American Honda Finance Corp. is an early partner.
Along with buyers staying warmer in closed lanes, VirtuaLane achieves greater efficiency by not having to move physical inventory. Hammer said that has been a "byproduct but not the goal."
The goal is safety. The issue received greater attention after a May 2017 accident at Lynnway Auto Auction near Boston killed five people. An auction driver lost control of a vehicle and crashed through a wall.
Last March, the National Auto Auction Association's board adopted safety guidelines for auctions that include new procedures and training. ADESA has prided itself on being at the forefront of that effort.
How have auction attendees received the VirtuaLane concept? Warmly, Hammer says, though they're still adjusting. "They're used to cars driving through the lanes and now they go outside and they turn on the car and listen to it outside the lane," he said. "So they have to modify their process."
VirtuaLane is just one of several examples of the wholesale process going digital, just as the retail segment has been. ADESA parent company KAR Auction Services has been striving to meet its customers wherever and however they want to do business. Its TradeRev mobile wholesale platform has been a major undertaking, one that has cut into the company's profits as it invests in more personnel to ease its expansion.
About 54 percent of the vehicles sold at KAR's ADESA and Insurance Auto Auctions are sold online. CFO Eric Loughmiller said KAR expects that figure to reach 75 percent within five years.
VirtuaLane fits in with this shift toward more digital offerings. "We're aligned with our customers and their objective, so it isn't us creating something and selling our customers on something we would like to do," Hammer said. He added that it heightens safety while keeping the camaraderie often found at auto auctions.
"So you might think of [VirtuaLane] as a Buffalo Wild Wings or something where you got the big screens, activity going on, sitting at a bar stool," Hammer said.
"Short of the alcohol," he added with a laugh. "We don't do that part."
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