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Steve Schmith, Automotive News: Hi, everyone, welcome to the All Ears podcast, a 10-part series sponsored by Ally and produced by the Automotive News Content Studio. My name is Steve Schmith without Automotive News. I'll be your host over the course of this series where we'll delve into a number of topics that are reshaping the automotive industry, including the latest on cybersecurity, how dealers can get ready for a future of EVs in the service lane, creating customer experiences when shopping for a vehicle that keep them coming back for more, and how to prepare for millennial customers and employees who are now in their mid 20s. We'll also hear from some of Ally's best spot leaders who will share their perspectives and offer recommendations on how dealers and others in automotive retailing can navigate transformational changes underway in the business of making, selling and servicing vehicles. Our objective is to provide actionable insights that you can use immediately in running your business and offer perspectives to help inform your business decisions. In this first episode, we're speaking with Steve Capusta, senior vice president of remarketing services at Ally, to gain perspectives on how dealers ought to be thinking about and using digital auction platforms to gain better access to inventories of used vehicles, particularly timely and important as the shortage of new vehicles continues and valuations of, and demand for, used vehicles continues to skyrocket. How has the pandemic accelerated the shift to and use of digital auction platforms? And how can dealers of any size benefit by embracing the shift to online auctions? We've caught up with Steve Capusta, senior vice president of marketing services at Ally. Steve, thanks so much for joining me today on the All Ears podcast. How are you?
Steve Kapusta, Ally: I'm great. How are you, sir?
SS: I am wonderful. Thanks for spending a few minutes and sharing your perspective. We've got a very exciting topic today and that is on the shift to online auctions for used car inventory. Let's hop right in. The past year's events have had a dramatic impact on used vehicle sales, the pandemic, lower vehicle miles, high demand for used cars, inventory and part shortages. That's a lot. After everything that has happened in the past year. What does the used market look like now that we're halfway through the year? How are sales overall and what does that trend look like for both wholesale and retail prices?
SK: Well, Steve, the used car market is on fire and it looks to be that way for a while. New inventory is real thin and Economics 101 is at play with current demand really outpacing supply.
SS: What are you hearing from dealers about the challenges of sourcing used inventory after the crunch dealers experienced in 2020? Has it gotten easier or harder to find vehicles to sell?
SK: It has gotten tougher to find as much used inventory as the dealers want. Used vehicle prices are extremely strong. That said, dealers are survivors and they're finding ways to get the vehicles they need.
SS: In some respects, the basis of competition has also expanded. You certainly have got the the players like CarMax, but you've got new folks entering like Vroom and Carlotz. Get a car Carvana. How are those players changing the basis of competition for traditional dealerships?
SK: Well, many dealers have stepped up their game, Steve, and realize the opportunity used vehicles provide to their dealerships. Bottom line, there's plenty of room for all these players. Consumers have different preferences on how and where they want to transact and each of these players are are trying to figure that out.
SS: So we know that the landscape, the marketplace of used car dealers is very diverse. You've got these very large companies, you've got small local dealers that are serving local, smaller communities. When you look at that landscape, how can smaller groups or independent dealers compete for vehicles and find the used inventory they need? Any advice you could offer to those folks listening?
SK: Yeah, I think the biggest thing there, Steve, is don't use one or two sources, leverage all the sources that are available to you. And I think, you know, dealers will find a way to get the vehicles that they need. But it's certainly not been the same over the past year or so. And they've found different ways and different opportunities to pick up used vehicles than the traditional way
SS: We've seen in response to covid over the last year a lot of shift for dealers and retailers to connect with consumers through touchless and digital ways. The needle has moved in digital retailing and appears like some of those actions in response and in an effort to connect with consumers are now making their way into the auction environment of this industry. How much has auction shifted online during the pandemic and how much of that shift do you think is here to stay? What's going to stick?
SK: Yeah, I think it's safe to say a number of folks were forced to move into the online environment because of the the pandemic and the situation that we're all in. I think from our perspective, we believe that a decent amount of the shift remains beyond the pandemic. Many dealers were, as I said, forced into that. But interestingly enough, many have found it's a very simple and easy way and it's working for them. So I would say some never onliners are certainly now believers.
SS: Thanks for listening. We'll be right back with more.
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SS: What are the relative benefits of online auctions and acquisition versus the old fashioned in-person way of auctions?
SK: I think the biggest one, from my perspective, is time and efficiency. When you're acquiring inventory online, you can also acquire inventory from consumers at the dealership so you can multitask. And as you take a look at the old way of doing business, you know, there was a bunch of travel. So now you don't have to worry about travel online. You don't have to worry about traffic jams and delayed flights. So efficiency is certainly been a big deal for most dealers.
SS: Can you share some perspective with our listeners on how dealers can optimize their use of online auction sites like SmartAuction? Are there tips that you would recommend?
SK: Yeah, that's a great question. I would tell you, I think the dealer should be focusing in on two main areas to consider, and the first one is you should log in every day as there's always fresh inventory and prices do change. And then the second one is saved searches on the website are really efficient and the websites will text or email you in specific vehicles you're looking for are available. So it's a great way to be efficient and effective at the same time.
SS: You talk about how a lot of the auction activity has shifted to digital platforms. If I'm a dealer, large or small, the question I think that I would have is, "Do I have the right people to really effectively operate on these digital platforms to use them effectively?" Can you talk a little bit about that? Do I need to have somebody highly skilled in this area to start dipping my toe in the water and starting to experiment with these online auctions if it's something relatively new to my business?
SK: Yeah, that's a great question. I think what we see out there is dealers have people engaging at all different ages and at all different backgrounds relative to how long they've been in and around the business. I think technology has really enabled the transition. So, many dealers are leveraging technology to enable folks that maybe have less experience and have had less history around this side of the business relative to how to transact on auction sites and what the relative current market value pricing is, which makes and models are popular and where demand is at. So a lot of tools out there gathering that data and are at the fingertips of dealers that are subscribing to it. So it's enabling pretty much anyone to go in there and push the buttons and make transactions.
SS: And we've been talking for the last few minutes around the transaction, the sale side of the business, but we all know there's an entire other side of the business and that's the service. Some have even suggested that the service lane can become another resource for finding sellable used vehicles. What can dealers do to build awareness and procedures among service employees for identifying potential opportunities to acquire vehicles?
SK: Yeah, the the service lane is is a very, very has become a very, very important part for dealers. And certainly with the opportunity on the used side in the inventory, I think the biggest thing that we see is training is obviously very important and then building a regimented approach for the service advisers to follow. In today's environment a little tougher than than it was pre-pandemic, because in some cases we're seeing dealers don't necessarily have the alternative vehicle for the consumer. So that transaction in the cell, if you will, or purchase of the used vehicle at the dealership level is a little tougher in this thin inventory environment that we're in right now.
SS: Why don't we close with any sort of tips or best practices. There's a lot of dealers out there that are working hard to make the most out of their used car sales in this fast moving market, new digital platforms, new ways of finding that inventory through digital platforms. Any best practices that you could offer to our our listeners?
SK: There's a couple of things that come to mind that I would share. I think the biggest one that that we see is you need to really consider turning your used inventory quickly. And if you can't, you should consider wholesaling out of it. And then the second one that's pretty important is I would leverage and invest in technology everywhere you can. It's a win for the dealership. It's a win for the employees, and it's certainly a win for their consumers.
SS: Steve, thanks so much for joining us today, very informative in sharing your perspectives on the future of the digitization of online auctions. Appreciate you spending a few minutes with us.
SK: Thank you, Steve. Appreciate the time.
SS: That's a wrap on the first episode of the All Ears podcast. Stay tuned for future episodes in the series designed to help those working in automotive retailing navigate the road ahead. On behalf of Ally and the Automotive News Custom Content Studio, thanks for joining us.