KAR Global is shifting all of its U.S. TradeRev customers to BacklotCars, the company said Wednesday as it reported a fourth-quarter loss of $17.1 million.
CEO Jim Hallett said in an earnings call that dealers seem to favor BacklotCars' 24/7 bid-ask marketplace, vs. the timed auction of TradeRev, and that the inspection process used by BacklotCars is expected to lower costs for the company and give greater consistency on condition reports.
"And most important, we believe the price realization on the BacklotCars platform in the U.S. outperforms the competition in the U.S. market," Hallett said.
The TradeRev brand name will live on in Canada. KAR bought 50 percent of TradeRev in 2014 and acquired the rest of the company in 2017. The rollout hit speed bumps thereafter. KAR said at the beginning of last year that the rollout of TradeRev weighed on its results for 2019. Hitting the reset button, the company adjusted its ADESA auction and TradeRev sales forces to share duties and prevent overlap.
Asked about the rollout Wednesday, Hallett said, "I think we got beat on our go-to-market strategy," he said. But Hallett said they "learned a lot" from the Canadian product, which remains the leading digital dealer-to-dealer marketplace north of the U.S. border.
"We thought we could just bring that to the United States and drop it in, and that wasn't the case," he said, adding that dealer behavior is different in the U.S. BacklotCars, on the other hand, was able to develop a product more in line with how American dealers operate, such as with the bid-ask marketplace, which essentially gives dealers up to three days to sell and bid on cars.
KAR bought BacklotCars in November for $425 million.