3 trends shaping the future of the wholesale used car business

Leaders at the Wholesale Auto Insights panel during Used Car Week unpacked how affordability pressures, the rise of EVs, and technology are forcing a rethink of what it takes to win in this space.

1) Tech, people and processes: There was a lot of discussion during the panel – moderated by Joe Overby, senior editor of Cherokee Media Group – about technology, spanning the wider adoption of tech in the business. 

If there’s one consensus among panelists, it’s that tech investment is no longer optional. 

• “…when we think about the technology and the business, whether it be your marketers in this room, the buyers that are buying your cars or just the marketplace itself, to me this has got to be about ease of use,” said John Mathiowetz, Vice President of Sales and Strategy at IAA.

Tools that make pricing, condition assessments, and market trends easy to understand are table stakes.

• Steve Kapusta, Senior Vice President of Ally Remarketing Services, SmartAuction also highlighted how real-time data and AI are revolutionizing decision-making. Wholesale customers don’t have time to wait for batch-processed updates anymore. Real-time is the standard now.

Easier said than done: “…realistically, when you're building a marketplace to gain scale, it's difficult…you start realizing the option business is far more complex than just a bid button and buy button. There's a lot of logistics behind it, and you need support and infrastructure to back that up to deliver the client experience that they're looking for,” commented Jason Ferreri, Chief Revenue Officer of the America’s Group.

Overall, the message was clear: lean in or fall behind.

2) Physical auction presence: Amid all the talk about tech, one of the most buzz-about trends in the wholesale sector is the growth of physical auction sites, which was a topic of discussion in the panel along with the role of digital platforms in the auction business – a market that is expected to grow to $4.13 billion by 2029, according to a report by Statista.    

• “…dealers looking for a more complete retail ready type vehicle, meaning access to conditioning services from our consigner. So, brick and mortar is important, having those physical footprint (is) important,”said Ferreri.

“…my vision has always been land meets tech. And when it comes to that, you can't have one without the other if you don't want to take a meaningful share of the market. So if you are only a digital auction, you're really minimizing your opportunities,” added Jason McClenahan, CEO of EBlock.

3) Reconditioning: Another area discussed during the panel discussion was reconditioning and tech applications in the space. Reconditioning involves restoring used vehicles to a condition suitable for retail sale. This includes a range of services like mechanical repairs, cosmetic fixes, cleaning, and detailing to ensure vehicles meet consumer expectations. Dealers rely on reconditioning to speed up inventory turnover.

Why it matters: Today’s buyers demand vehicles that look and feel new, even when buying used. Reconditioning ensures dealers can meet these expectations without compromising profitability. 

And as EVs and hybrids make up a growing share of wholesale inventory, reconditioning becomes more complex. From handling battery maintenance to repairing advanced driver-assistance systems (ADAS), auction facilities must evolve their capabilities.

• “…access to reconditioning might be as important or more important now than maybe it's ever been, which is a little interesting to think about since we talk so much about hybrid environments and digital,” said McClenahan.

• “…[Carvana’s mega recondition sites] not only preserve the ADESA business, [they] enable us to continue to grow record, record rates…we've seen more growth in the last two years than we've seen in years, but we are combining that strategy with best-in-class reconditioning technology that we've never had available to the ADESA teams…we truly believe that this will enhance our offering,” added – Mike Caggiano, Executive VP of ADESA Operations.

Bottom line: The wholesale market’s ability to preserve the physical auction strengths that dealers rely on while meeting the growing demand for digital innovation — will undoubtedly define its future.

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