The auction visionary: Selling 1.3 million cars a year

Welcome to another edition of the Car Dealership Guy Podcast Summary.

Today’s guest is Shiv Dutt, senior vice president of OPENLANE, a digital wholesale platform serving dealers across the U.S. In this episode, Shiv discusses the importance of incorporating digital technology into the car business and the trends he sees developing in areas ranging from pricing to dealership management.

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1. The relationship business.

The car business is all about relationships. Shiv explains that his tenure at OPENLANE began thanks to his being friends with the company’s leaders, who felt that an outsider’s perspective could better tackle the challenges dealers face in the current car market. Since Shiv had a thorough knowledge of technology and entrepreneurship, while still being relatively new to the auto industry, he was a perfect candidate for a role at the firm.

2. Antiquated mindsets.

Being an outsider, one of the things that surprised Shiv when he first began to acclimate to the auto industry is how traditionalist it can be. One of the most common refrains he recalls hearing during this period was “We don’t have to worry about that in the car business.” Shiv urges dealers to forego this antiquated mindset, since it leads them to think that lessons learned by other industries won’t apply to the car sector. Forward-thinking mindsets are crucial to staying ahead of the competition, regardless of the business.

3. The wholesale landscape.

The current wholesale landscape is ripe for disruption, with new opportunities to drive profit and performance appearing around every corner. Out of all these new avenues for improvement, optimization and personalization are some of the most exciting. Shiv explains that dealers have more than enough data to identify the right buyer for any vehicle. Unfortunately, the process to do so still takes anywhere from 20 to 30 days. Speeding up that process and getting vehicles into buyers’ hands faster will have a massive impact on the entire wholesale landscape.

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OPENLANE - National reach, comprehensive inspections, and a range of inventory, from dealer trades to commercial and off-lease exclusives. Learn more at openlane.com.

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4. OPENLANE’s role.

OPENLANE manages the entire wholesale journey, overseeing 1.3 million transactions per year. This includes everything from identifying vehicles for sale, conducting inspections and connecting buyers with sellers. All of these processes are done digitally, with a variety of services in place to serve various kinds of sellers and buyers. For example, OPENLANE offers both a 24/7 marketplace as well as timed auctions, so that dealers can either plan ahead for when they want to shop for inventory or take better advantage of their down time. The company also provides comprehensive post-purchase services, including logistics, floor planning assistance and arbitration, as well as a buy-back guarantee if dealers don’t like their vehicle.

5. Why digital?

Shiv explains that OPENLANE transitioned away from physical wholesale events so that it could focus on its strengths. While he acknowledges that in-person auctions have their benefits, he warns that businesses who over-diversify often lose specialization in critical areas. By becoming fully digital, OPENLANE is able to focus solely on developing technological solutions for the countless challenges dealers face.

6. Making it easy.

When it comes to the auto industry, Shiv sees three primary trends. First and foremost, the wholesale process is becoming easier for both sellers and buyers. This is great news for dealers, who work under heavy time constraints and only have so much time to spend on administrative tasks. By outsourcing some of that burden, whether through digitization or better customer service, dealers can spend more time on enhancing the customer experience. One of the areas in biggest need of optimization is vehicle inspection. Shiv notes that OPENLANE is already looking to make this process more efficient through the use of its artificial intelligence platform, Visual Boost AI, which can help identify damaged components by analyzing images.

7. Shop my way.

The next big trend is giving buyers more control over how they purchase vehicles. In-person retail has survived the digital revolution and will continue to thrive well into the future. However, even though only 10% of shoppers buy a vehicle fully online, Shiv notes that the vast majority of consumers use an omni-channel approach, one that incorporates both digital and physical retail practices. This means that dealers can’t afford to ignore their digital experience any more than their in-store experience. Digitization also allows dealers to accommodate certain customers without sacrificing the needs of others, ultimately improving satisfaction across the board.

8. Decentralization.

The final trend Shiv discusses is decentralization in the dealership management chain. While big dealership groups have thrived through careful cultivation of their brand image and leadership expertise, the individual storefronts that make up these massive entities know their local markets better than the corporate office. Shiv believes that, as time goes on, local dealers will be given more freedom to make decisions based on their customers’ needs, while the groups they belong to will gain better insights into the unique circumstances of each market.

9. What do good dealers do?

Shiv believes that the best dealers always put the customer first, remaining committed to transparency in every step of the transaction. Doing this is more challenging than it may seem, however. While many dealers know they should incorporate customer feedback into their operations, Shiv explains that there is a difference between listening and hearing. To really understand their clients, dealers must identify the root causes of the issues they are facing, which requires a deeper level of analysis than simple listening can provide. 

10. Pricing trends.

OPENLANE overseas a massive portion of all off-lease inventory in the U.S., getting data insights into the car market before anyone else. The biggest trend happening now involves car prices, which continue to fall heavily on the dealership side. In June, prices were falling at roughly one-half point every week. The response to this has been equally interesting. While buyers consistently expect prices to fall even faster, sellers are determined to hold out, keeping prices high even if it takes longer to close the sale.

11. Principles of excellence.

OPENLANE wants to make wholesale easy, and in order to do so, Shiv plans to uphold five core principles. 

1: Enable customers to buy/sell their way by refining OPENLANE’s digital tools and introducing new services. 

2: Expand the scale of OPENLANE’s services, giving dealers access to everything they need in one place while increasing the type of inventory available to buyers. 

3: Speed up the process by making the vehicle inspection process more efficient and connecting the right buyers with the right sellers as fast as possible. 

4: Lower costs by improving transparency, which helps reduce arbitration, and improving the average revenue per unit, which will allow the platform to charge lower fees. 

5: Build trust by making the process as transparent as possible. This means that sellers and buyers can have more confidence in their wholesale provider, freeing up time for dealers to spend on serving customers.

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