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We Are Ready

The editor looks back at some of the positives that came out of the Great Recession and explains why that painful period has the industry prepared for whatever the future holds.

April 6, 2016

Nothing tests a journalist’s skills more than a good credit crisis, an economic downturn and an ensuing recovery. But what’s really neat about covering economic cycles is we journalists can sit on the sidelines and see firsthand the positives that come out of those painful periods.

One of the positives I witnessed is the evolution of dealer technology. And from what I observed, it was the used-vehicle market that drove those innovations and got dealers to finally start embracing the Internet. And there were two pivotal years for dealership technology: 2009 and 2014.

So let’s go back to the National Automobile Dealers Association (NADA)’s 2009 convention. There were plenty of storylines coming out of that show, including the state of the auto finance industry. But there were also big announcements coming from providers of inventory management systems.

It wasn’t that software makers were adding new bells and whistles. In fact, I keenly remember them talking about how they had simplified their offerings by removing features dealers weren’t using. What was the hot topic in that space were the partnerships tech vendors were forging with firms like Black Book, Manheim, NADA Used Car Guide and even vehicle history reporting firms like Experian Automotive and Carfax. Yeah, those announcements weren’t very sexy, but they were critical to the innovations we’re seeing today.

And that integration continued into 2010. In fact, the big announcement that year was Dale Pollak’s decision to sell vAuto to Cox Enterprises, connecting the company he founded in 2005 to three gigantic retail and wholesale marketplaces in Manheim, Autotrader and Kelley Blue Book. I talked to Dale about his decision in July 2014, right around the time the three brands reorganized into a single unit we now know as Cox Automotive.

“I saw the possibility of being able to create solutions that would otherwise not be possible because I wouldn’t be able to get the cooperation, data, etc., from these companies unless I was a part of them,” he said at the time.

During that 2014 interview, Dale talked about the next phase in online vehicle buying, and, well, what he described sounded a lot like Cox Automotive’s MakeMyDeal online selling system, which had become commercially available the month prior to our interview. But what had him really excited was a wholesale tool and strategy the company was developing at the time. Dale said it would be “game-changing for the future of the wholesale industry.” The expected rollout of that solution was 2016.

Well, at this month’s 2016 NADA Convention & Expo, vAuto debuted what it calls a “game-changing innovation.” The name of the tool is Stockwave. And according to the company’s press release, the system is designed to assess a dealership’s used-vehicle inventory based on its current sales velocity and market conditions for specific vehicles. It then shows vehicle segments where dealers should acquire more inventory or reduce units in stock. And through integrations with auctions across the country, including Manheim competitors like ADESA and SmartAuction, Stockwave automatically shows the wholesale vehicles that fit the dealer’s used-vehicle portfolio.

See, what we’re witnessing is the next evolution in retail technology. These systems are not just delivering the data, they’re telling you what it means.

Heck, here’s how Black Book described its new connection with DRIVIN’s proprietary trading platform: “Black Book will power the vehicle valuation service of DRIVIN insights, a first-of-its-kind dealer tool that turns 100 million data points into actionable stories for a dealer’s lot and local market, based on consumer shopping trends, local market supply/demand, optimal inventory levels, and unique dealer behavior.”

There was something else that was noteworthy about 2009 and 2014. See, during both years, market observers tossed out “Year of the Used Car” predictions. And as you all know, 2009 was exactly that, but not for the reasons we hoped. Overreaction to rising gas prices, rising unemployment, shrinking margins and pricing transparency created a volatile environment that had more losers than winners.

The situation improved by 2011, as vehicle production that was down but growing helped support a favorable used-vehicle market. But in the summer of 2014, several trends began to emerge that had many market watchers predicting a price correction by the end of 2015. As you all know, that didn’t happen.

Well, most market observers believe change is coming to the used-vehicle market, as you’ll read on Page 16. No, that’s not my message this month. I just wanted to show you how far we’ve come and how ready I think we are for whatever’s ahead.

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