Changing the Rules

Jeffrey Schwartz was named president of Mota Motors this past November after serving as the president and CEO of Autobytel. In his first year on the job, Schwartz is looking to revolutionize how used cars are sold and marketed online. To that end, he and his team have created a new program designed to certify the “uncertifiable.” … And he makes it clear that his company has no interest in getting into the pricing game.

F&I: Tell our readers what you’ve been up to.

Schwartz: Well, as you know, I’m one of the directors of U.S. Auto Parts, which we took public four years ago. Since then, I’ve been looking for the next big idea, and I think the next big idea is certifying used cars. So, Mota is going to be the launch pad for this new way of doing business.

F&I: Wasn’t Mota launched as an inspection service for private sellers?

Schwartz: That’s right. The business was about creating these private-party classified sites. So, if you’re a private seller using AutoTrader’s premium classified service, that’s our system. And after performing thousands of inspections nationally, we got quite good at it. But we also learned that you’re not going to make a lot of money in the private-party business. That’s when we decided to create a service designed for dealers, financial institutions and the remarketing channel. It’s called SureSale.

F&I: How does it work?

Schwartz: Basically, it’s a certified pre-owned marketing program. So, every vehicle that gets SureSale-certified must be inspected by an independent inspection company. And every certified car comes with a five-month, 5,000-mile comprehensive limited warranty. We also offer a series of wrap service agreements, which offer coverage from 12 to up to 36 months. We also offer a five-day, 500-mile buyback guarantee. And we deliver all of this through a very slick online application.

F&I: What will dealers see on their end?

Schwartz: Using the SureSale application, dealers can upload their inventory. Then we’ll check about 50 to 60 different title brands to make sure the car is eligible for certification. And just so your readers know, we can certify cars that are 15 years old or have 150,000 miles on the odometer, so we’re really going after a range of cars that were “uncertifiable,” if you will.

What we’re really creating here is a highly branded, third-party, independent CPO brand. And once the dealer’s inventory is uploaded, we track the VINs and then schedule a 130-point inspection, which usually can be completed within a day. And while performing the inspection, the inspector will take 20 photos of the car, and then he’ll push a button to indicate that the vehicle has passed the inspection.

F&I: So, who’s doing the inspections?

Schwartz: It’s a large testing and measurement company, and they are able to go anywhere to perform inspections. The reason you need an independent inspection is because some states require that in order to call a vehicle certified. But doing so also dramatically improves the pricing of the vehicle service contract. It can literally cut the contact cost down by 30 to 40 percent, a benefit we pass along to our dealers and consumers.

F&I: Is there a no-haggle pricing requirement?

Schwartz: We have no position about the purchase price, but we have a strong opinion about the price of the vehicle service contract. We’re giving dealers very generous commission opportunities on those contracts, but we’re requiring that they sell the plans at a fixed price. The reason for that is customer satisfaction, which is very important to us.

F&I: So, you’re not telling dealers how to price their vehicles?

Schwartz: I have no interest in telling a dealer how much he should sell his car for. There are other guys that are smarter than me that will try and figure that out. Look, there were 35 million used cars sold last year, 1.7 million of which were certified by a factory program. That means there were more than 30 million cars that were sold and didn’t get certified.

And that’s the segment we’re targeting. See, price is only an issue in the absence of value. If you’re arguing over price, you’ve already lost the value discussion. And that’s how SureSale is going to change things. Remember, according to J.D. Power, CPO is worth $2,300 to a consumer. According to AutoTrader, CPO is worth closer to $3,000.