Lauer considers CarWave a success, and attributes it to two reasons.
1. The Internet. People can see a wider range of vehicles, and dealers can capitalize accordingly with vehicle inventory. For example, he noted a Lexus dealership he visited had a 2013 Honda Civic on the lot. While more affluent buyers are probably shopping for Lexus vehicles, a younger shopper may be after that Civic.
2. Margin compression. Dealers’ slimming profit margins on the vehicles they sell have led them to seek inventory that will turn over relatively quickly, Lauer said.
“So they’re searching wider for inventory that will do that for them,” he said.
Lauer calls CarWave an efficient way for dealerships to replenish their lots.
“Like anything, in any business, you don’t like to move inventory from one pile to another pile, one location to a central warehouse,” he said. “It’s always expensive to move it and store it. So now we’re allowing the vehicles to go straight from franchised dealerships to buyers.”
Buyers, namely other dealerships, pay for transportation. On each transaction, buyers pay a fee, which Lauer said is below brick-and-mortar auction rates. There are no seller or inspection fees.
Lauer acknowledges he is far from the only digital vehicle auction platform. The two largest auction companies in the U.S., KAR Auction Services’ ADESA and Cox Automotive’s Manheim, have online auction offerings, and Internet-based relative newcomers such as ACV Auctions and The Appraisal Lane are growing as well. “Other competitors really validate that this is the way to go,” Lauer said.
And, echoing the sentiments of digital retailers such as Carvana and Vroom, Lauer said the remarketing sector is highly fragmented, with tens of thousands of entrepreneurial dealers.
“So when you have a highly fragmented industry,” he said, “the cool thing about it is customers vote with their dollars.”
