5 Mins With ADESA UK MD Jonathan Holland

Jonathan Holland, the head of online vehicle remarketing business ADESA UK, outlines a need for the industry to sell a vehicle before it leaves its current keeper.

What is ADESA?
Owned by KAR Global, we trade on the US Stock Exchange and we’re highly relevant in North America, where we compete in two markets, forming a duopoly. Two or three years ago there was a focus on global expansion, and this brought about acquisitions and new business start-ups, including that of ADESA. Our focus is online remarketing. However, the whole market is in that space to some extent following the speed of change prompted by the COVID-19 crisis.

So, how is ADESA different compared with the main market players?
Our position is very much that of a disruptor. Our proposition is different in that we focus on upstream remarketing. Downstream is where you move a vehicle to a facility and get it reconditioned and prepared before it is moved on again to a buyer following a sales process. Even if you trade online you are not really availing yourself of the advantages that can be offered by upstream remarketing. In upstream remarketing a vehicle is sold before it is moved from its current keeper. It removes the need for various movements – to storage locations, reconditioning sites and auction houses, removing cost and speeding up processes.

If you can remarket a vehicle faster, then you can reduce the days to sell, the stocking costs, the logistics – costs which we call ‘total cost of disposal’. Our average days-to-sell is three and we also offer a total cost of sale calculator, so those cost benefits are transparent. The ability to reduce vehicle movements also reduces CO2 emissions.

Who benefits from those savings?
I’d say the majority of the savings would lie with the owner of that asset, which is traditionally a fleet at source, but it’s also dealers who are remarketing vehicles. Upstream remarketing does give dealers access to fresher stock, which does add value. 

What have been the key changes to your businesses resulting from COVID-19?
The first thing it did was really help the online remarketing journey from a car retailer’s perspective because many had been very sceptical about buying vehicles online. While there are clearly still improvements to be made, the pandemic has forced the market to make that switch. All of a sudden, we have industry players who said they’d never transact online, doing just that.

And the key challenges posed by the pandemic?
I’d say the past year has been quite unpredictable. Supply and demand have been fluctuating. As we came out of lockdown last year there was this significant pent-up demand and supply was still languishing further up the chain. This lockdown has been slightly different in that supply chains have remained open. However, with contract extensions and the impact on the new car market, supply is affected and demand has been very much up and down.

I think, to some extent, we are in the same boat as everyone else. The supply is out of our hands. It’s determined by contracts coming to a close.

So, does ADESA have any of the physical infrastructure which is part of the make-up of a ‘traditional’ remarketing provider?
We do have three defleet locations where we can provide a variety of services. Our primary focus is to sell any vehicles before they come into the locations, but we know we can’t sell every vehicle before it needs to be moved. We have 14 acres in Newbury, 21 in Doncaster and four-to-five in Edinburgh. To what extent we might prepare a vehicle depends on our client. For certain clients who want SMART repair, we do that. Other clients are keen to gain the full benefits of speed of sale and will deliver vehicles directly.

And what about ADESA’s UK workforce and management make-up?
We have 100 staff in a variety of roles. A big element of that is IT, but we have sales staff. We have a team developing buyer relationships and vendor relationships and a traditional corporate structure. I think we have around 25 staff at our logistics sites in total. We have account managers. Dependent on the size of the client, they can develop a relationship, but we have many that now self-serve. We have a number of scrum teams that develop our software.

We’ve got a global platform that we’re developing and we’ve taken the view that we will never finish development. We’re always seeking enhancements and taking views from dealers about the product. In addition to that we have a self-inspection tool, which uses artificial intelligence (AI) to identify damage to vehicles, which means that, effetively, anyone can appraise a vehicle. We hope to create great transparency.

Retailers are keeping a close eye on used car values in the aftermath of COVID-19. Do fluctuations affect ADESA?
We’re facilitated by supply and demand and, if there are fluctuations, they don’t make a difference to us. 

What is ADESA’s top priority in 2021?
We’ve got the buyers and we’re looking for new sources of stock. Dealers will go where the stock is.