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Recon Business: Rolling With The Tech Changes

Recon business: Rolling with the tech changes

The times are changing in the auction and wholesale auto business, and Vince Kovatch says that ADESA continues focusing on offering multiple formats of reconditioning, “whether that car stays on our property and is sold through the lanes, or that car is sold upstream and is now residing on a dealer’s lot.”

“The time you have to recon that car is shrinking,” said Kovatch, who is vice president of remarketing services for KAR Global, ADESA’s parent.

Kovatch leads KAR’s Dent-ology business, which provides recon services such as body repairs and paint. He says KAR is working to offer dealers and other customers “the ability to recon that car wherever it lies.”

“So, in terms of our focus and ADESA’s focus on recon, it’s about adapting to customer needs and keeping up with the changing times in terms of how cars are sold,” Kovatch said.

At Manheim, the company has also adapted to the changing technology, and reconditioning is also becoming a bigger area of focus.

“We really have put a lot of intense energy on it,” said Manheim vice president of reconditioning Tony Markese.

Markese says Manheim sees the auction business changing significantly, with disruption by “digital avenues that are now available.” Manheim foresees more offsite transactions in the future, and the company still plans to be part of those transactions, Markese said.

“But we expect to see fewer cars at auction at the physical locations, and that leaves us a great opportunity since we have a lot of pavement, and we have the biggest reconditioning facilities already that it opened up a new avenue for us for new reconditioning clients as we look into the future,” Markese said. “When you look at what we call new form retailers that sell digitally, when we look at the mobility elements of fleet management and Ubers and Lyfts of the world that need vehicles reconditioned … we’re really excited about the opportunity.”

Auctions are stepping up their work in the recon area while keeping up with the changing times. Meanwhile, service providers such as vehicle reconditioning software company ReconVelocity and reconditioning services company CARS Recon are right there with the auction companies in rolling with the changes.

Tech opportunities, challenges

If you ask Manheim’s Markese how reconditioning a vehicle is different than it was five to 10 years ago, he says he will provide two answers. The first answer centers around technology.

Advanced driver assist systems, or ADAS systems, on vehicles are creating opportunities and challenges for the company. Those systems must be recalibrated, and recon staff must be sensitive to them when doing work such as painting bumpers and repairing windshields.

“So, I see on one end the world is different because we have some new technologies that we have to deal with and create opportunities in reconditioning,” Markese said.

His second answer centers around clients.

“We see this new form kind of retailer that is looking to have physical footprints all over the country, and they are looking for partners,” he said. He mentioned parent comapany Cox Automotive’s recent announcement that it was investing $350 million in transportation and technology company Rivian.

“Those are the kinds of clients that really as we look forward, create a lot of opportunities for us in the reconditioning area,” Markese said.

To take advantage of those opportunities, companies must have enough people to perform the work. Markese mentioned Manheim’s launch of an apprentice program earlier this year. Participants go through a 12-week program and then become a technician at a Manheim reconditioning facility. The company also launched a new apprentice program for body shop technicians.

Filling in the gaps

KAR’s commitment to reconditioning was evident as it acquired Dent-ology at the beginning of this year. The company was looking to increase its ability to augment ADESA’s service offerings, Kovatch said.

“You think of ADESA’s recon services, conventional body shop repair type stuff, what ADESA and KAR were looking to do was to offer some of the services that historically had to be sublet, because we just didn’t have the competency, so that would include wheel repair, PDR (and) interior repairs,” he said. “We wanted to start bringing all those services in-house and offer them to our ADESA customers, but then also have the capability to offer those services outside of the auction walls. That was a big part of the strategy behind the acquisition of Dent-ology.”

ADESA and Dent-ology’s focus on recon and overall focus, he said, is about adapting to customer needs and keeping up with the changing times regarding how cars are sold.

The company is also keeping a pulse on its reconditioning facilities, Kovatch said. The company possesses what he describes as “a unique set of assets” in terms of real estate and equipment, and he feels not many other companies possess those capabilities.

ADESA continues looking at ways to offer those to fleet companies and “mobility-type companies,” Kovatch said. He sees his company as having the assets those companies need, and ADESA has the ability to do “high-production, high-volume, high-quality repairs,” he said.

The company, he said, is looking at “How do we start positioning ourselves to service cars that aren’t necessarily even seeing the lanes? They’re just in the lifecycle of their fleet service. That has become a bigger focus of ours: How do we start to step into that market and become a resource for fleet mobility-type companies.”

Recon vendors also roll with changes

Hugh Hathcock is definitely all-in when it comes to the reconditioning business and helping the remarketing industry keep up with the changing times. His company, ReconVelocity, officially launched in August.

The company describes the reconditioning process as an overlooked area of opportunity and says it brings “sophisticated technology and pit crew precision” to the reconditioning process. Hathcock says the product can help dealers “turn reconditioning into a profit generator.”

The reconditioning process for the average car dealer is the same as it was 20 years ago, Hathcock said.

“They’re manually doing it, putting it on a spreadsheet. Maybe some of them have moved into a Google doc, probably 30 to 40% of the total new car dealer body have moved into a Google doc … that’s something they created to keep up with it,” Hathcock said. “Eighty percent, it’s really probably 90%, of all new car franchised dealers aren’t using a software technology tool to keep up with their recon process.”

Industry members are increasingly becoming aware of the value of reconditioning, said CARS Recon president and chief executive officer Ron Hope.

“I would say there’s probably more awareness being focused on recon right now than there has been since the 1990s,” he said. “The advantage of a properly prepared car has been identified beginning with the dealer group, I believe.”

He added, “If you properly look at the vehicle and you’re smart about spending your reconditioning dollars, you should realize a return of a minimum of three to one for every dollar spent.”

Source URL : https://www.autoremarketing.com/wholesale/recon-business-rolling-tech-changes

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