Market Conditions Commentary
 
The launching pad of ideas: Auto Trader, the market, and a quick thought on the incredible misunderstanding of the power of industry transforming technology and Simulcast (with a large S out of respect)
by Robert Hollenshead
Jan 28 2012 10:37AM

First:   I want to tell you guys and girls something.  Auto Trader is a first class company, no, Chip Perry and his crew are truly in a class of their own.  They put on an annual meeting that was really incredible. More importantly, they showcased the group of companies that they have assembled that is changing the future of the car business.  I am extending a person invitation to any Auto Trader employee to join me in action, on the auction block, on any given Friday.  If you thought Kid Rock was good at the ATC party, let me let you experience some live electricity in the action lanes, where the market is made, before it is analyzed.  You will not be disappointed and your eyes will be welded open.


 If anyone left that event of more than 1,500 people and has anything but fantastic things to say about the company they work for, don’t listen to them and definitely don’t hire them because you can’t be a better place to work.  They will eventually have worse things to say about you.  The group of companies Chip Perry and his group have put together are the best in their class and the cumulative result is an organization that will reshape the future of the car business.  This ain’t no advertisement or a butt kiss. It is my observation. I am a guy that built and operates  a half billion dollar business at the grass roots of wholesale and has an insider’s view of Auto Trader.  Ideas do not scare Chip.  He gets ideas.


 Since ideas are a forte of ours, it is a good place for us.  A rocket must have a pad to be launched from.  They don’t build rockets at Cape Canaveral.  They launch them there.  A “brand” is a launching pad for ideas.  Without a launching pad ideas are fun to play with and are costly, mentally and financially.  Plus,  they have little chance of coming to fruition or realizing economic gain. 


When ideas and dreams have a brand to launch from only the sky is the limit.  And buddy, coming up with solutions are not our problem.  We have a chest full of them.  They are designed by a dealer that understands the circumstances.  It looks to me, the guy in the laboratory,  that we have at least one launching pad to put these babies into orbit.  Trade in Market place was the first of a pile of solutions, designed by a dealer for dealers;  a new kind of market report that includes ALL the information you need to make informed decisions, a condition report that is universally understood and guaranteed, a web based video game that will make a dealer’s job of sourcing cars the right cars infinitely easier (I know it sounds crazy, but when you see it and understand it, you won’t believe it, it’s wild), a diminished value product that will help us get beyond the insanity of the bad information on the vehicle history reports we are now subject to, and a wholesale holdback product that can rearrange the remarketing business overnight.


 These are but a few of what we have in the oven.  Each one is designed to make a dealer’s world better, more efficient, and increase your credibility through transparency.  Sounds like a pile of poo you say?  Make no mistake Jake, you will love each one of them and the other ones coming close behind.  We are finally moving toward the launching pad.  And with the other projects that are in the staging mode that are not for them, we have a couple of other launching pads that are ready and chomping at the bit to take off from theirs.


 I truly feel blessed to be alive at this time.  While the world in some aspects is falling apart, we are in the infancy of change regarding the adaption of technology to the automotive remarketing industry.  This will be seen as the “good old days” in the future. 


Second and on the market:   I got back from Vegas on Friday morning and couldn’t get to sleep until about 4AM, got up at 5:30 AM to go to the sale.  At 60 years old, my tank doesn’t carry as much fuel as it used to.  I was exhausted.  But when I hit the corner on Rt 72 and the adrenalin kicked in, reality of having many hundreds of foster cars needing a new home, I was pumped (it’s stunning to me that after decades of doing this that “game time” hasn’t lost it’s luster…it’s exactly like knowing you are going to get into a fight…fight or flight kicks in…we choose to fight, amazing). I wasn’t around all week and was cringing thinking about what I was going to find.  What I found was, everything was chilly, copasetic, ready to rumble…and rumble we did.  The auction had 7,000 units and sold 3,000.  Lane 22 sold 96.9% of our total.  I believe a new January record.  Simulcast was ripping.  Thank you each and every one of the 789 participants of simulcast in our lane.  Homer Skelton of Memphis, Walser of Minnesota, Texas Direct of Houston, Atlanta Luxury of Atlanata, Car Max of everywhere, Brenda from A&G Norfolk, and that stinking Tony from Kar Smart of  Louisville.  I can’t make a profit on that boy to save my butt.  That’s Kar Smart.  The name ain’t no joke.  This kid really is smart.  If he is bidding, don’t even think, just bid.  He did his homework and the car is flat out worth the candy…without exception.  His Daddy taught this boy well. 


There was 90 other guys bidding and I am not trying to be disrespectful by not mentioning you.  I sincerely appreciate and honor your trust in me.  It has come through decades of torture, but I think it is now clear.  It is not an accident that we not only sell more cars than anyone in the world, dealers from everywhere  “trust” me.  I will not let that trust be betrayed.  If you have issues, do not call the auction, call me.  I promise you I will get you straight.  This ain’t no one way street.  Don’t take advantage of my offer as one of being stupid (even though I might be) and I am here for you.


I could see some real hunger from the mid-west guys.  It looks like they are near desperation for inventory.  If a car doesn’t look like a rental or something that is back off lease from BMW or MB, buddy, they are flying.  The junk market, under $12,000 units, showed a bit of a spark.  Trucks are ripping and are all going west.  I guess when you sell $8,000,000 of merch in a six hour period at 96% conversion in a 40% marketplace in January, you shouldn’t bitch. 


Third:  One last thought.  I constantly get asked a really funny question.  How do you control regional variation for pricing on Trade in Marketplace?  This is so comical and so indicative of the lack of knowledge of the wholesale business.  These questions actually come from “experts”, people that run large well known industry companies.  They have zero comprehension of the wholesale industry.  It is surrealistic when you think about it.  And they are serious, that’s what’s scary.  I am guaranteeing the value on 50,000 units a week on Trade in Marketplace.  They are in every corner on this country.  I sell thousands of cars per month, more than any car dealer in our country.  Here’s the point;  I don’t sell 5% of my cars locally.  They all go places outside our local market, so to think that there is some regionality that we miss in actual hilarious.  A correct Condition Report, trust and a Simulcast product and voila, regionality is a thing that seems valid, if you don’t buy and sell.  It would be logical if you have no market experience, rely on the paralysis of analysis and haven’t  experienced simulcast or the ball shaking reality of needing to sell 700 cars, that you own with your cash on the line, in an afternoon.


Regionality  is a thing we took advantage of when we were children, running cars north and south east and west…in the 80s…you know, when K cars were hot and custom vans just kicked in , Córdoba’s and Buick Somersets (remember them, two tone blue and beige, couldn’t sell them new, but them clocked  babies were  firecrackers used) were on fire in different zones, but that was primarily due to going through the time machine in the process. I see this as if it were in a laboratory under a microscope. 


With condition reports and trust there isn’t a corner of this continent we don’t do business with (with the exception of Wyoming, but I’m not sure Billy goats or moose are buying cars so they are not statistically important).  So my suggestion and invitation to the brain trusts that have never participated in the actual marketplace, but voice a full throated naïve opinion with zero skin in or experience in what the real market is, come on out to the Wall Street of the wholesale market.  Dip your toe in the water of understanding.   Watch the actual market in action (I had 39 states and 17 countries logged in on my lanes yesterday).  Then take that experience and start to form an “opinion” in fact, not an evaluation of half baked, incomplete statistics.  That’s like reading a page of Tolstoy and claiming to be an expert in Russian literature.  It’s silly.  But when you don’t know the difference, you don’t perceive how silly it looks.  No frets.  I have patience.  That’s what happens at 60 and after 40 years in a business that runs at 12,000 RPMs seven days a week. 


Sell Well, and don’t be such sissies, stick your two cents in.

Love,

Roberto

Robert Hollenshead

Founder and President


4 Readers' Comments

1
Todd Burt
MANHEIM
PA 17545
8 years ago
You know you're changing the Automotive industry when people are pushing past Kid Rock & Penn & Teller to get their picture with you! On my way to Pep Boys to get a four-point harness.... It's going to be a WILD ride!

2
Yakov Bandura
Syracuse
NY 13206
8 years ago
Hi Bob,

Yesterday was one hell of an auction. Lots of fun. I logged in just to watch and see what's going, but ended up buying 10 cars. Didn't spend a lot of doe, but I know I am ready for tax season. Nice cars with nice history on them. I know I'm making money on them for sure. Everybody that paid attention yesterday will make some good doe in the next 30 days. Thank you very much for what you do for us. Sell well. Don't drive fast. Have fun!

3
Tyler Rombough
North syracuse
NY 13212
8 years ago
Hey Bob,
I actually spoke to you on the phone one time and to me it was as if I just got to talk to Michael Jordan after the big game. It was something I will never forget. I was 24 when I started reading your market conditions blogs and now I just turned 29 and when I get the email notifications that you have a new commentary I stop whatever I am doing to read it. It re-charges my batteries, gives me infinite confidence and more than anything I know I have access to insider information. I am no expert in the business, but I have do have a tiny bit of skin in the game. You make it fun for me to do what I do, I live and die by the energy of the auction arena, and I cannot thank you enough for sharing your wisdom with all of us regularly. I aspire to have your outlook, knowledge, and instincts one day. Thank you for all you have taught me, and thank you for putting a smile on my face every time I walk into my office and log on to Lane 22. If I ever had my picture taken with you it would

4
Robert Hollenshead
MANHEIM
PA 17545
8 years ago
Guys, that means more than money to me. We all do this to make money, but the fact that anyone sees me as someone they see as an inspiration, is an inspiration to me. Thanks for you confidence.