Consolidating Our Way To the Bottom
That was my first thought after seeing an article last week about the vAuto integration getting tighter with the Auto Trader side of the business.
I never purposely poke at our competition, but I think dealers should be asking themselves how much control they want a vendor to have in setting their market prices and margin. The Cox companies are working hard to complete the ownership of the entire vehicle lifecycle. They’ve got Manheim on the wholesale side owning auctions, condition reports, remarketing. Then you have vAuto setting the market values on what “you should pay” to make sure that you’re competitive on the retail side, depending on how much margin you want to make. (We know if you follow their buying guidelines 100% of the time you’d watch your entire used stock disappear.)
There’s also HomeNet, which controls inventory distribution to the online channels. We then cross the great divide to retail, with KBB driving retail values, Trader as the marketing channel, and now vAuto showing comparative retail market pricing to the consumer (so you can make sure you’re priced in the upper quartile for most competitive pricing).
Holy cow – talk about driving a race to the bottom! This has gone beyond visibility, data, and analytics and crossed into what seems to be an uncomfortable level of control over a dealer’s inventory, the price at which it’s acquired, and how much it’s sold for in the retail space. What’s happening with the level of control Cox now wields over a dealer’s supply and demand should make any business owner consider whether or not this is healthy for the industry, and for the market as a whole.
Todd Dearborn
VP Sales, CarsDirect
310.280.4282
todd.dearborn@carsdirect.com
