Courtyard of KAR Auction Services headquarters. ADESA, part of the KAR Auction Services family, has experienced growing online sales and declining physical auction sales. 
 - Photo courtesy of KAR Auction Services, Inc. 

Courtyard of KAR Auction Services headquarters. ADESA, part of the KAR Auction Services family, has experienced growing online sales and declining physical auction sales. 

Photo courtesy of KAR Auction Services, Inc. 

The wholesale industry is in the early stages of a digital transformation that's boosting sales at ADESA, KAR Auction Services CEO Jim Hallett said during the company's first-quarter earnings call earlier this month. Online sales have driven 7% in overall volume growth during the quarter, and have helped offset waning sales at physical auctions. 

Looking at the sales volume growth at ADESA over the past two years, the numbers back up that statement, as ADESA has experienced year-over-year online sales volume growth every quarter since the first quarter of 2016.

The same was true for physical sales volume for most of that time frame until the third quarter of 2017, when physical sales volume dipped for the first time, falling 1%. During that same quarter, online sales volume was up 34%.

In the fourth quarter of 2017, physical sales volume was down 3% and online volume was again up 34%. In the most recent quarter, physical sales volume was down 6% while online volume was up 44%.

"Let me say that this is a trend that is expected to continue," Hallett said during the first quarter earnings call. "We are clearly in the early stages of a digital transformation in the wholesale used car auction business. This is not the first time that we’ve seen transformation coming."

KAR has rebooted its Openlane upstream digital remarketing platform and incorporated the technologies from its acquisitions of Drivin and TradeRev. Drivin provides data that helps used car dealers set prices based on their local marketplace. TradeRev will provide Openlane with its artificial intelligence. Openlane has helped KAR grow its private label volume from under 300,000 vehicles sold in 2012 to nearly 1 million sold in 2017, Hallett said.


Related: KAR Revamps Openlane Upstream Digital Platform

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