Connect with us

Auto

Car auction company KAR goes 100% digital years ahead of schedule

Published

on

An Indiana-based auction house is emerging amid the coronavirus pandemic as a technology company, and the disruption caused by the global health crisis has turned a three-year process into what could be considered an overnight success.

KAR Auction Services, based near Indianapolis, made a name for itself in the business of used car auctions.

As last year’s pandemic lockdown turned more companies on to remote work and homebound citizens to online shopping, in April the company took its auction services digital, CEO Jim Hallett told CNBC’s Jim Cramer Tuesday.

“We planned on going 100% digital over the course the next two or three years,” he said in a “Mad Money” interview. “We basically got that taken care of in the space of about two or three weeks and, quite frankly, it has exceeded our expectations.”

The process to digitize the auction house began about five years ago and by 2019, three-in-five car sales that KAR facilitated came through the web, Hallett said.

The company also doubled down on both digital and in the dealer-to-dealer market by purchasing BacklotCars, an online dealer-to-dealer vehicle wholesaling platform, for $425 million last September. BacklotCars serves dealers in 46 states across the country. Dealer-to-dealer transactions are a key business for KAR and Hallett said it auctions as many as 15 million cars annually under that umbrella.

Facilitating auctions online has given buyers access to more inventory than what’s available in their local market, while sellers gain access to a larger buyer base, Hallett explained. KAR serves 150,000 registered buyers in the U.S. Beginning in July, the company said it has faced a used car shortage in the wholesale marketplace.

“All in all, it’s been a win-win, and our dealers are really pleased and satisfied with how the digital model’s performing,” Hallett said.

The digital process has made the business more efficient, Hallet said, and the company’s cost of sales has declined in recent years. In the quarter ended Sept. 30, KAR reported a nearly 20% decline in its cost of sales, which followed a roughly 23% decline the year prior, according to Factset.

Through the first nine months of 2020, KAR also a saw revenue decline of 21%, measuring at about $1.66 million as the country battled through the pandemic. Revenue has fallen double digits for seven straight quarters.

Cramer noted that the company’s workforce is now below 10,000, down from 15,400 in April, suggesting that it was accompanied by an expansion in gross margins, or the amount of capital a company retains on each dollar of sales.

Despite the workforce reduction caused by the online transition, Hallet said he expects the company to recover jobs as its digital business grows.

“As you become a digital company and you continue to innovate … we will bring additional talent back into the marketplace so that we can support this digital platform and all of the digital acquisitions that were focused on as we go forward,” he said.

Since the start of the new year, KAR shares have climbed 11.50%, closing Tuesday’s session at $20.75, within dollars of its pre-pandemic price levels.

KAR shares finished 2020 down almost 15% as the market recovered from the coronavirus-induced shutdown in the first quarter last year. The stock has more than doubled from its pandemic lows of under $10 per share.


Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Auto

Govt plans to impose green tax on old polluting vehicles

Published

on

By

NEW DELHI: The government plans to impose a green tax on old polluting vehicles soon in a bid to protect the environment and curb pollution.
Vehicles like strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG will be exempted while the revenue collected through the green tax will be utilised for tackling pollution, the Ministry of Road Transport and Highways said on Monday.
“The Union Minister for Road Transport and Highways Nitin Gadkari has approved a proposal to levy a ‘green tax’ on old vehicles which are polluting the environment,” it said in a statement.
The proposal will now go to the states for consultation before it is formally notified, it added.
Under the scheme, transport vehicles older than eight years could be charged green tax at the time of renewal of fitness certificate at the rate of 10 to 25% of road tax.
“Personal vehicles to be charged green tax at the time of renewal of registration certification after 15 years; public transport vehicles, such as city buses, to be charged lower green tax; higher green tax (50% of road tax) for vehicles being registered in highly polluted cities,” the statement said.
Differential tax will also be charged depending on fuel (petrol/ diesel) and the type of vehicle.
Apart from strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG etc, vehicles used in farming, such as tractor, harvester and tiller will be exempted from the tax, the statement said.
According to the ministry, the revenue collected from the green tax will be kept in a separate account and will be used for tackling pollution.
The states will be required to set up state-of-art facilities for emission monitoring, it added.
Listing the benefits of the green tax, the ministry said that it will dissuade people from using vehicles which damage the environment and motivate them to switch to newer, less polluting vehicles.
“Green tax will reduce the pollution level, and make the polluter pay for pollution,” it added.


Source link

Continue Reading

Auto

Mercedes-Benz expects ‘substantial’ growth in India this year: Martin Schwenk

Published

on

By

German luxury carmaker Mercedes-Benz expects ‘substantial’ growth in India this year driven by a line-up of 15 products and sustained demand recovery being witnessed from the fourth quarter of last year, according to a top company official.

The company, however, sees reaching its peak level of 2018 in India, only in 2022, due to supply-chain constraints especially in Europe.

“Overall, I think we can really assume that the momentum which we have seen in the fourth quarter is continuing… With the reduction of COVID cases a lot of normalcy has happened. We have seen very strong demand in all our range.

“I would think the festive season plus new products have triggered that, and would continue in 2021,” Mercedes-Benz India Managing Director and CEO Martin Schwenk told PTI.

He was responding to a query on the company’s outlook for the ongoing calendar year.

Schwenk further said, “We have 15 products in our pipeline. With (the ongoing) demand we should have a good chance for recovery and substantial growth in 2021.”

In 2020, the company had reported 43 per cent decline in sales at 7,893 units in India, as compared to 13,786 units sold in 2019.

Giving a perspective of how the demand recovery has been steady and strong in the second half of 2020, he said, “We have seen in the fourth quarter of 2020, a 40 per cent increase compared to the third quarter.”

In the first quarter of 2020, the company had sold 2,386 units and it plummeted to just 563 units in Q2 due to the lockdown. It sold 2,058 units in the third quarter and in the fourth quarter clocked 2,886 units, a growth of 40 per cent as compared to the preceding quarter.

When asked how long it would take for Mercedes-Benz India to reach its highest ever sales of 15,538 units in 2018, Schwenk said, “2018 was our best year which we had and I don’t think that we will achieve it in 2021. I think we will achieve that in 2022.”

Giving reasons, he said, “What limits us at the moment is more of the actual production start. We have requirements for support from Europe and there are still some concerns with travels… At the moment there are some constraints…”.

Stating that global demand has picked up better than expected, he said some of the company’s high sellers such GLE and GLS SUVs are facing constraints.

“We have order banks on these vehicles and we have one to three months waiting period on GLS. That is caused by multiple constraints in the system itself,” Schwenk said adding the company is hoping that after the first quarter of 2021 these things would be resolved.

Commenting on demand sustainability, he said India’s key economic indicators are looking good which is helping in creating positive consumer sentiments, specially the business people who are key customers of the company.

“At the moment we have stable demand, a positive development on the demand side. I can clearly see that new products and improving customer sentiments created the demand… I think we will see continued demand,” Schwenk said.


Source link

Continue Reading

Auto

Xpeng rolls out autonomous driving features in challenge to Tesla

Published

on

By

Xpeng CEO He Xiaopeng stands next to the company’s P7 electric sedan as he addresses media at the 2020 Beijing auto show.

Evelyn Cheng | CNBC

GUANGZHOU, China — Chinese electric carmaker Xpeng Motors has started rolling out its new autonomous highway driving features to eligible customers as it looks to ramp up its challenge to Tesla in the world’s largest auto market.

The electric vehicle start-up announced the Navigation Guided Pilot or NGP this month. The feature allows drivers to automatically change lanes, speed up or slow down, overtake cars as well as enter and exit highways.

It is part of the next generation of Xpeng’s XPILOT 3.0 “advanced driver-assistance system” (ADAS). Customers who have purchased the option on the premium version of Xpeng’s P7 sedan will be able to download NGP over WiFi.

The features are part of a broader so-called over-the-air update that allows customers to download new software via WiFi. It is similar to upgrading the operating system on a phone.

XPeng’s operating system, Xmart OS 2.5.0, will be available to all P7 customers, the company said. It includes an upgraded voice assistant and certain in-car apps.

The company, which is headquartered in Guangzhou, is trying to highlight its software and autonomous driving capabilities as a way to differentiate from domestic rivals like Nio and Li Auto as well as challenge Tesla.

The U.S. electric carmaker has its own autonomous ADAS called Autopilot.

China’s electric vehicle companies are looking to add more autonomous features to their cars. Nio has its own system called NIO Pilot.


Source link

Continue Reading

Breaking News

Shares