The transport of used cars in North America has gone through a significant transformation as online purchasing takes more ground away from traditional auctions. Online tools are also being used more to organise the shipping of vehicles, which is now more often between disparate parts of the country.
With the growth in national transport for remarketed vehicles, there are clear opportunities for national hauliers to benefit as manufacturers look to raise the value of resales.
The used car market has a major impact on the vehicle transport industry, accounting for about 65% of the 40m annual vehicle transactions in the country.
"You have just under 20,000 new car dealers but 70,000 used car dealers out there trading vehicles," said David Carp, director of fleet remarketing at Kia Motors America. "In a new car market, the latest SAAR (seasonally adjusted annual sales rate) is 14.4m new cars but think about all the used cars being sold."
But the way the used cars are being sold is changing the face of vehicle logistics across the region in many ways. Using the latest quoting software, online buyers can see how much it is going to cost them to move a car, which can influence their buying decision.
According to Richard Okida, remarketing manager for Toyota Financial Services, the last seven years have seen a dramatic change.
"When I first joined the department we had just launched our upstream sales platform and got into the internet venue," he said. "During the last seven years it has grown to a point where we have become very successful and the majority of our sales is through the internet, not the auction house."
Online sales now account for 35% of all vehicles sold upstream, according to Chad Ruffin, general manager of Southern California for Adesa, the vehicle remarketing and auction provider. Ruffin said his facility sold between 65,000 and 70,000 vehicles a year, but the distance between sales as well as volume has been driving demand for vehicle logistics.
"There are a lot more guys on the East Coast buying off the West Coast for instance, creating a really big need to be able to get cars delivered. Not every dealer is a franchise dealer that buys 30 cars, there are a lot of guys that will buy one or two cars and you've got to figure how to get that car to a dealer who could be on the other side of the country, which can be real problem."
Ruffin called for better ways to get those cars to their market and to communicate with the transport providers responsible for getting them there.
Carp agreed that the impact on the car haulier industry has been substantial, particularly as virtual sales grow faster than those at physical auctions.
Manufacturers have been aware of the online trend and, eager to exploit it, have been offering customers transport subsidies to encourage national bidding for used cars, according to Carp.
"Most of the manufacturers now subsidise transport to get that national draw at the auction because it raises the value," said Carp. "We'll spend a little money to get some focus on that car online and offer some subsidy to keep our residuals up and keep the competition. There are lots of opportunities for national businesses involved in transport to get a piece of that business."
Toyota also offers incentives. "We will incentivise some of the sales and offer transportation assistance to our purchasing dealers to draw them from out of state," said Okida.
That interest on a national level is changing the face of regional trucking. "Ten or fifteen years ago, you go to an auction and you get solicited by five or six people that had to pick up with a three car hauler," said Carp. "You don't see that anymore, it has really gone national."
What has also gone however, thanks to the downturn that hit in 2008, is the number of hauliers operating in the country, a shortage that is affecting both new and used vehicle movements.
"When the whole industry downsized to 10m a lot of the trucking companies went away and now we have a big shortage of trucks and railcars [wagons]," said Carp. He added that Kia's growth in new car sales was also limiting its capacity to move used vehicles. "Since Kia built its plant in West Point, Georgia we are having a big problem because now that it is on the East Coast our lead times to rail vehicles from Georgia to the West Coast is 21 days."
United Road, which has a fleet of around 3,500 vehicle carriers moving more than 1.8m vehicles per year in the US and Canada, half of which are remarketed vehicles, is one provider making efforts to get capacity lift for both individual cars and high volumes.
"It is very important to have the customers help us fill backlanes, and figure out what we can do together to increase the efficiency," said Kathleen McCann, president of United Road. "It is often more easily said than done, but we need to do it and if you can add a single vehicle on a unit because it is going in the right direction or create a backhaul by working with the customer, we are all going to do it to meet demand because it is very significant and is going to be a continuing problem for the folks in remarketing."
Dealers have a part to play as well. According to McCann dealers are able to go online and see where their freight is and understand where the vehicles are in the supply chain.
"Helping to reduce inefficiency in the driver experience is very important," said McCann. "And it is really critical with the dealer. They need to make sure they have available hours for drivers to get in and out. They need to check the vehicles quickly so the driver can get back on the road. If we can pull 5-10% of efficiency out of waiting times that is a real capacity improvement."