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Monday, June 12, 2006 

Vol. 2 No. 23

iRem@rketing 2006: The Technology Conference of the Used Car Industry; or Savvy Seminars in San Antonio, Part I.

I don’t remember exactly how many years ago Ron Smith and his crew at AutoRemarketing Magazine launched the iRemarketing Conference, but I do know I haven’t missed one in at least five years. The latest one, held in San Antonio, May 17 – 19 was especially interesting, as I got to meet a few people new to remarketing, and to see old friends conduct some very informative presentations.

The always accommodating registration folks at the start of iRem@rketing 2006

Ron Smith, Publisher of AutoRemarketing greats the crowd at iRem@rketing 2006, while Bill Zadeits, Associate Publisher and conference chairperson, observes.

With an opening greeting from Ron Smith and only one keynote speech, this year’s conference offered detailed workshops running simultaneously, which allowed for more audience interaction and participation. While most conferences include breakout sessions, this is the first that I have attended that was comprised almost entirely of workshops, and I think it made the event very effective and educational. Of course, during the breakfasts, breaks, and receptions at the close of each day, there was plenty of time to network and catch up with presenters and old friends in the industry (in most cases these are one and the same…).

Day One: A Presentation Worth Leaving the Golf Course For

After a morning golf outing, the first day started with one of the most informative workshops of the event, which is saying a lot, because there were many good ones over the two and half days. John Manchin, Remarketing Manager, Subaru Auto Leasing, Ltd., presented one of the most comprehensive presentations I’ve ever seen on the initial conception, implementation and tangible metrics of creating an upstream program for manufacturer leased vehicles. In addition to being a 31-year veteran of the car business, John is also an adjunct professor at Eastern University School of Business, and his teaching experience was clearly in evidence. John’s insights also reflect 12 years in the retail end of things, where I think any folks in sales for a vehicle manufacturer ought to be required to spend some time…it would create more realistic expectations in the manufacturer’s executive suite.

Selection of the Unfittest? Debunking a Widely-Held Myth

While John acknowledged that hindsight is always “20/20,” one of the things I liked best was that he recounted some of the “myths” that were circulated by the “bricks and mortar” folks just a few years ago, which inhibited the use of upstream innovations, even for manufacturers. It seems silly now, but the idea of “adverse selection” for those units reaching physical auction, did make many potential “early adopters” step back and reconsider undertaking an upstream program. The “adverse selection” story went like this: if an organization implemented an upstream program for their off-lease or off-fleet units, they would, naturally, sell the best vehicles upstream, leaving less desirable vehicles for the physical auction to sell. This, in turn, would lead those buyers in the lanes to bid lower for this lower number of units, which would, in turn, lower the total returns for the entire portfolio.

And yet, as John Manchin accurately pointed out, if this adverse selection myth, so widely propagated by the physical auctions and their trade association held true, then it would run counter to the very fundamentals of supply and demand. That is, given the same number of buyers and a reduced supply of vehicles, those vehicles running would get higher prices relative to the fewer cars in the auction lanes. In fact, the world was supposed to believe that the remaining vehicles would garner so low a price relative to what they would get if there were double or triple the number of vehicles running at the same time, that it would completely overwhelm the savings and financial benefits the seller received on those units sold upstream.

The “adverse selection” idea seems ludicrous today, and, of course, was proven wrong by guys like John Manchin, who ran upstream programs, kept accurate metrics, and can document millions of dollars in net savings annually from the implementation of upstream sales. But it was not that long ago that this counter-intuitive notion was embraced and did inhibit innovation for a period of time – partly because it was pronounced by some of the most respected large scale institutions in the country and also because it preyed on the normal fear that institutions have of change, as John pointed out in his presentation.

The Power of Peers

John took us through a comprehensive chronological summary of the goals he set out for Subaru’s upstream program before its initiation, the challenges and opportunities of implementing upstream selling, how the upstream system works at Subaru, and, most importantly, the metrics of the program’s success to date. After attending the workshop, I immediately asked John if he would give us the highlights of his talk in a podcast (I am always thinking of you, dear readers), and, fortunately for us, he consented. (Click on the headline above.) I think that I was impressed with John’s workshop not only because of how well it was prepared and presented, but, because of the power to inspire that he has in his address. No matter how much I or any other vendor attempt to motivate various sectors of the marketplace to adopt upstream remarketing and enjoy the benefits, it’s no match for presentations like John’s, a no-holds-barred account of the initial challenges and benefits of implementing an upstream program, that has the most impact on motivating change and creating the (re) marketplace of the future. Nice job John, and thanks again for the podcast.

John Manchin, Remarketing Manager, Subaru Auto Leasing, Ltd. conducts a well-received workshop on Subaru Sold, the upstream remarketing platform for Subaru.

And Rounding Out Day One…

There were three other workshops, in addition to John Manchin’s seminar, during the first half-day of the conference, that, fortunately, were repeated on the last half day of the event. Randy Barone, from aaXchange, one of the leading used vehicle inventory management systems available to retail dealers (provided by JM Solutions), conducted an effective presentation on the benefits of using technology to make used vehicle management much more effective and profitable as a retailer – transforming it to a science from a mysterious “hit or miss” art. In addition, my old friend Clive Kinross made an excellent presentation on his online vehicle auction exchange, Onlane (Onlane just won ARI’s Remarketing Partner of the Year award, by the way). And finally, Stephen Pugh and Lenny Sims from NADA Used Car Guides, and George Heppe from GigglePop, also presented a workshop. All and all, the first half day of iRem@rketing 2006 was filled with valuable information…

Next Entry: iRem@rketing 2006 Part II (including a podcast with Keynote Jack Nerad, editorial director and executive market analyst for Kelley Blue Book; host of the national radio show, “America on the Road,” and featured personality on the History Channel’s AutoManiac”)

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Interesting blog. I can see that you've done a lot of work on it.

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