As vice president of remarketing for Acme Auto Leasing, LLC, Mike Phelps recently faced a challenge within his department. The North Haven, Conn., leasing company manages closed-end lease vehicles for federal, state, and municipal governments. For Acme, remarketing consisted of manually offering off-lease cars to government employees post-grounding, followed by sale at auction. Modern upstream remarketing programs offer savings of $800-$1,200 per vehicle, but the programs are designed for commercial fleets. In that context, the program makes vehicles available to driver, employee, and institutional buyer channels in that order. Unfortunately, many government agencies are not structured to permit driver sales so the standard upstream programs can’t be used. This was particularly frustrating for Phelps because Acme’s government clients typically return three-year-old vehicles with very low mileage and in extra-clean condition. Such vehicles should sell well to individual buyers, but Acme had no way to market to those buyers cost-effectively. Through his research, Phelps found that Driveitaway’s platform program could be adapted to deliver upstream’s benefits for government vehicles without imposing additional work on Acme’s remarketing department. Better still, the program could be up and running on an Acme-branded Web site within 30 days. Upstream’s Potential
For a typical commercial fleet of three-year-old cars with 50,000-80,000 miles, 25-50 percent of vehicles are sold through the upstream program. The sales ratio depends on how many prospective buyers have access to the Web site and on the vehicle pricing policy. To hit the higher end of the range, it’s essential to remarket the cars to a broad range of buyers, to price the cars at “near wholesale prices,” and to present a full description of the vehicle (typically through a third-party inspection report that includes a written description of any damage and 20-30 digital photos). Buyers are attracted by the combination of full disclosure and a substantial savings (about $2,000) over retail prices. A fully featured program allows potential buyers to search for cars online, obtain financing, purchase a service contract, arrange transportation, and otherwise duplicate the retail experience in a physical dealership. Acme liked the potential $800-$1,200 cost savings (which come from avoiding out-of-pocket expenses such as transportation and auction fees and from a quicker selling cycle that reduces depreciation). But just as important was the reduced workload. Driveitaway offers a trained call center to answer buyer questions, and all inspections are scheduled and managed by the inspection company. “It’s one of the few innovations in the industry in which we could sell more vehicles, doing less work,” Phelps said. Adapting the Program
Acme and Driveitaway modified the standard upstream program to meet the constraints imposed by Acme’s government clients. Vehicles are offered to government employees immediately after turn-in, emphasizing the near-wholesale pricing and unusually low mileage. Registered users can search by 20 features in addition to make/model and year. For any vehicles not sold to employees, the upstream platform can transfer the digital vehicle profile to other electronic remarketing platforms such as Manheim’s Online Vehicle Exchange. The result is that off-lease vehicles benefit from a 24/7 remarketing process representing annual buying power of hundreds of thousands of vehicles. Acme’s traditional employee remarketing effort sells 20-25 percent of vehicles. With the new remarketing program in place, Phelps expects to sell more than 75 percent of vehicles upstream. “This program creates a win-win situation for everyone,” noted Phelps.