ACV Auctions is an online wholesale auto auction platform that helps dealers source and manage inventory, price vehicles, transfer titles, and finance and transport vehicles.
The company operates in the $230bn US wholesale vehicle market which facilitates the sale of over 22m dealer and commercial vehicles per year. Of the 22m wholesale vehicles sold annually, ~32% are dealer-to-dealer, 22% are off-auctions, and over 30% are from commercial consignors to dealers. ACV operates in the dealer-to-dealer channel and competes directly with KAR Auction’s Backlot Cars and Manheim.
ACV offers buyers more transparency and assurance when purchasing wholesale and sellers and saves sellers time and money relative to using physical auctions. ACV’s fees are ~$360 per vehicle which is about half of KAR or Manheim.
The company has over 18,000 marketplace users and is looking to onboard larger dealers to build on the base of independents. ACV is run by the company’s early angel investor who took over from the two founders in 2016.
Written in December 2021
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The first thing would be contracts in transit, CIT, turning the cash over as quickly as possible. For example, in the traditional auto industry, the average CIT is three to six days from the time they sell the car to the time the bank pays them. The way I presented the product when I was with ACV is that I would ask some open-ended questions or questions I knew the answer to such as, what's your CIT? Six days. Did you know that anywhere between 17% and 22% of your entire CIT is actually in the trade? Because you valued for the trade, you gave them money for it but now that piece of metal is sitting back in your lap there. Wouldn't it be really cool if you can actually have the money for the trade-in even before you get the money from the bank?
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Let's say you're a dealer, you had a great weekend. You have a bunch of vehicles that you took in for trade. You would call ACV, Monday afternoon, they would shoot the cars, they'd launch them, they'd have the cars sold. If you have the title in hand, you just send the title to ACV and they would ACH your money back within 24 hours. Meanwhile, they're probably still waiting for the cash from the bank on the original deal, so I'm actually facilitating that part of the car deal a lot faster for them, and all they've done is set an appointment for ACV to show up. That's all they had to do. That and their title clerk putting the title in that envelope and sending it to us or sending it to ACV. Efficiency, speed and high speed, low drag.
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