What if a vehicle condition report were fast, thorough, and 100% accurate? Where no one argued over scratches, misplaced car keys, and delivery timetables?
The savings in time, money, and labor would boost the profits and efficiency of any auction operation.
A growing minority of auction owners and operators are discovering this new reality through a digital-and-data driven photo system called Black Widow, which takes 360-degree photos inside and outside a processed vehicle.
The circular black photo set-up with spider-like arms has been making its way into industry trade shows, including a center-spot appearance at the Conference of Automotive Remarketing in Las Vegas June 16 and 17.
Owner and CEO Jason Hauk has been demonstrating the system now installed at about 40 auctions nationwide.
Images Spur Buying & Selling
Buyers are likely to purchase more cars because of the quality of the images, Hauk says. “If you capture it quickly, then their channels on the digital side increase. It’s faster to get it up and looking at it, and more people can get engaged.”
A recurring challenge among auctions is many condition reports lack photos. Black Widow’s automated, drive-through vehicle imaging system takes consistent, high-resolution 4k images in seconds, and delivers them directly to any digital marketplace. With increased buyer confidence, sellers can spur more bids and maximize retention value.
Taking photos with Black Widow also allows dealers to market their cars on their websites before the car ever arrives. While OEMs can build a car in less than two days, vehicles usually don’t arrive at dealerships for an average of 31 days. With Black Widow, OEMs could take photos as a vehicle comes off the production line and market them with visuals immediately.
The system avoids the need for pricey photo studios, clunky apps, inefficient processes, third-party vendors, dedicated photographers, or weather interferences.
A Trustworthy Black Widow
Steve Gertsch, owner of Montana Auto Auction in Billings, Montana, has found the Black Widow system useful for the 600-650 vehicles he runs through his auction weekly and about 2,000-2,500 monthly. The vehicles include fleet, dealer consignments, Canadian vehicles, dealer trades, and front-line retail vehicles.
For his operation, Black Widow completely revolutionized the old school way for documenting and processing vehicles.
“We’ve been able to cut our CR costs down to under $10 per car,” Gertsch told Vehicle Remarketing. “Most places are double that. For me, it’s such a no-brainer if it’s about an auction wanting to make the system better.”
The operation owns six trucks that bring vehicles from North Dakota, South Dakota, Montana, Wyoming, Idaho, and Canada, which supplies 30% of its vehicle volume.
The auction employs 90-100 workers, including mechanics, recon workers, body shop, and auction handlers.
Gertsch uses a second system at an offsite reconditioning facility, which has proven to be a steady profit center. His employees detail vehicles for dealers and then use Black Widow to take photos to post on their websites. Because the system helps dealers sell their vehicles, Gertsch can charge an online marketing fee for the high-quality photos and web positioning.
“You don’t need more than one system unless you are doing large numbers,” Gertsch says. “You drive the vehicle down the tunnel, stop on the plate, take photos in 10-15 seconds, drive out, and you’re done. You can pump out a lot of cars through there in a day.”
Within 60 days, Montana Auto Auction will finish testing the full automatic condition reporting system that enables accurate vehicle assessments for automated grading. Then it will be able to connect with Black Widow’s system that can streamline all condition reports and make them consistent. “Taking the human error out of it is what we want,” he says.
In choosing Black Widow, Gertsch considered all options: Booths, hand-held devices, spinning set ups, tunnels – all of which proved expensive. “We went with Black Widow because it standardizes all photos and makes them professional right off the bat. It has saved us so much time. We used hand-held versions before that lacked consistency.”
Montana Auto Auction has been able to cut the number of its full-time CR writers to one. Previously, the auction had to use four or five CR writers on some days. Now, one person can keep up with the vehicle flow on most days, saving the company on labor and training costs. Finding workers in the $12-$16 per hour range has become difficult for many businesses in the pandemic, sparing Montana Auto Auction time and costs to find employees.
Gertsch is selling about 45% of his vehicles online, compared to other operations that average about 15-20%, he said in a June interview on Auto Transport Intel, a YouTube channel dedicated to the transportation of remarketed vehicles.
Gertsch set up the Black Widow system in 2019 and says the immediate cost savings enabled it to pay for itself within six months. After the first wave of pandemic lockdowns, business has picked up again amid a labor shortage.
“Without Black Widow, there’s no way I could keep up. I would have needed 10 CR writers to keep up with what’s going on. I would have been out there doing CRs myself.”
Photos taken with Black Widow can be put on websites while they are on the delivery truck, giving dealers time to market auctioned vehicles. If a vehicle on average spends seven days on a truck, that’s one week where it can be viewed, browsed, and shopped. It also lessens the depreciation rate. “The minute the car is on the lot, it depreciates. You can cut the melt rate by already offering it enroute,” Hauk says.
A used car on average costs $42 per day in interest; if it decreases by seven days, that’s about $300, he says. “You are turning money faster, connecting everyone, and streaming picture anywhere. We all want everything now, so the consumer drives us.”
Hauk likens the image technology to the “Netflix model”: You can stream the actual car and condition while enroute, giving transparency and consistency.
Who Scratched My Car?
Accurate images minimize the auction payout on missed items and arbitration costs on any disputes over the quality or condition of the vehicles.
The Black Widow images and information also help resolve any number of disputes among the parties and handlers that move a vehicle from seller to buyer. Arguments among dealers, service centers, transporters, auctions, sellers, and/or buyers often center on one simple question: “Who scratched the car?” The system pinpoints at what stage a scratch appeared, thereby diffusing a dispute.
Hauk says collective industry insurance claims during this process run into the billions because no one captures accurate images.
Who Has the Keys?
Another common mishap involves lost keys, for which Manheim, for example, spent $16 million in one year, Hauk says. Pictures show who took what keys and when and whether they put them back on the roof.
“By giving transparency in all sectors and silos, the efficiency improvement is like going from a stagecoach to spaceship,” he says.
A Lifelong Photo Album
The vision for Black Widow is for each vehicle to get a cradle-to-grave digital photo album, documenting every detail of aging.
“We would like to expand quickly and give to everyone,” Hauk says. “This makes everything go faster. An imported car gets pictured going on and off the boat, on and off the rail, on and off the truck, and into the dealership, he adds.
In another industry application, Black Widow is used to document cattle. “Every silo is different,” Hauk says. “We’re bringing transparency to any industry that gives them help and efficiency.
“Pictures and eyeballs are bilingual, globally. Everyone has eyeballs. Everyone understands a picture.”
Data Rich Documents
Because Black Widow’s patented technology combines artificial intelligence and digital tools, the photos also can supply cumulative data and stats on auction processes and product inventories, Hauk says. Such data can include every aspect of a vehicle condition, tire quality, damages, scratches — all segmented and diced based on vehicle makes, models, types, and use cases.
“Anyone in the global supply chain can benefit from the data,” Hauk says. “The auctions are low hanging fruit,” compared to OEMs and insurance providers, to name a few.
Dealers can simply benefit from the complete photo sets, enabling them to buy vehicles remotely and add to online showcased sales inventory.
The iPhone of Auctions
Operationally, Black Widow’s evolution resembles that of the iPhone. Once a version wears out or transitions to a more advanced one, the customer gets a new contract with updated software and/or equipment, like swapping out an iPhone 10 for a 12.
“For us, it’s about reoccurring revenue,” Hauk says. “The equipment stays the same, but we’re always innovating and changing. We like to own the fact you don’t worry about innovation changes. The systems update weekly.”
The BW equipment has a shelf life of about five years. “If you take the tech side of it off the plate for customers, then they can focus on what they are doing,” Hauk says. Upgrades can be done remotely or physically as needed. “The brain stays there when you swap out cameras. There’s minimal downtime.”
So far, the 40 clients within the auction industry using Black Widow have pictured about two million vehicles. That means the potential savings and efficiency in the auction industry has only been scratched on the surface, so to speak. Hauk says his goal is to put 1,000 Black Widow systems in circulation by 2024. He estimates the size of the corporate and independent auction market at about 300 operations.
Hauk predicts the demand for digital imaging will remain long after the COVID virus subsides. “COVID was a bad thing and a blessing for us. It increased the need for digital marketing by a decade.”
Originally posted on Vehicle Remarketing