Current and former IARA presidents Jeff Bescher and Paul Seger have always shared much in common. As veteran vehicle remarketers, they have worked and circulated in the same industry, held similar management positions, and served and led in the International Automotive Remarketers Alliance for much of the past two decades.
Bescher is the president of Strategic Remarketing Solutions Inc. and Seger is the executive vice president and general manager of Element Fleet Management Inc.
Yet no one could foresee another bond that has now connected the two complementary industry leaders; they are the only IARA presidents whose terms span the global pandemic, requiring them to confront the unique, unpredictable effects and challenges it brought to the remarketing industry and the IARA.
For the alliance’s 20th anniversary, the leadership team recently Zoomed in from their Chicago area home offices for a Q&A about the state of the industry and the IARA, past and future.
[Note: Answers have been edited for brevity and clarity].
Q: In reviewing the first 15 years, what IARA accomplishments, milestones, or decisions stand out more now, from the perspective of time and hindsight?
Bescher: When the IARA started in Southern California in 2001, there was somewhat muted support for a consignor led organization. Reaching out to auction partners in the early years was tough. Through consistent communication and relationship building, the IARA laid out ideas to build a stronger, more cohesive remarketing industry. Getting the vendors and suppliers to partner with the consignors to discuss industrywide issues has been a major accomplishment. We began making a strategic partnership with the National Auto Auction Association (NAAA). Following that, co-locating our spring meeting with Bobit and the Conference of Automotive Remarketing put IARA on the map. Since it started, we have always wanted this to be an alliance of people who network with each other. Everyone’s voice counts, even the ones of smaller companies. At the IARA, everyone sits around the table, has a voice, and can talk.
Seger: I think this alliance and the relationships that were part of it were key to communicating and getting through a tragedy in this industry. We would not have bridged this as easily had we not had this association. We have built deep relationships through the IARA. We leaned on each other during the challenges of COVID, which helped us take IARA to a higher level of information and communication shared among members.
Q: What IARA successes have taken on added significance or emerged as more consequential over time?
Bescher: The IARA Standards and Compliance Committees started seriously talking about compliance issues seven to eight years ago, and they were instrumental in getting together with auction providers and remarketing industry businesses to determine what consignors needed and what could be done within the industry. That work to standardize processes, where appropriate, continues. The certification and education programs have taken on more importance. Many companies have realized some of the content in our modules are topics they don’t always deal with. Our resources expose younger and newer industry participants to all the facets of what’s happening.
Seger: Changing the certification process to a mentorship and proctorship perspective has made it easier for industry professionals to join the Certified Automotive Remarketer (CAR) program. We’ve seen the value to my team of the number of people becoming certified. I’m building it into their career development plans. As the program has become more known to businesses, the IARA has brought in external industry knowledge so employees can become better informed.
Q: Looking outward, in the last five years, what have been the IARA’s major contributions to the wider industry?
Bescher: Leading on the standards for the processes that touch every consignor. For example, if a standard involved something not in the current AutoIMS format, we could get together and say, “Can you add this field so we can measure how everyone is doing? Can we have a baseline for the performance in selling and remarketing vehicles?” Creating efficiencies benefits everyone. Looking at just the last two years. It’s become very common to have virtual interactions, but that was not normal before. Seminars have been a big key for us to get information about the industry to our members – both for their knowledge and to share with their management. Sharing information from multiple consignors in multiple segments, in addition to the various suppliers’ take on their situation, helps our members better understand what’s going on.
Seger: Besides the information value the alliance can provide, it’s the networking, relationships, and business opportunities that have come to me through the association that I would not have realized in a timely way. The alliance has been able to bring together people and information about issues like data and privacy, logistics, and suppliers. We are seeing more industry members working together on new opportunities, and those are endless.
Q: Looking inward, how has the IARA advanced its services and interactions with the membership?
Bescher: Increased member communication has been a broad goal for the IARA in the last couple of years. The monthly e-newsletter (The Voice) we just began publishing in 2021 has been a big benefit. There is so much good information coming out of committee meetings that we need to get out to all of our members. That helps everyone understand where the vendors, consignors, and auctions are and what they’re doing.
Seger: The virtual methods, webinars, and digital information we could push out through the COVID challenge was unique and set us apart from many in the industry who send out information. We were among the influencers who kept the lines of communication open.
Q: As the only two IARA presidents whose terms span the disruptions of the global pandemic, what long-term changes have you seen emerge for the IARA and the wider remarketing industry?
Bescher: Both Paul and I believe the IARA should be strategic, not reactive. The pandemic forced us to take immediate steps to be strategic and avoid waiting for things to happen. We held a virtual conference and hosted seminars so as the pandemic unfolded we could share, from the consignors’ perspective, what was happening with our volumes and when the vehicles would be coming back. Our members, consignors, and vendors could share the latest information with others at their locations. It reinforced where both of us want to take the IARA and how to influence the future.
Seger: As the sitting president when the pandemic hit, I didn’t look at it as a challenge as much as I did an opportunity for the alliance to rally and become more relevant for vendors, suppliers, and members. We were able to put the IARA further on the map with people acknowledging the value of the association. The hunger for remarketing info as COVID hit became more extensive and started to affect many businesses and organizations. We enabled various industry parties and the buyer base to report on their situations and how they were handling business and safety. The IARA became a conduit for information and the resource for the latest developments.
Q: What are the biggest challenges (or opportunities) ahead for the alliance and for the remarketing industry as you look further into the 2020s?
Bescher: The rise of virtual marketplaces from traditional auctions. New entrants into the market just took off because of the pandemic and existing players expanded aggressively into the virtual realm. For three decades, the traditional auction model has been an efficient way to move a large volume of vehicles with competitive pricing in the used car market. Complementing that model with a virtual marketplace introduces complexities of how vehicles are processed, stored, and transported. Everyone has a chance to add new services and create new business methods that make us more efficient and lead to long-term growth. I also see three big trends that we should try to address: First, privacy and data security in cars will be a major issue in the coming years; second, compliance requirements on automotive lenders are getting more stringent – what will that mean for both consignors and suppliers? How do we react to that? Finally, all of the changes surrounding electric vehicle remarketing.
Seger: I look at this future as one of the brightest times in the auto industry. With changes ahead in digital areas and data privacy, there are many ways companies can add services, reinvent themselves, streamline, narrow costs, and do things differently that could better position them for long-term growth. The IARA can continue to become that reference and resource for information on the latest happenings in the industry. I would rather be part of an evolution and help determine the direction of it than be reacting to someone outside of our space directing our future. You want to have a hand in something where all of us are working together as part of an evolution.
The value of the alliance is to work toward a one-stop shop from the consignors’ perspective and to learn about all the opportunities on the digital side. New people coming into the marketplace will recognize the IARA is a great place to get decision makers together and determine how future assets are to be sold. The connectivity of those relationships is the value you get from the alliance.
Q: How will the growth in electric vehicles affect the remarketing industry, and what do you foresee as its market share?
Bescher: The creation of the secondary market will happen no matter what. The question is, how will we get there? Charging, moving, and repossessing EVs safely will determine the quality of the secondary market. Supply and demand will work itself out. We need to talk about new initiatives and make sure remarketers and vendor suppliers get consistent information.
Seger: We’ve learned there are many legs to EV initiatives, including safety and batteries. There is much to understand about what we are remarketing. EV initiatives will game change the IARA value proposition. As we look at our goals and outputs, we will have to form new committees and decide what [procedures] we should plan for, and how we get there. It starts with consumer demand on the resale side. Getting consumers to want used EVs is a long putt right now.
Q: When assessing the vehicle supply chain constraints and volatility of the past 1.5 years, what do you envision as a healthy balance of supply, pricing, and consignor/auction revenue?
Bescher: Supply and demand will always drive price. A healthy balance in the secondary market will consist of adjustment and correction, so we have a supply chain that allows builders to make as many cars as they want while selling at a reasonable profit. That will happen with time as supply constraints ease. Lenders need to price based on production levels, consumer tastes, and credit risks. I think the supply chain will slowly get back to a normal place and OEMs will battle for market share, with under- and over-supply in some markets depending on consumer appetites. On the automotive finance side, lenders will be competing for their share of loan volumes. I’ve been around long enough to have seen the same business cycles repeat themselves, and I think it will happen again. Lenders are at risk now of putting too high residual values on vehicles based on the last two years performance. That in turn can drive how many units are remarketed and in what channel.
Seger: We need time to get back to normality. For it to work, everyone has to win. It comes down to lenders who have risk in vehicles being resold from lease or repossession. The values in the marketplace must satisfy their risk assumptions built into every model. Supply and demand happens from there. It starts with acceptable market returns. You let lenders originate, and that drives the front-end cycle that fills the volume. The ability to originate loans is the future of vehicles coming back into remarketing.
Note: This article appeared in the IARA 20th Anniversary Commemorative Issue published in November 2021.
Originally posted on Vehicle Remarketing