Manufacturers are no longer giving away the store to keep factories open. Rental rates have not kept up with rising fleet costs. Car rental operators are trying to cope by streamlining operations and cutting costs in other areas.
One channel to look for savings is remarketing.
ATC-Onlane has partnered with Avis Budget Group to sell daily rental fleet vehicles wholesale, through the ATC Open Web site at www.atcopen.com. The program launched April 11.
The idea is to sell a portion of Avis Budget’s inventory faster and at lower cost compared to brick-and-mortar vehicle auctions. The service is designed to greatly reduce the time the vehicles are out of service before the sale, helping Avis Budget Group achieve higher overall fleet utilization.
Through ATC-Onlane’s extensive dealership population, buyers from across the country have access to rental cars coming off fleet.
“Avis was very clear that they wanted to maximize local income for the vehicles that were already in their portfolio, and at the same time minimize remarketing costs,” says Clive Kinross, senior vice president, ATC-Onlane.
ATC Open allows potential buyers to select from Avis Budget’s inventory of a variety of makes and models at a market “buy it now” price. Buyers receive detailed vehicle profiles, including the year, make, model, location and options. This helps them to make a more informed decision about purchasing vehicles in small or large quantities.
Cutting Costs by Improving Efficiencies
RACs may not necessarily see a higher return on their fleet vehicles sold online as opposed to the traditional way. The savings comes in the efficiency of the process.
ATC Open is designed to save costs on transporting vehicles to auction locations. With physical auctions, if your car doesn’t sell, additional costs are incurred to transport the vehicle back to fleet.
Transportation can take up to a week – valuable time in which the vehicle is both depreciating in value and not creating income.
Through this process, Avis Budget has been able to mechanize a formerly manual procedure through a direct-buy Internet chamber. “It’s like buying a book from Amazon,” says Greg Thiebault, Avis Budget’s director of turn-back operations/electronic sales channels. [PAGEBREAK] “We’re pioneering this type of upstream selling platform,” says Thiebault. “It will take a while for dealers to get their heads around how the process works.”
Though the concept of online auction sales is not new, ATC-Onlane’s integration with Avis Budget’s back-office systems is unique. The process took more than six months.
“Our ability to customize the process for Avis wasn’t something that the industry was really doing before,” Kinross says. “We couple that with our huge network of dealers and our logistical support.”
The online route limits the amount of time that a vehicle is off-fleet. Specific to the Avis Budget service, vehicles are being rented right up to the point of sale. Avis then only incurs costs when the vehicle sells.
Once a dealer buys the vehicle, Avis Budget’s local fleet manager will de-fleet it and within five business days the transaction will be complete. ATC-Onlane pays Avis Budget for the car and then collects the funds from the buyer. The process is totally hands off on Avis Budget’s end once the vehicle is de-fleeted, Kinross says.
“When we switched gears with our acquisition strategy, we decided it was time to find other ways to remarket our vehicles,” says Thiebault. “ATC came to our table with a strong proposal, good technology, experienced individuals and a good thought process.”
Criteria for Vehicles
A vehicle must meet two criteria before it’s deemed ready to sell through ATC-Onlane’s service. One, the car must be a risk vehicle, and two, the car must have reached the point in its lifecycle when it has been approved to be sold – typically between six and 12 months.
When a vehicle in Avis Budget’s portfolio has reached this status, ATC-Onlane will automatically send a file feed notifying the vehicle’s fleet manager that it is now eligible for sale.
Avis Budget prices the vehicle based on make, model, year, options and mileage band.
Need for Inspection?
The rental cars that Avis Budget puts online have been well maintained and are in satisfactory condition. Thus ATC-Onlane sells them with a disclosure stating that the vehicle does not need more than $250 worth of repairs to bring it up to wholesale condition standards. [PAGEBREAK] “Lifting the cars while they are active in the rental fleet eliminates the need for a condition report,” Thiebault says. “The vehicles are then simply merchandised with a stock photo, within a mileage range.”
The buying dealer is responsible for transporting the car to his location. According to Kinross, dealers tend to handle the moving process themselves if it’s an in-state purchase. With out-of-state transactions, dealers often rely on ATC-Onlane’s transporting and logistics department.
ATC Open has worked closely with Avis Budget fleet managers from across the country to train them in this innovative method.
“The process is not necessarily complicated, but it’s certainly something they were not doing before,” says Kinross.
The manager will de-fleet the vehicle, report its mileage and then get out of the way. ATC-Onlane’s system then automatically creates a bill of sale and handles the remainder of the transaction.
“We are real experts at making the lives of the dealer and seller really easy, from a process perspective,” Kinross says. “That’s why we’ve spent eight years developing that expertise, so we can make their life very easy for them.”
A Source to Buy Fleet Vehicles
Along with dealers, car rental companies can also take advantage of ATC Open’s online vehicle marketplace as a source to buy fleet vehicles.
Avis Budget reports that they are starting to gain traction with this program, though it is still too early to report actual savings.
“Only a handful of players can even think about implementing a program like this one,” says Thiebault. “ATC stepped up to the plate and said ‘we can do this.’ I’ve been very impressed with what they’ve brought to the table.”
ATC-Onlane also has online sales agreements with Enterprise Rent-A-Car and Vanguard (Alamo and National). The company anticipates more interest from smaller companies in the near future.
“The reason we’re seeing this growth is because dealers like this way of managing their inventory,” Kinross says. “They like to depend on the computer – push a button and they buy their stock of cars.”