Majd G. Saboura

Director of Wholesale Business Development, vAuto

Turning Wholesale Buying into Competitive Advantage

4

Interactive Poll Question 1 (insert after slide 3):

How has your auction sourcing game plan changed in the last

12-18 months?

We’re going to more auctions than we used to.

We’re buying a few more cars online than we used to.

We don’t go to physical auctions; we only buy online.

Our process really hasn’t changed.

5

The wholesale landscape is becoming increasingly complex

6

Wholesale Market Trends

Increasing supply

0

2

4

6

8

10

12

1999 2001 2003 2005 2007 2009 2011 2013 2015

MillionsofUnits

NAAA Member Auction Volumes

7

Monthly Lease Penetration Rates

Source: Edmunds.com

30.1%

32.0%

33.2%

31.9% 31.8%

30.9%

Dec'15 Jan'16 Feb'16 Mar'16 Apr'16 May'16

8

Wholesale Market Volumes

Off-Lease Units Driving Supply Increase(units in millions)

2.55

3.1

3.6

4.0

2015 2016 2017 2018

Wholesale Market TrendsIncreased Wholesale Price Volatility

“Almost everyone is expecting that prices will decline. To get to

what we’ve expected for 2016, we’re going to have to have a

steeper fall off.”

- Thomas Webb, Chief Economist, Manheim

10

Retail Market Trend

Strong Market—Record-Setting CPO Sales

11

Retail Trend

Increased Need For Auction Vehicles

12

Retail Market Trend

More “near-new” used vehicle

inventory

13

Retail Market Trend

Margin Compression

Continues

14

Two Take-Aways From Trends

NEED TO “BUY RIGHT”

TO MAXIMIZEFRONT-END GROSS

INCREASEDINCREASED

COMPETITIONFORTHEAUCTION VEHICLES

“RIGHT”

Two Common Auction Complaints

1. Tough To Find Right Cars

2. Tough To Buy Right Cars

On The Money

16

With more wholesale supply why is it so hard to get the right auction

vehicles at the right prices?

17

Interactive Poll Question 2 (after slide 15):

What’s the “right” amount to pay for an auction vehicle?

At/below average auction prices for the unit (e.g., MMR).

A % above average auction prices, if the car meets certain

conditions.

A set % below the retail asking price, factoring in acquisition,

pack, other costs.

Not sure

Two Responses To Auction Sourcing Challenge

Look Harder

Look Smarter

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Experience/Instinct Driven

o Not using tools and technology

o Not using market/scarcity reports

Preference For In-Lane Purchases

o Visiting 1 or 2 auctions – maybe?

o Need to replace sold inventory with

something

Look Harder, Dealers

20

More effort/time with less reward

o On average review 100 to buy 1

o 40+ hours a week researching/prepare

More risk of paying too much, aged

units

o Aged units over 60 days sourced at auction

o Out of sync from market

Look Harder, Dealers

21

Look Smarter, Dealers

Data-driven, disciplined

Assess profit up-front then condition/history

Stick to data/metrics to guide profit-focused purchase

Total Gross Mindset

Complete view of all data points

Sacrifice front end gross for total gross (F&I, etc…)

22

Look Smarter, Dealers

Online emphasis for efficiency

Expand Auction sources – on average 7-10 auctions

More online vs. in-lane – 60/40? 70/30?

Less time researching, more time buying

85% discipline / 15% instinct

Focus on right vehicle for the right price

23

Biggest complaint today is overpaying for vehicles at auctions Look smarter dealer redefines overpayment

24

Interactive Poll Question 3 (after slide 21)

Which of the following best describes you?

A Look Harder Dealer

A Look Smarter Dealer

Not applicable

Crystal Ball

• Rise of buyer-driven recommendations (e.g., Amazon, Netflix,)

• Outsourcing/redeployment of acquisition resources (Sonic/Manheim)

• Ongoing margin compression

• Need for increased effectiveness and efficiency

Q & A

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Thank You!Majd G. SabouraDirector of Wholesale Business Development, vAuto

majd.saboura@vAuto.com