In this transcribed episode of the Used Car Dealer Podcast, Zach dives into an engaging conversation with Brian Kramer, GM of AccuTrade. They discuss the current shifts in the used car market, the innovative appraisal tools offered by AccuTrade, and how these tools help dealers make smarter decisions while enhancing the customer experience. Brian shares insights on navigating misconceptions in vehicle appraisals, success stories from dealerships, and AccuTrade's plans for 2025. Dealers of all sizes will find valuable advice on staying competitive in a digital-first market.

Zach:
Zach here, and today I'm thrilled to welcome Brian Kramer, the GM of AccuTrade at Cars Commerce, which is a publicly traded company. AccuTrade is revolutionizing the automotive space with advanced appraisal technology and data solutions that empower dealers and consumers alike. So, Brian, thanks so much for joining me on the podcast today.

Brian:
No, thanks for having me. I'm a big fan of the show.

Zach:
So, Brian, you've held various leadership roles in the auto industry. Can you give the audience a little bit about your background and what led you to AccuTrade?

Brian:
Yeah. So I spent 27 years in retail, held every position in a dealership. For the last 19 years, I was in retail running multiple dealerships for the Germains, AutoNation, and the Germains before that again. In the end, I ended up running a 600, now 700 car a month Toyota store in a little fishing village down here in Naples, Florida.

What led me to AccuTrade is I started getting mentored by Robert Hollenshead, and he basically opened my eyes after, you know, a quarter century to a whole different way of looking at things and maximizing the wholesale exit as well as the retail exit. For so much of my career, I'd only been focused on that. What we were able to do in a very short period of time once I finally figured out that unlock and looked at it in terms of what vehicles are really worth, not just what my perception of them was, and being able to identify a best end-user strategy, did, you know, a lot of different things that our team was able to accomplish at the Toyota Lincoln store down in Naples and the used car operation.

So I ended up getting with Alex Vetter, Bob, and Alex asked me, he said, "Do you think that this is something that's scalable that could get unlocked for dealers across the country?" And I told him, absolutely. And that's what we're helping dealers do now with AccuTrade.

Zach:
Wow, that's an awesome story. And when you look at the used car market, especially since the pandemic, we've seen major shifts in recent years. What do you think are the most significant changes in today's market?

Brian:
So you can talk about EVs, you can talk about—but EVs are just a new version of what hybrids were 20 years ago. There's always going to be that high-volatility vehicle when gas prices in the recession and Great Recession hit four bucks a gallon and Hummers and Escalades and everything went through the same thing. You see the same pattern, right? Where you have market day supply, 45-day lookback of sales versus, you know, forecasting, and then you've got, you know, days on market or days on lot, days to sale, which is kind of a forward-leading indicator.

So what we're seeing now with EVs is, if you have all the right data points, you can see the storm coming before it actually happens. But I wouldn't say that's the biggest major shift. Values have always been volatile in one segment or another. I think the biggest shift is what CarMax and Carvana are doing in terms of direct-from-consumer acquisition. And now a lot of these other big public aggregators are getting on board with that.

And I think that, you know, what our goal is at AccuTrade and Cars Commerce is to be able to enable and empower every dealer to be able to operate at that scale without, you know, the requirement of having 100 rooftops and having their own marketing company and their own AI engine to analyze the data—that we can arm the rebels, you know, to compete.

Zach:
So, AccuTrade is really known, I think a lot in the market, for its appraisal technology. How does it help dealers assess vehicle values in this kind of fluctuating market?

Brian:
So we touched on it a minute ago with looking at forward-leading indicators as well as lag measures. All of our competitors only provide a 45-day lookback, and that's great—it's half the equation, right? But it doesn't provide you where it's going.

So if you have, for instance—I saw yesterday on a BMW 3 Series, you know, all-wheel drive, that was a 2023. It had a 76 market day supply. So most dealers will be hesitant on that going into, you know, end of the year, but it had 19 average days on market. So that's—you can see where it's about to go, and something just changed, which is typically, you know, the no-sale percentage just dropped; a bunch of people probably—there's a lot of sales at the auction.

But that's—and conversely, if those numbers are flip-flopped, if you've got a 19 market day supply, people are gonna over-appraise those cars, and at 76 days on lot, it just means that there's a high no-sale percentage, and the bubble is gonna pop at some point.

We track average depreciation daily, monthly, and, you know, internally—we don't share it—but we track no-sale percentage because we think that what didn't sell is just as, if not more, important than what did sell, which is why—and I don't think that even our competitors would disagree—that we have the most accurate appraisal values in the industry.

Zach:
So digital tools, they're definitely critical in the used car industry. And one of the ways I think AccuTrade kind of stands out from other solutions is it has a component where, just like if you go to cars.com or Carvana, enter your license plate or enter VIN, you get an instant trade appraisal. And it gives that almost like omnichannel, like digital retail, transparent-like feel. Like, what are your thoughts on how AccuTrade kind of stands out from the competition?

Brian:
Well, you know, so many people cringe when you say "omnichannel," but I think it's because they weren't really doing business in an omnichannel way, and they were saying that—calling it omnichannel but then still having a lead form at the end and not really being able to keep going.

So, yes, we break down license plate, VIN number, or year-make-model, depending on whatever the consumer wants, because I think that's a very important element—is that a lot of dealers will put their own—I used to do it—put your own biases and your own beliefs into how you think the consumer wants to buy, rather than giving them the choice to self-guide their journey.

And there's a lot of dealers that will, for instance, only provide a range because they don't believe in the guaranteed values or the range is—and we see this all the time with our competitors—the range will be, you know, $28,000 to $32,000, a really high number. But then the guaranteed offer is $19,000 from the same provider. So that causes friction; it causes lack of trust, digital trust between the consumer.

We think it should be one number, and it should be a competitive number. We're more competitive than our competitors 59% of the time, according to some Wall Street analysts who measure us on a regular basis. So I would say that our value is the most accurate because I think it's like the Goldilocks zone—the values have to be just right. They can't be too low; they can't be too high, because then you won't get the appointments, the customer doesn't come in, or the worst case—they come in, and then you're not able to honor the number.

So we want to make sure it's exact. We decode more digits of the VIN than any other competitor. That's getting better every day. But I would say that we—you know, when it comes to mileage, bad CarFaxes, niche cars—every other competitor will only guarantee a number on a vehicle 78% of the time. We guarantee 98.5% of our appraisals.

So that means even up to the $850,000 Ford GT that we bought recently or Lamborghini Reventón or, you know, you name the oddball—2024 Lucid or how about Fisker Oceans on the way down? Nobody would guarantee those things except for us. So we're like the Navy SEALs; when nobody else wants to hang the number on the car and somebody needs to get it—and even a lot of those, you know, a lot of the other big aggregators call us for a second opinion when they're trying to get a guaranteed number, because it's easy to appraise the 75% or 78%. It's really hard to appraise that last 20%.

Zach:
Very true. And what are some of the common misconceptions you see around vehicle appraisals and valuations, especially if dealers aren't using products like AccuTrade or, in some cases, vAuto, like used car dealers?

Brian:
Yeah, and I used vAuto up until the day I left retail, and I'm a huge fan of it and a huge fan of Dale's. But that technology, you know, came out in—you know, when BDCs were coming out in 2005. That was like the iPhone—the iPhone hadn't come out yet. And so there's some certain limitations that, obviously, a lot of the other competitors and AccuTrade have figured out in the meantime.

One of the biggest misconceptions that I think—that the biggest is, what's the impact to a vehicle's value with a bad CarFax indicator, VHR? What about high mileage versus low miles? The impact of color—or as Bob Hollenshead says, you know, those are—each one is a strike, but when you get three strikes, you're basically out. And there's a compound effect when you have a bad CarFax plus a bad color plus bad mileage.

And when you, you know, loop those three together—it's one thing if you have one of those, but if you have two, you know, it makes it a lot more difficult from an SRP, VDP standpoint. If you have a bad VHR, you're gonna get about half the SRPs as you would on a good VHR vehicle. So you have to take your price into consideration in order to drive the SRP—or search results pages—up.

So I don't think that dealers take that into consideration, and there's not an automated way on the most difficult vehicles, especially luxury cars, exotics, to be able to account for a McLaren that's a two-year-old McLaren with a bad CarFax that's been in a front-end collision without airbag deployment, that's bright blue with, you know, 48,000 miles on it. You know, that's one of those things that sometimes takes days for a dealer to appraise.

Or even—I'll give you the best example: Ford F-150. Looked at two Ford F-150s recently. One's burgundy; one's white. The white one has four-wheel drive, it's got a pano roof, it's got boards, it's got a tonneau cover, it's got leather, power seats, and navigation. The burgundy one has none of that. But the average MMR auction value on both of them is the same because the VIN decodes the same way with us.

So if you're on—that particular vehicle is like a 2023, I think, with 20,000 miles on each one of them. The burgundy one that has less equipment, doesn't have all the options—we appraised it, I think, at $38,000; average MMR is $43,000. The white one is $47,000 with us. That's one of those situations where a dealer will go, "Oh, CarMax, Carvana, they're putting crazy money in the car," and they're not putting crazy money in the car. They know what that car will retail for, and they have more data available to them in the competitive sets.

And I think that's what dealers don't realize is, unless you have software like AccuTrade, you're at a distinct disadvantage against those two companies, not to mention some of the other big ones. And it's mission-critical that you don't over-appraise the burgundy one, because most dealers say, "I took it in $1,000 less than MMR," which is still thousands too much. But the bigger missed opportunity is not appraising the white one for the right money. And then it goes to the auction, and nobody realizes why it's going through for that much money, and it's because they can only decode the VIN to a certain extent.

So they don't know. So the dealer with AccuTrade can acquire more aggressively—or what they perceive as more aggressively—because they already know what the exit is. So it is a distinct advantage.

Zach:
Yeah, no, that definitely makes sense. And I remember once Bob told me, if you're not using a tool like AccuTrade to do vehicle appraisals, it's theft by ignorance. And I think that might resonate with a lot of people listening.

So customer experience is becoming key for dealers. We see players like Carvana, for instance, in the marketplace. How does AccuTrade's tools enhance the appraisal and buying process? And we've talked a little bit about dealers, but on the consumer side—the consumer experience.

Brian:
Well, to your point, you know, Carvana has really figured it out, and obviously their acquisitions—they and CarMax are acquiring 85% plus of their inventory directly from consumers. Now, Carvana, when they were acquiring 12%, they were buying all those cars at the auction, or CarMax was. Everybody was, you know, "How are they doing what—?" They weren't anywhere near as profitable. Now that they're, you know, in the eighties, they're wildly profitable. And I think that that's the goal—that should be the goal for every franchise dealer.

Now, how do you do that? You have to focus on the customer experience and work backwards. And you cannot use the trade appraisal process as a lead aggregation form, where you ask a few questions and then, "Here, put your information; somebody will be in touch with you." You have to let the consumer guide the journey. They need to be able to adjust the miles up and down; it needs to be a self-service SaaS model that's very simple.

And we're constantly—we just added an enhancement on the cars.com website, because we're just relentlessly pursuing how can we eliminate one more click and still guarantee the offer and still be just as competitive? Because we want to get it down to where, you know, in our cars.com My Garage that's live on the site now, the client—we already know the client's name, we already know the client's number, we already know their email address, we already know everything about them. We've already got the—we, you know, it's kind of like a Carvana value tracker where you can, you know, get updated on the values. But we believe that's the future of lead generation.

First thing. Second thing is we're gonna be integrating the ability for them to pull their own payoffs in a self-service manner. Most—if you take a look at every dealer's website, what's their closing ratio during store hours versus off hours? It's like 3X. So if you're not allowing the customer to go full journey—some—a lot of websites, we see an 80% plus bounce rate on the GA4 events. If you don't allow the customer—it's fine to give a range, but if they want to keep going and actually get a guaranteed value, if you don't give them that option, there's an 80% bounce, and they go to a Carvana or CarMax or something like that.

So I think that even where the landing page is at the end of the journey, they should drop into the SRP page of the dealership's inventory, because CarMax and Carvana don't advertise the consumer, you know, buying a car; they just advertise them selling them their car, and that's what the traffic generator is. And if dealers aren't maximizing that, that's the price of admission these days in order to get them to view your inventory.

Zach:
And do you have a success story that might resonate with, like, a single-store used car dealership that effectively used AccuTrade's online or in-store trade appraisals? So you talked a little bit about, like, higher-volume dealers. What about, like, smaller, kind of mid-volume dealers really being effective with AccuTrade?

Brian:
Yeah, I've got 22 examples. One of them is, you know, a dealer in Sarasota called Ho Buys Cars—Howard Horowitz. And he's buying 30 to 50 cars a month. It's just him and his lot porter. He takes the leads. You know, I've actually had some big groups complain about him, saying he's got a bunch of people and they must be manipulating the system.

And I'll tell you the secret to his success—and his closing ratio is like 20% on the inbound leads, which is unheard of from an acquisition standpoint. If you call his number on his website, he'll pick up the phone in one ring every single time. And if you're within an hour of him, he's gonna come out to you to appraise your vehicle and buy it from you. And everything he advertises is it's gonna be the easiest experience. And they can go by—you know, from—obviously, there's a ton of dealers in Sarasota, Tampa area. But he says his value prop is not that he's gonna beat CarMax by 500 bucks; it's that it's going to be the easiest, effortless car-selling experience you've ever had. And he has repeats, referrals, and he was buying all of the cars at the auction a few hundred bucks.

Now, obviously, his margins are a completely different story. But the—I mean, I could go on for days, but George Saliba, which everybody can follow—George Saliba, his last name is S-A-L-I-B-A-J-N-S—yeah, on TikTok. I won't say the number, but it's in the four-digit number of how many inbound leads he gets through social media, his website—all through the AccuTrade.

And as he's told me, he said, "You know, I manage all my prospects through the inbound." We've got—it's similar to a CRM where you can see all the leads coming in and, you know, if they've been, you know, adjusted or not. But he also—and you can text the offers; you can send condition reports right from, you know, within the tool.

But what he's—I mean, you've obviously seen his videos and how interesting that is. But if you think about $30 a lead, what he's able to do—he, you know, obviously he's a great marketer, but he wouldn't be able to handle all those unless he hired another 10 or 20 headcount in order to process all these guaranteed offers, because he's doing what CarMax and Carvana are doing. He's letting the system appraise 80% of his cars, and he's doing exotics and all kinds of crazy stuff, but he's only getting involved in the 20%. The system takes care of the other 80%. So it really allows you to scale in a big way if you're short-staffed and a smaller—like, especially an independent.

Zach:
Yeah, those are two just awesome examples. And as we look to, like, 2025, what are some of the exciting things coming down the pipeline from AccuTrade's standpoint?

Brian:
Well, probably the most exciting is something that we've been working on for almost—well, it will be three years here in March—is what we call IIP. It's Inventory Intelligence Platform. So I think that everybody would agree that AccuTrade is the most powerful vehicle acquisition platform from a decentralized way for sight-unseen appraisals, websites, inbound, buy center, service drive acquisition.

But we haven't had the other half of the piece, which is syndication, pricing, AI-based recommendations so that, you know, everybody, for the most part, I think, knows what to do, but the amount of time it takes you to identify, "So why is this car not selling? Why are the VDPs so low and the SRPs are high?" or vice versa. Our system will tell you that. It will say, "You're missing these three key options. Please add these to your merchandising text." AI-based comment generators that are unique to different search engines.

But I think that not having to go search and identify and taking 10 minutes or 20 minutes a car to figure out, as a used car manager, why they're not selling when you get the bullets flying and you have inbound calls coming in and you're doing everything as a used car manager, right—approving recon—we want to take as much of that off the operator's plate as possible and automate it with AI. So it will just serve up, "This is the issue with this car. Check the photos; there's issues with the photos," you know, whatever the issues are.

Identifying within the inventory, you know, "If you were able to eliminate these vehicles that have over a market day supply of 70, it would increase your PVR by this. Wholesaling these units today would increase your PVR from this to this and also, you know, reduce your average days to sale by 17 days." And it'll break down the holding costs—all of that stuff. So it's gonna be really transformational. Nothing like that's been in automotive. Nothing close yet.

Zach:
Wow, that's pretty exciting. And I'm sure at NADA you guys will have a lot of the exciting updates as well coming in.

Brian:
Absolutely. We'll be doing demos of it and talking all about it.

Zach:
My last question: What advice would you give to a single-store used car dealership as they're thinking about navigating the evolving digital and appraisal landscape?

Brian:
That's a great question. So, obviously, I'm biased. But if I left Cars Commerce today and I opened up an independent store, I think all of our biggest independent dealers would agree with me that they wouldn't be able to do business without AccuTrade. And that's obviously, you know, a self-serving comment.

But I think that every dealer needs to be kind of like with the Oakland A's and Billy Beane in "Moneyball." And they said, "Anybody who's not thinking about this model is out of their mind, and they'll be a dinosaur in five years," you know, Boston Red Sox owner. I look at this in the same way.

If you're not looking at CarMax and Carvana, what they're doing and how they're impacting the industry, and not trying to figure out that formula, and not partnering with somebody like us that can automate not just the values—that's becoming the price of admission, because if you don't do that, they just jump to those two websites, and they will, and then you're gonna lose the trade.

So gathering those trades and switching the perception from look-to-book and wanting to be at 50% look-to-book to "I want to be at 50% trade-win capture," which is, if you sell 100 cars, I'm taking in 50 trades. Because a lot of people will sell 100 cars, and they'll take in 20 trades, and they don't really think about it because the national average is 26.

So focusing on that on a daily basis and focusing not just on your daily sales rate but on your daily acquisition rate—how many cars did I acquire from consumers today? And just constantly having that and rethinking BDCs. You know, BDCs that handle inbound phone calls—there should be something dedicated like that for acquisition teams, where you have a team that actually just handles this from cradle to grave. You're able to cut same-day checks.

It's the most volatile and the most rewarding part of the business. New cars—you're at the mercy of whatever is being built and whatever the market conditions are, lease programs, you know, OEM incentives. Service is going to continue until 2030 to grow at a pretty healthy rate; same thing with parts and collision. But used cars is what I'm seeing—I talked to three dealers this morning, and the difference between the three dealers I talked to that are winning, that had record months last month, and a bunch of the other dealers I talked to that talk about external market conditions and how tough it is and how the auctions have lost their minds and you can't make any money on cars—and then the same dealers in the same market are enjoying record months.

It always comes down to used cars and their sourcing strategy. And the ones that are winning are sourcing them from consumers, and the ones that are struggling are buying at the auction.

Zach:
Yeah, that's such thoughtful advice, I think, for used car dealers listening to this podcast. And I love the "Moneyball" reference. I actually threw out the opening pitch for the Oakland A's last year, so I got to go to the stadium and everything where they shot "Moneyball."

So, Brian, it's just been awesome having you on the podcast. You're so insightful. I just appreciate your time today, and so does the audience.

Brian:
Thank you for having me, Zach. I appreciate it.