Fleet of foot isn’t a term usually applied to multinationals with sizeable legacy operations. But, in the automotive industry, new tech companies and other disrupters are forcing incumbents to revolutionise their approach to the market.
Nowhere is this more apparent than in the auction and remarketing sector, where digital technology is moving resale opportunities upstream, enabling fleets and leasing companies to maximise residual values by minimising time to sell.
At the centre of change is Cox Automotive and its UK CEO Martin Forbes.
Forbes was appointed last July to oversee a business with multiple operations, including Manheim with its 16 remarketing centres and digital sales channel, RMS Automotive which provides lifecycle vehicle management for large fleets and leasing companies, and the Movex de-fleet and refurbishment service.
However, the wide – and at that point widening – portfolio of businesses was causing Cox something of a headache.
“I have a ‘do less, execute well’ mentality; Cox was trying to do too much,” Forbes says. “We needed to redefine and focus on what I call ‘core plus’. Core is our B2B wholesale business; the plus is our adjacencies – the businesses that drive the core: NextGear, our funding arm for dealers to buy stock, and Movex.
“We created confusion in the past; now we have a simple structure: Dealer Auctions, our new joint venture with Auto Trader; Manheim, our auction centre, inspect and collect, and de-fleet business; NextGear; and Modix, our digital marketing solution.”
Car search site sold
Part of the simplification strategy was to offload; car search site Motors.co.uk was sold last October.
“Motors came under the ‘do less, execute better’ strategy. Gumtree approached us and we realised it was the right business to take Motors to the next level,” Forbes explains.
It also opened the way to a partnership with Auto Trader, although Forbes insists this wasn’t the reason for the disposal: “No, it had nothing to do with Auto Trader. We’d already got over that issue.”
He believes the Auto Trader deal means Cox is “disrupting our own market by shifting from physical to digital”. The Dealer Auction joint venture brings together Auto Trader’s digital experience, platforms and data with Cox’s understanding of the wholesale market, refurb and storage facilities, and ability to move metal.
It also brings Auto Trader back into the fold after the company promised to shake-up the auctions market with the launch last year of Smart Buying, an online service which enables leasing companies and larger fleet operators to bypass the traditional auction by selling ex-company cars direct to dealers.
“We have seen leasing companies using their own platforms and manufacturer captives using third parties,” Forbes says.
“Dealer Auction will allow us to aggregate stock in the marketplace. Right now, it’s a fragmented market for buyers. They log onto the auction websites to see stock with different contracts, different grading and different photos, and a lack of data – it’s too much art and not enough science.
“We are trying to create an environment where stock is put into an aggregated pool so buyers can see everything that is available. If they want to transact online they can, but if they don’t then they can still go to the auction centre, whether that’s one of ours or a rival business.
“There is no reason why any leasing company with a solus remarketing agreement from a physical environment wouldn’t want to put their vehicles up on a digital environment first where you have 13,000 dealers, especially if that reduces the days in stock and increases values. We can provide that service.”
Average buyer fees at physical auction average £200 to £250; on Dealer Auction they average £60. In addition, cars can go online for sale within hours, compared with up to 14 days at physical auction.
Consequently, Cox is seeing resale prices rise a couple of percentage points because dealers are taking the buyer fee into consideration so they are willing to bid more to secure the car.
Dealer Auction sales are rising every month. Including its Simulcast online bidding platform, Cox is selling 25-30% of stock in a digital environment.
This year, Forbes expects to close in on 100,000 online sales. And the profile is changing: stock used to be the older, cheaper cars; increasingly it is younger and the prices are rising – good news for fleets and leasing companies disposing of three- and four-year-old vehicles.
“We predict 80% of wholesale stock will be sold online by 2023, but I’m not hung up on the details,” Forbes says. “Whether it’s 60% or 80%, 2023 or 2025, our statement shows the direction of travel.”
So what does this direction of travel mean for the company’s 16 remarketing centres in the UK?
“We have to be open and honest – will we have 16 in two or three years’ time? The answer is no,” Forbes replies.
“Physical auction isn’t dead and buried, but there is stock that is relevant for digital, such as manufacturer and fleet/leasing stock with a younger age profile, and an element that suits the physical lane, such as dealer part-ex.
“We will reconfigure our locations. We will have fewer sites but they will be bigger and strategically placed. We will have to complement digital sales by going into de-fleet and refurbishment in a much bigger way. The journey starts now, but it will be 2023/24 by the time we have reconfigured with the right capabilities in the right locations.”
Future for the centres
Those centres may become dual-purpose as Mobility as a Service (MaaS) initiatives create a need for large centres which can manage, service and maintain cars.
“Having de-fleet centres with duality of purpose will increase our footprint as MaaS, transport as a service and subscription models start to take hold,” Forbes says.
He predicts a major shift into mobility services, with the automotive industry heading the same way as mobile phones where people buy credit and different packages.
“It’s not ownership, but a rental model where people can shift in and out of cars dependent on their need,” he says. “I also see a world where there is no subscription; it’s simply a click of a button and a car turns up to collect you. We already have this in big cities, with the likes of Uber.”
Cox is the UK’s second largest remarketing company in a B2B market worth £500 million, and is responsible for between 400,000 and 450,000 vehicle transactions a year. It has an ambition to become number one, but recognises that the more pressing need is to keep pace with technological change.
“If we continue with the strategy we have, we will become irrelevant,” Forbes says. “We need a full end-to-end proposition that allows the dealer, fleet and leasing company to keep pace with the market."
We need more female talent
Martin Forbes believes that more needs to be done to attract women to the automotive sector and to get them into senior management roles.
“Only 20% of people in our industry are women and that can’t be right,” he says. “It’s been proven that you get higher performing businesses where there is a better diversity mix within senior management teams and down the organisation.
“We need more female talent; we’re nothing without talent. Selfishly, we want to pull more talent into Cox Automotive but, taking the greater good, we’ve got to pull more women into this industry full stop.”
He believes that women can challenge conventional thinking, bring fresh ideas and a different approach to the boardroom.
“I look at three things: people, customer and performance,” he says. “If you get the right balance of people that will make sure you get it right for the customer and if you get it right for the customer you'll get it right from a financial perspective.”
He admits that some parts of Cox Automotive are doing a better job than others at bringing women into the industry.
“If you go to our Colchester auction centre on a Thursday night the majority of the people working behind the scenes are female,” he says. “But there are other parts of the organisation where we need to do better. I need to look at how I bring more female senior leaders onto the board. We’re blessed to have Alison Fisher (chief people officer) but I’ve got to look and say ‘where is our next line of talent coming from?’”
Forbes doesn’t believe that quotas are the answer as they could “drive the wrong behaviour”.
“The risk is that people say ‘I need to get a woman’ instead of looking for the best person for the job,” he says. “Where you need to start is grass routes. You need to bring more women into the automotive industry, support them and sponsor them, and provide them with the right flexible environment to allow them to grow so they don't feel they've got so far as a senior person, they leave for family and they feel they have to give up on their career or just stay at a certain level.”
To promote diversity, Cox Automotive has set up a quarterly networking group called Women with Drive, which has grown from having just 30 attendees at its first event in 2016 to around 200 at the last event on International Women’s Day (March 8, 2019).
It has also launched the Barbara Cox Award – named after the daughter of James M Cox who founded Cox Automotive’s parent company in the US, Cox Enterprises.
Barbara Cox was a business pioneer in her own right and served as a director of Cox Enterprises in the US and the award recognises a woman who shares her traits – namely a commitment to innovation, leadership or community.
The award has been running in the US since 2005 and launched in the UK this year as the Cox Automotive brand has only been established here in the past few years.
Beryl Carney, JCT600’s head of commercial vehicles, picked up this year’s accolade and Forbes believes that role models like her will inspire other women to succeed in the automotive industry.
- Find out how Beryl Carney has transformed JCT600's Volkswagen van centres on our sister site AM.