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5 Dec 18

“Our clients are global, so KAR needs to be global too”

Big news for the Remarketing industry on both sides of the Atlantic: KAR Auction Services (U.S.) has acquired CarsOnTheWeb (Belgium). We presented the facts last Thursday. But what’s behind the move? We got on the phone with two masterminds behind the acquisition.

Being the careful and deliberate execs that they are, Benjamin Skuy (pictured left, KAR’s executive VP for international markets and strategic initiatives) and Jonathan Holland (pictured right, Managing Director of KAR’s UK subsidiary ADESA Remarketing) point out that any talk of the acquisition of CarsOnTheWeb (COTW) would be limited as the deal still awaits approval from two national regulatory authorities. 

Cross-border complexity
The requirement for regulatory approval is an indication of the complexity of cross-border remarketing – a specialty of COTW; founded in Belgium, the online used-vehicle auction platform quickly expanded to become a European-level player. It has a supplier network in six countries (Belgium, Netherlands, France, Germany, Italy and Spain) and sells into 50 countries. In 2017, the company rolled out an ambitious programme for organic growth, targeting 70,000 units in calendar year 2018 and 100,000 by 2021. Its ultimate ambition is to become the Number One remarketing auction site for cross-border trade in Europe. 

That’s exactly the drive and expertise that made KAR prick up its ears when COTW came on its radar. 

“KAR is a major player in the North American remarketing industry – covering the U.S., Canada and Mexico”, says Mr Skuy. “We remarket 5.5 million cars annually, which translates into a turnover of around $50 billion. We do physical auctions, but almost half of the vehicles – many from OEMs and their captives – are sold online. We have 300 locations in North America”.

Five-point checklist
That thumbnail portrait matters, because ultimately it’s KAR’s own size that drives its ambition: “Our clients are global, so our ambitions need to be global too. That’s why we first acquired the entity that would become ADESA in the UK, and then started examining our options to expand into continental Europe – an extremely large, well-defined and mature remarketing space”. 

For KAR the key success factors for Europe were:

  • Must be a recognised online remarketer;
  • Possess a robust buyer base especially in markets that could pay more for vehicles than could be realized domestically;
  • Have a strong logistics component;
  • Have a physical presence in Europe’s key markets;
  • Competence in cross-border transactions.

“Not only did COTW tick all of those boxes, we also like the fact that our cultures are very much alike”, says Mr Skuy.

So, how will this change the way ADESA UK works? “Not much”, says Jonathan Holland. “In fact, nothing at all. We will all focus on our strengths, which will result in success. Also, there is very little overlap between our markets – yes, it helps that there’s the English Channel in between”.

Sister brand
COTW will become a sister brand to ADESA UK, its CEO Johan Meyssen will remain in place and also report to Mr Skuy. It’s a move not dissimilar to COTW’s own acquisition, this February, of Germany-based GW Liste. The acquisition fit with COTW’s ambitions of increasing both its sales volume and its sourcing channels in the crucial German market. Both companies continued to operate as separately branded entities.

That is also KAR’s plan, at least initially. “As regards the branding of COTW we will evaluate the acquisition post-close. We will eventually decide on whatever serves our clients best”, says Mr Skuy.

Globalising trend
Which of course also was the motivation to start expanding in the first place: “The remarketing industry is on the brink of a globalising trend. From a commercial customer point of view decisions are being made in Europe that impact North America, and similarly, decisions made in North America are impacting Europe. Commercial customers are looking for global solutions. Thanks to KAR’s presence in the UK with ADESA and, following the requisite approvals, in Europe with COTW, we will be at the forefront”. 

“As regards further acquisitions, we will be extremely diligent and patient”, says Mr Skuy. “We will act when we encounter a significant opportunity in the market to better serve our customers – as we now did with COTW”.

Authored by: Frank Jacobs