Auto dealers don’t get to pick their inventory from a catalog or from snazzy marketing materials delivered personally from a sales representative. Building and maintaining inventory for an auto dealership requires travel to a remote location, partaking in chaotic and competitive auctions and significant logistics expenses. But that is changing in the digital age: enter ACV.
ACV is a digital auto dealer app, allowing auto dealers to view, bid and purchase car inventory via online auctions. The company appointed former Synacor Founder George Chamoun as its CEO and received $5 million in funding from a group of venture capital companies on Sept. 19.
ACV held its first auctions a year ago and won $1 million in the 43North business plan competition in Oct. 2015. The company has tripled its workforce, according to Buffalo News, and plans to expand from its base in Buffalo to the larger markets of Cleveland and Pittsburgh.
In the U.S. alone, there are over 9 million dealer-to-dealer wholesale transactions a year. Automotive dealers typically auction off about half of the cars that consumers bring them to other dealers, and the other half are sold on their lot.
Those wholesale cars must be transported to physical auctions, placed in lanes with an auctioneer bidding simultaneously in each lane, while harried dealers scurry frenziedly hoping to find the right vehicle in the right line before its number comes up for bidding. Any inspection of a car amounts to a second’s glance underneath for rust and, at a stretch, opening the door to look inside. Oh, and then all of the spoils must be transported back to the buyer’s lot.
With the ACV model, a 20-minute auction is conducted right from the dealer’s lot. A car gets traded in, and there is an instant auction. The app sends a notification to dealers, for example: “Right now, BMW X5, 110K miles.” And the dealer can start bidding on the car.
ACV performs a vehicle inspection and provides 30–40 photos online of each car in its “vehicle conditioning report,” which reduces the buyer’s risk in buying a vehicle sight-unseen. According to Chamoun: “Our customers have found their average reconditioning cost has gone down with ACV, the opposite of what you might think, because of a thorough vehicle conditioning report provided with the app.”
Chamoun’s nuts-and-bolts perspective to the business — no fuss, no muss — makes the focus of his business all about client trust.
“We want to be the most trusted platform for dealers to buy wholesale cars. We are using mobile technology, a condition report app, notifications and streamlining logistics, all the stuff that other B2B applications do but, at the end of the day, if we are the trusted source to buy wholesale vehicles, that’s a very big business.”
Scaling is the next challenge for ACV, and Chamoun has a methodical approach to that, too. “This is a business that you build regionally, and then, you just grow one step at a time because you need to get the buyers and the sellers to show up.”
For now, ACV is focusing on the U.S. market. According to Chamoun: “Over the next six to nine months, we’ll primarily be in the Northeast and then look to expand on the East Coast, and then, we’ll start to head west. It’s not really an issue; it’s more the reality of this business.”
And as far as international markets are concerned, ACV sees possibilities a year or two either directly or indirectly with a strategic partnership.
Does ACV see any barriers to its growth?
Chamoun’s no-nonsense response is: “We’re not a medical company that needs compliance or a software company that is waiting on a patent; this is hiring the right folks, picking the right market and getting out there.”