All Ears Podcast | Reliable Condition Reports & Maintaining High Standards.

In this episode of the Ally All Ears podcast, host Emma Hancock interviews Kelly Olson, Senior Director of Operations for SmartAuction at Ally Financial, about the importance of quality control in online wholesale auctions. Olson discusses advancements in online auction platforms, highlighting the importance of detailed condition reports, AI technology for damage detection, and the evolving incorporation of electric vehicle information, all aimed at building trust and reliability for dealers purchasing pre-owned inventory.

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Emma Hancock: Hi, everyone. Welcome back to the All Ears podcast. I’m Emma Hancock with Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News Content Studio. In each episode, we explore topics that are important to leaders in automotive retailing. Our guests include experts in their field from Ally, plus dealers from around the country to offer actionable solutions in our ever changing industry.

Today, we catch up with Kelly Olson, Senior Director of Operations for SmartAuction at Ally Financial, to talk about wholesale quality control. With most dealers relying on a blend of in person and online buying and selling at auction to manage their pre-owned inventory, the reliability of the condition report, and the auction itself becomes paramount.

Kelly, thank you so much for taking the time.

Kelly Olson: Thank you Emma. I’m delighted to be here today.

Emma Hancock: It’s great to have you here. So, Kelly, there’s been so many advancements with online auction platforms and certainly Ally’s SmartAuction platform is well known and brings together a range of wholesale capabilities under one virtual roof. What are some of the tools within an online auction platform that might help dealers trust what they’re buying?

Kelly Olson: Emma, there’s so much information available today in the online auction format that it can be overwhelming for a buyer to determine what vehicles are the best to buy. Many online auction platforms have the basic tools to identify vehicle build data, options and accessories, as well as current vehicle condition, including mileage, interior, exterior, and mechanical issues that are over and above normal wear and tear for that particular unit.

This information is considered table stakes for any online vehicle auction to describe a vehicle’s current condition. The items that differentiate auction platforms to give buyers trust in purchasing vehicles, in my opinion, is the customer service after the sale, including assistance with vehicle pickup issues, questions regarding marketable title transfer, and arbitration processes.

Specifically for arbitration, buyers should ensure the auction has a clearly defined arbitration policy that is administered in a consistent manner. In this age where information and data flow freely through system integrations, excellence in customer service is still the differentiator to build trust when purchasing vehicles at auction.

Emma Hancock: And I think, you know, the differentiator, really comes down to ensuring that everyone’s got that clear and transparent picture of the vehicle they’re about to bid on. It just feels like now more than ever, that’s really, really paramount. Conditioning reports have come a long way and have helped dealers feel like they’re the next best thing to being there in person when bidding and buying online. What are some of the enhancements you’re seeing with conditioning reports? And how granular are they now?

Kelly Olson: Condition reports have come a long way over the years, and they are really the foundation for any used vehicle transaction, no matter what venue you’re talking about, whether it’s a physical auction or whether it’s on an online platform. And as you said, the buyer must be able to rely on the seller’s description of the vehicle when making their purchase.

So, traditionally, inspection agents have been the source of complete vehicle inspections to give the buyers the best description of the exterior, interior and mechanical conditions. The technology to collect condition report data has evolved over the years to include more clarity and high resolution images, including the ability to zoom in on a problem area and the addition of videos to hear vehicle engines running so you can hear if there is a backfire or it’s running rough or something along those lines. Each of these enhancements can give the buyer better insight into vehicle abnormalities, similar to what you said, it’s the next best thing to being there.

We’ve also seen the use of mobile applications to capture vehicle images and damage information that has grown in popularity that will allow an inspection agent very quickly to capture the inspection information wherever the vehicle may be, whether it’s in an auction yard, a dealership lot or even at a customer residence, and they can quickly upload those vehicle offerings to an online auction. So, within a matter of four to six minutes, somebody can go out, inspect the vehicle, gather the information on the vehicle and have that vehicle posted up to an online auction. So, things just are continuing to evolve, not only in the tools that are available, but in the speed at which you can get those vehicles posted to an auction.

Additionally, some physical facilities utilize photo booths and image drive through technologies where a set of vehicle images can be taken in seconds to capture the vehicle information at one point in time. So again, it goes to that speed of which the vehicle condition can be captured and put online.

So, some of the most exciting enhancements that I think I’ve seen recently–and I’m going to use the buzz word or the buzz term AI–it involves AI. The AI technology is really advancing to detect physical damage to a vehicle via images taken of the unit. This is still a growing area where machine learning is quickly advancing to detect abnormalities in paint and vehicle panels to identify scratches, dents, poor repairs, et cetera.

Most of the advancements I have seen in this area have really focused on the exterior of damage detection, so on the outer panels of the vehicle, with the interior and mechanical damage detection on the radar for these technology companies. So, at this time, the technology continues to mature, continues to evolve, and it will eventually allow consistency in reporting vehicle condition while reducing some of the natural elements like the sun and the rain and the shadows that normally happen when you have an individual inspector going out, and they take out that human judgment as well. And those can cause inconsistencies today.

So, while the AI technology is very exciting in this realm, right now, I really just view it as an effective tool to augment condition reports that are being conducted by the inspection agents but has great possibilities down the road.

Another evolution in condition reports is the incorporation of electric vehicle information, specifically in the area of battery health. Access to battery health attributes through customer or OEM supply data is currently being utilized to estimate battery life ranges, and this continues to evolve as more electric vehicles come through the remarketing channels in the years to come.

At this time, we feel we have a good idea of the range of battery life for a two to four year old vehicle. But when the vehicles start coming in that are older, say it’s an electric vehicle that’s six years old, eight years old, I think that data is still evolving. And as more of those vehicles come in through the remarketing channel, we’ll get a better idea to really zero in on the battery life ranges that we can give a potential customer who’s looking to buy a vehicle.

Emma Hancock: It’s so exciting what you’re talking about, Kelly, like just the sort of almost like a blend that you’re describing of tools and technology where you’re adding automation, where it makes sense. To your point, you still need that that human coming in and really using their expertise, but then using some of these enhancements to create more consistency to enhance the condition report process. I think it’s incredible.

Kelly, these days, many used vehicles are being bought by consumers as an alternative to new. For dealers looking to source top quality used vehicles at auction, like certified preowned, is it worth paying more to secure a higher level of condition?

Kelly Olson: I think the old adage here is you get what you pay for, is really true. But it really is at the discretion of the individual buying for their inventory for their lot.

Certified preowned vehicles must meet a defined set of parameters that are set forth by the specific manufacturer program. And most of these programs are limited to vehicles that are not more than five years old, and they have mileage limitations. If that’s what you’re looking for, if you’re looking for those late model vehicles with the low mileage, and you’ve got a customer that you want to turn that vehicle quickly, and some dealers behind these don’t have the facilities to do that CPO work or repairs to the vehicle.

So, they need a car that’s like sale ready. So, if that’s what you’re looking for, then I think it is of value to spend the extra money for those vehicles. But as they come with a higher price tag, there are benefits to that. But in my opinion, each buyer will need to assess their own needs and weigh the extra costs against what their inventory and their customer needs are.

Emma Hancock: Yes. It’s so true. This is where dealers can use all of the tools to decipher whether it’s a good idea to bid on a higher priced, higher quality vehicle. Kelly, thank you so much. You’ve given us some great insights today on such a major topic. That is it for this episode of the All Ears podcast. I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio, thanks for listening and bye for now.

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