A Different Take on AutoTrader.com's Acquisitions

To execute on participatory marketing solutions like AutoTrader.com, many dealers need help feeding their data into the system on the input side and properly handling the contacts on the output side. AutoTrader.com's acquisition of Vin Solutions fits with their purchases of HomeNet, vAuto, and CDM. Together, these represent a vertical expansion. The only piece that can be seen as a horizontal expansion is kbb.com. The obvious advantages to these acquisitions are integration and future synergies from what is arguably the strongest, if not largest, set of dealer sales teams in the market. What I'm waiting to hear more about is training.

Most dealers buying products from this set of companies are not extracting all the value available. If rate increases are part of this overall strategy, then there will need to be a strong training efforts to help dealers get more out of the systems they purchase. (See my 2009 paper on Profit Generating Systems.) Providing an integrated bundle of services will make things easier for dealers, but these products will still be participatory in nature.

The likely place to start is with dealer groups. Some groups have fairly defined processes for their dealers. For example, there is a CarMax way of doing things and CarMax customers have come to know what to expect online and offline regardless of what market they are in. Dealer Groups can extract huge benefits by instituting known best practices across their stores. AutoTrader.com could provide the kind of training these dealer groups need for every store to receive maximum benefit from their products.

The alternative is to work with independent trainers and consultants to help spread knowledge and best practices across the industry. The more AutoTrader.com tries to displace independents the more pushback the will receive, justified or not. However, some trainers and consultants will resist even the most basic logic in order to differentiate themselves. Dale Pollak, founder of vAuto, has experienced this very thing for years now. This approach, if it were attempted, would need to be surgical, cutting out some and empowering others.

Whether the various companies under AutoTrader.com ever come together as one sales force is yet to be seen, but the training piece must come together in order for the dream of integration to be realized. This will be the organization's greatest challenge over the years ahead. It knows how to sell, how to promote itself, and how to develop technology. It has never figured out how to help a sizable majority its dealer customers keep up with the car buying public, and no one else has either.