Carmel-based KAR bought the business, TradeRev, for $80 million in stages from 2014 to 2017. TradeRev has accelerated growth, but losses have ballooned—from $53 million in 2018 to $72 million in 2019.
At the same time, the gap between it and the No. 1 player in the dealer-to-dealer app field—Buffalo, New York-based ACV Auctions—has widened.
ACV says it sold 240,000 cars last year, nearly triple the number a year earlier. TradeRev, on the other hand, sold 157,000—up from 117,000 a year earlier but far short of its 200,000 goal.
Both firms are merely nibbling at what their executives believe is a huge market, with 5 million or more transactions annually.
“We are still in the early innings of the transformation of the dealer-to-dealer space, so rapid growth is possible,” KAR CEO Jim Hallett said last August on a conference call with analysts. At the time, he was forecasting that the continued growth in sales volumes would allow TradeRev to reach profitability in 2021.
KAR still forecasts TradeRev’s turning profitable in 2021, but not entirely driven by higher sales volumes. In January, KAR reduced costs—and increased efficiency—by combining the TradeRev sales team with the dealer consignment-sales team for its Adesa auction division and eliminating 70 sales jobs.
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