KAR reported higher year-over-year revenue, more profits per each vehicle sold and a net profit from its continuing operations in the quarter that ended Sept. 30
KAR Global, the wholesale auctions provider, plans to move 300 positions in the U.S. and Canada to a global shared services organization, something it deemed a cost-savings maneuver.
He said the program is expected to generate $10 million in annual savings from the company’s current cost structure — something the company expects to see in 2023, when it moves to the offshore model. The impact of the initiative is not included in KAR’s realized savings in selling, general and administrative expenses for 2022, Loughmiller said.
Conversion rates were lower in the third quarter than they were a year ago because used-vehicle values are in decline and buyers are less willing to pay the higher prices sought by many sellers, Kelly said. Kelly said he expects used-vehicle values to continue declining through at least the fourth quarter. A softening in used-vehicle pricing could be a long-term positive for the business because it will allow more vehicles to flow back into the wholesale channel, he said.
"For example, physical auction volumes, which remain a good proxy for industry volumes, were down eight per cent below the third quarter of last year and were 37 per cent below the pre-COVID levels of Q3 2019," Kelly said.
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