Bid4Cars

BID4CARS

BID4CARS

Tech Investments to be Rolled Out in 2019 PRODUCTION: David Napier

Following a significant investment into its technology offering, South Africa’s leading vehicle auction and management company, Bid4Cars, is set to roll out a new and improved system in the first half of 2019. GM, Mike Scarth talks to Enterprise Africa about the company’s ongoing success.

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There is an emerging trend in South Africa’s automotive industry that is helping big-name dealerships streamline their stock and contributing to the development of the lower-end of the market by assisting smaller dealers access supply of quality vehicles for their forecourts.

Consider the situation; you head to your local dealership – a big name from South Korea. You take your current bakkie, a reliable model from a Japanese brand, and complete the trade in. You get a shiny new car, and the dealership is left with your old vehicle.

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The dealership could sell it, but it’s not their brand, it’s not brand new, and it may not be what their target audience expects. So, they need to find another way to dispose of the vehicle while still generating revenue.

The answer: Bid4Cars, a Johannesburg-based, business-tobusiness, vehicle auctioning and management organisation. Founded in 2008 in the Western Cape, Bid4Cars has grown steadily, accelerating its reputation each year thanks to a constant focus on technological leadership and frequent development of critical mass.

The idea of auctioning was experimented with by a small pool of dealerships and the goal was to be fair and transparent. Dealerships were finding that they were cornered by a handful of buyers that would determine the prices of vehicles. It made sense to grow a platform that would bring a larger pool of buyers into play. The virtue of that meant that the buyer market would grow and the result of that was that vehicle value was determined correctly. Instead of being cornered by a handful of dealers, these companies were exposed to a much greater pool of buyers.

INDUSTRY FOCUS: AUTOMOTIVE

Today, the company enjoys an extremely strong reputation in the country’s automotive sector. It is a trusted partner of many of the major international brands and will be looking for further growth in 2019.

In May, Bid4Cars welcomed a new General Manager, Mike Scarth who is putting his years of experience with the Imperial Group to good use.

“I’ve been in the Imperial group since 2003 where I have had many different roles. Most recently, I was working with Renault South Africa as the GM of Marketing,” he tells Enterprise Africa.

TECH-BASED Bid4Cars service is digital. It is conveniently positioned over an online platform which the company has recently invested R2 million into upgrading.

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“Over time motor vehicles become aged and technology moves on quickly with new models being introduced. That’s very much like our technology, we have to move very quickly with the market,” says Scarth.

“We are prescribed to improving our software adoption and we find ourselves with a great new technology that allows us to adopt e-commerce principles. We are also exploring machine learning and we believe it has its place within the realms of auctioning. The investment has already taken place and we are building a new platform which is in Beta testing right now. We expect that by March 2019, our new platform should be market ready,” he adds.

Daily, Bid4Cars has more than 400 vehicles up for auction. It boasts that 80% of all vehicles loaded and

// WE EXPECT THAT BY MARCH 2019, OUR NEW PLATFORM SHOULD BE MARKET READY // advertised on its platform are sold at market value, and it offers dealerships the ability to manage the disposal of this stock easily through one single device. Buyers are not charged commission on cars bought and only pay their highest bid placed.

Conveniently, all bids are inclusive of VAT, and sellers will only be invoiced upon successful sale and not per vehicle loaded.

Scarth suggests that a big draw for dealerships is the company’s in-depth knowledge of the vehicles it processes.

BID4CARS

“Although we are seen as an auction house, we do have a separate value proposition and that is the ability to provide dealerships with the digital means of doing vehicle appraisals,” he says. “Traditional dealers will use books and papers to conduct vehicle appraisals whereas we have introduced that in a digital version. It allows dealerships to conduct all of their trading activity digitally and that allows them to capture everything, which allows the dealer to extrapolate, turning that data into meaningful information to help them make better decisions. We have improved the process on the valuation side considerably and if we compare it to the auctioning side, we have found that dealerships still want to find a quick and thorough way of liquidating assets and buyers want to find an easy way to make buying decisions.”

The updated technology also allows buyers to take part in tailored auctions, where maximum information is served allowing for a fully-informed decision making process.

“There is big demand in the market for customised auctions,” Scarth details, “we have introduced the ability to make offers on vehicles that haven’t met their reserve, everything will be mobi-responsive, and we have completely overhauled the app where buyers and sellers can get a good idea of what is currently available. Traditionally, we have been very desktop-focussed but we are now looking at being responsive across desktop, tablets and mobile. It’s about enhancing the experience for both buyers and sellers by staying in line with basic e-commerce principles.

“The better the experience for the buyer and seller, the more trusted your platform. A lot of the buyers need a clear picture of a vehicle – the way it looks, all the details and descriptions about it, clear imagery – these are what buyers are demanding and so that is what we are putting into the new platform,” he adds.

NO SLOWDOWN After establishment 10 years ago, Bid4Cars has been through a number of significant ownership changes.

Its founders, a tech developer and a local entrepreneur, tested the idea extensively before onboarding Hyundai South Africa – a significant brand in the country’s automotive sector. “The platform was rolled out across the entire Hyundai network and the success was immense,” says Scarth.

In 2009, Bid4Cars became part of the Imperial Holdings portfolio and utilised its position within that group to build its customer base. When Imperial announced in 2017 that it would reorganise its business into two separate divisions; Imperial Logistics and Motus, Bid4Cars was categorised as part of the “vehicles division”, Motus.

In November, Imperial Logistics and

Motus were unbundled and listed as two independent entities. Where most would find this uncertainty challenging, Bid4Cars has continued to operate seamlessly, and Scarth predicts no slowdown in the future.

“The unbundling has resulted in Motus becoming a completely separate business from Imperial and the shares have been spilt on the JSE,” he says. “My outlook is that it will be business as usual. We continue to play a key role in the motoring industry and we don’t foresee any significant changes at this point.”

In fact, it looks as though the company will pick up new clients in the New Year – a few of which are countrywide, further solidifying the company’s importance in the industry.

“We have seen a shift where we are talking to businesses that want

is an Online new, used and demo vehicle advertising platform.

The Carfind.co.za website has 2 main functions: 1

A platform that allows people to easily look for a vehicle that they wish to purchase.

2

A platform that allows private people or dealerships to list and sell their vehicles.

These vehicles include Cars, Bakkies, Motor Bikes, Caravans, Boats, Trucks and both Commercial and Leisure Trailers.

The Carfind.co.za platform also provides opportunities for Auto Promotions and Allied Services such as Insurance/Car Track/Vehicle Facts etc via various Banner Advertising packages.

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INDUSTRY FOCUS: AUTOMOTIVE

// TRADITIONALLY, WE HAVE BEEN VERY DESKTOP-FOCUSSED BUT WE ARE NOW LOOKING AT BEING RESPONSIVE ACROSS DESKTOP, TABLETS AND MOBILE // to dispose of their fleets or rental programmes – that is a new flavour for us,” admits Scarth. “We are finding ourselves growing outside of the dealership group and into businesses that want to dispose of large amounts of vehicles. We are still exploring the opportunities and we are in negotiation with a large fleet business right now.”

But, focus on Bid4Cars core business will not be sacrificed as the company looks for diversification in its client base.

“Hyundai views Bid4Cars as a key partner. They contribute significantly to our platform and our relationship is going into its 11th year. From a group perspective, we also partner with Kia Motors, Renault South Africa, the Multi Franchise brand from Motus, Tavcor Motor Group, Eastern Cape Motors,

and we are close to signing up another group of dealerships to the platform,” Scarth ensures.

ON A REALLY GOOD TRACK South Africa’s automotive industry receives a large amount of attention each year, from both government and the private sector. Auto-manufacturing accounts for 34% of all manufacturing in South Africa (manufacturing is worth 13% of GDP). Beyond manufacturing, the auto sector, and all of its associated value chains, are vital to the local economy (or any economy), and the government has offered up the Automotive Production and Development Plan (APDP) and the associated Automotive Incentive Scheme (AIS) to assist in boosting this vital sector.

Scarth believes that bolstering any part of the industry will bring benefits to the economy and is happy with the noises being made by government.

“We have to focus on the longterm prospects of the automotive industry. The government’s decision to revise the APDP, in line with providing incentives to produce and manufacture in this country, is the subject of a lot of interest,” he says. “The relationship between government and business is moving in the right direction; there is stronger cooperation going on between the two and the talks are becoming a lot more robust, but with that there is

a level of political uncertainty which contributes to decisions by OEMs about whether they should set up shop in South Africa.”

At the start of December, it was announced by Stats SA that the country had exited technical recession, with 2.2% growth in 2018’s third quarter. Of course, this is positive reading for any business, especially those that are active in industries desperate for FDI. “The macro-environment must provide a greater sense of certainty to make it attractive for OEMs to come and consider South Africa as a destination for manufacturing. At the moment, we have seven OEMs manufacturing in South Africa but there is definitely scope for more to come. South Africa’s policies have to be continuously reviewed to ensure we are keeping up with the times, and by reviewing these policies to make them more robust, we should be able to attract investment. By just installing a little more confidence, South Africa will be on a really good track to bring in a lot more investment.

This country has the companies to complement manufacturing and is far along with the growth of Development Zones which catalyse the industry, so my outlook is optimistic. We are in a used car space but bringing in more OEMs and growing our economy will naturally filter down to platforms like us and help us to contribute to growth,” says Scarth.

TECH BACKED BY PEOPLE From three 10 years ago, Bid4Cars staff complement is now up to 15 and job creation is at the forefront of the mind of the General Manager. His view is that by driving the development of new business, Bid4Cars will drive the need for people.

“The outlook for the company in the next year is to expand and for our staff-base to expand – that is the end goal,” he says.

“If you have an environment where you can create business, then you can create jobs. The term ‘job creation’ is

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BID4CARS

used quite loosely, my view is that business creation is key as if you create business, you create jobs.”

He says that, despite the company’s status as a technology business, it is people that back up the performance of technology. Since its earliest days, Bid4Car’s work has been about building relationships, and then delivering for its clients.

“Although we are a technology driven business, we can’t shy away from the human factor which plays a pivotal role. Relationships for Bid4Cars are paramount. We will continue to try our best to maintain relationships with our key partners and grow relationships with new brands.”

In the future, growth will be achieved by gaining more customers – both buyers and sellers.

“Keeping critical mass is so

important,” reminds Scarth. “The amount of buyers and the amount of sellers needs to be fuelled constantly; you can’t have a platform with just one side.”

And parties from both sides end up on Bid4Cars platform thanks to the development of trust. Trust is the key aspect of any business but even more so in the auctioning space.

“The reputation management has required a lot of focus because buyers and sellers need a sense of trust, so that is where I have concentrated a lot. Any buyer or seller that buys from an auction has more risk than walking onto a forecourt where the purchase is protected by the Consumer Protection Act. Driving e-commerce principles, and managing the trust and reputation has been the main education for me,” says the GM.

Fortunately, the company’s reputational advantage is strong, and with investments into new technology set to be completed in the first half of 2019, next year looks set to be another strong one for Bid4Cars. Backed by Motus (which reported revenue of R77.7bn and operating profit of R3.6bn at the end of June) and enjoying the support of some of South Africa’s biggest auto brands, Bid4Cars is perfectly positioned to achieve the growth it wants and expects.

WWW.BID4CARS.CO.ZA

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ENTERPRISE AFRICA

DECEMBER 2018