ACV Auctions digitized the dealer-to-dealer wholesale car market, which moves 10-20 million vehicles annually between dealers. Launched in Buffalo in 2015, the platform now handles 700-800k units yearly, about 15-20% of all dealer-consigned volume, by letting franchise and independent dealers bid regionally and handling payments, titles, and logistics.
Chapters
So I guess for a little bit of context though, could you kind of give us maybe like an overview of ACV Auctions as a marketplace before we jump into some of the more specific topics?
Yeah, I mean, look, it's B2B, but it's not entirely different than if anybody goes on eBay while they're on this call and looks up a car, right? They'll be, it's digitized what at the time was a primarily physical auction. Depending on how you count, somewhere between 10 and 20 million cars a year. Changed hands from dealers to other dealers, you know, in a physical way at the time that we started. You know, the numbers probably was 16 or 17 million, half of that being where the car was sourced from a rental fleet or a leasing company. And the other half of it were made up of the cars that got traded into dealers that they didn't want to retail, right? Right? I'm a Ford dealer and you just trade in a Silverado. Well, guess what? The last thing I'm doing is putting that on my lot next to my F-150. You know, dealers care a lot about brand loyalty and brand continuity. So because of that, there's this, you know, 15 to 20 million cars a year that kind of were moving around. And ACV is just, it's a mobile-first platform that allows for you to bid on and purchase cars with, I mean, you can use the computer too, but— but right over the phone if you're a business. You know, 17,000 franchise dealers, you know, those are people that have a Chevy or Ford emblem over their store. And then 100,000+ independent dealers, you know, that's Jack Greco's Auto Barn down on the corner. And so highly fragmented on both sides, you know, and we slowly started, we started the company in Buffalo, New York. Home of the future Super Bowl champs of 2024. But, you know, we took very much an adjacent growth hypothesis, adjacent market growth hypothesis where like we kind of grew out from there. A car's a real regional thing. Like if you're in Seattle, you don't need to go all the way to North Carolina to buy a Toyota Corolla. You know, you fly over, you know, 3 million of 'em in between. So how do, you know, we kind of grew, so there was a regional approach to this, but the whole thing was digital. And we, I think, did a really good job of decoupling the transaction. It wasn't buyer and seller, it was buyer had a relationship with ACV and the seller had a relationship with ACV. So we tried to own every part of that experience so that we could optimize every part of that experience. You know, payments, the moving of paperwork and titles. If there was an issue, we called arbitration. We help arrange financing and transportation. Like, that all happened with us. And if there was a problem, outside of having a magic wand to make the car that somebody thought they bought appear, you know, which we couldn't do, everything short of that we did to try and keep people happy. It's funny. I mean, you know, the overwhelming majority of what normally would be in like a marketing budget, because we did almost no marketing whatsoever, We put almost entirely back into what I call goodwill or make good. So we were trying to say, look, we want you as a customer for life. We understand that we're going to screw a lot of things up. We understand you're probably going to screw some things up. We're going to try and put as much of the value as we can back into this. So even if it takes years for you to ultimately become positive, for us to create more value than what it's cost us, we'll have you forever. And I think it's one of the reasons people are so committed to the platform. So I can't tell you how many dealers are on it right now. I've been out of it for a handful of years now, but it's a lot. They're probably doing somewhere between, you know, 700,000 and 800,000 units that they've transacted. Figure about double that's what's run across the system. So, and I think it's primarily dealer consignment. So it's probably about 20%, 15 to 20% of dealer consigned units in the US. Are running across ACV. And that's from selling our first car in 2015. So that's a little less than 9 years of growth, which, you know, 20% market touch is pretty high. You know, it's good reason why it's worth what it's worth today.
