Eric Loughmiller will wrap up his tenure of nearly 16 years as KAR Global’s CFO when he retires from the wholesale auctions provider at the end of the month.
Since joining KAR in April 2007, the company’s finance chief has been witness to two industry-shaping events — the Great Recession in 2008-09 and, a decade later, a global pandemic that forced wholesale auction players to further consider technologies enabling operations to continue at a safe distance.
In the late 2010s, it became clear to KAR that zeroing in on offering digital and hybrid wholesale auction tools was the way of the future. COVID-19 provided further evidence for that, Loughmiller said. In 2022, his final year with KAR, the company took the pivot to digital even further, shedding ADESA U.S., its physical auction network, in a $2.2 billion sale to Carvana Co.
Loughmiller, 63, spoke with Staff Reporter C.J. Moore about his time at KAR Global, the company’s journey in evolving to majority-online offerings and his outlook on how technology will shape wholesale auctions in the future. Here are edited excerpts.
On KAR Global’s role after its ADESA U.S. divestment and larger shift to digital offerings
[In] 2017, we really became focused and announced publicly that we felt KAR would lead the digital transformation of the wholesale used-car auction industry. We felt it would take a fair amount of time — that it would be a long-term transition and transformation. When COVID hit our industry, everything — suddenly overnight — became digital. I’ll tell you that that was a pivot point for the entire industry.
The divestment of the U.S. physical auction business allowed us to pay down debt in order for our balance sheet to more appropriately match up to most digital marketplace businesses in other areas and industries, other products. You’re looking at digital retail even for clothing lines, Amazon. All of them have a much different balance sheet than what our business had and so this was a continuation of a strategy that we defined four or five years ahead of 2022.
On how that shift has played out in 2022
It’s played out well, other than the fact that we continue to have a constraint on supply throughout the industry in all channels.
I think there’s been great acceptance of the fact that we’re a digitally focused company.
I think everything we’ve done in ’22 is completely consistent with our strategy. That may be the confusion that some in our industry have. We aren’t saying that physical locations go away. We just don’t think they’re as valuable to the wholesale transaction as they used to be when you had to go to a location in order to get access to the deal.
On advantages of digital and hybrid auction technologies
The concept of going digital is to increase the liquidity in the marketplace.
I think over time, the customers will see the advantages. There will be this element of “Well, I trust my eyes and my ears more than somebody else’s.”
That will always be the case. But … if you aren’t buying online, you don’t have access to most of the cars right now. There are just so few cars in the marketplace. You’re going to miss your opportunity.
Condition reports are the key — can we provide [dealers] more and better information than they are getting even in their 30- to 45-second viewing of the car that drives through a lane at a physical location?
On physical auctions
Our capital is aligned for us to aggressively pursue growth of a digital strategy. And I think that’s where the market will go. It is not going to go there as quickly as COVID led us to believe it might. Some people went back to physical [auctions]. Physical auctions will play an important role in our industry for a long time, but I do think that digital will play an even more important role and that’s where the growth will be.