Profile: KAR Auction Services Inc (KAR.N)

KAR.N on New York Stock Exchange

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KAR Auction Services, Inc., incorporated on November 9, 2006, is a provider of vehicle auction services in North America. The Company operates in three business segments: ADESA, Inc. (ADESA), Insurance Auto Auctions, Inc. (IAAI) and Automotive Finance Corporation (AFC). The Company facilitates a marketplace providing auction services for sellers of used, or whole car, vehicles and salvage vehicles through its 228 physical auction locations at December 31, 2011, and multiple Internet venues. During the year ended December 31, 2011, it facilitated the sale of over 3.1 million used and salvage vehicles. Its revenues are generated through auction fees from both vehicle buyers and sellers, as well as by providing value-added ancillary services, including inspections, storage, transportation, reconditioning, salvage recovery, titling, and floorplan financing. December 31, 2011, it had a network of 69 whole car auction locations and 159 salvage auction locations. In June 2013, KAR Auction Services Inc acquired PWI Holdings Inc.

ADESA, Inc.

ADESA, oits whole car auction services business, is a provider of used vehicle auction services in North America. Vehicles at ADESA's auctions are typically sold by commercial fleet operators, financial institutions, rental car companies, used vehicle dealers and vehicle manufacturers and their captive finance companies to franchised and independent used vehicle dealers. The Company serves its international customer base through online auctions and auction facilities that are developed and strategically located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely or in person. Its online service offerings include OPENLANE, an Internet-based remarketing solutions, and allows the Company to offer vehicles for sale from any location.

The vehicles available at its auctions include vehicles from institutional customers, such as off-lease vehicles, repossessed vehicles, rental vehicles and other program fleet vehicles that have reached a predetermined age or mileage and have been repurchased by the manufacturers, as well as vehicles from used vehicle dealers turning their inventory. The Company offers both online and physical auctions. Vehicles are typically offered for sale at the physical auctions on at least a weekly basis at its locations and the auctions are broadcast over the Internet with streaming audio and video so that remote bidders can participate through its online capabilities. Its online auctions function round the clock, providing its customers with exposure for their vehicles and to offer vehicles in auctions that last for a few hours, days or even weeks. The Company generates revenue primarily from auction fees paid by vehicle buyers and sellers.

The Company’s services include Auction Related Services, Transportation Services, Reconditioning Services, Inspection Services Provided By AutoVIN, Title and Repossession Administration and Remarketing Services Provided By PAR and ADESA Analytical Services. ADESA provides marketing and advertising for the vehicles to be auctioned, dealer registration, storage of consigned and purchased inventory, clearing of funds, arbitration of disputes, auction vehicle registration, condition report processing, post-sale inspections, security for consigned inventory, title processing, sales results reports, pre-sale lineups and auctioning of vehicles by licensed auctioneers.

The Company provides both inbound (pickup) and outbound (delivery) transportation services utilizing its own equipment and personnel, as well as licensed and insured third party carriers. Through the CarsArrive Internet-based system, customers can instantly review price quotes and delivery times, and vehicle transporters can check available loads and also receive instant notification of available shipments. CarsArrive is an OPENLANE company that functions as an outsource provider of automated vehicle shipping services. Its ADESA auctions provide detailing, body work, paintless dent repair (PDR), light mechanical work, glass repair, tire and key replacement and upholstery repair. AutoVIN, Inc. (AutoVIN) provides vehicle condition reporting, inventory verification auditing, program compliance auditing and facility inspections. Field managers are equipped with handheld computers and digital cameras to record all inspection and audit data on-site. The same technology is utilized at its whole car auction locations.

PAR provides end-to-end management of the remarketing process, including titling, repossession administration, inventory management, auction selection, pricing and representation of the vehicles at auction for those customers seeking to outsource all or just a portion of their remarketing needs. ADESA’s analytical services provide value-added market analysis to its customers and the media. These services include access to publications and custom analysis of wholesale market trends for ADESA's customers, including peer group and market benchmarking studies, analysis of the benefits of reconditioning, site selection for optimized remarketing of vehicles, portfolio analysis of auction sales and computer-generated mapping and buyer analysis.

The Company’s ADESA online solutions include OPENLANE/DealerBlock, ADESA LiveBlock, ADESA Run List, ADESA Market Guide, ADESA Virtual Inventory and ADESA Notify Me. OPENLANE/DealerBlock platforms provide for either real-time or bulletin-board online auctions of consigned inventory not scheduled for physical auction. These platforms are also utilized for upstream and midstream selling, which facilitate the sale of vehicles prior to their arrival at a physical auction site. Its live auction Internet bidding solution, ADESA LiveBlock, operates in concert with its physical auctions and provides registered buyers with the opportunity to participate in live auctions. ADESA Run List provides a summary of consigned vehicles offered for auction sale, allowing dealers to preview inventory and vehicle condition reports prior to an auction event. ADESA Market Guide provides wholesale auction prices, auction sales results, market data and vehicle condition information. ADESA Virtual Inventory is a subscription-based service to allow dealers to embed ADESA's search technology into a dealer's Website to increase the number of vehicles advertised by the dealer. ADESA Notify Me is an e-mail notification service for dealers looking for particular vehicles being run at physical or online auctions.

The Company competes with Cox Enterprises, Inc., OVE.com and SmartAuction.

Insurance Auto Auctions, Inc.

IAA, its salvage auction services business, is a provider of salvage auction services in North America. Vehicles at its salvage auctions are typically damaged or low value vehicles that are predominantly sold by automobile insurance companies, non-profit organizations, automobile dealers, vehicle leasing companies and rental car companies to licensed dismantlers, rebuilders, scrap dealers or qualified public buyers. The Company is a provider of salvage vehicle auctions and related services in North America. It operates as Insurance Auto Auctions in the United States and Impact Auto Auctions in Canada and serve its customer base through salvage auction locations throughout North America. The Company facilitates the remarketing of damaged vehicles that are designated as total-losses by insurance companies, recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made and older model vehicles donated to charity or sold by dealers in salvage auctions. The Company processes salvage vehicles primarily on a consignment basis. In return for agreed upon fees, it sells vehicles on behalf of its suppliers, which continue to own the vehicles until they are sold to buyers at auction. In addition to auction fees, it charges fees to vehicle suppliers for various services, including towing, title processing and other administrative services.

The services provided by IAA include Auction Model, IAA Title Management, Vehicle Inspection Centers, Transportation and Towing, Remarketing Division and Donation Division. Through its auction model vehicles are offered simultaneously to live and online buyers in a live auction format utilizing i-Bid LIVE. It processes title documents in order to comply with the Department of Motor Vehicles (DMV) requirements for all vehicles. In addition, it customarily offers the insurance companies' staff training for each state's DMV document processing procedures.

The Company maintains vehicle inspection centers (VICs), at its facilities. A VIC is a temporary storage and inspection facility located at one of its sites that is operated by the insurance company. Some of these VIC sites are formalized through temporary license agreements with the insurance companies that supply the vehicles. VICs minimize vehicle storage charges incurred by insurance company suppliers at the temporary storage facility or repair shop and also improve service time for the policyholder. Inbound and outbound logistics administration with actual services typically provided by third party carriers. Remarketing Division focuses on vehicles, rental sellers, fleet and leasing companies, banks and dealer trade-in inventory. Donation Division processes vehicle donations to charities across the United States to help turn vehicles into money for a variety of charitable organizations.

The Company’s IAA online solutions include i-Bid LIVE, I-Buy Fast, CSAToday and Automated Salvage Auction Processing (ASAP). Its live auction Internet bidding solution, i-Bid LIVE, operates in concert with its physical auctions and provides registered buyers with the opportunity to participate in live auctions. I-Buy Fast is an immediate buying option that allows qualified buyers to purchase vehicles between auctions for a fixed price. The process of salvage disposition through its system begins at the first report of loss or when a stolen vehicle has been subsequently recovered. An insurance company representative consigns the vehicle to the Company, either by phone, facsimile or electronically through its online data management system, CSAToday. The Company has developed a Web-based information system, Automated Salvage Auction Processing system (ASAP). ASAP provides salvage vehicle suppliers with 24-hour online access to tools to manage the salvage disposition process, including inventory management, salvage returns analysis and electronic data interchange of titling information.

The Company competes with Copart, Total Resource Auctions, Greenleaf and LKQ Corporation.

Automotive Finance Corporation

The Company is provider of floorplan financing to independent used vehicle dealers. It provides short-term inventory-secured financing, floorplan financing, to independent used vehicle dealers through branches throughout North America. In 2011, AFC serviced over one million loan transactions, which includes both loans paid off and loans extended, or curtailed. It sells the majority of its United States dollar-denominated finance receivables without recourse to a wholly owned bankruptcy remote special purpose entity, which sells an undivided participation interest in such finance receivables to a bank conduit facility on a revolving basis. The Company also securitizes the majority of its Canadian dollar denominated finance receivables through a separate third-party bank conduit facility. It generates a portion of its revenues from fees. These fees include origination, floorplan, curtailment and other related program fees. When the loan is extended or paid in full, AFC collects all accrued fees and interest. Floorplan financing supports independent used vehicle dealers in North America who purchase vehicles from its auctions, other auctions and non-auction purchases. In 2011, approximately 80% of the vehicles floorplanned by AFC were vehicles purchased by dealers at auction. As of December 31, 2011, AFC had over 7,900 active dealers. AFC operates two divisions which are organized into eleven regions in North America.

The Company competes with Manheim Automotive Financial Services (MAFS) and Dealer Services Corporation.

Company Address

KAR Auction Services Inc

13085 HAMILTON CROSSING BOULEVAR
CARMEL   IN   46032
P: +1800.9233725
F: +1302.6365454

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