February 7, 2018 / 1:39 PM / 10 months ago

KAR buys STRATIM to boost ride-sharing fleet management business

DETROIT (Reuters) - KAR Auction Services Inc (KAR.N), a leading U.S. operator of car auction and salvage services, said on Wednesday it has acquired fleet management software company STRATIM to enter the nascent industry of providing services to ride-sharing and other transportation-as-a-service providers.

Carmel, Indiana-based KAR did not disclose terms for the acquisition of STRATIM, a San Francisco-based startup.

STRATIM is already tracking more than 1 million vehicles in car- or ride-sharing services for around 50 customers in North America, including major automakers, to help them boost usage and keep their vehicle fleets in working order.

STRATIM’s platform operates in 20 U.S. cities and clients include General Motors Co’s (GM.N) Maven car sharing and rental unit, Ford Motor Co’s (F.N) Chariot shuttle service, Toyota Motor Corp (7203.T) and BMW AG (BMWG.DE).

Major automakers are racing to roll out alternatives to private car ownership including ride sharing amid the rise of Uber Technologies Inc UBER.UL and Lyft Inc, as well as to develop commercially viable self-driving cars.

The rush is based on the notion that instead of buying cars - the auto industry’s business model for a century - consumers will generate revenue through car usage.

There is also a race to provide lucrative parts and services for those growing fleets of vehicles.

KAR facilitated the sale of more than 5 million used and salvaged vehicles in 2016, large numbers of which were cleaned and serviced prior to sale.

KAR Chief Executive Jim Hallett told Reuters moving into fleet management “is just an expansion of our brick-and-mortar business” for its auto industry customers.

“There’s a lot of money being invested in this space, every (auto) manufacturer is partnering with someone and they’re all going to have their own fleets,” Hallett said. “These fleets will need to be managed, maintained and at some point in time those cars have to be sold.

Alongside main rival Manheim, KAR dominates the U.S. car auction market.

Keeping shared cars cleaned and in good order is key to boosting profit margins otherwise they cannot generate revenue, STRATIM CEO Sean Behr told Reuters.

Companies such as Waymo, Alphabet Inc’s (GOOGL.O) self-driving car unit, face the same fleet-management challenges.

Last year, the largest U.S. auto retail chain AutoNation Inc (AN.N) announced a multi-year partnership to maintain and repair Waymo’s self-driving car fleet. Waymo also signed an agreement with Avis Budget Group Inc (CAR.O) for the car rental firm to service its fleet.

Reporting by Nick Carey

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