Carmel-based KAR Global (NYSE: KAR) has announced plans to acquire an app and web-based dealer-to-dealer vehicle wholesale auction platform headquartered in Missouri. BacklotCars uses artificial intelligence and machine learning to simplify the vehicle buying experience for sellers, buyers and bidders. KAR says the acquisition, valued at $425 million, will further diversify its digital capabilities.
KAR says bringing BacklotCars into its portfolio help grow its TradeRev auction platform.
During a conference call with investors, KAR Chief Executive Officer Jim Hallett said the acquisition is part of an increasingly important effort to move to a more digital platform.
“A lot has happened in our industry over the past six months. KAR Global has accelerated the transformation of its businesses from legacy, physical auctions, to a leader in digital wholesale marketplaces,” said Hallett. “We have experienced unprecedented declines in our business in March and April, followed by an unexpected recovery in volumes, record-high wholesale prices and record conversion rates. And we have pivoted our business model following COVID-19 disruptions to be less labor intense in all of our market places.”
BacklotCars was founded in 2015 and currently serves dealers in 46 states.
The platform, Hallett says, is similar to KAR’s TradeRev platform, but uses a slightly different auction format that uses a 24/7 bid-ask marketplace. He says the company has demonstrated extraordinary growth over the past few years.
“BacklotCars has grown rapidly in the highly competitive dealer-to-dealer space and is the perfect complement to our current capabilities and footprint,” Hallett said in a news release. “I’m confident the addition of Backlot’s leadership, technology, and exceptional customer-service model will quickly benefit our combined customers, enhance KAR’s competitive position and accelerate growth for both organizations.”
Once the acquisition closes, KAR says BacklotCars co-founders Justin Davis, Ryan Davis, Josh Parsons and Fabricio Solanes, along with other key leadership members, will remain with the company.
KAR says it plans to continue operating the Kansas City headquarters location for BacklotCars.
The acquisition is expected to close before the end of the year, pending legal and regulatory approvals.
Hallett says the acquisition is part of an increasingly important effort to move to a more digital platform.