The absence of cars in lanes was one reason KAR Global was able to report a third-quarter profit, despite lower revenue.
Gaining efficiencies by going digital is part of a strategy that was accelerated by the coronavirus pandemic and is unlikely to change anytime soon, CEO Jim Hallett said.
“We are 100 percent digital, and we have no plans to return to running cars,” Hallett told investors in a conference call Wednesday.
Shares of KAR closed Wednesday’s trading up 1 percent to $16.41.
Hallett had already been shifting the auction company in a more digital direction before the pandemic hit, citing safety concerns around cars and trucks running through lanes. In March, as COVID-19 cases were rising in the U.S., KAR shuttered auction operations before resuming them as all-digital sales in April.
Many employees who supported sale-day operations have been let go. In March, KAR had 15,000 active employees. By early April, it had furloughed some 11,000 of them. About 6,000 employees have since been called back.
KAR announced in September that it had agreed to pay $425 million to acquire BacklotCars, a web-based dealer-to-dealer wholesale platform that offers a mobile app, similar to the company’s TradeRev product. The transaction is expected to close before the end of the year.
And KAR has a minority stake in CarLotz, an online used-vehicle consignment platform that hopes to go public via a reverse merger this quarter.
It all points to a company that continues to focus on deriving revenue from digital offerings after a turbulent spring and summer in the wholesale market.
“It is clear to me that we are a very different business today than we were one year ago, and I am encouraged by the future prospects of our business,” Hallett said Wednesday.
KAR’s revenue fell 15 percent to $593.6 million in the third quarter. Net income from continuing operations rose 33 percent to $47.1 million.