Dealership services giant Reynolds and Reynolds has taken a minority equity stake in the Appraisal Lane, an online used-vehicle trade network, the companies said today.
Andrew Iorgulescu, co-founder and president of Appraisal Lane, of Austin, Texas, would not disclose terms of the deal but said Reynolds’ investment is “significant enough that we were willing to give Reynolds two of our [five] board seats.
“Myself and the three other founders of Appraisal Lane are still going to maintain control over the business and that was by design,” he said.
“There’s a lot of experience on the [Appraisal Lane] team as it relates to wholesale, wholesale auctions, inventory management, and from the early, early days of the Internet. This isn’t an area that Reynolds has spent a lot of time in, so maintaining and making sure that we keep great experience on the team is incredibly important.”
Openlane, CarMax ties
Iorgulescu was a founder of what is now Openlane, an online wholesale used-vehicle platform now owned by KAR Auction Services Inc. Appraisal Lane co-founder and CEO Jeff Risner is a former director of purchasing at CarMax Inc.
In a statement, Robert Burnett, senior vice president of corporate development at Reynolds, said: “This is one more example of Reynolds’ ongoing commitment to helping automotive retailers operate more efficiently and profitably while, at the same time, improving the overall car-buying experience for dealership customers.”
Burnett was not available for further comment.
Iorgulescu said about 1,000 dealers, the majority of whom are franchised dealers, buy and sell vehicles using Appraisal Lane’s app. Those dealers are largely concentrated in markets in the northeastern and southeastern regions of the U.S. The company plans to expand to other markets throughout the U.S., he said.
Credit line
The app enables dealers to upload information about a vehicle they want to sell, such as its make, model, mileage and condition, and receive a firm, cash offer from Appraisal Lane’s team of staff appraisers. Those vehicles are offered for sale to other dealers, but Appraisal Lane will buy the vehicle whether it has an immediate buyer or not, Iorgulescu said.
To facilitate those deals, Reynolds, of Dayton, Ohio, has appointed a credit facility for the acquisition and sale of vehicles. Since April 2015, Appraisal Lane executed over $65 million in wholesale vehicle transactions, including $45 million this year. In that period, dealers uploaded over 40,000 vehicles with an appraised value of over $500 million.
Iorgulescu said the partnership with Reynolds has been in the making for about a year and was finalized about 60 days ago. He also said there are a lot of details still being ironed out.
“With their help, with their partnership, with their financial lead sources coming to bear,” Iorgulescu said, “there is a number of different things we’re going to be working on with them, going forward.”
