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Autotrader PURCHASED vAuto
- Thread starter Jeff Kershner
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- May 1, 2005
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- Jeff
Dale, thanks for commenting and offering the community your response.
Reading through many the comments and responses I still wonder where this was such a great buy for AutoTrader. I hear the price tag was in the 180-200 million area.
AutoTrader is going to need to really sell the shit out of vAuto in order to turn a profit on this purchase. Unless of course there is something else they are going to do with it. Maybe tie the data into something else that they already have in place or something else they are looking to purchase.
vAuto is not so much about the tool itself. It's the "Velocity" / Dale Pollack process that currently works. These tool just make it easier to read your market.
And once every dealer is using vAuto or some pricing tool - we will all be chasing the bottom line (it's already happened in several markets where these tools have saturated a region - I've seen it). No matter how you roll the dice, no matter how pretty your words, and it will take years for it to happen, but these tools will change our dealer profitability on the used car side.
But maybe hat's just be the evolution of the business.
Reading through many the comments and responses I still wonder where this was such a great buy for AutoTrader. I hear the price tag was in the 180-200 million area.
AutoTrader is going to need to really sell the shit out of vAuto in order to turn a profit on this purchase. Unless of course there is something else they are going to do with it. Maybe tie the data into something else that they already have in place or something else they are looking to purchase.
vAuto is not so much about the tool itself. It's the "Velocity" / Dale Pollack process that currently works. These tool just make it easier to read your market.
And once every dealer is using vAuto or some pricing tool - we will all be chasing the bottom line (it's already happened in several markets where these tools have saturated a region - I've seen it). No matter how you roll the dice, no matter how pretty your words, and it will take years for it to happen, but these tools will change our dealer profitability on the used car side.
But maybe hat's just be the evolution of the business.
If its $200 mill paid, it sounds like a lot, but is it? Lets pull out the crystal ball and plug in some numbers (aka Uncle Joe's best guess 
.
$55 mill vAuto revenues annually (3100 rooftops at $1500 p/top)
$17 mill COGS (Cost of Goods Sold)
$38 mill annual vAuto profit
Software companies are highly profitable (...as is any company Publically traded software companies average 75% gross margin. I plugged vAuto in at 70% gross margin.
Assuming that 'Trader consumed all the profits, their break even is 5.2 years out IF NOTHING CHANGES. Surely Chip and Dale hit the squirrel cages hard and saw synergies that will amplify vAuto's revs. So far, I see no stretch by either party.
The 200million dollar question is will the marriage of vAuto and 'Trader create new opportunities for whom they serve? Or, as is everyone's worry, will this marriage create a new monster that devours dealer profits?
Over the years, Dale and his customers have had many personal conversations. Chip Perry knows Dale's customers are going to have push back and Dale is seeing 1st hand all the baggage that AutoTrader has with it's reputation. Chip is going to need Dale's character and leadership to hold it all together in the transition.
This will be a great thread to re-read in 5 years. I'll leave a note for myself for 2015...
Dear Dale Pollack,
It's been 5 years since you sold vAuto to AutoTrader.com. Where are your Dealers now?
references:
http://vauto.com/uploadedFiles/sharedContent/PDF/...
http://seekingalpha.com/article/10166-chart-softw...
.$55 mill vAuto revenues annually (3100 rooftops at $1500 p/top)
$17 mill COGS (Cost of Goods Sold)
$38 mill annual vAuto profit
Software companies are highly profitable (...as is any company
Publically traded software companies average 75% gross margin. I plugged vAuto in at 70% gross margin.Assuming that 'Trader consumed all the profits, their break even is 5.2 years out IF NOTHING CHANGES. Surely Chip and Dale hit the squirrel cages hard and saw synergies that will amplify vAuto's revs. So far, I see no stretch by either party.
The 200million dollar question is will the marriage of vAuto and 'Trader create new opportunities for whom they serve? Or, as is everyone's worry, will this marriage create a new monster that devours dealer profits?
Over the years, Dale and his customers have had many personal conversations. Chip Perry knows Dale's customers are going to have push back and Dale is seeing 1st hand all the baggage that AutoTrader has with it's reputation. Chip is going to need Dale's character and leadership to hold it all together in the transition.
This will be a great thread to re-read in 5 years. I'll leave a note for myself for 2015...
Dear Dale Pollack,
It's been 5 years since you sold vAuto to AutoTrader.com. Where are your Dealers now?
references:
http://vauto.com/uploadedFiles/sharedContent/PDF/...
http://seekingalpha.com/article/10166-chart-softw...
