KAR looking to care for employees & customers in wake of Harvey

KAR Auction Services has 1,000 employees in the Houston area, some who needed to be rescued after Hurricane Harvey hit the region. (Image by michelmond / Shutterstock.com)
CARMEL, Ind. - 

As passionate as Jim Hallett spoke about the ways KAR Auction Services is geared up to handle the wholesale market workload coming because of Hurricane Harvey, the company’s chairman and chief executive officer emphasized more than anything during an exclusive conversation with AuSM on Friday how the well-being of nearly 1,000 employees in the impacted region trumped it all.

While KAR wasn’t aware of any employees being injured, Hallett shared that some individuals initially ended up in shelters after being rescued by emergency personnel. That stark reality is giving KAR’s team some profound perspective as Insurance Auto Auctions braces to process thousands of damaged units and ADESA prepares for the likelihood more units will be coming down the lanes at physical facilities or online.

“I think you start with a good word, horrific. First and foremost, we’re talking about lives here. We’re talking about people losing their lives in this event. Losing their homes and their entire belongings. When you think about it, it’s just really devastating,” Hallett said.

“We’re truly committed to our employees and truly committed to the community,” he said later during the phone conversation. “We want to help these employees and want to help these communities rebuild. We’re going to work with local officials to help people get re-established. This is a big comeback here.

“I want to tell you how proud I am of this organization and how proud I am of all of our employees throughout KAR, all of KAR, all of our business entities. It’s unbelievable the number of employees we’ve had say, ‘How can I help?’ These are employees not anywhere near Houston; employees that are scattered around the country and North America who are stepping up,” Hallett went on to say.

“That’s such a refreshing feeling and speaks to the culture at KAR,” he added.

KAR also is organizing programs so its employees can volunteer as well as donate financially.

“We want to take care of our own but also want to be able to help the community, as well,” Hallett said. “It makes me very proud as CEO of this company to know we have a culture that cares, not only cares about ourselves but cares about each other and our community. At the end of the day as tough as this is and difficult as it is, it’s going to make our company even stronger.”

Stronger plan at IAA

Also participating on the exclusive call was John Kett, who is chief executive officer and president of Insurance Auto Auctions. While IAA and its insurance company clients are still gathering information, Kett acknowledged the damage from Harvey is likely to surpass what the company handled during Hurricane Katrina and Superstorm Sandy.

“We’re really going to focus on the recovery,” Kett said. “At IAA, that’s really where we begin to help. We’re helping to get those vehicles off the streets and out of people’s yards and helping the insurance companies settle claims so they can help their policyholders begin to rebuild their lives. First and foremost, that’s what we provide in an event like this.”

Kett highlighted how IAA has modified its disaster response, using the experiences gained through Katrina, Sandy and Hurricane Matthew last fall. One component of the enhanced planning Kett explained is how IAA already identified key personnel who will be a part of handling tasks associated with natural disasters like hurricanes. He indicated members of that team headed for Texas even before Harvey finished dumping more than 50 inches of rain in some locations near Houston.

Kett noted that IAA also has improved its database of pre-screened tow truck operators as more than 1,000 units are set to pick up damaged vehicles in the region. He also touched on how IAA is making sure additional employees have temporary housing accommodations and plenty of fuel is available for equipment. It’s all part of mobilizing as much as possible for when the real heavy-lifting beings.

“Our approach is getting people there, getting equipment and getting capacity. We have a plan throughout the flood-prone areas to have additional real estate available. The size and scale of this were far beyond our normal planning horizon so we’re adding hundreds of acres as we speak,” Kett said.

“We’ve done a much better job of being ready. We worked through our plans during the non-catastrophe part of the year so when the storm does hit we can just put those plans into motion,” he continued.

And once IAA coordinates with insurance companies and salvage units are to be sold, the company already has plans in motion for those tasks, too.

“Once it’s time to begin to liquidate, another thing we bring to the table is we’ve got an extensive buyer base both domestically and internationally. We’ve got buyers in 110 countries. They like this type of inventory,” Kett said. “We’re already beginning to build marketing campaigns to make them aware so they’re ready when we’re able to begin selling these vehicles.”

Meeting needs of dealers & consignors

Not far off from his emphasis on the well-being of employees, Hallett also described how the entire KAR family of companies is looking to cater to the needs of dealers as well as consignors since Harvey is leaving the wholesale market in a unique position. For example, additional off-lease volume no longer is likely to be troublesome.

“This is a big opportunity for the remarketing customers. I think this is really going to help many these captive finance companies and leasing companies to be able to move some of these what I call young vehicles, 3-year-old, off-lease cars with 40,000 miles on them, and move them into the Houston market and have a great outlet for these vehicles,” Hallett said.

“I do believe we were concerned about some price erosion with oversupply of off-lease cars,” he continued. “I think there may even be an opportunity for the price to stabilize if not improve a little bit. That’s not just in the Texas market. That could affect prices across the country.”

While hundreds of KAR employees have been impacted by Harvey, Hallett wanted the entire industry to know KAR is “open for business.” The company indicated usual activities at ADESA, IAA and AFC operations in Texas and beyond are on schedule.

“We want our customers to know, both sellers and buyers, that we are absolutely going to do everything we can to support their selling and buying activities in every possible venue we have, including our physical auction footprint, our online nationwide private label business through OPENLANE and TradeRev that allows dealers to buy vehicles as well as AFC that provides the liquidity to buy these cars,” Hallett said.

“We’re not going to take advantage of the situation,” he added. “We’re not going to increase prices because of demand. We’re going to be very fair and understanding. We’re going to do business as usual without putting any extra burden on the buyers and sellers. We’re going to assist them in any way we can.”

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