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Rochester Top 100: Used-car seller revs up with organic growth

Rochester Business Journal
February 21, 2014


Offering more bang for the buck has enabled Auction Direct USA not only to survive a recession but also to thrive in uncertain economic times.

“What we were able to do is stay loyal to the brand, which was providing the market’s best price,” CEO John Iannone said.

Auction Direct is a used-car auction house based in Victor, Ontario County. The company employs some 250 people at its locations in Ontario County, Buffalo, Raleigh, N.C., and Jacksonville, Fla., including 70 in Victor.

Iannone is looking to expand the company primarily through organic growth. He expects to add 30 to 50 people companywide in the next 12 months or so.

“We still do keep our eye on sight of being a national retailer of pre-owned cars and hope to someday get to the level of some of the great companies out there like CarMax,” Iannone said. “Right now we’re looking for slow and steady growth in markets that will provide us good opportunities. And many of those are markets we already compete in.”

He declined to discuss revenue but said last year Auction Direct sold 8,000 vehicles, up from 7,000 in 2012 and roughly 5,800 in 2011.

“We saw Internet traffic increase. People learned how to shop very well over the last few years—big-ticket items especially,” he said. “There wasn’t the disposable income people had had before.”

A lack of disposable income and an increase in the number of consumers who need to make their dollar go farther will propel the company’ growth, Iannone added.

“One thing we’ve concentrated on is developing a demand-driven inventory,” said Todd Hoagey, chief operating officer. “In other words, stocking what people are looking for as opposed to stocking 50 Edsels and hoping somebody comes in and force them to buy it.”

Auction Direct got its start in 2005 when Iannone approached Hoagey to develop a business plan for a company that would enable car buyers to bid on used vehicles. The company has evolved to one in which customers can view inventory online or can request their dream vehicle and have Auction Direct track down the car.

To eliminate the pressure most people feel when searching for vehicles, Auction Direct has stripped the commission concept from its business model.

Iannone said the biggest industry challenge the company faces over the next couple of years is the same one any business selling big-ticket items will face: outside forces taking a toll on consumers’ pocketbooks.

“It leads to how well the stock market is doing, is unemployment going in the right direction, are interest rates going to maintain affordable loans for folks that are looking to make a big purchase,” he said.

Hoagey said Auction Direct will need to see some stability in the industry to continue on the growth trajectory it has had in the last few years.

“I believe we’re getting there. I believe the next couple of years, particularly from a used-car perspective, is going to be stable and hopefully improving and continue to be strong,” he said.

He sees opportunities in continuing to make the car-buying process as easy as possible for customers.

“Regardless of how friendly we are and how easy we try to make that transaction, it’s still a long, cumbersome activity,” he acknowledged. “That’s something we’d like to concentrate on. We’d like to really improve that experience.”

Iannone agreed, adding that Auction Direct has seen its customer base expand beyond a small radius around its locations, primarily because its emphasis has been to improve and expand its online presence.

“We’re very excited about the opportunities because we kind of went through everything a startup company can go through. We started in late 2005 and really had nothing but a descending economy to work against,” Iannone said. “So I think we’re battle-hardened, and I think we’re excited about potential, knowing what we know from all those trials and tribulations.”

The Rochester Top 100 program is presented by the Rochester Business Alliance Inc. and KPMG LLP. Launched in 1987, it recognizes the fastest-growing private companies in Greater Rochester. This year’s Rochester Top 100 event will be held Nov. 5. For more information, go to rochesterbusinessalliance.com.

Auction Direct USA
National retailer of used vehicles.
Founded: 2005
Top executive: John Iannone, CEO
2013 ranking: 93
Employees: 250 (70 locally)
Location: Victor, Ontario County
Website: www.auctiondirectusa.com

2/21/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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