2025 Wrap Up: Cole Reiken, Managing Director of BlueDriver

Music is: "Twisted" Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 4.0 License
http://creativecommons.org/licenses/by/4.0/

Transcript

SPEAKER_00 0:13

Welcome to Used Car News Podcast. Used Car News is your top source for fast and reliable news that car dealers can rely on for this evolving industry.

SPEAKER_01 0:25

Hello everyone. Welcome to the year-end edition of the Used Car News Podcast. My name is Jeff Ballan, I'm managing editor of Used Car News. And this our final guest of the year is Mr. Cole Riken. Welcome, Cole.

SPEAKER_02 0:40

Thanks, Jeff. Great to have you here. I'm very happy to wrap up the year with you.

SPEAKER_01 0:44

Oh glad for you to be here. Cole Riken is managing director director of Blue Driver, and that's powered by Reparify. And anybody who knows who's worked with uh Reparify or worked with diagnostic stuff, as we all do in the Use Current auction space, they probably know Reparifying. You've probably heard of Cole Riken. Although Cole Riken, you're based to our neighbors in the north, correct? North and East, I guess.

SPEAKER_02 1:07

That's right. Yeah, I am based in uh Toronto, but spend uh most of my weeks in the U.S. uh with customers and at our U.S. offices. Yeah. So I'm there quite a bit.

SPEAKER_01 1:17

And my understanding is you spent time as a leader in leadership positions for open lane and Canadian black books. So you you've got some deep experience in this area.

SPEAKER_02 1:25

I have, yeah. I spent uh both on the retail side and uh the auction wholesale side, um uh working both across the border in the auction business. Uh formerly uh was the head of product for Edessa.ca and Edessa.com. So the online uh marketplaces back when it was owned by car. Uh and before that, it was head of uh product for Canadian Blackbook and worked hand in hand with our BlackBook partners in the US, you know, really looking to valuation space and uh, you know, bringing solutions to market to help understand uh residual values, portfolio risk, um, you know, overall valuations of vehicles and how we go about doing that. So deep knowledge in both the auction space and the retail side of the world.

SPEAKER_01 2:08

Excellent. Excellent. I did see a little bit of your bio. Not surprisingly, you're involved in like youth hockey, which is probably shocking for somebody from in Toronto, right?

SPEAKER_02 2:17

Yeah, my my passion, uh, I coach a competitive hockey team and uh I facilitated, I sit on a board of directors of a local hockey association where we enable approximately 700 youths to to actually play hockey every weekend uh through all levels of uh competitiveness from House League right up to uh almost the highest levels in the Toronto area. It's lots of fun.

SPEAKER_01 2:39

Fantastic. That's great. Okay, we and we love, you know, we always deal with a lot of people in this industry. People don't realize the uh the um the charitable stuff and the and the and the uh community work that guys and this uh guys and gals in this business uh participate in. So I appreciate you mentioning that. Um so let's talk about diagnostics in vehicles. Now we know that it seems like my entire time here, the the average age of uh uh US cars, used cars on the road has gone up and up and now it's like over 12 years. I think I remember when it first hit 10 years.

SPEAKER_02 3:11

Right, yeah, 12 and a half yeah, 12 and a half years ago.

SPEAKER_01 3:15

Oh my gosh. So you have now we have dealers who have to look at from both sides, both taking in trades, maybe deciding whether to retail them or wholesale them, and then the auction side. What are from your clients and from your expertise in this business? What is this aging um fleet doing in the business? What how is the how are dealers affected? How are auctions affected?

SPEAKER_02 3:38

Yeah, it's a very interesting question because it, you know, there's similarities on both sides. You know, first go back to what you're saying. You know, we have you know, the average age of a car on the road right now uh is at its all-time that it's ever been 12 and a half years. But not only that, we have more cars on the road than ever been before. The the size of the fleets uh across uh the market is increasing as well. And you know, the the impact in the trade-in process and what dealers are going out to buy, um, you know, hasn't uh you know an impact on has cars enter the remarketing channels. You know, first and foremost, you know, I would say um, you know, eight years ago, give or take, you know, an average used car manager probably had seen the cars they're taking in on trade. They were more familiar with the models that they had because they've sold more recently. And the average car they're bringing back on trade was not as old. So their familiarity with the fleets or the cars that were coming back where they knew what to look for, they knew right away these are trouble areas with these vehicles. As cars get older, the mix of cars that you know the used car, the dealerships and the used car managers and appraisers are looking at, that dynamic changes. And as cars, you know, the problem areas change with the age of car. You know, if a five-year-old car has uh one set of problems, but an eight and a half-year-old car or their belts has a whole set of different uh challenges with that. So that's that's kind of one. And and you know, as cars are flow through the remarketing channels and then into the auction process, you know, if if you know issues aren't caught or the new, the aged vehicles, you know, that don't do well or aren't right for a retail environment, but move into the the wholesale auction, you know, whatever issues that are uh uh present with an older vehicle get passed down to the auction level, where you have the auction now having to worry about reconditioning on an older vehicle, right? So, you know, the way I think about it, and we'll get into this a little more as is you know, when we start talking specifically about Blue Driver Max and how we help the auctions and the dealerships, is like, you know, historically, you know, scanning a vehicle or your diagnostics of a vehicle is primarily a technical service-focused function, but you know, really bringing this forward to understand what it is that you're buying or what it is that you're inheriting, you know, earlier on in that process will help offset a lot of the downstream or into the the reconditioning process impacts.

SPEAKER_01 6:03

Absolutely, especially as you deal with um again, deciding whether to retail. I know uh in the years that I've been covering it, uh, used car new car dealers uh are retailing more than they used to. A lot of times they anything that didn't match their brand or a specific um condition, boom, went right to the auction. Now they're retailing more and more. So of course, this information has got to be more important.

SPEAKER_02 6:27

Right. And just to go a little bit further on that, you know, one, you know, used cars right now are a great solution to the affordability challenges that we have at the retail level. And to your to Jeff to you know, just reiterate what you're saying is that because of that, retailers now are taking, you know, where where they're franchised, they're branching out from you know what would be traditionally their core, um, and looking for vehicles that are good retail units. And because of that, you know, going back, not only the age of the vehicle and the conditions are coming back in a far different way than they would five or eight years ago. The their familiarity with those branded vehicles or or their lack of familiarity with their non-branded vehicles also plays an impact to how they assess the value of those vehicles and assess what can be good for retail or what they can't keep. And that's where a diagnostic tool comes in to help them understand, you know, you know, they may not be familiar historically with the problem areas or what to look for with an off-brand vehicle and where a diagnostic tool comes in is to help them provide transparency into the areas where they're not familiar to look. And that's where scanning that vehicle first, as we say with our Blea Driver Max training, start your appraisal with a scan so that you get insights into where, you know, if that vehicle has any mechanical issues with it and understand the problems you're inheriting. And and, you know, to go back to what you're saying at the beginning, the older the vehicle, the more likely you're going to inherit a vehicle, whether a dash light is present or not, there's more than likely a chance or something uh hiding under the surface mechanically with that vehicle.

SPEAKER_01 8:00

Yeah, it's funny. We my wife has a leased car, it's like a year old, and take it in for like oil change and tire rotation, kind of basic maintenance, and they they scan it right there before you even get it further. I mean, they're looking, and obviously there's nothing wrong with the car, but that's that's how much a part of it, even for something that's fairly new, you know. Um, the other thing, um, do you notice in terms of especially if cars come in with trades and um on the new car side or even used car side, and then getting them to auction, um, with these older cars, does it become an issue also with not just what that there's an issue, but repairs? I mean, the whole reconditioning thing, I mean, is it it's gonna take longer depending on the type of um parts that are not available? I mean, uh, do you hear that or see that?

SPEAKER_02 8:46

Not not so much in the parts, but if you go, if you look at the reconditioning process at the retail level, um, you know, um, our our sister company, Repair360, has some data that talks about, you know, the average reconditioning time runs 14 or 15 days. Um, and you when you begin with a manic uh a mechanical scan um using a Blue Driver Max device, the the scan, the diagnostic data, and when you get the travel codes back, um, one of the things Blue Driver Max does really, really well for dealers is we take that diagnostic scan and we translate that to normal English and then provide you insights into what the reconditioning costs are, what needs to be reconditioned, how much it's going to cost from a lab burn parts perspective. And we can take that data and we can pass it into reconditioning software, such as Repair 360. And what we found away doing that, you can actually cut down time by pre-ordering parts, scheduling third-party uh service people, um, you know, getting that workflow started earlier on. So we actually cut days out of the reconditioning cycle. You can get that vehicle scheduled and planned earlier compared to just without a Mc uh diagnostic scan or using a device at all, you where traditionally you get that car and you take it on training, you put it in the back, um, and eventually gets processed into the reconditioning process. And somebody starts all over again with a scan and you've missed the benefits, you've missed the benefits of you know, finding issues with the deal and finding gross profit opportunities using a scan device because we can see what problems you're inheriting. You can buy that car better. But also on the back end, you can actually schedule those repairs and those parts earlier on to get everything you know in the same day that you're taking that on trade. So that cuts down reconditioning days. And you know, our data kind of shows about $100 a day is what it costs to hold the car during that reconditioning process before it gets back to the front line. So every day you cut down, you're just finding more profitability on the reconditioning side, as well as with the diagnostic scan, understanding what it's going to take to recondition the car before you actually take a possession of it in that appraisal process. You can buy that car right. It helps you find more gross profit at the transaction.

SPEAKER_01 10:55

This interesting is it sounds like almost on the repair side, it's kind of a little bit like what V Auto V Auto did in terms of checking the market and deciding what the value of the car is by, by you know, you know, numbers of vehicles in that specific market, what it costs. And yet here in the repair, you're kind of doing it but from that kind of micro level on the repair side.

SPEAKER_02 11:14

So that's a great example. V Auto is one of our partners, and we actually take that diagnostic scan and actually pass that into V Auto, and they use our diagnostic capabilities to help inform that evaluation of that vehicle. So it's it's a it's a great example that you just so happen to pull up. Um, uh, in that it's the same uh situation where you are by scanning that vehicle and passing that information to V Auto, V Auto uses that information of the mechanical condition of the vehicle, does its magic around the appraise, the vehicle value, taking into consideration the mechanical condition that we're passing in to get a more accurate number on that vehicle. Again, why we say with or without a uh vehicle appraisal software that's out there, Blue Driver Max helps you find or buy vehicles more accurately, put the right number on the vehicles. If you know the problems that you're inheriting, you find out the reconditioning costs ahead of time. Whatever guidebook you're using, if it's, you know, for example, a you know, fictional number here, $20,000 vehicle, and we find, you know, $725 worth of mechanical reconditioning costs, then you know, you're not gonna just pay $20,000 for that vehicle. A good operator is gonna pay $19 or $18.5 for that vehicle and buy that car correctly, leaving you your your space for the recon of what you now know going into that deal, you're gonna have to deal with. And and that trans, you know, that also finds you profitability as an operator. What we also know is uh through our survey, we went to market in April, did a huge national survey across the US, across dealerships. And what we found is dealers on average um will miss up to twelve thousand dollars a month of uncut mechanical issues that impact the used vehicle department's operation on the bottom line. So these are deals that have been done. They didn't catch, they didn't scan a car up front, they've just you know did the deal, they put it in the back, and through the reconditioning progress, they discover some mechanical issue with that vehicle. And that comes back to the used car operations and immediately hits that bottom line. And if you carry that through, if that is not a unit that's good for retail and you're gonna pass that through to the wholesale um side of the world, that that reconditioning issue, that uncaught issue, actually just gets passed to the to the auction level, and you're gonna have to deal with reconditioning at that point as well.

SPEAKER_01 13:38

Let me talk about that. Um, at the uh in general speaking, okay, so dealers look at this situation for whatever reason that maybe that trade-in doesn't work for their lot, maybe it's they can't, whatever, maybe it's something that they can't afford the time to take to recon. It goes into the um auction lanes. For auctions, do you see? I don't know if you see this trend or not, in terms of because of the aging fleets, are we seeing more red light sales or is have we seen a boost in reconditioning at the auction end? Because I know you know fleets are always going to do their recon, but um, I don't know about independence of franchises, how much they're gonna put in recon once it gets to the lanes.

SPEAKER_02 14:15

So I can comment to red lights or the recon overall reconditioning costs, you know, our experience and our partners, every operation is you know, operates you know to their proprietary business practices. What I can tell you is that we are capturing more uh during the inspection, the when the pre-inspection process, when vehicles are coming in to the auctions, we are catching more issues because of the age of the fleet. You know, the the simply are you know, there are more issues with cars, the older they are, you know, doesn't uh you know it's a big generality here, but I see it across North American, Japanese, or European vehicles. The older they are, the more the more we catch during a scan. Um, and therefore that what we see coming through is more uh reporting on CRs, on the condition reports that doctrines are showing um through there. And then each one, you know, each one has a threshold on what they're gonna rec, you know, what needs to be reconditioned or not, but we are exposing more because older issue, you know, older vehicles that are higher, higher mileage, uh you know, just end up having more issues here. And we can, I can confidently say that our data shows consistently that we are capturing more of those issues at the inspection process.

SPEAKER_01 15:24

And I do think that probably there's well as the these fleets are aging, these types of vehicles, you're probably going to get more pre and post-sale inspections because of that.

SPEAKER_02 15:34

Yeah, we, you know, we we can involve uh kind of you know, during that inspection process, you know, and the injection, a lot of the Blue Driver Max data comes through and will power a lot of the condition reports through there. I always recommend, you know, it doesn't you know for dealerships, you know, people buying, regardless if you're buying as a trade-in, at an auction, at you know, a third channel of you know private party sales, yeah, right? Whatever that might be, however, you're acquiring vehicles in this day and age, because of the general you know, sophistication of cars, the more computer systeming and more recent vehicles, the age of old vehicles, cars in general are more complex, and simply just look, feel, smell of a vehicle isn't enough anymore. And you know, I don't, you know, um Blue Driver Max and in using a diagnostic device shouldn't be looked at as a you know, a mechanical only uh or a service-only issue. We should be investing in that to help uh plan our exit strategy of a vehicle, know what we're buying ahead of time so that we can plan how to get out of that vehicle. And the days of, you know, uh I I jokingly used to say when I was in the retail side, you know, uh used car operator when they buy a car, they'd lean back. I've seen one of those before and be able to put a price on it. You know, good guys just go out and take a look at it and be able to put a price on it. Great guys just go out and you know, drive the car around the block and go, okay, I know what I'm getting now. But I think you gotta do, I think you gotta take that last part of not only test driving that vehicle, but actually running a diagnostic tool. It is only going to help you become more informed because not everything shows up on a dashlight that you know there are underlying issues that are with vehicles. And you know, the trouble areas we see, you know, um, you know, are are often are you know within um proprietary computer systems, uh sorry, not proprietary, but within the enhanced uh systems inside of a car's computer system, like ABS, um, you know, body control units, transmissions, where more expensive repairs happen, you got to really understand what you're getting to avoid those bigger headaches later on.

SPEAKER_01 17:37

Yeah, and they won't a lot of times you're right, they won't show up on a test drive or something like that. It's more internal. Yeah. So let's get into the blue driver max. When you guys in diagnostic tools, how are you seeing, say, in the time that you've been there, um, in terms of in this area, what say dealers or auctions, how they use those tools in the past, or how much they use those tools and what they are now. I mean, what's changed? Is it that yeah, I would say the tools or something else?

SPEAKER_02 18:09

Um, I I think there's two parts there. I think that technology's come a long way and we continue to drive enhancements um through it. You know, computer systems and cars change all the time. Um, and you know, manufacturers change uh the protocols and what information are shared in their systems within cars, so that you know the hardware devices need to keep up with those changes being made. For example, we just put out a significant release to work with Nissan um to align with their new computer system and their computer language they use to pass information from one to another. And if devices aren't keeping up with those things, you're gonna miss more recent Nissan vehicles and not being able to speak with them correctly. So it's really the as the hardware um, as manufacturers change how they communicate and the information they're putting out on within an oboe do port, those hardware devices, you gotta put you pick a partner that's maintaining and keeping up with these changes in the marketplace. Number one. I think number two, it's becoming more evident um with the aging fleet and the cost of repairs. The cost of parts are up, the labor's up, everything's becoming more expensive. That dealers uh and auctions need to have more transparency into what is happening, what is the day, you know, what is the vehicle they're about to buy? Can they efficiently or effectively put a deal together or effectively reconditioning that vehicle? And that believe it or not, there are um, you know, very advanced partners that we have that take the scanning information and they got you know the ROI calculated. I'm gonna recon on these items because I know the payback's gonna be there versus I can let these ones go and disclose what the issue is with those with those. And there's you know, that insight of the you know, the the uh I know what information, yeah, I know what the condition of the vehicle is, I know where we need to invest in recon so that I can actually get the maximum yield for that vehicle on the uh when I go to sell it. So, you know, those are very sophisticated, advanced partners that we have doing that. But if you pull it back to the average person, look, I can tell you with confidence, less than 40% of dealers out there are actually scanning, uh you know, using a diagnostic device right now. Those that do catch more issues are making more, you know, frankly, I can tell you the three things we hear constantly. So you're helping me find gross profit in a deal because I'm not overpaying for a car. I'm not having the surprise losses at the end of month or having the service manager contact me anymore. And you know, with that old open line, did you know this car has? Um, that we don't know with the appraisal. And you know, the last one is we did we haven't touched on earlier is that through scanning a vehicle with the age of vehicles, we talked about older vehicles having more issues, we can detect when a check engine light has been cleared. And it's not uncommon um to hear stories from our customers of hey, I caught somebody trying to pass, you know, pull a fast one on me where they cleared the check engine light and pulled up, you know, immediately to the dealership, trying to pass it off as a good car. And we're able to we're able to detect when a check engine light has been cleared. Um, we pull odometer readings and VINs right from the computer systems of the cars. So it helps give you some peace of mind of not, you know, it happens less and less, but odometer rollbacks or VIN replating gives you the insights to be able to show, you know, to see what's happening with each vehicle. So you don't have, you know, you prevent fraud in that way. So we make dealers' lives easier by not being taken advantage of when you scan a vehicle first.

SPEAKER_01 21:28

Yeah, and it also helps because there's going to be dealers, maybe a dealer who has a great fixed stops operation, they're not afraid of that stuff because they they can they have the ability to fix it, they can they can make that money back or whatever. Whereas opposed to the guy who doesn't do his own service, then holy cow, that's that's a totally different deal.

SPEAKER_02 21:47

That well, I I'd say even for it's even more important for the person that doesn't do their own service to actually be understanding what they are about to buy. What is it they're taking on trades, absolutely having a good Understanding because that's where you know you can find out later on what surprises or what you you know what someone's trying to pass off as a good car or a clean car, not a sorry, not a good car, but a clean car, if you will, um, versus when you actually have to invest and say, uh, oh, this actually is an issue. I'm gonna spend more on recon, and they should be able to buy that car correctly. Um, you know, when they have to third party though those servers work on that.

SPEAKER_01 22:24

So, what are the latest things that you guys are doing or purify this blue driver max? What are what are the the newest uh little tools or the newest little uh improvements that you guys have made to help dealers and our auctions on the diagnostic side?

SPEAKER_02 22:38

So there's lots happening on that front. So um we constantly are evolving and helping provide transparency to uh your dealer partners through our diagnostic uh reports. Um, you know, we have one of the most complete uh coverages uh through the licensing of data of OEMs. We have the you know one of the largest libraries out there, and because that we're able to cover more of the car park than not. And the car park keeps expanding new vehicles all the time. We talked about uh updates and changes in communication protocols. So, you know, making sure you're up to date at the foundational levels, bringing able to do that. Then we get into the next level of helping to bring, you know, further transparency and coverage of uh what's gonna cost to repair that vehicle and giving dealers the ability to adjust and tweak how they look at doing that. Um, so things along adjusting the shop rate for how you calculate the cost of repair, um, items like using OEM versus aftermarket parts to understand those cost repairs and giving that flexibility to a dealer so they can really tweak the math to make it work and how they want to look at their business. These are all recent enhancements that are there, all through the lens of a brand new customizable uh diagnostic report that you can share with the customer. And we hear great feedback with the customers uh from our dealer partners with this, where they're able to print off our diagnostic report and and actually show uh you know a customer and say, you know, here's the report. This is a third-party system doing the thing, like they're this is what they're catching as part of your vehicle. And and this is why I am offering you this for your for your trade. Um, so when we a third-party standard like Blue Driver Max can come in and actually be that voice of um, you know, the third-party voice to help you justify how you price your vehicles or on a trade-in basis um are there. So we keep driving to, you know, A, help dealers find more gross profit in each transaction, B to miss, you know, uh prevent the surprise uh to catch any of those mechanical issues before they end up being surprises. And then three, you know, make their lives easier, if you will, through the you know, the making sure the check engine lights are caught and you know, not nothing fraudulent is happening to them on the back end.

SPEAKER_01 24:52

Excellent. Well, excellent. This is a good spot to stop. I uh Cole Right can repair if I really appreciate you going through all this uh stuff, and especially at a time where you know, bottom line is everything, and you know, cars cars sometimes are in short supply, and the better cars are in short supply. So you really have to know how to deal with not just a problem car, but everyday car that has stuff that you might miss.

SPEAKER_02 25:16

Thanks, Jeff. This has been wonderful. Uh happy holidays to you, and thanks again for helping me.

SPEAKER_01 25:20

You as well. Uh Cole Riken, thank you so much, and folks at Perify. And uh, this is the Used Car News Podcast, wishing everybody a Merry Christmas and a happy new year.

SPEAKER_00 25:35

Thanks for listening to Used Car News Podcast. Each month, we'll bring you fast and reliable news that car dealers can rely on for this evolving industry. For a free subscription to Used Car News, please go to UsedCarNews.com.