How acquisitions fit into Cox’s investment strategy

Industry

Cox Automotive started 2021 with two relatively big acquisitions cut from very different cloths.

One of the purchases, imaging technology company Fyusion, has obvious and immediate implications for Cox’s Manheim auction unit. The other, Dickinson Fleet Services, which does mobile servicing for medium- and heavy-duty trucks, is part of Cox’s broader strategy to capitalize on the burgeoning mobility space. The acquisitions closed in late December, and purchase prices were not disclosed.

The Fyusion acquisition is a bid to give remote auction buyers more confidence. Cox had been working with the San Francisco company for at least two years, using its technology for 360-degree exterior imaging on the Manheim Express mobile wholesaling platform.

Cox is bringing Fyusion in-house at a time when images are more crucial than ever to the wholesale buying process. During the coronavirus pandemic, wholesale auctions made a huge shift online. About 83 percent of Manheim’s inventory is now sold to digital buyers, the company said.

“We really want this experience to be as if they’re physically looking at the car in more of a digital fashion,” Cox Automotive President Steve Rowley told Automotive News last week.

Recent additions to Fyusion’s capabilities include 360-degree interior imaging and audio and video tags as part of condition reports. As artificial intelligence becomes more effective, Fyusion will continue to build its imaging offerings, Rowley said.

Condition reports remain a major issue that Manheim and its competitors are trying to solve for digital buyers, Manheim President Grace Huang said.

“We think we have the secret sauce with Fyusion,” Huang said.

Fyusion co-founder and CEO Radu Rusu will remain with the company, reporting to an internal board. Rusu said joining Cox was “imperative” for the relatively small 60-employee firm to achieve scale with its technological ambitions.

“It’s all about understanding the car in its entirety, so to speak, in every situation, not just imaging,” Rusu said.

Meanwhile, Cox leaders view the acquisition of the much bigger Dickinson, which employs 800 technicians using 700 mobile service vehicles, as key to its mobility efforts.

Mobility is part of a three-pronged investment approach for Cox Automotive. Rowley said Cox’s three investment interests are in core, adjacencies and new-growth areas, with mobility falling in the last category.

“We have a pretty big definition of mobility from fleet services to autonomous vehicles, shared vehicles, electrification, batteries, etc.,” Rowley said, adding that he sees the overall mobility market as a $60 billion opportunity.

Rowley noted the growing volume of fleet vehicles on North American roads, with many being used to deliver packages over the holidays as more people stay home in general.

Cox measures the fleet services business in terms of miles driven.

“By 2030, we predict that the number of miles [driven in the U.S.] will be about 30 percent driven by the fleet companies,” Rowley said. “And today that probably sits somewhere around 6 to 7 percent. So we think there’s a lot of growth in that arena.”

Mike Dickinson and Ted Coltrain, Dickinson’s executive officers, will remain in their roles, reporting to Joe George, president of Cox Automotive’s mobility division. The fleet-services firm will be a pillar of Cox’s Pivet mobility brand, which has vehicle servicing hubs in Atlanta, Phoenix and Las Vegas.

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