Carmel-based KAR Auction Services acquires tech startup Stratim

As the automotive industry looks toward a future where an increasing number of people pay to use cars rather than own them, Carmel-based KAR Auction Services Inc. says it just acquired a tech company that will help it jump into this fast-evolving market.

KAR, one of the nation’s largest used-car auction companies, announced Wednesday that it has acquired Stratim Systems Inc., a San Francisco-based startup that uses technology to help companies manage fleets of vehicles. Established in 2016, Stratim has about 35 employees.

Financial terms were not disclosed, and KAR said the acquisition price was not material from a financial standpoint.

The real significance of the acquisition, said KAR Chairman and CEO Jim Hallett, is that it allows KAR to enter what he calls the “mobility” market. Generally defined, Hallett said, mobility is built around the concept of people paying for the use of a vehicle rather than owning it. That could include anything from a fleet of cars that customers pay to use to autonomous vehicles that shuttle people or things from place to place.

The mobility model is “very very prevalent” in other parts of the world, particularly in Europe, Hallett said. But it’s just now gaining traction in the United States, and companies are scrambling to get in on the action.

 “We’ve seen all the major manufacturers in North America invest a gazillion dollars in this mobility space” over the past 18 to 24 months, Hallett said. “There’s a lot of money chasing this space. There’s a lot of people wanting to get in this space.”

All of those fleets, Hallett said, will require management—the vehicles might not have drivers, but they will still need to be serviced, repaired, refueled and washed.

That’s where KAR sees its opportunity.

“When those fleets go into service, somebody’s got to manage those fleets,” Hallett said.

Using the software developed by Stratim, fleet owners can track which vehicles need maintenance work, for instance, analyze data about vehicle usage and determine when vehicles are due for replacement.

KAR already has relationships with auction customers who might become mobility customers, Hallett said, which should give it a leg up in this new market.

KAR says Stratim’s founder and president, Sean Behr, will remain in the role of Stratim president, and the company will maintain its current San Francisco operation.

Part of Stratim’s appeal, Hallett said, was the strength of its leadership team, which had worked together on several successful start-ups before founding Stratim in 2016.

KAR reported revenue of $3.2 billion and a profit of $222 million in 2016, the latest period for which full-year figures are available. The company has 77 auction facilities in North America and expects to sell more than 10.6 million vehicles this year.