Going Once, Going Twice, Going Paperless | A Conversation with Hugo Carmona of Cox Automotive

For this edition of eLUMINATE: An eSTART Coalition Profile Series, we spoke with Hugo Carmona, Director of State Government Affairs at Cox Automotive Inc.. Hugo has spent eight years navigating the regulatory landscape across Cox's sprawling automotive portfolio, and he brings a perspective that doesn't come up often in title and registration conversations: the wholesale auction. In this conversation, he talks about how Cox found its way to eSTART, why DMVs tend to overlook auctions, and what the industry still needs to figure out before electronic titling can work at scale.

Introduce yourself and tell us about Cox Automotive.

I'm Hugo Carmona, Director of State Government Affairs at Cox Enterprises, primarily supporting the Cox Automotive division. A lot of my work is reading state legislation and rulemaking, analyzing the impact to our business units, and then working with stakeholders on whether there's an advocacy need or a compliance need.

Cox was founded in 1898 by James M. Cox, the former governor of Ohio, and is now in its fourth generation of family ownership. Most people don't know the company started with a newspaper purchase in Ohio and evolved from there: radio, broadcast television, cable, internet, broadband, and now beyond that. Today, it's a diverse portfolio spanning automotive, media and communications, and sustainable growth businesses. We even have a Cox Farms division that is the largest operator of greenhouses in North America.

For today's purposes, Cox Automotive connects car shoppers, dealers, OEMs, lenders, auctions, and fleet operators. We touch pretty much every part of the vehicle life cycle: valuation, acquisition, financing, dealer operations, marketing, e-commerce, and remarketing. Manheim has been part of the Cox family since 1968 and remains the world's largest wholesale automotive marketplace. Also under the automotive division are NextGear Capital for floor plan financing, Autotrader and Kelley Blue Book on the consumer side, and Dealertrack, vAuto, and Dealer.com for dealer operations—and many more leading brands. We're really a central services and technology provider for the automotive industry.

What did your path to this role look like?

I primarily have a legal background. Before Cox, I worked at the local and federal government level. I joined Cox in 2016 on the internet and cable side, focusing on state government affairs for Cox Communications, and shifted over to the automotive side in 2018. It's been eight years now supporting Cox Automotive.

I benefited a lot from relationships that were preexisting to my time here. Fellow eSTART members, auction partners, dealer association partners, AAMVA and the jurisdictions, etc. There are a lot of relationships in this industry, commercial and government, and those folks were incredibly helpful in explaining not just the issues but the history and which pitfalls to avoid. That context has been really valuable to being an effective advocate for the business.

How did Cox get involved with eSTART?

I heard about it through social media and podcasts, and then it started popping up in my legislative and industry calls. We work closely at the National Auto Auction Association level, and NAAA was invited to join eSTART early on.

Cox Automotive was honored to be one of the first invitees. We came in maybe six months after the group was formed.

As a concept, I thought it was brilliant. State government affairs tend to fall into the track of only stepping in when something is going wrong. eSTART created an opportunity for more productive conversations by coming to the table to understand what each stakeholders' priorities are. We had always been siloed, talking about state-specific or sub-industry-specific issues. At eSTART it was like, “let's all get focused on a common goal: making sense of this new way of buying and selling cars.”

How does eSTART's mission connect to what Cox is working on?

Title policy and title-processing procedures are central to multiple Cox Automotive business units, and our use cases are a bit less traditional than what you see from dealers and consumer lenders.

For better or worse, I don't think motor vehicle administrators think about wholesale operators like Manheim very much. We end up having to educate the MVAs whenever we bring up auction issues and what our actual role is. We're a facilitator, a neutral marketplace that is a vital, necessary and often overlooked cog in the wheel.

For that model to function, the marketplace has a responsibility to ensure that all parties can conduct the transaction the way it's described. There has to be a marketable, transferable title at the end of the transaction. If a buyer walks away from a Manheim transaction without a clean title (putting aside the regulatory concerns for a second), that's bad business and a reputational impact to us. How likely is that party to come back and transact again? Most importantly, the ultimate beneficiary is the consumer purchasing the vehicle on the retail market that needs a clean title.

It’s a similar story for NextGear Capital. Titles can serve multiple purposes.  Dealer-to-dealer, wholesale reassignments evidence a purchasing dealer’s newly acquired interest in a vehicle, allowing that dealer to pledge the vehicle as collateral on his floor plan line of credit in return for an advance.  NextGear Capital processes between 12,000 and 16,000 physical titles per business day (with Manheim at similar volumes), so any change to a single state’s—or group of states’—vehicle titling procedures will have a ripple effect on NextGear Capital that must be planned for well in advance.

The eSTART mission is to help everybody save time and money by modernizing title and reg processes - we have a lot of skin in the game when it comes to making sure vehicle titles can move efficiently across state lines – and we are excited about what the future holds.

What's the biggest barrier to title and registration modernization?

Modernization means a lot of things, but the advances from a service provider standpoint, the technological capabilities that providers are bringing to the table almost quarterly, are unlike anything I've seen in my eight years here. Every time I go to a conference I'm blown away at what's available to a jurisdiction that wants to modernize.

But the number one barrier remains funding. States are always looking for more resources to do system upgrades and enter into contracts with technology providers. And then it's interstate connectivity. At the wholesale auction level, we don't know which state buyers will be located in. Right now, we can't guarantee that State A is using a platform this is compatible with State B’s. How do you facilitate transactions electronically throughout the US when interconnectivity hasn’t been fully established?

Fifteen years ago that felt like a pipe dream. We're closer than ever, but there's still a lot of work to do. Every state is on a different timeline, and not everyone has the funding or the bandwidth to prioritize it at the same time.

Anything else you want to leave readers with?

I'll give a shout out to eSTART’s members for doing the yeoman's work on surgical updates to statutes, getting rid of archaic requirements, and to eSTART for bringing those members together to collaborate on these issues. Things like mandatory notarization on every document before DMV submission, or requirements that haven't kept pace with how consumers actually buy cars today, are not necessary in today’s processes. This work is a really productive way to move things forward.

There's also a few practical questions that we’re grappling with as an industry. For example, in an e-titling system, if the seller has to log into a DMV portal to relinquish their ownership interest in a vehicle, will they do that themselves at the wholesale level, or can the auction do it on their behalf? Right now the auction handles some titling paperwork for the seller to ensure a smooth process. What does that look like digitally? Will the auctions be logging in with thousands of different seller credentials from multiple jurisdictions? I'm not sure DMV administrators have fully worked through what that looks like at the wholesale level and what that means for their state’s dealers, and the auction industry needs to start coming up with answers to these types of questions.

Similarly, vehicle titles are central to floor planning operations. Unless NextGear Capital is able to see who the owner of a particular vehicle is at any given time—a process that currently centers on reviewing the dealer reassignments on the paper title itself—NextGear Capital cannot lend money to one dealer or another. If floor planners can’t determine a vehicle’s ownership status, then that creates a domino effect that culminates in a lower supply for vehicles available for consumers to purchase.

We support the overall modernization effort. Clean titles, lower claims, faster sales. Done correctly, these goals will enhance confidence in the wholesale marketplace. Electronic titles have the potential to unlock all of it. It's just a matter of figuring out how we get there.