Vehicles posted on Manheim’s OVE.com retain a higher auction value than those that are re-run through the physical lane, according to a recent Manheim study.
The study was an analysis of 15 Manheim national commercial customers that list “no sales” on OVE.com.
Used Sales Rise
Used car sales are expected to increase 3.2 percent from September 2014. TrueCar Inc. estimates that total used auto sales, including franchise and independent dealerships and private-party transactions, may exceed 4,328,643 units sold in September.
Metallic Black Tops Car Colors for 2015
Autotrader named Metallic Black as the 2015 Car Color of the Year. Autotrader collaborated with artist Natalie Dee and Super Black Lacquers to develop a limited run of Autotrader Black nail polish, based upon the 2015 most-searched black car.
CarMax Inc. recently reported record results for the quarter ended Aug. 31 and is jumping into sports marketing to help the used-car superstore chain maintain its momentum.
Total used vehicle unit sales grew 9.2 percent and comparable store used unit sales increased 4.6 percent versus the prior year’s
same quarter.
Wholesale vehicle unit sales grew 8.7 percent versus the same quarter last year.
The increase in whole-
sale sales comes in part from an extra sales day. Excluding the extra day, wholesale vehicle unit sales would have increased about Continued on page 3
Banks Back off from Subprime Finance as Risk Grows
Fewer banks are easing underwriting terms for auto finance.
Fitch reports that while underwriting terms remain eased relative to historical standards, recent Federal Reserve senior loan ofcer survey data showed that just 3.3 percent of net respondents eased underwriting standards in the second quarter of 2015.
This compares with 14 percent of net respondents who eased standards in the July 2013 survey.
Part of the reason of a slowdown in the easing of credit is a return of risk.
Year-over-year performance for the top nine Fitch-rated
auto lenders was mixed, reflecting the continued easing of underwriting standards, higher subprime lending and a decline in used-car values.
Data from S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices show the rate for auto loan defaults rose four basis points to 0.9 percent in August.
The indices show defaults rose in most credit categories.
Four of the five major cities saw their default rates increase in the month of August.
New York saw the largest increase, with Dallas, Miami and Chicago also seeing increases.
Texas. This is the superstore chain’s sixth store in the Houston area.
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CarMax Inks Deals
5-percent year-over-year.
Other sales and revenues increased 4.6 percent yearover-year. Extended protection plan revenues rose 1.8 percent reflecting the growth in retail unit sales, partially ofset by an increase in estimated cancellation reserves. Net thirdparty finance fee payments increased 14.1 percent due to the increase in retail units sold, as well as some shifts in the mix among providers.
Total gross profit increased to $521.4 million, up 12.5 percent versus last year’s same quarter. Used vehicle gross profit rose 8.8 percent, primarily driven by the 9.2 percent increase in total used unit sales. Used vehicle gross profit per unit was relatively flat at $2,166 compared with $2,173 in the corresponding prior year period.
Wholesale vehicle gross profit increased 18.2 percent versus the prior year’s quarter, driven by the combination of the 8.7 percent increase in wholesale vehicle unit sales and an 8.8 percent improvement in wholesale vehicle gross profit per unit to $951 from $874.
Other gross profit rose 24.8 percent reflecting the increase in other sales and revenues and a $10.4 million one-time increase in service department gross profits.
This increase resulted from a change in timing in the firm’s recognition of reconditioning overhead costs. These costs, which previously had been expensed as incurred, are now allocated to the carrying cost of inventory.
Compared with last year’s same quarter, CarMax Auto Finance income increased 6.2 percent to $98.3 million, driven by an increase in average managed receivables,
partly ofset by a lower total interest margin percentage.
Average managed receivables grew 16.4 percent to $8.99 billion. The total interest margin, which reflects the spread between interest and fees charged to consumers and funding costs, declined to 6.2 percent of average managed receivables from 6.6 percent in last year’s same quarter.
CarMax also recently announced new partnerships the NFL’s New England Patriots and the NCAA’s Minnesota Golden Gophers. Additionally, CarMax expanded its relationship with the Denver Broncos.
The deal with the Patriots will help CarMax as it expands in the Boston market.
As part of the multi-year sponsorship agreement, CarMax is now the ofcial used car retailer of the team and will be visible to fans and consumers through extensive branding within Gillette Stadium and the surrounding footprint, as well as media, digital and social elements throughout the 2015 season.
“Boston is an important new market for CarMax, and we are thrilled to partner with one of the most exciting and successful teams in football,” said Jim Lyski, CarMax chief marketing ofcer. “Our focus will be to use this partnership to better serve our customers and fans in the New England area.”
The company is set to open stores in Norwood and Danvers, Mass., in December, with a third store in Westborough planned to open next summer.
At Gillette Stadium, CarMax will be the first brand to be showcased on the stadium’s iconic bridge and lighthouse. The bridge was
– Continued from page 1
recently expanded to four times its previous size to give fans plenty of room to hang out and watch the action while improving the concourse’s foot trafc on game days.
“We know Patriots fans have been asking for the bridge to be expanded, and we are proud to be a part of the expansion to an area of the stadium that provides fans with so much enjoyment,” Lyski said.
The deal with the Golden Gophers plays a similar role as CarMax adds stores in the Minneapolis market.
The company ofcially opened its second location in the Twin Cities, located in Maplewood, last month. The store is more than 20,000 square feet, occupies more than 7 acres and stocks more than 300 used vehicles.
CarMax opened its first Minnesota store in Brooklyn Park in March.
In celebration of the Maplewood store opening, CarMax donated $5,000 to the White Bear Area YMCA. This donation came at the recommendation of Maplewood CarMax associates who also spent a day volunteering with the organization to help transform an unutilized skateboard park into a community garden, complete with compost bins, that is designed to teach gardening skills to area children.
The CarMax Foundation also awarded a $10,000 grant to Special Olympics Minnesota to fund its Young Athletes program.
The deal with the Broncos will support the company’s four stores in the Denver area as they face increased competition from Sonic Automotive Group Inc.’s two Echo Park usedcar superstores.
All the sports pacts include a program called “The Bright Side of Game Day” in each market throughout the season.
In New England, CarMax is hosting a contest to celebrate local community heroes who bring the Bright Side to their communities through volunteer work and a commitment to helping others. Fans can nominate local community heroes who will have a chance to win a VIP Patriots package including tickets to a home game, on-field recognition and a $10,000 donation to the nonprofit of their choice.
In Denver and Minnesota,
the promotion will use Instagram, with fans posting photos showing how they are enjoying the Bright Side of Game Day for a chance to win VIP packages to home games. Community-based eforts will be a component of each of the CarMax partnerships. In Denver, the Broncos joined The CarMax Foundation Sept. 22 to build a second Kaboom playground together.
CarMax also will partner with the Gophers on their Military Appreciation Day and on various Patriots community initiatives throughout the 2015 season.
State Warns Public of ‘Too Good to Be True’ Auto Ads
New York’s governor has issued a consumer alert advising New Yorkers to exercise caution when making used car purchases from private sellers over the Internet following an increase in the number of complaints about online used car scams received by New York State Department of Motor Vehicles investigators.
State investigators receive an average of two dozen complaints per
month from across the state, a majority of which are related to online scams. Such complaints led to the arrests of six individuals for engaging in fraudulent vehicle sales in the month of August alone.
The DMV has identified two common used car and online scams.
One is that individuals who conceal or alter vehicle ownership documents by covering “brands” on vehicle titles or altering odometer
information to conceal alterations to the odometer.
Scammers do this to increase the value of the vehicle at the point of sale.
The other is that individuals who sell stolen cars post them online using ads that state they “need quick cash” or are selling the vehicle “before a divorce” or similar “fire sale” situations. Typically the cars are ofered
for far below market value or as “cash only” sales, and the titles are counterfeit or belong to a diferent vehicle.
This summer, investigators encountered nearly 20 victims of these types of scams.
Individuals arrested in these cases can face criminal charges for forgery, criminal impersonation, criminal possession of stolen property and other felonies.
NEWS BRIEFS
Autotrader Debuts Ad Campaigns
Autotrader recently launched new consumer and business marketing campaigns.
Autotrader is debuting two new TV commercials that reflect a shift in how Millennials relate to brands and the car shopping process. According to Autotrader research, Millennials spend an average of 17 hours shopping for a vehicle, with much of that time spent online researching their intended purchase.
The first new spot – “The Journey” – follows the mishaps of a young man when courting a woman who turns out to be his future wife.
The second spot – “One Search” – tells the story of a young woman who decides to leave the security of her small town to find new career opportunities in the city.
Autotrader also launched a new business-to-business advertising campaign titled “Bring Your A-Game.”
The campaign is being presented as a rally cry for dealers that captures the raw emotion of working hard, giving it everything you’ve got, and ultimately, winning. Through print, digital and multimedia creative assets, the “Bring Your A-Game” campaign showcases the essence of the new Autotrader.
Akron Auction Joins ServNet
The ServNet Auction Group has announced the addition of the Akron Auto Auction to its network of premier independent auto auctions.
ServNet President Patty Stanley made the announcement as the group prepared to meet with industry partners at the 2015 National Auto Auction Association convention in Orlando.
Akron Auto Auction was founded in 1945.
Today, Akron Auto Auction runs six lanes with four separate buildings on 30 acres. The facility includes a full transportation department, reconditioning department, inspection department, and floor planning services.
GWC Launches New Product
GWC Warranty recently introduced a new 5-year, 100,000-mile used vehicle coverage term length and a Service Lane product.
The new 5-year, 100,000-mile coverage term is available on select used vehicle protection plans.
Service Lane is designed for dealers with on-site service facilities. It allows dealers to sell GWC service contracts directly from their service facility.
DMS Adds Insurance Tool
Fetchaquote.com announced the integration of its electronic auto insurance service into the Frazer dealer management software.
Fetch’s integration with Frazer will allow a car-buying consumer to quickly obtain multiple insurance quotes and purchase a policy online in four minutes or less.
The insurance quotes are directly from the insurance carriers’ websites, giving the customer the ability to purchase auto insurance and print insurance cards right at the dealership.
Good Help Proves Hard to Find
While 97 percent of small businesses anticipate that they will either grow or remain stable in 2016, a majority of businesses report that finding qualified talent to support growth is a major concern.
This was the key finding of a recent survey conducted by Dealstruck, an online direct lender for small businesses.
The survey results indicate that small businesses are actively looking to bring on new talent, as 56 percent say they plan to hire in 2016.
However, along with optimistic growth prospects come hiring chal-
lenges, as 70 percent say they are unable to find qualified talent and 15 percent cite the lack of availability of qualified personnel as the greatest current threat to their growing businesses. Consequently, 26 percent of small businesses have recently been forced to turn away new business that they are not able to handle.
As sourcing good talent becomes increasingly difcult, small businesses are still heavily reliant on “word of mouth” for both hiring and marketing their businesses. When asked how they most often look for talent, 46 percent indicated word of mouth, 16 percent advertise, and only 10 percent said they primarily use a career website like Monster or Indeed.
The same was true for marketing, where 45 percent indicated that their primary marketing channel was word of mouth. Only 13 percent of small businesses said they prioritized advertising.
By General Media LLC
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Editorial: Ted Craig, Managing Editor Jeffrey Bellant, Staff Writer Contributing Writers: Ed Fitzgerald, Jenny King, Sheila McGrath Columnist: Tony Moorby
Used Car News is published the first and third Monday of each month.
Subscribers: We print advertisements as sent to us by auctions and other advertisers. It is not possible to verify the correctness of listed vehicles in auction ads. Most lists are partial and all lists are subject to last minute changes by auto auctions, so before travelling a long distance for a particular auto auction event, contact the auction by telephone for a fax of vehicles in the sale.
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Remarketing Industry Honors Top Performers
Several companies honored auctions at the recent National Auto Auction Association convention, including Chase Auto Finance.
Chase Auto Finance announced its ‘2015 Chase Cup for Auction Excellence’ winners.
The annual Chase Cup award recognizes auto auctions across the country for their exceptional performance in retention, operational efciency, expense control, accuracy, sales, operations and service delivery.
Chase reviewed the performance of the auto auctions with which Chase does business from August 2014 through July 2015. The review examined data measuring how well the auctions handled preparation, sales, invoice processing, transport requests, title processing and other capabilities.
Manheim Minneapolis was named the winner of the Best National Auction Performance, in addition to being recognized for delivering the best regional performance in the Midwest.
ADESA Cincinnati/Dayton was awarded the Douglas F. Wininger Memorial Award for Best National Performance Service Delivery, an award that recognizes outstanding service in measurable areas such as
invoicing, and other operational measures.
Manheim Seattle received a pair of honors for best performance in the West and best national performance in Mazda sales, and national awards for prime.
Chase also recognized other auctions for top performance:
• Best National Jaguar Sales:
– Manheim Pennsylvania
• Best National Land Rover Sales
– Manheim Riverside
• Best National Subaru Sales:
– Brasher’s Salt Lake Auto Auction
• Best Regional Performance, Northeastern:
– Manheim Pittsburgh
• Best Regional Performance, Southeastern:
– ADESA Lexington
• Best Regional Performance, Central:
– ADESA Kansas City.
NextGear Capital presented its third annual Auction Partners Awards in Orlando, Fla.
These awards recognize independently owned auto auctions for their dedication and support of the industry.
NextGear Capital President Brian Geitner presided over the awards presentation during an evening reception, held in conjunction with the National Auto Auction Associa
“We’ve fostered many relationships with auctions over the years, helping make the floor plan process simple and efcient,” Geitner said. “However, we recognize that these relationships are a two-way street, and we wouldn’t be who we are today without the dedication, attention to detail and customer-centric
Four auctions were honored with the Operational Excellence award, which is given to auctions that demonstrate excellent efciency, top sales retention, overall operational performance and the most efective response to the needs of NextGear Capital.
The Cox Automotive company also presented a Remarketer of the
Photo by Lester Austin
RAISING THE CUP: Winners of the 2015 Chase Cup Awards hoist the hardware they received in recognition for their efforts.
Lawsuit Adds to Liability Risk for Test Drives
By Sheila McGrath
Experts say Colorado dealers would be wise to verify that their insurance policies cover test drives, now that the state’s court of appeals has found a dealership liable for injuries sustained in an accident.
The Colorado Court of Appeals ruled in September that since a dealer representative had gone along on a test drive in which an accident occurred, the outing was a “joint venture,” making the dealership vicariously liable for the driver’s negligence.
The accident happened in the city of Littleton, after Kristin Hart asked to test drive a vehicle from Go Courtesy Ford.
He said he had spoken with a couple of member dealerships about the case, and the consensus was that since insurance would usually pay for any damages, they would continue sending salespeople along on test drives.
“The dealers that I talked to aren’t about to not have a salesperson go with the prospective buyers unless there are really extenuating circumstances,” O’Connell said.
But he said that while most dealers are probably covered, there might be some companies that specifically exclude test drives on their policy.
“If the policy excludes test drives, their liability is obviously huge,” O’Connell said.
“We all look at policies and don’t
“If the policy excludes test drives, their liability is obviously huge.”
Todd O’Connell
According to court documents, a salesman went with Hart as a passenger, chose the route and told her where to turn.
During the test drive, Hart attempted to turn left in front of oncoming trafc and collided with a car driven by Kelly Minna-Angard, who was injured.
know exactly what the coverages are inside them. I recommend that dealers review their coverage with their insurance provider.”
Minna-Angard filed a claim with her insurance company, which in turn sued Hart and the dealership.
According to the court of appeals decision, prior to Hart’s accident, Colorado courts had never been asked to rule on whether a test drive constituted a joint venture under the state’s laws.
The lawsuit hinged on whether the salesman’s presence in the car made the test drive a joint venture. Most courts have followed a rule that a dealer is not liable for a prospective buyer’s negligence if the salesman is not in the car, according to the decision.
But the lawsuit doesn’t mean dealers should change the way they do business, according to Todd O’Connell, executive director of the Colorado Independent Automobile Dealers Association.
The lower court ruled that since the parties had adverse financial interests – Hart was interested in buying the vehicle and the salesman was interested in selling it – the test drive did not constitute a joint venture, so the dealership wasn’t liable for the damages.
But a three-judge court of appeals panel overturned the decision, finding that the driver and the salesperson did share a common interest in getting the car sold, making the dealership vicariously liable for the driver’s negligence.
REGULATORS ON ‘WAR FOOTING,’ WARNS INDUSTRY ATTORNEY COMPLIANCE
By Jeffrey Bellant
FORT WORTH, Texas -
Independent dealers face increased compliance pressure and the issue was in the spotlight during the recent Innovate Independent Dealer Industry Conference here in September.
One industry veteran said that while many of today’s consumer regulations were birthed decades ago, the push for more restrictions on dealers is as great as ever today.
“Compliance has come roaring back,” said auto industry attorney Tom Hudson, a partner with the Hudson Cook law firm, during his keynote address at the event.
He cited statistics from DealerSocket’s recent survey of more than 2,000 independent/buy-here, payhere dealers.
In response to a question about a dealer’s most important problem, 16 percent listed government regulation/ compliance.
“That doesn’t sound like a whole big number,” Hudson said, “but if you had asked that question five years ago or 10 years ago, it wouldn’t even have (been) a blip.”
In the same survey, 7 percent of dealers said “compliance” was one of their top two goals for 2015.
“Where is all this coming from?” he asked. “The CFPB (Consumer Financial Protection Bureau) and the FTC (Federal Trade Commission) are both on a war footing.
“If you look in the rear view mirror, you begin to realize that what we’re in now is the middle of a 60- or 65year fight between consumer interests and business.”
Hudson said he remembers as a young person working at his father’s service station near several used-car dealerships. One day, a blue truck came by with a machine and started working on cars.
“I said, ‘what on earth are you guys doing?’” Hudson said. “They said, ‘Oh, we’re
re-grooving the tires.’
“Can you imagine today what the transportation authority would say if you were ‘re-grooving’ tires at your car dealership?”
Hudson said when financing for consumer goods became big after the G.I.s came home from World War II, it wasn’t just dealers misbehaving – it was any creditor. These were the days before Truth in Lending.
A consumer could get interest rates from 3 percent to just under 12 percent, but they were the same amount, just computed diferently, Hudson said.
“Consumers had no idea what they were hearing,” he said.
Hudson gave a brief discussion on William Proxmire, the U.S. Senator who first pushed through TILA and, largely on his initiative, the Equal Credit Opportunity Act and the Fair Credit Reporting Act.
In recent years, the creation of the CFPB and the passage of the Dodd-Frank Act placed more regulatory hurdles in front of dealers, while supported by a powerful consumer advocate in Sen. Elizabeth Warren, Hudson said.
“The tables have turned and the industry is on its heels,” he said. “I really think we have a new era of consumer protection. Your business is going to have to change.”
Hudson doesn’t believe the CFPB will ever go away,
even if a Republican wins the presidency in 2016.
“I’ve been in (Washington) D.C. since 1967 and I have seen zero federal agencies go away,” Hudson said. “They don’t go away and this one ain’t going away.
“If that’s what you’re pinning your hopes on, it’s time to sell the dealership and open a bait shop.”
One proposed federal law would have created a 36 percent national finance charge cap, Hudson said. There’s a new Department of Defense regulation that also calls for a finance charge cap.
“The consumer advocates want to push that into the market,” Hudson said.
While it may not sound bad to dealers, a “fly in the ointment” is that it would turn out to be an “all-in” finance charge calculation. Hudson said.
It would include all other optional items in that calculation, from credit life to service contracts.
Although Hudson doesn’t see any additional big federal regulations down the line, the states will be a different story. He cited the efforts in California this year to put heavy regulations on buy-here, pay-here dealers. Also, more than two dozen states made eforts to ban GPS and/or starter interrupt devices.
Hudson said he would not be surprised to see a ban or severe restrictions on spot deliveries in the form of enforcement actions.
He added that a ban on pre-dispute arbitration agreements is “probably a done deal.”
The latest battle is over open recalls and it’s unclear how that issue will be regulated in the future.
Another conference keynote speaker was Cindy Liebes, FTC regional director, whose presentation
sentation, a dealer confronted her, claiming she had misrepresented an action taken against his dealership by the FTC.
Liebes apologized to the dealer.
Hudson recommends training and certification through trade associations on issues of finance and collections.
featured a litany of FTC actions against dealers, through investigations like Operation Ruse Control and Operation Steer Clear with enforcement actions over alleged dealer fraud, deceptive advertising and other activities.
At the end of Liebes’ pre-
Hudson added dealers must monitor customer complaints and resolve them quickly, because regulators are monitoring private lawsuits and even dealers are turning in their competitors.
“Treat every complaint like it’s a live bomb,” he said.
Cindy Liebes of the Federal Trade Commission, above, and attorney Tom Hudson, top, deliver keynote addresses on the challenges dealers face in a tough regulatory environment.
Awards
- from page 5
Year award to Tallahassee Auto Auction for demonstrating the highest percentage of sales recovered based on percentage of valuation of each vehicle, the best throughput performance (number of days from when a vehicle is at the auction to days sold) and the best sales followup (efcient timing on getting proceeds of sales to NextGear Capital).
The 2015 Auction Partner Award winners are:
Car Auction that made the Warren Young Scholastic Foundation selfsustaining by raising $560,000.
Lynnway Auto Auction donated a baby blue pedal car for the auction. Geitner made the highest bid for NextGear Capital.
“Brian moved many of the bids creating a bidding frenzy like never seen before for kid’s toys,” said NAAA CEO Frank Hackett.
“He did if for a cause that we all believe in — education.”
• Operational Excellence Award: Acadia Auto Auction — Richmond, Maine
• Operational Excellence Award: Rochester-Syracuse Auto Auction — Waterloo, N.Y.
• Operational Excellence Award: Oklahoma Auto Exchange — Oklahoma City, Okla.
Since 2004, the Foundation has helped 144 students and awards $52,000 in scholarships annually.
Arias is the director of arbitration for Manheim.
He serves as the chairman of the Auction Standards Committee.
“Matt gives us so much of his time and expertise, it is difcult for me to think of anyone more worthy of this honor,” Hackett said.
• Operational Excellence Award: Lynnway Auto Auction — North Billerica, Mass. Geitner himself was recognized, along with Matt Arias, as an NAAA Warren Young Fellow.
They each received the Warren Young gold medallion.
“He hosts live webinars for our association, giving valuable information to auction owners and employees on auction standards.
Also, their names will be engraved on a plaque beside their esteemed Fellows, which is permanently displayed at NAAA headquarters near Washington, D.C.
Last year Geitner was instrumental in the 2014 Black Book Pedal
During one 60-minute webinar, Matt answered over 100 questions on arbitration.”
Arias also provides support and expertise for the website, IsItFrame. com, purchased by NAAA last year and hosted by AutoIMS.
Floor units with the touch of a button
myNextGear provides access to Kelley Blue Book™ values from any device
Make and schedule payments online or on the go
Real time. Real results.
In today’s industry, technology matters. What Matters Most to You? Join the conversation at nextgearcapital.com/what-matters-most
Dealers Pay for Violations
The Federal Trade Commission recently took action against dealerships in Texas and West Virginia.
The loan-servicing arm of Texasbased auto dealer Tricolor Auto Group will pay $82,777 in civil penalties as part of a settlement with the FTC. The settlement addresses charges that Tricolor failed to have written policies and procedures regarding the accuracy of reported credit information, and failed to properly investigate disputed consumer credit information.
policies or procedures addressing how to ensure the accuracy of that information.
The complaint further alleges that when consumers disputed the accuracy of the information provided by TAA to the CRA, TAA referred them back to the CRA instead of conducting an investigation as required under the Furnisher Rule.
In addition to the civil penalty, under the terms of the settlement, TAA will be permanently barred from any further violations of the Furnisher Rule.
The FTC’s complaint alleges that the company’s loan-servicing group, Tricolor Auto Acceptance LLC, violated the Furnisher Rule, which was implemented under the Fair Credit Reporting Act.
In other news, a West Virginia auto dealer, Ramey Motors Inc., has agreed to pay a $80,000 civil penalty to settle an FTC lawsuit brought in 2014.
The rule requires companies that report information about consumers to consumer reporting agencies to maintain policies and procedures designed to ensure that the information they report to CRAs is accurate and to allow consumers to dispute information they believe is inaccurate directly with the company that furnished the information.
The FTC charged Ramey Motors with violating the terms of a 2012 consent order with the FTC that barred it from deceptively advertising the cost of buying or leasing cars.
While TAA provides information on thousands of consumers to one CRA, the FTC’s complaint alleges that TAA had no written
The civil penalty settlement resolves charges that Ramey Motors’ ads violated the consent order by concealing important terms of sale and lease ofers, such as a required down payment, and failing to make credit disclosures clearly and conspicuously, as required by federal law.
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General Motors Avoids Criminal Prosecution
NEW YORK (AP) – General Motors agreed to pay $900 million to fend of criminal prosecution over the deadly ignition-switch scandal, striking a deal that brought criticism down on the Justice Department for not bringing charges against individual employees.
The switches, which can slip out of the “run” position and cut of the engine, have been linked to at least 169 deaths.
Despite evidence that GM’s legal and engineering stafs concealed the problem for nearly a decade, no employees were charged, though U.S. Attorney Preet Bharara said the investigation is still going on.
GM also announced it will spend $575 million to settle the majority of the civil lawsuits filed over the scandal.
Under the deal with prosecutors, an independent monitor will be appointed to oversee GM’s handling of safety problems. Two charges drawn up against GM – wire fraud and scheming to conceal information from government regulators –will be dropped after three years if the automaker cooperates fully.
GM agreed to a statement of facts that describes in scathing terms its deceptive and dismissive approach to the defect.
“They let the public down,”
Bharara said. “They didn’t tell the truth in the best way that they should have – to the regulators, to the public – about this serious safety issue that risked life and limb.”
The twin agreements bring to more than $5.3 billion the amount GM has spent on a problem authorities say could have been handled for less than a dollar per car. Those expenses include fines, compensation for victims and the recall of millions of vehicles.
With the settlements, GM takes a big step toward moving past the scandal.
GM CEO Mary Barra appeared before several hundred employees in suburban Detroit Sept. 24 and again apologized to the crash victims. When asked whether employees should have been charged, she deferred to Bharara’s ofce.
But she added: “We understand that lives were impacted. That is something that we understand and we take forward and will have with us every day.”
The settlement brought bitter criticism from safety advocates and family members.
Consumer advocate Clarence Ditlow, head of the nonprofit Center for Auto Safety, said GM ofcials will “walk of scot-free while its customers are 6 feet under.”
“If a person kills someone because he decided to drive drunk, he will go to jail,” said Laura Christian, the mother of a woman who died in her 2005 Cobalt. Yet GM employees whose decisions led to scores of deaths “are able to hide behind a corporation because our laws are insufcient. It must change.”
Bharara said he understands
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victims’ families might be disappointed that no individuals were arrested. But he said there is no law with specific criminal penalties for failing to disclose auto safety problems.
Without such a statute, prosecutors had to rely on broader laws covering false statements and wire fraud, he said.
STATING THE CASE : General Motors CEO Mary Barra announces GM has reached a settlement with the U.S. Attorney’s Offce for the Southern District of New York regarding the company’s handling of an ignition switch defect in certain older model vehicles.
Volkswagen Faces Legal Woes in Emissions Scandal
WASHINGTON (AP) – Who knew about the deception, when did they know it and who directed it?
Those are among questions that state and federal investigators want answered as they plunge into the emissions scandal at Volkswagen that has cost the chief executive his job, caused stock prices to plummet and could result in billions of dollars in fines.
Legal experts say the German automaker is likely to face significant legal problems, including potential criminal charges, arising from its admission that 11 million of its diesel vehicles sold worldwide contained software specifically designed to help cheat emissions tests.
The Environmental Protection Agency has accused VW of installing sophisticated stealth software that enabled “clean diesel” versions of its Passat, Jetta, Golf and Beetle models to detect when they were being tested and emit less-polluting exhaust than in real-world driving conditions.
The agency says the “defeat devices” allowed those models to belch up to 40 times the allowed amounts of harmful fumes in order to improve driving performance.
The Justice Department says it’s “working closely” with
EPA investigators.
“If there is sufcient evidence to show that Volkswagen intentionally programmed its vehicles to override the emission control devices, the company and any individuals involved could face criminal charges under the Clean Air Act, and for conspiracy, fraud and false statements,” said David M. Uhlmann, a former chief of the Justice Department’s Environmental Crimes Section who is now a law professor at the University of Michigan.
He called criminal charges “almost certain.”
But Ullmann cautioned that hauling the executives involved into a U.S. courtroom could be challenging because much of the conduct at issue probably occurred overseas.
While the U.S. has an extradition treaty with Germany, European regulators are also now investigating and could claim first dibs on prosecuting company ofcials.
CEO Martin Winterkorn resigned, and Volkswagen announced it would set aside $7.3 billion to cover the cost of the scandal, but even that may not be enough.
The company has apologized, but has not yet detailed who was responsible for the defeat devices.
German media reported that Volkswagen had received warnings
years ago about the use of illegal tricks to defeat emissions tests. Bild am Sonntag said VW’s internal investigation has found a 2007 letter from parts supplier Bosch warning Volkswagen not to use the software during regular operation.
Frankfurter Allgemeine Sonntagszeitung said a Volkswagen technician raised concerns about illegal practices in connection with emissions levels in 2011.
The Clean Air Act allows for fines
of up to $37,500 for each of the 482,000 suspect VWs sold in the United States, potentially totaling more than $18 billion.
Attorneys general for nearly 30 states and the District of Columbia have announced a coordinated investigation and said they are issuing subpoenas for company records.
There’s also a high likelihood of class-action lawsuits by angry VW owners.
“I opened my business in 1998 with about 15 diferent lenders and selling around 30 cars a month. In 2004 most of the lenders dried up and so did my volume and cash fow. My frst Portfolio Proft Express check was $47,000. Credit Acceptance not only saved my dealership, it’s allowed me to increase my sales. The program has been life-changing for me and my customers.”
Joe Kaisk
Dealer Forges Signatures
A Michigan auto dealer accused of forging a police ofcer’s signature on vehicle inspection documents now faces 14 felony charges. Barry Church, president of Church & Sons Auto Sales at 4499 Davison Road in Burton, faces seven counts of forgery and seven counts of uttering and publishing after falsified forms were submitted to a Genesee County Secretary of State ofce.
The forms certified that salvaged cars had been inspected by law enforcement to ensure they were not stolen or contained stolen parts.
The charges, which are all 14year felonies, came as a result of an investigation by the Secretary of State’s fraud investigation section. Church was bound over for trial in Genesee County Circuit Court earlier this month.
Church purchased the vehicles with model years 2007 to 2011 in Ontario, Canada, which had deemed the vehicles unfit to drive on the road.
Auto dealers often buy salvage cars at auction with the idea of repairing them for resale or using the parts to repair other cars.
A vehicle with a salvage title cannot qualify for a license plate or be used on public roads until it is recertified by a specially trained police ofcer and retitled.
The inspections check everything from headlights and turn signals to safety belts, brakes, bumpers, tires, exhaust, as well as ensuring that no major component parts are stolen.
The false inspection reports were spotted when a Secretary of State employee noticed that several inspection forms had a police ofcer’s photocopied signature.
“Thanks to sharp-eyed Secretary of State employees, possibly dangerous vehicles won’t be on Michigan roads,” Secretary of State Ruth Johnson said.
“Our new focus on fighting fraud is again succeeding in protecting car-buying consumers from getting ripped of.” Church is said to have admitted to a Secretary of State fraud investigator that he had signed the forms as a police ofcer.
During the course of the investigation, police discovered that there were more forged inspection reports.
Individuals Drive Digital
A study of more than 7,500 consumers by Capgemini reveals car buyers expect an increasingly individualized experience, requiring OEMs and dealers to further communicate and share customer data.
The 16th annual Cars Online report: “The selfie experience: The evolving behavior of the connected customer,” shows the rising expectations among car buyers for a seamless, personal customer experience across the entire buying lifecycle, both online and ofine, putting customer individual preferences at the heart of ofers and services.
While the younger generation (18-34 year olds) has a higher afnity with online channels, the study reveals that even “digital natives” want physical touch-points for purchase, ownership and repurchase so dealers remain crucial to the selling process.
Customers demand technical expertise from dealers, and expect more personalized and frequent communication between purchase and delivery. Half expect at least weekly notifications on delivery updates, while the majority (58 percent) want to be able to adjust their order after the initial purchase.
Most consumers (80 percent) interested in connected car features are prepared to allow access to their data, provided there is transparent information on how it’s used – showing high levels of trust in OEMs. Nearly all customers who feel very informed about the use of their data are satisfied with their dealer or OEM. However, as many as 37 percent say they have not been contacted at all by their dealer or manufacturer in the last year.
“Accustomed to personalized services and an experience that combines on and ofine channels in other sectors such as retail, con-
sumers are demanding the same in the automotive industry both preand post-car purchase,” said Kai Grambow, global head of automotive at Capgemini.
“Digital communication channels such as social media, insights into behavior made possible by data analytics, and the desire for added services means OEMs and dealers should provide such an experience. However, in order to achieve this, there must be a shift in mentality away from the segregation of manufacturing, sales and aftercare.”
Grambow said there is little data sharing between OEMs and dealers today, but this is a real opportunity for the industry. OEMs and dealers need to cooperate and use the right analytical technology to provide a more comprehensive customer experience.
The report also details a significant appetite for advanced new technologies and connected services, providing OEMs and dealers with fresh opportunities, but also challenges.
Half of consumers want to use or are already using connected car features, with more than three quarters (80 percent) of these saying it is important for their next car.
However, the threat of a cyber attack is still a significant concern for some consumers (38 percent) who say it is a reason not to use these features.
Looking ahead, half of all consumers surveyed would be interested in buying a car from technology giants like Apple or Google, even if they are satisfied with their current brand. This increases to 65 percent among younger customers. Consumers, particularly in the younger age category, are equally willing to pay significantly more for autonomous driving.
Manufacturers Sign on to Automatic Braking
Ten major vehicle manufacturers have committed to making automatic emergency braking a standard feature on all new vehicles built, the U.S. Department of Transportation, its National Highway Trafc Safety Administration and the Insurance Institute for Highway Safety announced.
“We are entering a new era of vehicle safety, focused on preventing crashes from ever occurring, rather than just protecting occupants when crashes happen,” said U.S. Transportation Secretary Anthony Foxx. “But if technologies such as automatic emergency braking are only available as options or on the most expensive models, too few Americans will see the benefits of this new era. These 10 companies are committing to making AEB available to all new-car buyers.”
The announcement, made at the dedication of IIHS’s newly expanded Vehicle Research Center, represents a major step toward making crash-prevention technologies more widely available to consumers. The 10 companies – Audi, BMW, Ford, General Motors, Mazda, Mercedes Benz, Tesla, Toyota, Volkswagen and Volvo – will work with IIHS and NHTSA in the coming months on the details of implementing their historic commitment,
including the timeline for making AEB a standard feature. The department and IIHS encourage all other light-vehicle and trucking manufacturers to bring automated vehicle technology to all vehicles on U.S. roadways as soon as possible.
Automatic emergency braking includes a range of systems designed to address the large number of crashes, especially rear-end crashes, in which drivers do not apply the brakes or fail to apply sufcient braking power to avoid or mitigate a crash. AEB systems use on-vehicle sensors such as radar, cameras or lasers to detect an imminent crash, warn the driver and, if the driver does not take sufcient action, engage the brakes.
“The evidence is mounting that AEB is making a diference,” said IIHS President Adrian Lund. “Most crashes involve driver error. This technology can compensate for the mistakes every driver makes because the systems are always on alert, monitoring the road ahead and never getting tired or distracted.”
AEB technology is already showing benefits in the real world. Several studies, including a recent report from IIHS, show that AEB technology can reduce insurance injury claims by as much as 35 percent.
The 10 manufacturers committing to across-the-board AEB represent 57 percent of U.S. light-duty vehicle sales in 2014.
In January, NHTSA announced its proposal to add automatic emergency braking to the list of recommended advanced safety features included in its New Car Assessment Program. In May, Foxx announced a series of steps DOT and NHTSA will take to accelerate the development of advanced safety tech-
nologies such as vehicle-to-vehicle communications and autonomous driving.
Moving forward, IIHS and NHTSA will set specific performance criteria for manufacturers to meet their commitment, and will determine how soon consumers can expect to see AEB technology as standard equipment. In order for a vehicle to earn IIHS’s highest safety award, ‘Top Safety Pick’, IIHS requires the vehicle to have ABS.
Auctioneers Make Award a Family Tradition
John Nicholls, president of the Nicholls Auction Marketing Group, received the National Auto Auction Association Bernie Hart Memorial Auctioneer Award for 2015. The association, which represents more than 300 auto auction members in North America, presented the award at its 67th annual convention last month in Orlando, Fla. Named in honor of Bernie Hart, who served as NAAA’s executive director for more than 30 years before retiring in 1988, the annual award recognizes the industry’s most visible person.
Nicholls’ company conducts more than 300 auctions per year for Fortune 500 companies and he can be seen personally wielding the gavel at many of the sales for vehicles, real estate, equipment and thoroughbred horses – including five auto auctions each week for Manheim and CarMax, all four of the prestigious Barrett-Jackson Collector Car Auction events, the Branson Collector Car Auctions and numer-
ous charity fundraisers.
As a second-generation championship auctioneer, Nicholls is a chip of the old auction block, attaining the same honor NAAA awarded to his father Charles in 2004.
“John is an excellent auctioneer who exemplifies the best of his profession and is an asset to our industry,” said outgoing NAAA President Ellie Johnson, daughter of veteran auctioneer and auto auction owner Kenny Aycock, who was the first recipient of the Hart memorial award in 2000.
“Having myself just graduated from auctioneering school this year, I appreciate his skill, admire his clear, rapid-fire calling and envy his smooth control of the audience. If I could ever be only half as good as John, I’d consider it a great achievement.”
She recalled that her dad schooled John in the auctioneer’s art at the former’s small auction academy. The two men became close and continued to work together at many sales.
“Both Charles and John are so talented, it’s a heartwarming honor to be president in the year the son follows the father in receiving this most deserved award,” Johnson said.
The elder Nicholls went on to
graduate from the Reisch Auctioneering School – now the World Wide College of Auctioneering in Mason City, Iowa – and then founded his Fredericksburg, Va., auction with wife Jean in 1968.
John, after earning bachelor’s and master’s degrees, acquired his auctioneer education at the school in 1990 and is one of its featured instructors.
Over the next 25 years, Nicholls worked in the family business, becoming licensed in 11 states and the District of Columbia.
He amassed a number of professional achievements, which include being named 1994 Virginia State Champion Auctioneer; 2003 Virginia Auctioneer of the Year and 2003 World Automobile Auctioneer Champion; and the 2006-07 National Auctioneers Association Men’s Division Champion of the International Auctioneer’s Championship.
Today as president, Nicholls oversees all day-to-day operations of the full-service auction firm.
Under his leadership, Nicholls Auction Marketing Group recently earned recognition as Business of the Year by the Fredericksburg Regional Chamber of Commerce.
Nicholls also takes a leadership role in professional organizations.
He currently serves as the vice president of the National Auctioneers Association and on the board of the World Automobile Auctioneers Professional Association.
He is a past president and chairman of the board of the Virginia Auctioneer Association and a past member of the NAA board of directors.
He travels around the country as a featured speaker at many other state auctioneer associations and has represented the profession on NBC’s Today Show, at the National Association of Realtors Convention and St. Jude’s Children’s Research Hospital, in multiple news publications and on a real estate auction consulting trip to South Africa.
Residing in the Fredericksburg area with his family, Nicholls is involved in his community.
He is an active member of the Spotswood Baptist Church and serves on the boards of the Virginia Community Bank and the Joe Gibbs Youth for Tomorrow Foundation. Nicholls applies his championship bid calling talents at charity auctions to benefit a variety of organizations, such as schools, colleges, and hospitals, as well as Rappahannock Goodwill, Ducks Unlimited, Trout Unlimited and the National Wild Turkey Federation.
Firm Shares Tech Platform
Auction Edge is taking steps to grow as a company.
The firm recently announced an agreement with Openlane Inc. to build a private label website for Auction Edge utilizing Openlane’s proprietary technology platform.
The private label website created for Auction Edge will be known as the Edge Marketplace. Openlane will be delivering to Auction Edge and its member auctions a customized version of its online auction system.
Auction Edge is expected to offer this private label program to independent auctions in early 2016.
Auction Edge has hired Colette Marcilliat as vice president for its new Edge Marketplace. Marcilliat will focus her online experience in the remarketing industry on developing the strategy to launch Edge Marketplace.
Marcilliat brings more than two decades of executive marketing and sales leadership with companies such as ADESA, Openlane, Manheim OVE, Onlane and AutoTradeCenter. The vast majority of her experience is the crafting of vehicle remarketing channels and growth of online sales.
“From launching the industry’s first private label website to holding key leadership roles across
both auction and internet remarketing providers, Marcilliat has a rich history of championing the successful transition from brick and mortar auctions to web enabled marketplaces,” said Scott Finkle, Auction Edge president.
“We know that her addition to the Auction Edge team will advance the sales opportunities and capabilities of the independent auctions and all of the customers they serve.”
Auction Edge also announced an agreement to purchase Auto Auction Solutions of Pensacola, Fla. The deal is expected to close Oct. 30.
“The addition of Auto Auction Solutions to Auction Edge’s portfolio significantly expands our footprint of independent wholesale and public auctions, and provides tremendous opportunity for Auction Edge to grow its online platforms including Edge Pipeline, Edge Simulcast and Edge Lookout,” Finkle said.
Auto Auction Solutions will operate as Edge AAS, a division of Auction Edge.
Kathy Williamson will continue with the company as division vice president. Eric Williamson will assume the position of director of client services and will be in charge of installations, training and support.
Driverless Cars Move Forward
FRANKLIN, N.J. (AP) – “It’s turning! It’s turning,” said Jonathan Colella, his eyes fixed at the wheels on the “Cockroach.”
To the naked eye, the Cockroach looks like a “MacGyver” experiment: a piece of wood, some heavyduty wheels, a car battery and a tiny gasoline motor. The only reason it was actually going forward was because of a push from a homemade go-cart behind it.
But, for a few seconds recently, its small tires were slowly turning through a makeshift course at Franklin High School in the township’s Somerset section.
is there an intersection – and make decisions.”
Such technology is being researched and demonstrated at most major auto manufacturer and technology companies across the globe.
In 2012, Google disclosed that it has about $150,000 worth of equipment in its driverless Toyota, Audi and Lexus vehicles.
Driving on the New Jersey Turnpike while speaking to a reporter, Princeton University professor Alain Kornhauser said he believes he shouldn’t need to actually drive his car.
And the wheels were turning by themselves.
“In a best-case scenario, this could potentially change the world,” Colella told the Asbury Park Press in an interview before the test run.
“I should be able to fully concentrate on talking to you, text, do whatever I want,” Kornhauser said.
The Cockroach is DriveAI’s first prototype of its self-driving car, a project nearly two years in the making – including a summer of 12hour days programming software and designing the mechanics to make it work.
The team will soon demonstrate the car at an event called “In the Driver’s Seat” at BellWorks in Holmdel.
DriveAI is a nonprofit of 10 young enthusiasts – they’re all between 18 and 27 years old – who set out last year to build a self-driving car.
Most have a connection to Rutgers University, where they study or recently graduated.
They come from various computer science and engineering backgrounds.
“We wanted to see how fast we could do this with the resources we have,” team member Akin Shoyoye said.
They are still in the early phases: Even in the prototype, the Cockroach has the capability to accelerate, brake and perform basic steering, but it can’t adjust its speed to changing conditions.
“I’m not touching the gas or brakes. I have it on cruise control, following the car in front of me. It can do this better than I can.”
Kornhauser, the faculty chair of Princeton Autonomous Vehicle Engineering, called the autonomous-vehicle shift an “evolution” that has already begun.
Many luxury cars already ofer automatic lane guidance and collision avoidance, which detect and automatically react to potential crashes.
It’s only a small jump to the kinds of autonomous vehicle where drivers “don’t have to pay attention,” Kornhauser said. Once the insurance and logistics industries get involved, such technologies will become standard.
“We’ll all go out and buy one of those things because we don’t actually want to drive when we drive,” Kornhauser said.
Google debuted its driverless model earlier this year after six years at the forefront of self-driving research.
Of the 1 million miles Google’s cars have logged since 2012, the DriveAI team focuses on one important statistic: It has been involved in 14 crashes, each of which were the result of another driver’s mistake.
In May, the company received funding from Munich Reinsurance, which set a three-month deadline for a working prototype.
“This is finally a reality. This is a real company,” said team member Parth Mehrotra.
DriveAI’s model is on a smaller scale: It isn’t designed to go above 25 mph, and the team intends to move toward solely electric vehicles.
As test vehicles begin hitting the roadways – DriveAI’s tests are in driveways and high school parking lots – lawmakers are feverishly proposing and passing laws before such vehicles even get on the road.
To date, they’ve spent about $3,000 on it – including many trials and even more errors, many of them in a Somerset garage scattered with twist ties, computer parts and scraps.
“The type of car doesn’t matter –the software system is the same,” said team member Travis Vanderstad.
“The car has to see what’s going on around it – is there a turn,
Six states have enacted laws regulating self-driving cars and another 16 state legislatures have introduced legislation concerning them, including New Jersey.
Last year, the state Senate unanimously approved a bill that would essentially legalize self-driving cars, requiring the state Motor Vehicle Commission to adopt regulations governing their use.
Included in the regulations are registration and proof of insurance for any vehicles to be road-tested.
PEOPLE IN THE NEWS
Cox Automotive Fills
Top Slots
Cox Automotive recently made a pair of high level management appointments.
Cox announced a common leadership structure that brings two of the most wellknown automotive brands closer together.
Jared Rowe, who has been named president of the Cox Automotive Media Division, will now lead both Kelley Blue Book and Autotrader. Rowe will
report directly to Cox Automotive President Sandy Schwartz. Prior to this promotion, Rowe spent just more than a year as the president of Autotrader, and spent the two years before that at the helm of Kelley Blue Book.
Manheim has appointed Grace Huang as senior vice president of inventory services, a new role within the company. Huang will focus on the operational, revenue-generating organizations within the business and for product management. She will report to Janet Barnard, president of Manheim North America.
Huang previously held the role of vice president of enterprise product planning, for Cox Automotive. In her new position with Manheim, she will leverage her in-depth
knowledge of critical business initiatives, as well as her ability to link the value of products and information across Cox Automotive’s diverse portfolio. She will oversee auction operations, digital services, vehicle solutions and product management. Huang
joined Cox Enterprises in 2007 as director of business development for Cox Autotrader and has since served in several strategic leadership positions with Cox
Media Group and Cox Enterprises. Prior to that, she spent 10 years in the start-up world and as a consultant, including with the Boston Consulting Group.
Huang is a board member of the Atlanta Ronald McDonald House Charities.
She is a graduate of University of North Carolina’s KenanFlager Business School and earned a master’s degree in business administration from The Wharton School at the University of Pennsylvania.
ADESA Names AutoVIN Management Team
ADESA recently announced that its subsidiary, AutoVIN, has chosen a leadership team for the company’s expanded operations in Canada and the U.S. Richard Carpentier, chief operating
ofcer and senior vice president of operations across North America, now leads the AutoVIN team. Carpentier will oversee all aspects of the company’s day-today operations in Canada and the U.S., including field operations, call centers, quality assurance teams, client relations and business development.
Carpentier has more than 20 years of experience in the industry, managing operations and business development teams for inspection companies, first for Quadrex/Manders and later for DataScan. He most recently held the position of managing director for DataScan’s Canadian operations.
Carpentier will report to Trevor Henderson, chief operating ofcer for ADESA Canada.
With 10 years of experience at ADESA, Nick Pawlak will
serve as vice president of U.S. operations for AutoVIN. In this role, he will be responsible for all field operations in the U.S., including the company’s vast network of field inspectors, as well as the Carmel, Ind.-based ofce inside operations.
Since joining ADESA and the KAR Auction Services group of companies, Pawlak has held a variety of positions.
Gilles Pellerin will serve as director of Canadian operations. He will oversee all of the day-to-day duties of the team in Canada, including field operations and the staf of field inspectors, as well as the inside operations for both Canadian offices.
As the vice president of client relations, Ann Cammarata will lead all client relations and customer support for the AutoVIN database.
Grace Huang
Jared Rowe
RETAIL MARKETS
MISSISSIPPI
Chuck Ryan, owner/ operator, Chuck Ryan Cars, Long Beach, Miss.:
“I’ve been at this location for 40 years, but I’ve been in or around car lots since I was six or eight years old. I’m 72.
“I had three lots at one time, but now I’m down to one. The lot I’m at now makes money. But we’re thinking about a second location.
“I’ve got about 140 vehicles on my lot now. I had 150ish in February/March for a time. I have three or four wholesalers who bring me cars – new-car trade-ins for the most part. I use Manheim auctions. I use our local auction, Long Beach Auto Auction, which is only about 10 minutes from us. I buy and sell there.
“We sell about 30 per month on average. During tax time, we’ll sell 50 or 60. So we sell about 400 cars per year.
“The average retail price is about $5,500. That’s our
bread-and-butter.
“Our average down payment is $2,000. Our average term length is maybe 18 months. So it’s a short-term (contract), big down payment for a good car that will outrun the note.
“We’re a little picky and buy a little tight. We watch it pretty close and I have a small credit line.
“Mileage on my breadand-butter cars can be up to 140,000 miles. I would buy a good car with 200,000 miles. In particular, we sell Toyota, Nissan and Chevy trucks. Some Fords and some Dodges. We do very well with Kia and Hyundais.
“(Inventory) is split pretty evenly between trucks, SUVs and cars. I don’t have luck with Ford Tauruses or Chevy Impalas. I just can’t sell them.
“Toyotas don’t come back with many problems. Neither do Hondas. I also have great luck with Kia and Hyundais. With Nissan Altimas, I can sell all that I can buy. But the four-cylin-
der has problems.
“Reconditioning costs are about $600 to $700 a car. It’s a little higher than this time last year. As a buy-here, pay-here dealer, you’ve got to go to a little better car every year.
“We have a paint shop, a mechanics shop and a detail shop. Some of the mechanic shop we sub out.
“We also use GPS units. We used Goldstar for about 10 years, but we just moved to iMetric within the last 30 days. We’ll see how that works. I do not use starterinterrupt devices.
“We use print advertising with Coast Motor News, which is a slick (auto classified) magazine. It works for us. We also do a 30-minute infomercial on a cable channel. And we run weekly ads in a penny pincher.
“But about 40 to 50 percent of our business is repeat and referral.
“We recently sold a 2011 Honda Accord. It had 112,000 miles. It was a very clean car. We got $11,800.”
TEXAS
Ahmed Belmeshkan, general manager/CEO, New Rio Grande Motors, Fort Worth, Texas:
“I have one location. I’ve been in business 26 years.
“I keep 45 vehicles on average. Right now I’m carrying about 60. During income tax time, I carry more.
“I’m averaging about 25 to 30 sales recently, but about 35 per month for the whole year. Many of my cars come from auctions and from new-car dealer trade-ins.
But mostly I buy from Manheim Dallas-Fort Worth. Right now, new-car dealers are taking most of their cars to auction.
“This year, it’s been easier to get the vehicles I’m looking for.
“I’ve always been a buyhere, pay-here dealer. My average down payment is $1,000. The average term length is 24 months.
“About 90 percent of my customers are Hispanic. We’re in the north side of Fort Worth where there is
(a large Hispanic market).
“My average retail price is $12,000. This year I’m selling newer cars than last year.
“Sixty percent of my vehicles are pickups, 30 percent SUVs and the rest are cars. We sell more (cars) during income tax season.
“Average mileage is about 130,000. Model years are 2007 and up. For the pickups, I’ll go as old as 2003.
“I guarantee my vehicle with a three month engine/ transmission warranty. No gimmicks. I also include oil changes for the length of the (contract).
“Average reconditioning is about $350. I do that (in-house).
“I advertise in my community through (programs and events) like the Boys and Girls Club, Feed the Hungry and, especially, youth programs like baseball and soccer.
“I recently sold a 2011 Chevy 1500 crew cab. It had 169,000 miles. I sold it for $20,900.”
WHOLESALE MARKETS
IDAHO
Russ Smith, owner/ general manager, Dealers Auto Auction of Idaho, Nampa, Idaho:
“We’ve been in business more than 14 years. It will be 15 years next April. We have four lanes but we’re running three currently.
“Volumes are up quite a bit from last year. We’re up 37 percent. We’re running about 300 a week.
“The market here has been fantastic.
“We’re right at 59 percent sold. That’s up a little bit from last year.
“We are primarily dealer consignment. It’s probably 70 percent dealer consignment and 30 percent fleet-lease-repossessions.
“We’ve got about 130 to 140 dealers in the lanes, on average.
“The retail market in our neck of the woods is pretty strong. Independents are doing pretty well, but they’re not doing quite as well as new-car stores. The new car stores are putting
out a lot of cars.
“(On the commercial side) we do business with most of the major lease companies like ARI and Leaseplan. We sell for Westlake. We’ve got some title loan business and credit unions. So we’ve got a pretty good book of business coming in.
“We have GSA sales, like the U.S. Forest Service. We also have sales for Idaho Fish & Game. They’ll run close to 1,000 (vehicles) with us between June and the end of the year.
We typically run that sale once a month and it can have anywhere from 100 to 250 (units). It’s probably 70 percent trucks and 30 percent cars.
“Fish & Game hold their sale a couple of times a year on a separate day. They’ll run about 200 a year. Those could be anything from snowmobiles to trucks and sport utilities, primarily. It can include four-wheelers and boats.
“Average price (overall) is about $6,300. It’s up from
last year. We were probably $5,500 in 2014. The biggest impact has been the influx of Canadian vehicles into our market. Those vehicles are typically trucks and that can be anywhere from $10,000 to $30,000. That’s driven up our average sale price. It’s fantastic for our market. They are good vehicles that are priced to sell. They’re pretty hot.
“I think the rest of the year is going to be great. There is going to be a great volume of cars, but the prices are going to hold tight.”
PENNSYLVANIA
Lynn Weaver, general manager, America’s Auto Auction – Harrisburg, Mechanicsburg, Pa.:
“For this time of year, sales are very good. Consignments are holding steady.
“The sales percentage has been consistent. It’s dropping, but not drastically.
“We’re happy with the numbers. We’re where we should be compared with last
year and the previous years.
“Trucks are doing well. The segment of the market that’s not doing well is the really cheap stuf.
“The price of scrap has dropped so low that there seems to be no bottom. Those vehicles are backing up until the dealers recognize that problem and appraise the vehicles a little more aggressively.
“Our anniversary sale is Oct. 8. This will be our 34th anniversary.
“We’re expecting a huge sale.
“Dealers always want more, like we all do. They’re very optimistic.
“The new-car stores are having a great year on the retail side. They’re keeping more of their trades.
“The used-car dealers are doing well unless they’re on the low-end of the market. I’m talking about the guys who do some rebuilding.
Compiled by Jeffrey Bellant
“We’re also on OVE.com and SmartAuction. That provides a lot of exposure for our no-sale vehicles.
“There are a lot more people online watching, They’re not all bidding and buying, but it’s not unusual to have 50 or 100 dealers watching a lane.
“The online buyers are either are looking for a bargain or for a particular car. If they need a particular car, they’re willing to a pay a little more for it.
“From now until the holidays, there will probably be a lull.
“Tax season motivates the entire market in the right direction. It begins in January and runs right through April 15.
“We really look forward to that. That’s the start of year.
“If the weather cooperates in the Northeast, we should have a great January and February.
“Our online market has increased drastically. It seems like the light just came on with that. Auction Edge has helped us a lot in that area. It has brought a lot of new buyers into the marketplace.
MONTHLY DEALER CONSIGNMENT AVERAGES
COMPACT CAR
Jan 2015
$5,632 100,111
Feb 2015 $5,759 100,462
Mar 2015 $5,838 100,813
Apr 2015 $5,847 100,439
May 2015 $5,680 101,409
Jun 2015 $5,417 102,024
Jul 2015 $5,370 101,091
Aug 2015 $5,144 102,756
YTD AVG: $5,591 101,125
FULLSIZE CAR
Jan 2015 $4,266 108,579
Feb 2015 $4,007 113,914
Mar 2015 $4,240 114,926
Apr 2015 $3,984 115,364
May 2015 $4,101 112,518
Jun 2015 $3,879 113,940
Jul 2015 $3,749 115,275
Aug 2015 $3,859 114,560
YTD AVG: $4,015 113,712
LUXURY CAR
Jan 2015 $12,358 95,859
Feb 2015 $11,598 99,194
Mar 2015 $12,383 98,343
Apr 2015 $13,142 96,603
May 2015 $12,656 96,792
Jun 2015 $12,181 98,550
Jul 2015 $12,134 98,035
Aug 2015 $11,539 99,082
YTD AVG: $12,275 97,766
MIDSIZE CAR
Jan 2015 $6,156 108,790
Feb 2015 $6,211 109,109
Mar 2015 $6,387 109,545
Apr 2015 $6,475 108,701
May 2015 $6,298 108,902
Jun 2015 $6,114 109,730
Jul 2015 $6,085 108,396
Aug 2015 $5,908 109,750 YTD AVG: $6,213 109,112
PICKUP
Jan 2015
DISCONNECTED JOTTINGS FROM TONY MOORBY
Will Donald Trump become the next president of The United States? I very much doubt it. Washington doesn’t like outsiders and ranks will close around
lead the U.S. in times of tough changes. But his charismatic, somewhat homespun way to tell it how it was put him at the center stage here at home but
Tony Moorby
• 40-year veteran of the industry
• President from 1997–2000 of ADT Automotive
• Served as ADESA’s executive vice president of sales and marketing
• Moorby & Associates 2006–present
• Awarded the Ring of Honor by NIADA
• NAAA Hall of Famer
him trouncing any eforts to bring major changes to that bastion of self-protectionism.
Ben Carson will probably sufer the same fate. But the question has been asked loudly now; does one have to be a politician to be president?
Ronald Reagan was, for me, the most talented leader of any nation in recent memory. Previously a radio sports announcer, actor and admittedly, a stint as the Governor of California, wouldn’t normally herald the qualifications to
more importantly at the time, on the international scene.
“Telling it how it is” has become a Trump trademark, even at the behest of political correctness and I like him for that. I’ve written before to say that PC is getting in our own way of progress. Admittedly, cheap shots at other peoples’ perceived shortcomings aren’t well received – references to Fiorina’s face comes to mind – but nobody seems to be upset over millions of comments about Trump’s hair.
CR R O O S S W D
By Miles Mellor
Yes, the stump and the hustings have come down to these ridiculous levels of comparison, upheld at every point by the small minded media at a time when the world stage is on “Tilt”.
Perhaps the major deficit in Trump’s campaign lies in his lack of understanding of world afairs and learning on the fly doesn’t bode well for future planning. It’s refreshing to think that someone of his ilk would take the posture of “We’ll do it my way and to hell with the consequences”. While that may work in his corporation, it probably won’t when trying to keep a delicate balance between nations. George Bush did that with Iraq and we’re still living with the fallout 15 years later.
On that subject his brother, Jeb, asked on a recent debate whether the candidates felt safer after George Bush’s efforts in the Middle East and the deposing of Saddam Hussein. No one answered. They should have said ‘not no, but hell no’. That whole scenario fostered the growth of radi-
Sponsored
cal Islamism much as Nazism grew on the back of a weakened Eastern Europe with no single leadership – the void quickly taken by Hitler.
Marco Rubio seems to have a broader grip on international matters.
Meanwhile, Hillary Clinton continues to wriggle in and out of potentially disastrous scandals – it’s discomforting to see how easily she shrugs of potentially nefarious, previous behavior but that’s what it takes to do well in Washington – become a chameleon and adopt whatever color reflects the current surroundings and you’ll still be around when the predators have moved on.
I wouldn’t trust her as far as I could throw this laptop – or a Cray computer for that matter! If no other message comes from this current campaign, there should be one that resounds loudly and clearly; the American public is sick and
tired of today’s political set up. I still say term limits would keep politicians on their toes but I can’t see them voting for their own demise. Simplify the tax code and give everyone an equal opportunity to contribute reasonably to fund the costs of this nation.
Just recently a report came out to confirm that the military had spent $42 million in one year on teaching and arming soldiers to train armies in the Middle East. How many graduates from that fatuous program? Five!!
This is the sort of value-formoney that’s acceptable to the current Washington cadre. Why aren’t heads rolling? I’m sure Trump would never tolerate this type of abhorrent waste. I sincerely hope that the cossetted political incumbents take to wearing hair shirts and ashes and face some reality when it’s staring them so blatantly in the face.
Across
1. New Tesla, 2 words
4. Blueprint detail briefy
7. Cadillac’s ____ entertainment system
10. “__ you kidding?”
12. British-made SUV
13. ____ Rover
14. Beatles “___ Naturally”
15. Dangerous condition for tires
16. Buick SUV
17. Bentley Continental 20. Result of a crash
Smart and brilliant
24. Computer 26. Convertible’s opposite 27. Mercedes Benz van 31. Add more options into a sales deal, e.g. 33. Type of car entry
35. Fuel-effcient Chevy 36. Compact Honda 37. ___ of the puzzle
1. Chevy sedan 2. GMC Yukon ____ 3. Paper size: Abbr. 5. _____ parking 6. Dodge ____ 7. Small coin 8. Car sales booster
9. Lamborghini model 11. Indy 500, for one 17. Pick up 18. Spectrum of radio frequencies 19. Speed, abbr.
22. Compact SUV from Subaru
23. Sweet sound from a prospect
25. They come with belts, 2 words
28. Overshadow 29. Hyundai SUV 30. VW family car
Facebook approvals
time: Abbr. 36. Passing phase
___ all in a day’s work...
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AROUND THE BLOCK
an eight-lift mechanical shop, five-lane detail shop, two paint booth body shop, and a brand new condition report and imaging area – all under one roof,” Nichols said.
“We will have 80 paved acres for our customers and clients to utilize. There will be 8,190 spaces for customer parking, truck loading and inventory/storage. Our additional marshaling services facility in nearby Riverside Business Park has 22 acres paved and fenced for additional secured vehicle parking.
The new auction building will also house BSC America’s corporate offices and Bel Air Auto Auction’s administrative offices and regional staff, said Michelle Nichols Neff, vice president.
Event Features SUV Giveaway
Stevinson Automotive Group held its Annual Car Giveaway on Aug. 13 in conjunction with the Corn Roast Sale at Dealers Auto Auction of the Rockies.
This year Stevinson Automotive Group gave away a 2001 Lexus RX 300 in a drawing. Buyers of vehicles from Stevinson Automotive Group had seven weeks to qualify.
DAA of the Rockies drew the names of five customers, each of whom picked a box in hopes that the one chosen contained the key that would start the vehicle. Seyer Safi with Nations Auto IV was the lucky winner and the first name drawn.
R. Charles Nichols, BSC America’s president, estimates the construction will take approximately 15 months to the grand opening, and he is enthusiastic about the new auction’s many attributes.
“Our second building will house
BSC America, the parent company of Bel Air Auto Auction, Inc. and Tallahassee Auto Auction, held a groundbreaking for Bel Air Auto Auction’s new facility in Riverside, Md., on Sept. 16. When completed, it will have a 75,000-square-foot, 10-lane auction facility accompanied by a 35,000-square-foot mechanical and body shop.
The new facility will be able to accommodate continued growth and will better serve our customers’ needs, added Raymond C. Nichols, BSC America chairman.
“This was the first year that the winner was the first person drawn,” said Alex Zyla, marketing manager. “Stevinson Automotive Group has been great to partner with for this event, and our customers look forward to it every year.”
We invite news items and top-quality photos from our readers to be considered for “Around the Block.” Please include the name of a contact person and a telephone number. Send items and photos to: Jeffrey Bellant. Mail: Used Car News, 24114 Harper Ave., St. Clair Shores, MI 48080. Fax: (586) 772-9400 e-mail: jeff@usedcarnews.com
DIG IT: Auction staff and local officials celebrate the groundbreaking of a new facility at Bel Air Auto Auction in Riverside, Md.
