Used Car News 12/2/13

December 2, 2013

Dealership Invests in Cars, Customers

Cars Cost Most Teens Too Much Money

Driving-Tests.org launched a special investigation into the real costs of car ownership for teenage drivers.

The total estimated cost for a teen to own and maintain a car can be as high as $581 per month.

Site Finds East Coast Underprices Cars

Website iSeeCars released a list of the top U.S. cities that offered the most underpriced cars for sale.

The online firm found that New York City had two times the cars at least five percent below iSeeCars’ estimated market value than Los Angeles. Eight of the top 10 best cities for used car deals were on the East Coast..

More Borrowers Fall Behind on Auto Loans

Transunion reports that he auto loan delinquency rate increased to 1.04 percent in the third quarter, up on both a quarterly and yearly basis.

By Ted Craig

A New Mexico dealer has big plans for growing his business and reinventing the traditional buy-here, pay-here model.

Albuquerque-based Recarnation ofers in-house financing to its customers, but the focus is on providing

hassle-free transportation.

Other dealers have told Recarnation President Marc Powell his store is “over improving” its cars. Powell said he spends an average of $2,500 reconditioning each unit.

Recarnation recently added an 18,000-square-foot garage for what it advertises

as a life-extend process.

The store also ofers rentals and title loans to help its customers get through unexpected events.

This is a long way from the operation’s beginnings, when it sold on price.

In fact, the store’s original name in 1999 was The $5,000 Car Store.

The average price today is $9,500, so a new name was needed.

Recarnation fits the kind of forward-thinking approach Powell said he wants his store known for.

Another example of this diferent approach comes in having non-commission

Continued on page 7

Used Car Prices Set to Fall as Supply Increases

Used car prices continue to soften.

Edmunds.com reports that the average used car sold by franchise dealers in the third quarter of 2013 was $15,617. The average price was 2.8 percent lower than in the previous quarter, and 0.9 percent lower than in the third quarter of 2012.

The last time used car prices ran so low was in the third quarter of 2009, when the average car sold at a franchise dealership was $14,808, Edmunds reports.

Lower retail prices have yet to reflect themselves at auction. Although wholesale prices are lower, they remain at historically high levels.

Manheim chief economist Tom Webb said wholesale prices were moderately higher in the first 15 days of November than in October, when adjusted for mix, mileage and seasonality.

Tom Kontos, ADESA’s executive vice president of industry analysis, said wholesale prices will continue softening despite recent strength at auction.

That is due to increased supply of used vehicles.

Kontos said prices today are being supported in part by a reluctance of some commercial consignors to accept lower prices.

“They’ve gotten a little spoiled,” he said.

Chrysler Recalls Rams for Rods; Tesla Resists Action

DETROIT (AP) — Chrysler is recalling about 1.2 million Ram trucks to fix front-end problems that could lead to steering troubles.

The company announced three recalls on Friday. It wants to inspect the trucks and says only 453,000 will likely need repairs.

Chrysler said Friday in a statement that it knows of six crashes and two injuries involving the 2008 to 2012 Ram 2500 and 3500 trucks that are being recalled, and one crash with no injuries from the other recalled models.

The trucks are being recalled because tie-rod ends in the steering system may have been installed improperly, which Chrysler says stemmed from technicians misinterpreting instructions. Those tie-rods could be out of alignment, which Chrysler says can lead to steering failures.

The company has since updated the instructions and the parts involved.

The first case covers 842,400 Ram 2500 and 3500 trucks from 2003 through

2008. Chrysler says 116,000 were repaired with tie-rods in the steering system that could be out of alignment.

The other two involve trucks with tie-rod assemblies that were replaced in previous recalls. They cover 294,000 Ram 2500 and 3500 trucks from the 2008 through 2012 model years, and 2008 Ram 1500 fourby-four mega cabs. Also included are 43,000 Ram 4500 and 5500 four-byfour chassis cabs from 2008 through 2012.

Customers will be notified by letter in December, and work could begin in January, the company said. Owners of Ram 4500 and 5500 models can take their trucks to dealers for interim repairs because parts may not be available until late next year, the statement said. The interim service would involve realignment of the front ends.

Chrysler said about 968,000 of the afected trucks are in the U.S., with another 157,000 in Canada, 37,100 in Mexico and 18,000 from other countries.

In other recall news, Tesla

Congratulations Recarnation

2013 Dealer of the Year*

“Without Spartan Financial Partners support, this award would not have been possible.

We are deeply grateful for your patience, support and the monthly reviews that have dramatically improved many of our processes.

Your program has assisted us in understanding and striving for best practices, especially in terms of compliance and performance measurement.

We look forward to learning and growing with you.”

- Marc Powell President Recarnation Albuquerque, NM

Motors CEO Elon Musk says the company “definitely” won’t recall its Model S electric car despite three vehicle fires this fall.

“The headlines are extremely misleading. If fire risk is your concern, you would have a great deal of difculty being in any better car than the Model S,” Musk said.

There is one fire for every 1,300 gas-powered cars on U.S. roads, and for the Mod-

el S, that’s closer to one in 8,000, Musk said during an interview at The New York Times’ DealBook conference. He underscored that none of the drivers in the three cases was injured.

“There’s definitely not going to be a recall. There’s no reason for a recall, I believe,” he said.

Musk, who described himself as “somewhat of a perfectionist,” said Tesla would recall the Model S immedi-

ately if it thought the car had a safety problem. Ultimately, that decision might not be left to Tesla. The government could decide to recommend a recall of the Model S, and could take the company to court if it refuses. The National Highway Trafc Safety Administration said that it’s in contact with Tesla and authorities in Tennessee to decide whether it needs to take further action.

NEWS BRIEFS

World Omni Retains Strong Rating

Standard & Poor’s Ratings Services recently reafrmed its Strong rating of World Omni Financial Corp./CenterOne Financial Services LLC, which has maintained this status since 2004. This represents the highest ranking possible for a consumer finance, automobile loan and lease servicer. World Omni/CenterOne remains the only consumer finance, automobile loan and lease servicer in the nation to achieve this distinction.

According to S&P’s report, the overall ranking was reafrmed based on the company’s experienced management team, robust internal controls and risk management, training programs, policies and procedures, demonstrated default management and asset management expertise, high level of automation, efective use of technology, and execution of strategic business initiatives.

CFPB Partners with Another City

The Consumer Financial Protection Bureau (CFPB) and the City of Columbus, Ohio, announced a partnership to connect consumers with the CFPB to ask questions and submit complaints about financial products and services.

Columbus consumers can now dial the Mayor’s Constituent Service hotline at 311 to be connected

with the Bureau.

In Columbus, the phone number 311 is a non-emergency line connecting residents to city services. City representatives are available weekdays from 6 a.m. to 7 p.m. to respond to service requests and issues.

Columbus residents who call the Mayor’s hotline with a question or complaint about consumer financial products or services will be transferred directly to the Bureau, which can answer questions and accept complaints.

Experian Offers AutoCount to NIADA Members

Experian Automotive has teamed with the National Independent Automobile Dealers Association to provide its members with access to AutoCount Market Reports.

AutoCount Market Reports are designed to provide dealers with a 360-degree view of the vehicle landscape, including the competition, dealership performance and vehicle sales. The reports will provide NIADA members with data within a

20-mile radius around their county or regional market and give them insight into vehicle sales by make and model, top-selling vehicles by volume and local dealership market share.

Additionally, dealers can view a lender summary that provides lender market share in the dealer’s specified target radius.

CarMax Moves into St. Louis

CarMax Inc. ofcially opened its first store in St. Louis and also celebrated a second store coming soon to the area. The first store, located at 6201 South Lindbergh Blvd., is now

open, and the St. Peters store located at 4990 North Service Road will open Dec. 4. Each will stock more than 250 used vehicles.

Local dignitaries and CarMax associates attended a grand opening event, whichincluded a “Road Rally” for charity featuring local television personalities competing in contests, including a game of driving skill. CarMax donated $1,000 to each participant’s charity, and the winner’s charity received an additional $1,000.

The CarMax Foundation provided $10,000 grants to both the Boys & Girls Clubs of Greater St. Louis and Youth in Need.

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CAR NEWS (ISSN 1555-7413) is published at 24114 Harper, St. Clair Shores, MI 48080

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Editorial: Ted Craig, Managing Editor Jefrey Bellant, Staf Writer

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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. Used Car News assumes no guarantees or liabilities concerning the accuracy of any advertisements. All Rights Reserved. Reproduction in any form is prohibited without the written consent of the publisher.

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Toyota Still Shines in Resale Awards While GM Improves

Two leading value guides released their picks for the vehicles that will have the highest resale value.

Kelley Blue Book announced its annual Best Resale Value Awards, recognizing vehicles for their projected retained value through the initial five-year ownership period.

Toyota and Lexus earned top honors for best brand and best luxury brand, and each of those top brands had six segment winners from a total of 22 diferent segments.

Honda earned three segment awards, while Chevrolet captured two segment awards and placed an impressive three vehicles in the overall top 10 list.

Kelley Blue Book’s Best Resale Value Awards are in its 12th year and are based on projections from the Kelley Blue Book Ofcial Residual Value Guide.

Vehicles that earn the highest five-year residual values, expressed as a percentage of their original Manufacturer’s Suggested Retail Price (MSRP), are

selected for these awards. Low-volume vehicles and vehicles with an MSRP of more than $60,000 are excluded from award consideration, except in the luxury and high-performance categories.

Meanwhile, ALG announced the winners of its 14th annual Residual Value Awards, with MercedesBenz and Honda receiving top honors, for Premium Brand and Mainstream Brand respectively.

ALG’s Residual Value Awards (RVA) also honor vehicles in 24 segments that are forecast to retain the highest percentage of their Manufacturer’s Suggested Retail Price (MSRP) after a three-year period. Award recipients are chosen after evaluation of vehicle criteria including segment competition, historical vehicle performance and industry trends.

Toyota walked away with the most hardware, earning eight awards, ranging from the Prius c to the Land Cruiser.

Continued on next page

Kelley Blue Book Best Resale

Award Winners

Audi and Honda tied for the second-most segment honors, with three each.

“Toyota, Audi and Honda captured the most segment honors due to the consistent high value of all their products,” said Larry Dominique, president of ALG.

“Honda was named top Mainstream Brand due to their prudent use of incentives – $1,000 lower than the mainstream average – and low rental fleet penetration. These factors help maintain vehicle value, which tremendously benefits consumers.”

Among the segment winners, the Mazda3 won the hotly contested compact segment, knocking of the Hyundai Elantra, which had won that category three years in a row, and besting the Honda Civic and redesigned Toyota Corolla.

– Continued from prior page

“Trucks historically have lower residual value due to the work and abuse they endure, so manufacturers that have sold a high volume of trucks have been adversely afected in previous brand rankings,” said Eric Lyman, vice president of content and partner development at ALG.

“This new index is a better way to equally measure brands against each other, regardless of the segments in which they compete.”

The impact of the new methodology is demonstrated by the uptick in the 2014 residual positioning of the GMC and Toyota brands, while Buick experienced a decline.

The ascension of Mercedes-Benz to the top spot among premium brands snaps a seven-year streak by Japanese manufacturers, while Honda is the highest mainstream brand for the second straight year.

Among Premium vehicles, only Audi received multiple segment awards.

ALG’s RVA brand awards introduce a new methodology this year, the Residual Value Brand Index, which ensures that brands with portfolios heavily weighted on low-residual segments, such as larger trucks and SUVs, are not at a disadvantage.

AUTO AUCTION 11909 US Hwy. 6 • Waverly, NE 68462 (402) 475-5500 • www.lincolnautoauction.com

GSA, New Car Trades, Financial Institutions, Banks and Repo/Fleet Companies Sale: Wednesday, 10 a.m.

PORT CITY AUTO AUCTION PO BOX 220 • Route 197, Richmond, ME 04357 (207) 737-4193 • www.acadia-auctions.com

ARI, TD Bank, Credit Unions, AutoIMS, Dealer Trades Sale: Thursday, 9:30 5 Lanes 400+cars; Live Sale & Simulcast all lanes

DEALERS AUTO AUCTION OF IDAHO 3323 Port St. • Nampa, ID 83687 (208) 463-8250 • www.daaofidaho.com

GSA, Westlake Financial, ARI, Emkay, Online 24/7 with SmartAuction, Openlane, and OVE SALE: Wednesday, 9:30 a.m. (Live & Simulcast) INOPERABLE SALE: Monthly

GREATER TYLER AUTO AUCTION 11654 State Hwy 64W • Tyler, TX 75704 (903) 597-2800 • www.greatertyleraa.com • Auctioneer #8083

ARI, SRG, New Car Units, Banks, and Credit Unions SALE: Tuesday, 5 p.m.

VALUE AUTO AUCTION, LLC

3776 State Route 93 Northeast • Crooksville, OH 43731 (740) 982-3030 • www.valueautoauction.com

SALE: Thursday, 11 a.m. REPOS: Thursday, 10:30 a.m. Dealer Cash Drawings Weekly

NORTH EAST PENNSYLVANIA AUTO AUCTION 860 North Keyser Avenue • Scranton, PA 18504 (570) 207-2277 • www.nepautoauction.com 700-900 GSA Vehicles Weekly, Key Bank, FNB Corp/Regency, PAR North America

SALE:

Technology Increases Satisfaction

Sales satisfaction among newvehicle buyers is 52 points higher when their salesperson uses a tablet device than when their salesperson does not use a tablet during the sales process (844 vs. 792, respectively, on a 1,000-point scale), according to the J.D. Power 2013 U.S. Sales Satisfaction Index (SSI) Study.

“The study finds that tablets are proving to be versatile and effective tools that may help maintain consistency in the sales process, while providing easily accessible and dynamic product information,” said Chris Sutton, senior director of the automotive retail practice at J.D. Power. “Although tablet usage has increased from a year ago, dealers are still missing an opportunity to improve their sales experience by providing shoppers with sales information on a single platform that allows them to easily browse options and features with immediate commentary from their salesperson.”

Satisfaction is highest among newvehicle buyers who are presented with pricing/payment options on a computer screen or tablet (833), followed by a computer printout (820); verbal price quotes (792); and hand-written figures (780).

Tablet usage remains relatively limited, with only 10 percent of

Recarnation

dealership salespeople using these devices, which is up from 7 percent in 2012.

New-vehicle buyers most often indicate that salespeople use these devices to capture their personal information (51 percent); demonstrate vehicle features (41 percent); and display price or payment information (38 percent).

During the shopping process, consumers most often use their mobile devices at the dealership to access vehicle pricing information (72 percent); model information (52 percent); and search inventory (38 percent).

Rankings are based on the experiences of both buyers and rejecters. Overall sales satisfaction improves 9 points year over year to 673 in 2013.

Jaguar ranks highest among luxury brands in satisfaction with the new-vehicle buying experience with a score of 740. Among luxury brands, Volvo improves the most (+30 Index points) and moves up in the rankings to 9th in 2013 from 11th in 2012.

For a fourth consecutive year, Mini ranks highest among mass market brands, with a score of 718, a 6-point increase from 2012. Among mass market brands, Kia improves the most (33 index points) and ranks 11th in 2013, up from 16th in 2012.

– continued from page 1

transportation consultants, rather than salespeople.

These consultants handle the underwriting and the collections for each deal. Powell said this means careful decisions upfront and a quick response if customers fall behind.

“I want my folks to focus on putting people in the right car at the right price,” Powell said.

This more customer-friendly approach comes with a practical busi-

ness concern.

Powell sees thee biggest challenge for buy-here, pay-here coming from new-car stores that ofer subprime financing. The best response is selling on service, he said.

Others are seeing the result of Recarnation’s focus.

The store was named Quality Dealer of the Year by the New Mexico Independent Automobile Dealers Association and dealer of the year by Spartan Financial.

PAGE 8 - COLLECTIONS

Challenges Remain in Buy-Here, Pay-Here Collections

By Jeffrey Bellant

NEW ORLEANS – Collec-

tions remain critical in the buy-here, pay-here business and dealers face new challenges in today’s market.

Some discussions at the National Alliance of BuyHere, Pay-Here Dealers East Coast Conference focused on benchmarks for dealers and legal issues.

Consultant Gene Daughtry discussed benchmark trends from 20 group members.

In 2013, the percentage of accounts current for his 20 group’s top dealers is 77.5 percent. That’s virtually unchanged from a year ago.

The percentage of a benchmark dealer’s portfolio that is past due more than 10 days is under 11 percent, down from 2012.

“Our collectors are still doing a pretty good job of collecting the money,” Daughtry said.

But collectors’ jobs remain challenging, even for benchmark dealers.

Daughtry said total past

due accounts per collector are 95 in 2013, up from 83 in 2012. Total past due receivables per collector jumped to $650,344 in 2013, compared to $573,306.

In the area of charge-ofs, the news is worse.

For Daughtry’s benchmark 20 group dealers, the charge-ofs – as a percentage of the portfolio (annualized) – jumped to 17 percent in 2013, compared to 12.7 percent in 2012.

“The reason for that is dealers are getting a lot of voluntary repossessions,” he said.

Daughtry said one problem is that dealers seem to be getting away from personal relationships, whether it’s due to technology or other factors. But he said personal relationships are basic “blocking and tackling” in the business.

“No matter how much technology you’re using, there still has to be that personal relationship,” Daughtry said.

Continued on page 13

NEXT ISSUE: YEAR IN REVIEW

Dealer Pays for Phony Fee

The New York Attorney General has reached a settlement with Westchester auto dealer N.R. Automotive Inc., d/b/a New Rochelle Toyota, which was adding a $499 “administrative fee” to the purchase price of used vehicles.

No extra services or benefits were provided to customers in return for payment of the fee.

New Rochelle Toyota will repay a total of $86,826 to 174 customers who were charged the bogus administrative fee. The dealership has also agreed to reform its advertising practices and to pay $50,000 in

costs and penalties to the state. Between Jan. 1, 2012, and July 31, 2012, New Rochelle Toyota added a $499 “administrative fee” to the purchase price of used vehicles. The fee was pre-printed on the sales agreement used by the dealership and was located in the price column, near other pre-printed fees and taxes that consumers are required to pay. Thus, it appeared to consumers that the “administrative fee” was mandatory and non-negotiable. However, the “administrative fee” was simply tacked onto the price.

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Manheim Plans New Auction Group

Manheim announced the creation of Go Auto Exchange, LLC - a new joint venture with buy-here, payhere chain DriveTime.

made him a perfect fit to lead this exciting new business,” said Joe Luppino, Manheim’s chief financial ofcer. “Go Auto Exchange will benefit from Tim’s deep operational experience in running wholesale auctions and from DriveTime’s inventory and deep knowledge of this growing market segment.”

Go Auto Exchange and its locations will operate independently from Manheim and DriveTime locations.

This partnership creates a separate, independent wholesale auction company focused on independent dealers and the low-end vehicle segment. Go Auto Exchange will establish locations this year in Atlanta, Ga. and Phoenix, Ariz., and plans to expand to other key markets in 2014.

Tim Janego will serve as president of Go Auto Exchange. Janego, who most recently served as Manheim Regional Vice President for the East Region, brings broad experience and deep expertise in the wholesale auction industry.

He will work closely with teams from Manheim and DriveTime to have the new locations open by the end of the year.

“Tim’s extensive background in the wholesale auction industry

“As Manheim’s business today focuses on serving many diferent customers, Go Auto Exchange’s focus will be exclusively on the low-end vehicle segment in local markets,” Janego said. “Our highly-targeted approach allows us to concentrate solely on growing this segment, while allowing us to aggressively compete.”

The company will be headquartered in Atlanta and plans to add locations in early 2014.

Go Auto Exchange plans to hire a combination of auction pros and industry experts to run its locations. In addition, the company will partner with NextGear Capital to ofer vehicle financing options to independent dealers.

City Seizes Store for Road to Nowhere

By Sheila McGrath

Three years after the city of Santa Rosa, Calif., forced him of his property, used-car dealer George Dib is still searching for a new home for his business.

And after the city denied a rezoning request last month for a property that seemed like an ideal new site, he’ll be searching a little longer.

George Dib and his family had run Dib’s Auto Sales at the corner of Santa Rosa Avenue and Kawana Springs Road since 1989, at what their attorney Glenn Smith called “probably the best location in town.”

But in 2010, when plans were made to widen Santa Rosa Avenue, the city took Dib’s property in a condemnation action and told him he would have to relocate.

To date, the road-widening project has yet to begin.

“We all know that not a shovelful of dirt has been turned over yet on Santa Rosa Avenue,” Smith told the city’s Planning Commission at last month’s hearing.

“That lot where George was so happy is just sitting there vacant.

“The city doesn’t have the money or the infrastructure to do that project,” Smith said.

The Dibs did receive compensation for the lot, along with assurances they would be eligible for tax mitigation measures when they relocated.

But after the passage of three years, those tax provisions are about to expire.

Since their lot was taken, the Dibs have been renting a lot for their business. George’s wife, Karen Jurling Dib, said they have twice come close to buying a new site, but both purchases fell through.

“It’s not like we haven’t been trying,” she said.

Early this year, George Dib found a lot he wanted to buy about two miles from downtown Santa Rosa. The location was home to an RV dealership owned by Bob Montgomery, who wanted to sell it and retire.

The property had been an RV dealership since 1987, but prior to that, had been used for auto sales for decades.

However, Santa Rosa’s Planning Commission at last month’s meeting denied the zoning clearance the Dibs needed to open their business there.

They ruled the site was no longer zoned for car sales, and that auto sales would be a more intense use of the land than RV sales.

In 2007, the city had adopted a new plan for that stretch of Santa Rosa Avenue, which lies in the Burbank Garden Preservation District. The plan aimed for a pedestrianoriented environment with neighborhood retailers.

Continued on page 14

Collections – Continued from page 8

Even though sales are down, portfolios are up slightly, he added. One reason may be that cash-indeal amounts are up. With the challenges on the money

its dealers from charging interest on those payments.

Unfortunately, dealers get confused because the Federal Reserve allows dealers a couple of difer-

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Auction Raises Money to Help Animals in Need

For the fourth year in a row, Louisiana’s 1st Choice Auto Auction partnered with customers and vendors to host a charity golf tournament.

The foremost animal welfare agency in Louisiana, the LA/SPCA, was the recipient of the fundraising efort.

Seventy-six golfers teed of Oct. 4 at the newly renovated Lakewood Golf Course in New Orleans. The auction served jambalaya and gave away goody bags and door prizes.

Auction owner John Poteet said he is thrilled at the success of this years’ tournament.

“We raised $16,500 for the LA/ SPCA, which will greatly enhance their operation and fulfill their mission to improve the quality of life of all the animals they encounter,” Poteet said.

He expressed gratitude to all the generous event sponsors and participants, especially “our bank, Whitney Bank, which has been our corporate sponsor for the past two golf tournaments.”

Dean Howard, LA/SPCA Development Director said, “We continue to be astonished by the eforts of our supporters. Louisiana’s 1st Choice has not only stepped up to sponsor some of our major fundraising events, but they’ve taken the initia-

tive to even create their own fundraiser.”

Howard said the annual golf tournament has grown so much that its contribution this year will enable the LA/SPCA to create two rooms in its Phase II adoption and clinic facilities currently under construction.

“This is just one example of our community outreach throughout the year,” marketing manager Georgianne Poteet said.

Since opening, the auction has raised or donated almost $200,000 in cash and goods to various charitable organizations.

The auction recently raised $2,672 during Breast Cancer Awareness month for the Mary Bird Perkins Cancer Center in Hammond, La.

Employees wore special “I wear pink for the cure” shirts on sale days throughout the month. Bake sales were held, bracelets and pins were sold, and dealers donaed money.

City Seizes Store – Continued from page 12

Robert Ruiz, chairman of the Burbank Gardens Neighborhood Association, said his group has been working on the plan with the city for years.

“I have some sympathy for the family, but it would be nice if at some point we can begin to implement that

plan, and that plan begins with the first step forward,” he said City Planner Clare Hartman conceded at the hearing that it could be 20 or even 50 years before that transformation is complete.

RETAIL MARKETS

MINNESOTA

Paul Sonnenberg, owner, Marlo Motors, Perham, Minn.:

“We’ve been in business since 1964. We have one location.

“I average about 50 to 60 (units in inventory).

“On average, we’re selling about 25 per month.

“We mostly do just straight retail sales. We’ll do a little bit of buy-here, pay-here.

“We mainly get our vehicles from the auctions and direct from lease companies.

“The average retail price is between $10,000 and $15,000.

“I would say prices are up from this time last year.

“I would say that a majority of our inventory is domestic.

“We carry more cars and crossovers than trucks.

“Our average model year is between 2010 and 2013.

“The mileage on our vehicles can be anywhere from 1,000 miles to 100,000.

“But, on average, it’s

between 20,000 and 30,000 miles.

“The average cost of reconditioning is between $200 and $300.

“That’s probably a little bit higher than this time last year.

“We have our own service department, so we do outside service work.

“That business has actually been a lot better.

“People are trying to fix their old cars instead of trading them in.

“We use the national websites like AutoTrader, Cars.com, Carsoup.com and KeepItlocal.com. They do work.

“I also get leads through my website.

“But the expense of advertising is another thing that’s gone up drastically.

“We are in the process of looking to change things up in advertising. But we haven’t decided how we’re going to do that yet.

“We recently sold a 2013 Chrysler Town & Country. It had 18,000 miles on it.

“We sold it for $23,000.”

TEXAS

Greg Zak, owner, Dixon Motors, Houston:

“I’ve been in business on the retail side since 1998. Prior to that, I worked as a secondary finance source.

“I’m a buy-here, payhere dealer. I have one location.

“We keep about 75 units in the lot on average.

“At this time of the year, I stock up for tax time. So I probably have about 120 or so.

“My inventory this year, compared to last year prior to tax time, is down slightly. Last tax season, it wasn’t quite as good (as past years). We were slightly overstocked last year.

“On average, we sell around 35 to 40 per month. Sales are flat on a year-over-year basis.

“I get about 50-60 percent of my vehicles from the auction. I get about 10 to 15 percent from wholesalers. The rest come from repos.

“The number of repossessions has gone up this year. I would normally

get four voluntary repos a year. Now, I’m getting five or six a month.

“Those are all because of the subprime business. (We’ll have a customer) who decides he doesn’t want the car anymore. But we’ll work with him and try to get a payment. (When that fails), we’ll go out to pick up the vehicle and we’ll see a new car in his driveway.

“Our average retail price is probably $16,000 to $17,000. It’s about the same as last year. I sell a lot of trucks and SUVs and I have a higher actual cash value than most. My ACV is around $10,500.

“We carry about 50 percent trucks and SUVs.

“The average model year is between two and five years old.

“On mileage, we’ll generally try to get 80,000 and back. For cars, it will be around 40,000 to 60,000.

“We’re about 75 percent to 80 percent domestic. On the import side, we were selling a lot of Nissan Altimas and stuff like that. Demand had cooled on

Compiled by Jeffrey Bellant

those units, but now we’re selling more Volkswagens, Hyundais and even more Toyotas and Hondas.

“I’m putting too much into reconditioning. Even with a nicer car, we’ll spend $1,000 on reconditioning. On the trucks and SUVs, you end up replacing a set of tires. If you do that, that’s $400 right there.

“We’ve been working on (our recon costs). We have dropped it some. My goal is to drop it $300 per vehicle.

“We don’t have our own service shop.

“We market to our existing customer base. Other than that, we just market on the Internet (which is our website). We’re just trying to drive traffic to our website.

“In this market, Houston, we’ve got more dealers in our city than most states have. We have 2,500 dealers in the city alone.

“We recently sold a 2007 GMC Sierra truck. It had right around 100,000 miles. We sold it for $19,500.”

WHOLESALE MARKETS

NEW YORK

Scott Prankie, owner/ general manager, Rochester-Syracuse Auto Auction, Waterloo, N.Y.:

“We’ve been here since 1992.

“We have four lanes and we’re running all four.

“We’re running 350 to 400 units per week.

“It’s been fairly strong as of late (mid-November).

“I think demand is up a little bit.

“Sales percentages have been right around 60 percent.

“That’s pretty even with this time last year.

“Dealer consignment is probably 95 percent of our volume. That’s the same as last year.

“Our fleet/lease and repossessions have been strong.

“We’re getting cars from ARI, Wheels and Credit Acceptance Corp.

“We get a good mix of everything.

“We’ll get approximately 300 dealers in the lanes.

“That’s about the same as this time last year.

“We draw them from lo-

cal area: Rochester, Syracuse and south.

“Prices had eased up, but during (November) they surged again.

“Dealers are just hoping the retail market picks up so it’s a little better for them.

“The demand is still there.

“Dealers are still looking for cars, so it’s not a bad problem (for the auction).

“The online bidding has picked up.

“We use AuctionAccess and Auction Pipeline.

“It’s helping both (sides): the sellers and the buyers.

“We’ll have some special sales and promotions during the year.

“We always do a Christmas special where we give out presents.

“The average price (for dealer consignment) is about $4,500.

“Our fleet average is around $7,000 to $7,500.

“For tax season, a lot of dealers stock up now and bring them back to sell.

“Trucks and four-wheel drives are starting to pick up now.

“The year is going to end on a positive note.”

OREGON

Jerry Hinton, general manager, Brasher’s Portland Auto Auction, Portland, Ore.:

“We have eight available lanes and we’re running six.

“Volumes with dealer inventory, as it always is in the fourth quarter, are up.

“Conversion rates on dealer inventory are solid. It’s 56 percent – of the charts for the fourth quarter dealer inventory.

“Our conversion rate with our institutional units comes in at about 80 percent.

“We’re running about 900 to 1,100 per week. I think we’re up a little bit, about 10 percent, from this time last year.

“In terms of institutional volumes, we’ve seen some slight adjustment upward.

“We’ve opened up some of our territories with some of our existing accounts.

“We’ve also garnered some additional smaller accounts and we haven’t lost any, so that’s all good.

Compiled by Jeffrey Bellant

“So we’ve had some modest institutional increases.

“As far as dealer consignment goes, there have been more trades, because of the nature of the economy (improving).

“About 70 percent of our sale is dealer inventory.

The rest is bank finance and fleet/lease.

“During our regular sale, we draw about 550 dealers in the lanes and another 100 online.

“Even though I’ve heard nationally that prices are supposed to be dropping, I haven’t seen that.

“The one thing I do differently here is that I have floats on all of the cars every week.

“So if you’re authorized to write a check – which is 98 percent of our dealers –this puts small increments of working capital in each dealer’s hands to help buoy the market.

“Our float helps maintain and keep our market stable.

“We have traditional flooring, of course, with people like NextGear.

“But I put 28- to 60day floats on every single

car to almost every single dealer, which is $20,000 to $100,000.

“It also allows them to do reconditioning at our shops and add that to the flooring.

“Online, we use the Auction Pipeline. It’s definitely broadened the scope of the market for us.

“It’s not just institutional cars, either. They will bid on dealer cars, as well.

“(Online bidding) definitely makes a diference with certain accounts, like Wells Fargo, Honda and GSA, whose vehicles are later model units.

“The average price overall in the lanes is $7,500.

“I think it’s a little stronger than it was a year ago.

“Trucks have been strong since June. This is the time of the year for trucks anyway, but with gas prices down, it makes them even more popular.

“We (normally do) monthly GSA sales, but in October and November we had them every other week, just because their volumes hit at that time.

“We averaged 200 (GSA units) per sale.

Manheim Unveils Service Center

Manheim recently announced the opening of its new California Service Center in Riverside, Calif. The 89,000-square-foot multi-use building houses a Volkswagen Credit (VCI)/Audi Financial Services (AFS) Technical Operations Center, Manheim’s Employee Service Center West and other sales and support services for customers in the Southern California market.

“Our goal at Manheim is to continue to invest in solutions that benefit our customers and services that support our employees,” said Janet Barnard, executive vice president and chief operating ofcer for Manheim. “The California Service Center is a great example of that.”

The Manheim California Service Center ofers state-of-the-art certification and inspection services, as well as vehicle receiving support for Southern California market customers. It occupies 27 acres of 160 total acres that it shares with Manheim Riverside. The new VCI /AFS facility is eight times the size of the space previously occupied at Manheim Riverside. It has more than 16,000-square-feet of dedicated space for VCI/AFS operations.

Auction Celebrates 11th Anniversary

Dealers Auto Auction of the Southwest celebrated a month-long anniversary event in October. The auction also introduced the latest in a series of innovative services.

“We are grateful for the role that our customers have played in our success, so we have planned our anniversary celebration as a way to acknowledge their loyalty and support,” said Jim DesRochers, auction vice president.

DAASW has also introduced several key services. Stephanie Gingras, general manager at DAASW, said the auction continues to expand its industry-leading 360 Service with run list videos to enhance the

consignment of its dealer partners. Gingras said a couple of DAASW’s innovations include its “Mexico Ready” sale, which makes export buying simpler; and the Text Bidder Badge System, which eliminates the need to wait in line on auction day and does away with paper bidder badges.

Used Car News, 24114 Harper Ave., St. Clair Shores, MI 48080. Fax: (586) 772-9400 e-mail: jef@usedcarnews.com

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1The tradename “Subaru Motors Finance”

MONTHLY DEALER CONSIGNMENT AVERAGES

COS T OF INCENTIVES

OTHER VOICES

(Director Richard Cordray speaking at the Consumer Finance Proection Bureau’s auto finance conference.)

We have convened interested parties to discuss what has indeed become a much-talked-about issue – discrimination that can occur in auto lending. Cars and trucks can quite literally take consumers to new opportunities.

For some consumers, however, that purchase can come at a greater cost. Some people end up paying more on their auto loans than their neighbors – with the diference being not their creditworthiness but their race or ethnicity. Such discrimination may result in millions of dollars in unjustified consumer harm every year in the auto lending industry.

At the Consumer Financial Protection Bureau, we are committed to ensuring fair and equal access to credit. In fact, it is one of our statutory responsibilities as a financial regulatory agency. Over the years, Congress has made findings and has enacted laws to identify and root out diferential treatment of Americans in the marketplace based on gender, race, national origin, and other protected characteristics. At the Bureau, we are charged with enforcing the laws relating to credit discrimination, including the Equal Credit Opportunity Act.

We also know all too well that communities of color were hit especially hard by the recent financial meltdown. While nearly all Americans experienced declines in their household wealth, African Americans and Hispanics felt the steepest drops. They need and deserve to be treated fairly when seeking access to credit.

Last year, we issued a bulletin providing guidance that the Bureau would consider evidence of disparate impact as one method of proving discrimination under federal fair lending law.

and are unaware of lender incentives, not efectively disclosed, for intermediaries to provide higher rates than they actually qualify for. These incentives can result in African American, Asian, and Hispanic borrowers paying more to access credit than similarly situated nonminority borrowers. We have seen this dynamic broadly at work in the mortgage market, and a similar dynamic exists also for auto loans.

So what is our role in all of this?

Earlier this year, we issued another bulletin to clarify the boundaries of our authority over auto lending and to provide guidance to indirect auto lenders about compliance with the law. Congress has spoken very clearly and precisely in this area. The law specifies that we generally do not have jurisdiction over auto dealers and their practices, but we do have jurisdiction over the largest auto lenders and their lending programs.

We have sought carefully to observe and follow the exact contours of the regime laid down by Congress. And we have noted that we have a clear duty and thus a responsibility to address any discriminatory practices that result from the loan programs established by auto lenders, whether they are lending directly to consumers or instead are lending indirectly through intermediaries. The legal responsibility is the same. And again, from the standpoint of the individual consumer, the result is the same.

We know that, like us, many lenders are committed to creating a fair marketplace for all consumers by fighting practices that result in unlawful discrimination. Each lender bears the responsibility for policing its own lending programs to avoid such practices and to achieve that result.

There was nothing new in what we said at that time. In fact, we were simply making the statement that as a new federal agency we too would be joining with our sister regulatory agencies and the Department of Justice in acknowledging and reaffirming the existing law of the land. From the perspective of a consumer disadvantaged by such practices, it makes no practical diference whether the lender consciously intended to discriminate against them – the outcome, and the harm, is the very same.

We firmly believe that every consumer should have equal access to credit and an equal chance to pursue opportunities.

When consumers sit down at the table to discuss their prospects for a loan, they are often unaware of the options actually available to them

And it must be said that lenders who turn a blind eye and allow these practices to continue are undermining all those who are making conscious eforts to faithfully follow the law.

So in the bulletin we issued earlier this year, we reminded lenders ofering auto loans through dealerships that they remain accountable for complying with fair lending laws in their indirect lending programs. Again, none of this should have come as news to auto lenders, for whom these laws had already been in place for many years and many of whom had already been through litigation on some of these very same points.

In that bulletin, we provided guidance to lenders that their mark-up policies, which allow dealers to exercise discretion over the interest rates they charge consumers and provide direct financial incentives for charging higher prices, may lead to fair lending violations.

Disconnected Jottings From Tony Moorby...

It’s interesting how air travel has changed over the years. I remember going to Spain in the sixties to a vacation on the Costa Brava with the whole family and I was dressed in a pinstriped

suit, dress shirt with a detachable collar and a formal tie and shoes shiny enough to blind the air hostesses (that’s what they were called back then).

When I came to America, nearly all my travel was business related, like most of my fellow passengers. Everyone was resplendent in their smartest finery –understated business suits for both men and women were the order of the day. People stood upright and politeness in the waiting

areas came as naturally as getting up in the morning. A gentleman wouldn’t dream of occupying a seat should a lady be standing nearby, proffering his place without a second thought.

days. I arrived early at the gate in San Diego. It was part of one of those roundels housing about six gates a short walk from security.

I managed to get a seat affording me a view of the whole area. It was like Piccadilly Circus on a Saturday night, occupied with folks from the barroom scene in Star Wars!

the cheeks and forehead, but her mouth and lips retained their original patina and looked liked a scrunched up McDonald’s bag. To round out the look, her bleach-blond hair with dark roots was gathered with a lime-green rubber band – the only thing in her outfit that matched.

Boarding an airplane was a quiet, orderly affair, observing that predetermined seat numbers required nothing more than forming a line down the jet bridge or a walk across the tarmac to the waiting staircase. People waited patiently to be seated once on board and the occasional piece of hand luggage, hoisted with ease into a voluminous overhead compartment was the precursor to a comfortable flight. What a difference nowa-

O S S W D

By Miles Mellor

The lady opposite me, middle aged and attired in a disheveled ensemble of grey sweat pants, lime green plastic clogs, an orange tee-shirt extolling the virtues of Newport Beach, along with some of the remains of her breakfast, nursed a box on her lap containing her cat. Upon seeing my inquiring glance, she pronounced that she liked cats.

I told her I was not familiar and, to raise a little humor, I asked how they taste. She was not amused and refused to engage me further. She’d “had some work done”, evidenced by tight shiny skin about

The young man next to her, naturally hunched over his iPhone, had the stance of a bird of prey, shoulders up to his ears and fingers busily pecking at the keyboard carcass.

He sported an LA Lakers long-billed cap, turned cockily to one side like one of the Bowery Boys. I guessed him to be in his late twenties as his three-day growth of beard

was quite heavy, offering an unkempt look. His ill-fitting cardigan had sleeves down to his fingers and he’d cut a hole in the cuff to accommodate his thumbs’ need to dance across the keyboard. His T-shirt was the color of war atop indigo, drainpipe jeans with holes all over, for which I’m sure he paid extra.

Red high-top sneakers formed the end of the outfit, except, between his legs lay the obligatory L.L. Bean backpack and a skateboard. A skateboard for a twentysomething?

Multiply this scene by about 300 and you get the picture. Wearing shorts, as usual, I was ready for the boarding rugby scrum.

BMW ____ B7

Lotus from 1957 8. It makes roads slippery 10. Frees up a blockage in a line

Car ad abbreviation

Saab made these type of engines 14. Seat cover, for example

Unwanted marks on a car

Brown colored

Fusion and Focus

Spring back

23. Loyal, solid 25. ___ hunch (2 words) 27. Classic luxury car 29. Haggled over

Ford’s entertainment and communication system 32. Sequoia, for example 33. Saturn model 36. Caballero was one

It may need stroking 39. They make the M12 sports car

Lotus sports-car model

Basic tenets

Acura model

Went left, e.g.

Old Legend

Indy 500 leader, in a way (2 words)

Some Dodges

Popular Toyota

It’s under the hood

Fuel ____

Wear away

Internet address 11. Important part of a suspension system (2 words)

Tech exec.

Completion

Subaru crossover

Not great, not terrible

Rusted

__-size truck 26. It might be two car or three car

Ford’s luxury brand

Forest game

Boxy Toyota product

Highway sign

One time

Milliliter, for short

Web site address

Ave. intersector

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The Talon by GoldStar GPS. Still the best-selling and best-performing GPS tracking device around.

Let’s get to the truth about The Talon GPS Tracking Device from GoldStar GPS. It’s still by far the best-performing and best-selling device in our market. But don’t take our word for it. Just take a look at the numbers.

The Facts Don’t Lie:

• 10th generation patented technology innovation

• Over 500,000 units sold in less than 1 year — more than any other device in our market

• Next to non-existent failure rate of just 0.4%

• High quality, rugged, automotive-grade engineering and design

• Water-resistant, integrated sealed cable for enhanced durability

• Resettable fuse located in-device for greater protection

• Meets & exceeds all required carrier certifcations for receiving and transmitting cellular data

No wonder Talon is the dealers’ frst choice for GPS tracking hardware. But we’re not stopping there. Stay tuned for the next-generation Talon CDMA device — with even faster speeds and bigger bandwidth.

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