Fitch Ratings expects the credit profiles of U.S. auto manufacturers and suppliers to strengthen in 2015 despite slower growth in auto sales.
Fitch’s ratings outlook is positive while the overall sector outlook is stable.
Pent-up Demand, Falling Rates Drive Subprime
Falling subprime rates and pent up demand through the recession have driven strong growth in subprime auto loans and leases, although buy-here, pay-here growth has remained relatively even, reports the Center for Financial Services Innovation and Core Innovation Capital.
Small Business Owners Grow More Confident
The NFIB Small Business Optimism Index jumped up 2 points to 98.1, just a tick lower than its historical average before the Great Recession. Expectations for business conditions six months out rose a huge 16 percentage points.
Manheim Announces President, Partnership
nard served as senior vice president and general manager for other Cox Communications regional business areas, including Northern Virginia, Middle America and Omaha.
Barnard joined Cox in
gia operations.
Cox also announced that DriveTime has selected Manheim and Go Auto Exchange as exclusive remarketing partners.
This partnership makes Manheim and Go Auto Ex-
ing wholesale inventory through its physical locations, mobile auctions and online. DriveTime operates 122 stores in 47 markets. Manheim and DriveTime have been working together for several years. This wholesale auction company focused on independent dealers and the low-end vehicle segment, and Manheim’s equity stake in Go Financial. which provides dealers with financing options via NextGear Capital.
Regulators Continue to Turn up Heat on Auto Finance
Credit Acceptance Corp. is the latest finance company to face regulatory scrutiny.
Credit Acceptance executives announced that they have received a civil investigative subpoena from the U.S. Department of Justice directing the company to produce certain documents relating to subprime automotive finance and related securitization activities.
Earlier in December, the company received a civil investigative demand from the Massachusetts attorney general relating to the origination and collection of non-prime auto loans in Massachusetts.
More state regulators are following the federal govern-
ment’s lead. Recent press accounts said the New York Department of Financial Services is probing several high profile auto creditors, including Santander, TD Bank and several captives.
The New York regulator is said to be looking at their exposure to autos financing, especially subprime financing.
American Honda Financial Corp. also recently announced it was facing charges from the Consumer Financial Protection Bureau and the Justice Department for discriminatory credit practices.
Honda Financial said the regulators are seeking monetary relief and changes to pricing practices and policies.
CarMax Experiments with Financing Vehicles
Used-car superstore chain CarMax Inc. reported improved performance at its stores in the latest quarter, which ended Nov. 30.
Total used vehicle unit sales grew 14 percent and comparable store used unit sales grew 7.4 percent versus the prior year’s third quarter. Comparable store used unit sales benefited from a combination of factors, including our sixth consecutive quarter of growth in customer trafc, as well as improved conversion.
The percentage of retail vehicles financed by thirdparty subprime providers (those who purchase financings at a discount), combined with those financed under the the CarMax Auto Finance loan origination test, declined from 17.7 percent in the third quarter of fiscal 2014 to 15.2% in this year’s third quarter.
This test program originates loans for customers who typically would be financed by third-party subprime providers. During the quarter, CAF originated $12.3 million of loans in this
test, representing 0.5 percennt of retail unit sales.
As of November 30, a total of $56.7 million of loans had been originated in this test.
CarMax executives said the test program will continue.
Wholesale vehicle unit sales grew 10 percent versus the third quarter of fiscal 2014. Wholesale unit sales primarily benefited from increased appraisal trafc and the growth of the company’s store base.
Other sales and revenues increased $17.3 million yearover-year.
Extended protection plan (EPP) revenues (which includes extended service plan and guaranteed asset protection revenues) rose $12.9 million versus the prior year’s quarter. Total gross profit increased to $446.6 million. Used vehicle gross profit rose 15.2 percent, primarily driven by the increase in total used unit sales.
Used vehicle gross profit per unit rose $23 to $2,172.
Wholesale vehicle gross profit increased 14.8 percent versus the prior year’s
quarter, driven by the combination of the increase in wholesale unit sales and an improvement in wholesale vehicle gross profit per unit, which rose $40, to $927.
Other gross profit rose 30.9 percent reflecting the improvement in other sales and revenues.
SG&A expenses increased 11.3 percent to $316.6 million. The increase primarily reflected the increase in CarMax’s store base since
NOW TIME
THE
the beginning of last year’s same quarter (representing the addition of 20 stores) and higher variable selling costs resulting from the increase in comparable store used unit sales.
SG&A per retail unit declined $52 to $2,243, as our comparable store unit sales growth generated overhead leverage.
CAF income increased 6.9 percent to $89.7 million, driven by an increase in av-
erage managed receivables, partly ofset by a lower total interest margin percentage. Average managed receivables grew 17.9 percen to $8.03 billion as CAF loan originations have continued to grow.
The total interest margin, which reflects the spread between interest and fees charged to consumers and our funding costs, declined to 6.4 percent of average managed receivables.
As one of the largest automotive remarketers in the country, we consistently ofer the right vehicles in the right places with the promise of the Santander 7 certifcation.
NEWS BRIEFS
TransUnion Buys Drivers History
TransUnion announced the acquisition of a majority interest in Drivers History, a provider of trafc violations and criminal court data.
Although it will retain its operational independence, Drivers History will be expanding its relationship with TransUnion’s insurance business unit for the immediate benefit of both organizations.
Financial terms of the deal were not disclosed.
In March, TransUnion and Drivers History entered into a strategic relationship to ofer the insurance industry a database of drivers’ moving violations and other ofenses.
AutoTrader.com Teams with DealerRater for Online Reviews
DealerRater has partnered with AutoTrader.com to bring dealership reviews to the car shopping website.
Beginning this month, DealerRater reviews and ratings will be featured on AutoTrader.com dealer profile pages.
Shoppers on AutoTrader.com will also be able to click a “Rate & Review This Dealer” button that will direct them to the “Write a Review” page on DealerRater.com.
Consumers can rate dealers on the criteria of customer service, quality of work, friendliness, price and overall experience.
Once written and submitted, the
content is reviewed and verified by DealerRater’s content integrity team before appearing online.
Dealers subscribed to DealerRater’s Certified Dealer Program as well as non-certified dealers have the ability to display their DealerRater reviews on AutoTrader.com.
DealerRater Certified Dealers receive the added benefit of a twoweek reconciliation period for negative reviews when they can communicate with unsatisfied customers before the review is published.
After the two-week reconciliation period, the review will go live on DealerRater.com and AutoTrader. com if the review has not been edited or removed by the consumer.
America’s Car-Mart Opens Store
America’s Car-Mart Inc. announced the opening of its 137th dealership.
The dealership is located in Ada, Okla.
Ada is the 25th dealership in Oklahoma.
Jessica Sizemore will manage the Ada dealership.
Chain Buys Harrisburg Auction
America’s Auto Auction has acquired Harrisburg Auto Auction in Mechanicsburg, Pa.
Lynn Weaver will continue in his role as general manager.
The addition of Harrisburg Auto Auction brings America’s Auto Auction to 11 locations.
Harrisburg Auto Auction has been owned and operated by the Hoynitski family since its founding in 1982 by Stan Hoynitski.
IAA Opens Two Facilities
Insurance Auto Auctions Inc. announced the expansion of two branches in Tulsa, Okla., and
Des Moines, Iowa.
Both locations add to IAA’s capacity to service customers in key markets.
IAA’s Tulsa facility is located at 5311 W. 46th Street S. and will now utilize 24 acres with additional expansion opportunities.
There is a fully functioning auction facility that includes a 10,000-square-foot building, and recycled asphalt was used for the top surface of the outside vehicle storage area in keeping with IAA’s environmentally responsible culture.
The Des Moines branch, located at 3277 Ute Ave. in nearby Waukee, Iowa, will now occupy 24 acres.
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Contributing Writers: Ed Fitzgerald, Jenny King, Sheila McGrath
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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.
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PAGE 20
by Myles Mellor
Dealer Takes Spot on Board
nouncement.
Stan Norton
“Gov. Haslam made a fantastic choice by picking Stan Norton as the first ofcial independent motor vehicle dealer on the Tennessee Motor Vehicle Commission,” Giannini said. “City Auto Sales is an innovative industry leader due in large part to Stan Norton’s leadership and vision. He will be a tremendous asset to the commission, and we are grateful for his willingness to serve.”
Norton is a principal partner of City Auto Sales where he has been for 13 years.
“I’ve been in the car business for 28 years,” Norton said. “So I’ve got a lot of experience in everything from compliance to customer service and (legislation).
“There are 3,000 independents in
Tennessee and I feel very capable and confident in representing them. I’m glad we finally have a voice on the board. It only takes one voice to plant a seed to get an idea going.”
He said the challenge in his new role is focusing on how the rules apply to dealers, as opposed to making
“You may understand the rules, but how you sit on the board and apply those rules is a whole other thing,” Norton said. “You can have your own opinion, but it’s all about what the
Although he’s an independent dealer, Norton also serves on the board of the Tennessee Automotive Association, which represents new-
“I’m the first independent on the TAA board as well,” he said.
Norton hit the ground running with two hearings in December for the Motor Vehicle Commission, one of which involved Tesla’s eforts to get licensed to sell cars in Tennessee.
Darryl Noble, executive director of the Tennessee Independent Automobile Dealers Association, said Norton’s appointment is good for independents.
“For the used-car industry, this is something that’s been needed for a long time,” he said.
Noble said he’s been pleased with the work the commission has done, but it’s good for the state’s used-car dealers to know they have representation on the commission.
The Tennessee Automotive Association, representing new-car dealers, and the Tennessee IADA lobbied together on Norton’s behalf, Noble said.
“I want to credit Bob Weaver (executive vice president of TAA), who was instrumental in working with us to make this happen,” Noble said.
Carfax Earns Workplace Award
Carfax has achieved distinction from its employees as one of the ‘Best Places to Work’ in the nation for 2015, according to Glassdoor. Carfax is one of only 50 smallmedium U.S. businesses to earn the Glassdoor Employees’ Choice Award.
Carfax consistently ranks in the top two percent of U.S. companies for employee satisfaction. Members of Team Carfax take full advantage of a work environment that promotes socialization and collaboration, as well as a positive work-life balance.
For example, employees often conduct meetings seated on beanbag chairs, enjoy a generous paid
leave and holiday schedule, and compete in fitness-oriented and team building outings together. Team Carfax also shares in the success of individual departments and the company.
In addition to the award from Glassdoor, the firm has been named as one of the ‘Best Places to Work in Virginia’ by Virginia Business for the fourth straight year. The company also won the ‘Best Place to Work” in 2011 from Inside Columbia’s CEO magazine and has been voted a ‘Best Place to Work’ by The Washington Post and The Washingtonian. Carfax was founded in Columbia, Mo., and is headquartered in northern Virginia.
ST. PAUL, Minn. (AP) – A federal judge says a Hastings auto dealership can’t be forced to provide employees with health insurance that covers certain forms of birth control.
Citing a precedent the U.S. Supreme Court set this summer, U.S. District Judge Paul Magnuson ruled that Douglas Erickson, the owner of Hastings Ford and Hastings Chrysler Center, can’t be required to provide coverage that violates his religious beliefs.
More States Add EV Charging Court Exempts Auto Store
During the past few years, several models of plug-in electric vehicles (PEVs), including battery electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs), have been introduced in the light-duty vehicle market.
PEVs are limited by driving range, which is related to battery capacity, and can usually travel between 60 and 200 miles before recharging. Therefore, charging infrastructure is crucial to the success of these kinds of vehicles.
To address this issue, states have established plans to promote the development of infrastructure
Erickson says contraceptives that prevent a fertilized egg from being implanted in the uterus violate his belief that life begins at conception. It’s the latest in a string of court decisions across the country involving family-owned businesses that have sued to become exempt from the so-called contraceptive mandate in the federal Afordable Care Act because of their religious beliefs.
through financial incentives for the building of new public and private recharging facilities.
In 2008, Washington and Oregon established plans to facilitate PEV travel by installing recharging stations at convenient intervals on major travel corridors, including along Interstate 5, the main north-south highway that runs from Canada to Mexico.
Each station contains one 480volt direct current (DC) fast charger and one 240-volt Level 2 charger. Fast chargers take 15 to 30 minutes to charge a vehicle’s battery, while Level 2 chargers take about 4 hours.
Planned Parenthood is criticizing the decision. WEDNESDAY
Auto Credit Set for Growth Despite Default Rise
Auto credit will grow in 2015, with more financing for subprime consumers as defaults remain relatively low.
TransUnion’s annual auto loan forecast calls for auto loan debt to continue to rise to $18,244 at the end of 2015.
This would mark 19 consecutive quarters of increases since the first quarter of 2011, when auto loan debt per borrower stood at $14,954.
“We expect the auto loan market to continue to perform exceptionally well in 2015, with more sales leading to continued increases in auto loan debt per borrower as the national portfolio gets younger on average,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit.
“We anticipate the economy to continue to improve next year, with a better employment picture helping the auto industry. While the auto loan delinquency rate has slowly risen to a point where it will be above 2010 levels, we are still far of the peaks observed in 2008 and 2009 when delinquencies were more than 30 basis points higher.”
The TransUnion forecast calls for the national auto loan delinquency rate (the ratio of borrowers 60 or more days past due) to end 2014 at
1.2 percent, and increase slightly to 1.27 percent at the end of 2015.
Delinquency levels for subprime borrowers have grown from 4.2 percent in the third quarter of 2012 to 4.5 percent in the third quarter of 2013 to 5.3 percent in the third quarter of 2014.
However, the contribution of this segment to the overall delinquency rate has been muted because their share has remained between 14 percent and 15 percent during this timeframe.
Subprime share of balances had peaked in 2009 at just over 22 percent.
“The auto loan market has been especially strong for lenders, as much of the growth observed in the last few years has come from prime or better risk tiers,” Turek said. “There is room for growth in the subprime sector as evidenced by more competition.
“Prior to the recession the percent of subprime auto balances were nearly 5 percent higher than they are now.”
On a state level, auto loan delinquency rates are expected to rise in 38 states.
Auto loan debt is expected to rise in every state and the District of Columbia.
Auto Loan Delinquency Rate to Marginally Increase
FRANCHISE DEALERS WILL SELL MORE USED CARS
The exact number of used cars sold in the U.S. proves a hard number to track, although all analysts agree it should finish next year higher.
One category is well documented and that is certified pre-owned vehicles. CPO is on track to set a sales record for 2014 and should top that number this year.
That’s good news for les-
sors, as the demand for CPO units will ofset much of the increase in of-lease supply.
Franchise dealers are buying up more used cars in general, said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. The standalone used-car stores being launched by Asbury and Sonic will only add to this demand.
NO WORRIES ABOUT THE ECONOMY, MAYBE
USED CARS PRICES WILL SOFTEN, WON’T COLLAPSE
Some Wall Street analysts are looking at the growing number of of-lease units and trade-ins and predict a collapse in used-car prices.
Industry insiders see moderation far short of this doomsday scenario.
What worries Manheim chief economist Tom Webb the most about today’s economy is how little there is to worry about.
Unemployment and energy prices are down. The dollar is strong. And business leaders from large corporations to small businesses have a positive outlook for 2015.
Still, many consumers, especially low-income con-
sumers, continue to struggle even as the overall economy improves and wealthier consumers prosper, said Joe Spina, Edmunds.com director of remarketing. This is seen in used sales, where the more expensive certified units make up a larger percentage of overall sales. This means an economic setback could cause more problems than the overall numbers suggest.
LOW GAS PRICES WON’T HURT COMPACTS; OTHER FACTORS WILL
Few people thought in 2008 that the conversation would ever focus around gas prices dropping to the $2 mark.
The efect of gas prices is psychological in many ways, said Tom Kontos, ADESA’s executive vice president of industry analysis. They play a role in consumers’ thinking because they see the price as they drive to work and hear about it on the news.
Many casual observers expect consumers to move from small cars to SUVs. There is less substitution among consumers than is sometimes simply stated.
“Not everybody looking for a Civic is going to look for a truck,” said Cars.com chief analyst Jesse Toprak.
Consumers are more likely to move up in the same cate-
gory. So, a Civic buyer would move up to an Accord.
The opposite occurred when gas prices shot up in 2008, Toprak said.
The biggest drag on compacts will be supply rather than demand, Kontos said.
Manufacturers brought a lot more models to market when gas prices rose in 2008.
Kontos said the talk of a flood of of-lease units fails to reflect the way those leases were generated. While they have grown to a higher level in the past few years, that change was gradual.
“It’s not as if new-car sales have a V-shaped recovery,”
Kontos said.
The market today difers from that of 10 years ago, however. Kontos said dealers today operate with a just-in-time mindset, using inventory management systems to stock units that turn quickly and online auctions to obtain them.
Gutierrez said prices for one- to three-year-old units will be flat. Four- to six-yearold units will remain scarce, so prices should hold up for these, as long as credit remains available.
One of the biggest effects of higher off-lease volumes will be on the newcar side as lessors cut back on originations as residuals moderate.
Spina said this is especially true of the captives that only recently entered leasing.
Kontos worries about how consignors in general will react to lower prices at auction. He said there will be a temptation to seek new alternatives rather than accept fluctuations in the market.
INTEREST RATES, INCENTIVES WILL RISE, BUT NOT HIGH ENOUGH TO HURT
Spina selects compact SUVs as a segment that should do well next year.
They’ll benefit from lower gas prices and a good mix of units coming into the used market.
Hofer expects buy-here, pay-here dealers to benefit the most from lower gas prices for a number of reasons. One is that they can stock a wider array of vehicles as the cost to operate them will be lower.
The Federal Reserve should start raising rates in the middle of next year, but they’ll likely raise them slowly and are starting at an extremely low level.
“Given where rates are today, that’s not a major item,” Webb said.
The situation in the rest of the world remains less certain. The U.S. will increase rates at the same time other countries are lowering theirs.
Higher interest rates mean incentives are less likely to
rise, said George Hofer, an economics professor at the University of Richmond.
George car, rose
Incentives currently cost manufacturers very little, Hofer said, because their borrowing costs are so low.
There is little motivation to boost incentives even with slower growth of new-car sales due to the current United Auto Workers’ contract.
Manufacturers are no longer pushing inventory to dealers.
“Before, since you already paid for the labor to build the
car, you might as well build the car,” Hofer said.
Incentives overall might rise little, but Spina sees diferences among the segments. For example, there might be more incentive dollars for compacts and alternative-fuel vehicles to ofset the efect of lower gas prices.
Webb sees the yen as the biggest wildcard for the auto industry. A weakening yen could spark increased competition in the newcar market.
Car’s Future Lies in Mobility
By Jenny King
Naughton said.
“Cadillac said they are going to have one on the road in a few years,” he said. Mercedes-Benz and BMW also are ready with next-generation vehicles.
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PLYMOUTH, Mich. – With annual global new car sales projected to reach 100 million units by 2020, and over one billion vehicles already on the road, where do we go from here?
Bloomberg News reporters Jef Green and Keith Naughton suggest solutions to increasing trafc gridlock, lack of parking and serious air pollution include automated cars that come when they are called.
Car ownership, they told members of the Detroit Press Club and Women in Communications, may decline in the U.S., even as sales in China continue to outpace other markets.
The migration to congested megacities will take a toll on sales. There are predictions, they said, that the current rates of growth will decline as problems with pollution, gridlock and parking increase.
The autonomous car, he said, will pick you up and take you where you want to go. You will not own the car. They could move like schools of fish, making transportation safer and more efcient.
Car companies should stop thinking of themselves solely as car manufacturers and more as mobility solutions providers, the pair said. They will have to find ways to monetize other mobility solutions.
Millennials -are shying away from the expense and inconvenience of owning a car, opting for the Uber approach of calling for a ride when it’s needed and letting someone else do the driving, Green said. A growing number of young adults - as many as 30 percent - do not even have a driver’s license.
Compliance checking
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“Gridlock is more than just frustrating,” Naughton said. “It afects hospitals, it prevents trucks from delivering food and water; it freezes society.”
Ride sharing and ownership sharing are likely to grow in the next few years.
Another solution that seems futuristic but isn’t really that far away are autonomous cars,
“In major cities like Washington, D.C., Baltimore, San Francisco and Boston, 30 percent of households don’t have a car,” Green said.
“There’s a huge seismic shift coming,” Naughton said, “and it’s not the economy.”
The automakers need to be aware of this, he said.
FTC Sues Dealers for Ads
The Federal Trade Commission is taking action against two auto dealer groups operating in five states with more than two dozen retail stores for civil penalties for violations of FTC administrative orders, which prohibit them from deceptively advertising the cost of buying or leasing a car.
Billion Auto, a chain of 20 familyowned automobile dealerships in Iowa, Montana and South Dakota, and a family-controlled advertising company, Nichols Media Inc., have agreed to settle charges that they violated a 2012 FTC administrative order. That order prohibits Billion Auto, and any companies in active participation with it, from misrepresenting material costs and terms of vehicle finance and lease ofers and requires specific disclosures, as mandated by the Truth in Lending Act (TILA) and Regulation Z, and the Consumer Leasing Act (CLA) and Regulation M. The Billion Auto defendants have agreed to pay $360,000 in civil penalties to settle the FTC’s charges.
According to the complaint against Billion and Nichols, the dealerships and advertising company violated the 2012 FTC administrative order by frequently focusing on only a few attractive terms in their ads while hiding others in fine print, through
distracting visuals, or with rapidfire audio delivery. For example, some dealership ads promoted low monthly payments or attractive annual percentage rates and finance periods, while concealing other material items, such as low payments were for leases, not sales; major limits existed on who could qualify for discounts; and ofers often included significant added costs.
In a separate action seeking civil penalties, the FTC has charged Ramey Motors Inc., and three affiliated dealerships, in several locations in Virginia and West Virginia, with violating a similar 2012 FTC administrative order. Among other violations, Ramey Motors’ ads allegedly misrepresented the costs of financing or leasing a vehicle by concealing important terms of the ofer, such as a requirement to make a substantial down payment. The complaint also charges Ramey Motors with failing to make credit disclosures clearly and conspicuously, as required by the TILA. The FTC also alleges that the auto dealer group failed to retain and produce appropriate records to the commission to substantiate its ofers. Ramey Motors and its afliates are subject to $16,000 in civil penalties for each alleged violation of the FTC administrative order.
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Survey Names Spark Ugliest
The Chevrolet Spark EV was ranked the ugliest car in a survey by Carinsurance.com.
Respondents gave the following as reasons why people would buy a Spark EV:
The No. 1 reson survey respondents gave for why people would drive an ugly car was the drivers wanted to be diferent.
Nine percent of respondents have declined a ride because the driver’s car was too ugly – and more men (14 percent) than women (5 percent) have refused a ride in a grimacemobile. But men are more likely to buy an ewwww-evoking car if it means saving money.
Forty-one percent of drivers surveyed said they would buy an ugly car if it was less expensive than others on their list, and 45 percent of men, compared to 36 percent of women, said they’d do so.
When a friend or relative buys a frightful car, the majority of those surveyed said they’d respond diplomatically, although twice as many men as women said they’d be blunt about their opinion.
The rest of the top ten were: -
els in the survey cost well below the average new car price of $33,754 aslysts. For example, the Spark EV is
is $12,995.
Senate Confirms NHTSA Chief
ate confirmed a new administrator to lead the government’s auto safety agency, which faces complaints that regulators bungled two high-profile recalls involving faulty ignition switches and exploding air bags.
expert on human fatigue, was approved by voice vote to head the
critically important agency that is widely considered to be understafed and underfunded. The previous administrator, David StrickRosekind is currently a member of the National Transportation Safety Board, which investigates transportation accidents, and has led seven major investigations. While at the board, he persuaded fellow board members to make a controversial recommendation that states lower
the blood alcohol limit for driverscation threshold would bring the U.S. more in line with other countries, but is strongly opposed by the alcohol, restaurant and entertainment industries. So far, no state has adopted the recommendation.
The biggest issue facing Rosekind at the agency will be revitalizing its oversight of auto recalls becauseplain the agency is neither feared nor respected by the auto industry. Rosekind has a doctoral degree in psychology from Yale University and is a former director of Stan-
he conducted ground-breaking research of airline pilots and how they were afected by lack of sleep. consulting firm on fatigue issues,
“I’ve been in business 20 years. I have two locations, one in Smyrna and one in Camden, Del. They’re about 20 miles apart. The stores mirror each other. The only diference is that we have a repair shop in Smyrna.
“We roughly keep 140 vehicles in inventory. (In 2013), we carried more than 200. I think cars were harder to buy in 2013, so we actually would buy more. We’d buy pretty much anything that we could get for the right price. Now we’re actually being a little more choosey and managing our inventory better.
“We’re selling about 60 per month. That’s about the same as 2013, (even with the smaller inventory).
“We do about 25 percent buy-here, pay-here. We also have two or three subprime lenders that we work with closely. We also ofer traditional financing, starting out at about 2 percent.
“The average down pay-
ment on a buy-here, payhere deal is probably $1,000. We try to keep the (contracts) under two years.
“The average retail price is roughly in the $7,000 to $8,000 range. We try to buy a lot of trucks and sport utility vehicles. The average model year would be a 2007 or 2008.
“On mileage, we try to stay under 120,000. Our sweet spot is anywhere between 80,000 and 120,000, if we can find them there.
“We carry more domestics than imports. It’s probably 60/40.
“Roughly, we’ll spend in the $400 to $600 range for reconditioning. The recon costs have actually come down a bit from 2013. It seems like we’re able to purchase a better car in the past year. Our service shop has three bays and three techs. We just service our own cars.
“We have a website. We do online advertising through AutoTrader.com. We do some cable ads and some radio ads. That’s (the same mix) as last year.
“Pickup trucks always work well for us. Finding them is the trick.
“We just sold a 2009 Chrysler 300. It had 82,000 miles. We got $13,900 for that.
“I think things are improving slowly. It seems like the new-car guys are doing pretty well. So normally, there’s a trickle-down efect there.”
LOUISIANA
Jason Hawthorne, coowner/manager, Sam’s Used Trucks & Cars, Winnsboro, La.:
“We’ve been here about 20 years in our one location.
“On average, we probably keep 75 to 80 vehicles (in inventory).
“Our sales are down some, but I’d say we’re averaging 15 to 20 sales per month.
“The economy here is down from what it used to be, but we’re starting to stabilize.
“I mainly buy from the auctions. I would say 10 percent of our inventory comes from trade-ins.
“We do retail, subprime and buy-here, pay-here. I’m
going to say 50 percent buyhere, pay-here/subprime and then 50 percent retail. Overall, it’s the same as last year, except that sales are down a little bit.
“The average down payment (on buy-here, payhere) is about $2,000. I want to say the average term length is 30 months.
“Average retail price here is about $12,000 to $15,000.
“The average model year is about a 2008 or 2009. The average mileage is between 80,000 and 90,000.
“It’s more of a challenge getting the right car at auction. You have to search out to find the good, clean cars. You have to travel further and go to more auctions to get the same amount of inventory. That’s what’s hurting me right now.
“I carry more trucks and SUVs during the summer and I carry more cars during tax time. I’ll say we carry about 40 percent trucks, 20 percent SUVs and the rest would be cars.
“It’s about 50/50 domestics and imports.
“We sell a lot of diesels
here because we have a lot of farmers in our market.
“We’re spending an average of $300 to $500 to get vehicles ready for sale. That’s a little bit higher than last year. That’s because dealers are bringing cars to auction with missing hubcaps or needing window regulators or having hanging headliners. They used to fix that before bringing them to auction. But with the (shortage) of inventory, they don’t have to spend money because people are buying them anyway. People are still fighting over it.
“We own a service center, a mobile quick lube and a tire center.
“For advertising, we do radio and newspaper. We have done television in the past, but I didn’t do anything during the last quarter of 2014. They had so many campaign ads and so little space that they jacked the price up. So we laid of of that.”
“I sold a 2007 Nissan Armada recently. It had 156,000 miles We got $9,800 for it.”
WHOLESALE MARKETS
GEORGIA
Corey Sanford, general manager, America’s Auto Auction – Atlanta, Cartersville, Ga.:
“We first opened (as an independent) in October 2003. America’s Auto Auction Inc. purchased the auction on April 1, 2012.
“We’ve had the best year we’ve ever had. It’s gotten better every year. America’s Auto Auction Inc. has been amazing to work with.
“We have just four lanes. We run a two-lane Tuesday night sale that’s open to the public and a fourlane dealer sale on Fridays. The majority of (bidders) at the public sale are dealers, though.
“In our dealer sale, we consistently run about 800. It’s up a little. We also have a twice-a-month in-op sale. On those days we’ll run a total of 1,000 (units).
“During the month of November and into December, we’ve had sales percentages as high as 64 percent and as low as 57 percent.
“Seventy-five percent of our volume is dealer con-
signment and 25 percent fleet-lease-repossessions.
Some of our commercial consignors include CNAC, Element (formerly PHH), Title Max and Coastal Credit. We have about 40 smaller companies that make up our fleet-lease-repos.
“Fleet-lease volumes are steady and new-car trades are up. We don’t allow our dealer consignment is to go down. A dealer like Cobb County Toyota was running 25 a week in 2013 and they (were) running 45 a week by the end of 2014.
“We’ve been averaging about 480 bidders.
“The number of bidders in the lanes is up because of some of the new sellers we have.
“The average price (in December) was about $4,400. It was $4,100 in 2013. What do I atttribute the increase to? Well, we picked up the Rick Case Automotive Group, a huge dealership in Georgia. They run 120 cars every other Friday and they sell 98 percent. That’s over 200 cars-a-month sold from one dealer. That’s a big deal. We run those vehicles by
themselves in one lane an hour before our regular sale every other week.
“With the gas prices going down (in December), business is picking up for dealers.
“I’m looking to grow in 2015. The future is bright.”
TENNESSEE
Trent Long, general manager, Airport Auto Auction, Louisville, Tenn.:
“We’ve been in business since 1981. We have six lanes and we’re running six lanes.
“During an average sale, we’re running about 300 (units).
“Sales percentages for 2014 were at 69 percent in the middle of December. Our percentage sold in 2013 was 66 percent. Total volume in 2014 was up 2 percent compared to 2013.
“We’re bringing in, on average, about 250 to 260 buyers. They’re coming from Georgia, Alabama and Kentucky. A few are coming out of South Carolina and North Carolina.
“Their moods are up from
Compiled by Jeffrey Bellant
(2013). They definitely have a lot more positive outlook than they did (in 2013).
“They’re all trying to figure out the tax season game. They all seem to be in a better frame of mind for this tax season as compared to last tax season. Last (tax season), it seemed early on they kind of had their hands in their pockets, like they didn’t know what they were going to do. Everyone now seems to have a game plan.
“Our volumes are 85 percent dealer consignment and 15 percent lease/repos. The amount of lease/repo climbed in 2014 compared to 2013. So we’re primarily new-car dealer consignment. We’re running cars from 12 to 15 new-car dealerships at auction.
“We also run in-operable vehicles. About 15 - 20 would be a good average.
“The (commercial consigners) and new-car dealers will also consign things like boats, four-wheelers and motorcycles, but we don’t break those out as a special sale.
“Our online system is AWG. (Online activity) is
growing. You can see that grow month by month. It just seems like there are fewer phone calls from dealers asking us how to use it.
“The average price (on the block) is about $4,500, which is a little bit up. But this includes all units, including in-op units and $500 and below. So if you take out the in-op/$500and-below units, it would be a lot higher.
“Late-model stuff is going up. But I’ve even noticed (very cheap) stuf has jumped and I don’t know if that’s because of tax season or not. I haven’t looked at metal prices. Usually when junk cars start climbing, it’s due to metal prices.
“During (the last part of November and into December) that $5,000 to $8,000 car has really been (selling). It doesn’t necessarily have to do with the type of car –SUV or a smaller gas-saver – it’s more about the price range. Talking to the retail dealers, the sales of larger items in December were already (increasing) because of gas prices.”
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CarMax Inc. announced the promotion of Jon Daniels to senior vice president, CarMax Auto Finance.
In assuming responsibility for CAF, Daniels succeeds Angie Chattin, who is retiring. Chattin will work with CarMax in a consulting capacity.
Daniels joined CAF in 2008 as vice president, risk and analytics. He has extensive credit and banking experience from HSBC and Metris, where he worked prior to joining CarMax. Daniels earned his bachelor’s degree in mathematics from Flagler College and his master’s degree in operations research from the University of Kentucky.
CarMax also announced the 12 winners of The CarMax Foundation’s fifth annual CarMax Cares Community Service Award.
Associates across the country were nominated by their co-workers for their personal volunteer efforts and leadership in community giving.
Winners were honored at the company’s largest associate recognition event of the year in Las Vegas. Each winner selected a nonprofit organization to receive a $5,000 grant on their behalf from The CarMax Foundation.
The winners are:
Jamie Abbott; assistant business ofce manager; Franklin, Tenn.
Barbara Bean; business ofce associate; San Antonio, Texas
Black Book has promoted Jared Kalfus to senior vice president of sales where he will expand his current role overseeing data licensing
and lender solutions to now include the sales team of Black Book’s Activator Division.
With 20 years of experience in the automotive industry, Kalfus joined Black Book in June 2012, where he began his tenure as vice president of automotive licensing. Kalfus will remain responsible for overseeing the national sales team focused on licensing Black Book data to automotive OEM’s, auctions, VAR’s, and marketing companies.
He also leads the Black Book Lender Solutions team that supports automotive lenders, finance customers, banks, credit unions and title lenders.
“The expansion of Jared’s leadership role is a strategic decision that provides stronger integration of resources for Black Book’s automotive dealership customers,” said Tom Cross, President of Black Book.
Kalfus holds a bachelor’s degree in mass communications from the University of South Florida.
Kerrigan Advisors announced that, in line with the evolving needs of the market, it has launched a new private equity and family ofce advisory practice to be led by Ryan Kerrigan Kerrigan has worked in the private equity sector for over 13 years, including leading transaction origination for a middle-market private equity firm.
ADESA announced that Ronna Webb was named fleet-lease manager at ADESA Dallas.
Webb has 27 years of experience in the industry, serving most recently as director of CRM and inside sales for ADESA.
She started in 1987 as a block clerk and has served as factory department supervisor, General Motors account manager, factory manager and general operations manager during her career.
“Ronna is an industry veteran with a proven track record of innovative performance and mentorship,” said ADESA Dallas General Manager Ken Osborn
TRUE COS T OF IN C EN TI VES (TCI)
0.51%
4.75%
$9,072 8.62%
$1,413 -3.42%
Edmunds.com’s monthly True Cost of Incentives (TCI) report takes into account all of the manufacturers’ various United States incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used. TCI data (and other Edmunds.com data products) can be viewed industrywide, import vs. domestic, by country of origin, by make, by model and by segment. True Market Value (TMV) is the transaction price for vehicles.
Disconnected Jottings From Tony Moorby...
I fail to see the point in having an intelligence agency, just like most other countries, if we don’t keep things secret.
The CIA has a much broader mandate than say
the NSA who constantly oversteps their mark and then tries to lie and cover up their proctology-style peeping.
Congress just issued an encyclopedic report, at the cost of some $41 million, to announce how the CIA disported itself after 9/11 in trying to wrest information from various foreigners and those who would do us harm, along with their associates.
The dragnet was long
and large, carried out in an era of confusion, with no precedent, never having faced terrorism in this way before.
Do I believe in torture as part of a normal police
set alight?
Maybe it’s because time and distance has passed and looking at prisoners’ treatments in a quieter light makes it outrageous and ofensive.
Although, keeping a man cold, naked and handcufed for a number of days, pales in comparison to what’s happening to families in Syria, the Peshmergan troops, Iraq and Afghanistan.
carry on the current swing back to the right.
This, in a country that has extended its hand to millions and continues to do so – the most socially conscious and charitable nation on the globe – is more orchestrated political eyewash and does us no good whatsoever.
in a state of confusion.
Had we exerted no realistic eforts to find the perpetrators and their paymasters we’d still be paying for the political backlash.
or secret agency? No. But that’s a qualified ‘no’ and I realize a good many people do not share my opinions.
But why, when our citizens are having their throats slit after knowing for a long time that this is their death knell, in itself a torture, are members of Congress getting out the political birch twigs and self righteously engaging in self flagellation and apologizing for our reactions to 3,500 people being
Then there are all kinds of slaughter, torture and genocide on the African continent. Does seeing your parents hacked to death with a machete and then being taken into slavery constitute torture? It does in my book.
My cynical side tells me the timing for this “hair shirt and ashes” report, to all intents and purposes, saying that Americans have reached their social and cultural nadir under the Bush administration, is pointedly saying that we can expect more if we
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I suppose other countries are laughing at our gullibility but hoping the spotlight doesn’t switch directions, as I’m sure there is as much embarrassing background to be found anywhere in the world.
All I’m suggesting is that tough times take tough measures and unprecedented events take unprecedented actions, even if it’s
Correctness has grown to a point where we have to apologize for getting up in the morning and the people in Washington are trying to find ways of spreading goodwill at the behest of the competition.
Perhaps they should drop a lit Waterford ball from the scafolding surrounding the Capitol - they seem to have enough of our money to fritter away on all kinds of projects.
This way we could remind the world it’s a new year!
INSURANCE AUTO AUCTION S
By Miles Mellor
Across
1. Makers of the 3000 GT
6. Slang for a luxury car model
8. “You the apple of my eye” Stevie Wonder
10. English company that made the Robin, a three wheeled vehicle
11. British company that specialized in building racing and sports cars
13. Nissan Pickup truck
14. Pathfnder, for one
16. BMW B7
18. Top Formula One driver, Lewis
21. Boston’s Liberty Tree was one
22. Assist
23. Make the grade (2 words)
25. Drained of fuid
27. Reverse, e.g.
29. Business going public
30. Classic Corvette color
32. Little seen color for a car, violet
33. Dealership array generally
35. Paddle
36. Makers of the V12 Vanquish (2 words)
38. Old British sports car
39. Moves ahead slowly
40. Honda SUV
Down
1. Nissan SUV
2. Charges on the road
3. George Washington’s dream
4. Infatuated with
5. Toyota SUV
6. Beetle’s cousin
7. Pontiac model (2 words)
8. Classic car
9. Restrain, with “in”
12. Teacher’s assistant for short
15. Luxury Lincoln
17. Safety feature that is rigorously tested
19. Belt and hose, e.g. (2 words)
20. It’s essential for smooth running
21. Honda model
23. French automaker
24. Increase
26. Party member, briefy
28. Going up, like some costs
31. Cadillac El_____
34. ___ lock brakes
36. Braking system, abbr.
37. Bratty child
Tony Moorby
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main highway in Antioch, Illinois on Wisconsin border. Owner will finance. Floor planning available. Temporary partnership possibility. For more details, call Dave, 847-395-4641 For Sale Owner Retiring Building and property, has been in business for 30 years as an auto transport, trucking, auto sales and wholesaling company. Large building with 4 to 5 acres, 500 ft of frontage on a 4 lane highway, 10 min from Ohio Turnpike in Clyde,OH. Email Midwesttransportation@ outlook.com for more info.
the Blue Ridge Mountains. Shop holds about 6 cars. Sacrifice for 149,000. Also for sale right across the street is a working used car lot with office a detail garage on about a third of an acre flat; sacrifice this for 159,000, sales license not included but will negotiate it. Living quarters available also. Call
Compiled By Jeffrey Bellant
PRETTY IN PINK FOR A CAUSE
Over the past 12 years, employees at Flint Auto Auction in Michigan have used their teamwork on the surrounding community, recently banding together in support of the American Cancer Society. The staf wore Flint Auto Auction hoodies, scarves, ball caps and beanies emblazoned with a specially-designed Flint Auto Auction logo. Thirty auction employees donned their walking shoes and took to the streets in the 2014 Making Strides Against Breast Cancer Walk held in Flint on Oct. 18. The staf was backed by Flint Auto Auction owners Bill Williams and John Luce, who matched the funds raised by the employees. After the event, the team made a total donation of $2,000 to the American Cancer Society.
Cox Employees Clean Up Rivers
Through national partnerships with American Rivers and Ocean Conservancy, Cox Enterprises removed nearly five tons of materials from rivers and shorelines across the nation this year.
Nearly 700 Cox employees and their family members volunteered at cleanups in Atlanta; Dayton, Ohio; Jacksonville, Fla.; Miami; Orange County, Calif.; Orlando, Fla.; Seattle and Wantagh, N.Y.
The cleanups are part of Cox Conserves, the company’s national sustainability program, and included employees from Cox Enterprises and each of its major subsidiaries.
The cleanup locations included: Atlanta’s Chattahoochee River, Dayton’s Great Miami River, Jacksonville’s St. John’s River, Miami’s Key Biscayne, Orange County’s Doheny State Beach, Orlando’s Wekiva River, Seattle’s Puget Sound and Wantagh’s Jones Beach.
