Used Car News 3/2/15

Millenials Love Cars

Nearly a third of Millennials surveyed say they have “a love affair” with their vehicle, according to new research from AutoTrader.com.

More than 60 percent of Millennials enjoy browsing the dealer’s lot, compared to 53 percent of Generation Xers and 49 percent of Baby Boomers.

Captives, Credit Unions Offer Lowest Auto Rates

The lowest rates for auto financing came from captive finance companies (rates 35 percent below average) and credit unions (25 percent below average), according WalletHub. National banks (roughly average), and regional banks (40 percent above average) were more expensive.

CPO Sales Lead Market

Edmunds.com analysts reported that certified pre-owned sales hit an all-time high of 2.3 million, even though it was not a record year for used-car sales overall.

CPO made up 20.8 percent of total used car sales at franchised dealerships.

Dealer Going Strong at 90 Years Old

By Jeffrey Bellant

TROY, Mich. – In 1947, a new car cost $1,300 and a gallon of gas was about 15 cents.

Ferrari began production of street-legal automobiles that year with the 125 S, Saab produced its first car and the Volkswagen Beetle arrived in the United States.

“But the most important thing that happened in 1947 is that, at age 22, Mr. (Maurice) Van Collie got his first dealer license,” said Ted Cooper, vice president of the Michigan Independent Automobile Dealers Association.

What was billed as a meeting of the Michigan IADA Feb. 10 turned out to be a surprise birthday party honoring Van Collie, who turned 90 on Feb. 19 and marks his 58th year as a dealer in 2015.

“We’ve done a lot of research,” Cooper said, “and we looked all over the country at every association in the nation.

“We found out that Mr. Van is the oldest active car dealer in the country.”

Continued on page 10

Data Shows Subprime Finance Helps

Equifax Inc. recnetly looked at two groups of consumers with deep subprime credit scores, (those with Equifax Risk Scores below 550), over a three-year period: those who originated a subprime auto loan and those who did not.

Equifax found that over the three-year time period, those consumers with deep subprime credit scores that originated a subprime auto loan showed, in aggregate, a significant increase in their credit score.

In fact, those consumers improved their credit score by a median of 52 points, which is a 62.5 percent improvement over the median score change of the group that did not take out a loan.

Consumer Credit Scores

Those that took out a subprime auto loan were four times more likely than those who did not to improve their score to a level above 640, moving them out of the subprime segment.

“The auto industry’s success wouldn’t be what it is today if it weren’t for the responsible, solid subprime loans made to the many Americans in need of a car to get to their jobs or take their children to school,” said Equifax chief economist Amy Crews-Cutt.

“Lenders now have better tools, more data and enhanced technology available to them to make sounder and safer decisions.”

Construction Forces Dealer’s Move to Better Spot

By Sheila McGrath

It’s all water under the bridge now, but a $1 billion project to replace an aging span over the Mississippi River brought more than a few headaches for a Bettendorf, Iowa, dealer.

A new eight-lane I-74 bridge has been years in the planning stages, and will bring an easier commute for the 80,000 drivers who cross the river between Moline, Ill., and Bettendorf each day. Construction of the bridge won’t start until 2017, but before that, a handful of streets in Bettendorf have to be realigned to connect with it.

That’s why Premier Picks Auto Sales, a Bettendorf dealership specializing in high-end imports, was forced to relocate in 2011, along with more than 30 other businesses in the same neighborhood.

The move turned out to be a good one, said Jef Pick, who owns the family business where he works with his son, Jason. They’ve got a larger lot, better visibility and have tripled their sales since the move, he said.

“We couldn’t be happier to be in Bettendorf, and we couldn’t be happier with the way the city administrator worked with us instead of against us,” he said. “Something that was a negative turned into a very nice positive.”

Pick and the city recently tied up the last few loose ends related to the move, when the city council approved a $15,293 façade

grant to help cover the costs of renovating the new building and lot. The business now stocks about 75 vehicles – mostly Mercedes, Lexus, Toyota and Honda models – and sales are going well, Pick said.

Still, he hit a few roadblocks along the way.

Premier Picks Auto Sales had been in business more than five years at 1430 Grant St., and had an established clientele. They had no plans to leave until the bridge project came along.

“We had some very tense moments,” Pick said. “We were up against a timeline –

we had to move because the land was going to be condemned, and we wanted to stay within Bettendorf, but there are not a lot of open areas downtown where a used car dealership could go.”

After finding a new location near downtown at 2540 State St., Pick came up against a zoning problem. Even though the site had been used for years as a car lot, he needed to get a rezoning for the land because the former lot was a nonconforming use.

It took a lot of convincing, and some assistance from a city administrator, to

get the rezoning approved, Pick said.

On top of that, city leaders had just begun work on a downtown streetscape plan, and a used-car dealership didn’t necessarily fit with their ideas for the highly visible location.

In order to meet the requirements for the city’s new beautification plan, Pick spent about $100,000 on interior and exterior renovations on the building, along with blacktopping and lighting for the lot.

In 2011, Pick applied for funds from the city of Bettendorf’s Facade Program,

which was designed to ofset the costs for businesses afected by the I-74 bridge project. At a hearing in December 2014, city leaders approved the funds, and praised the outcome.

“They really run a nice operation and we’re so glad they stayed in Bettendorf,” said Steve Van Dyke, economic development director for the city.

“He has done a spectacular job of bringing that location up to par,” said City Council member Dean Mayne.

“It looks very nice, and has great curb appeal now.”

Federal, State Regulators Combine Their Efforts

Two Charlotte, N.C., usedcar dealerships must repay customers and change practices after settling lawsuits brought by state and federal regulators.

The lawsuit was filed in early 2014 by the North Carolina attorney general, the Civil Rights Division of the U.S. Department of Justice and the U.S. attorney for the western district of North Carolina against Auto Fare Inc., Southeastern Auto Corp. and their owner, Zuhdi A. Saadeh.

The lawsuit alleges the dealerships charged African-American customers

prices far above market rate for vehicles and signed them up for loans regulators claim were predatory. The North Carolina attorney general’s ofce contends that the defendants’ actions violated North Carolina’s Unfair and Deceptive Trade Practices Act and federal officials alleged violations of the Equal Credit Opportunity Act.

Both Auto Fare and Southeastern Auto Corp. are buyhere, pay-here dealerships.

As alleged in the lawsuit, Saadeh required high down payments and charged 29 percent interest on car

loans, the maximum allowed under state law. Payments and interest rates were set without actually assessing customers’ credit histories or their ability to make payments.

The lawsuit alleges that Saadeh repossessed vehicles without reasonable notice.

In some instances, the dealerships repossessed cars even though the owners were not behind on their loan payments.

Saadeh sometimes used GPS devices, installed without the customers’ consent, to locate and repossess cars.

Lawyers and manufac-

turers both constantly warn dealers to disclose the use of payment assurance devices.

The case is important for dealers outside North Carolina because it reflects a pair of regulatory trends, said attorney Joel Tasca of the Ballard Spahr law firm.

One trend is increased cooperation between state and federal regulators.

In this case, it allowed the feds to pursue a wider range of charges because they included state law violations.

The other trend is increased attention to claims of discriminatory practices.

Tasca said the allegations in the North Carolina case “seem pretty extreme,” but the regulators’ approach might become common.

Under the settlement, Auto Fare, Southeastern Auto Corp. and Saadeh must change their business and lending practices to make sure their loans and vehicle repossessions are fair.

The settlement also requires defendants to pay $225,000 to compensate consumer victims.

The settlement came after the court denied the defendants’ motion to dismiss the case.

AuctionACCESS Adds Floor Planner

AuctionACCESS has partnered with AuctionCredit to integrate the finance company’s floor plan data through the AuctionACCESS system.

AuctionACCESS auctions will now be able to view updated AuctionCredit floor plan availability as well as automatically initiate AuctionCredit floor plan transactions through the AuctionACCESS system.

AuctionACCESS now ofers dealer credentialing and floor plan transactions for over 260 subscribing auctions throughout the United States and Canada.

KAR Sees Gains

KAR Auction Services Inc. reported year-over-year gains in its fourth quarter.

For the fourth quarter of 2014, the company reported revenue of $606 million as compared with revenue of $540.6 million for the fourth quarter of 2013. Adjusted EBITDA for the quarter increased to $148.5 million, as compared with Adjusted EBITDA of $131.2 million for the fourth quarter of 2013.

Profits for the fourth quarter increased to $50.3 million, as compared with a net loss of $17.6 million in the fourth quarter of 2013.

Car-Mart Reports Higher Sales

America’s Car-Mart reported net income of $7.5 million on revenues

NEWS BRIEFS

of $132 million for its quarter ended Jan. 31.

Retail unit sales increased to 11,495 from 10,735 for the prior year quarter with 28 retail units sold per dealership per month, up from 27.7 for prior year quarter.

Average retail sales price increased $25 from the same period last year to $9,764.

Net charge-ofs as a percent of average finance receivables were 6.5 percent, down from 6.7 percent for prior year quarter.

America’s Car-Mart active accounts base now stands at more than 64,000.

The company reported debt to equity of 49.8 percent and debt to finance receivables of 26.5 percent for the latest quarter.

Coalition Questions CFPB

A coalition representing many of the nation’s largest auto finance sources urged the Consumer Financial Protection Bureau to address what it claims are bias and error found in the method it uses to determine whether unintentional dispa-

rate impact exists in an indirect auto lender’s portfolio.

Since 2013, the CFPB has urged financial institutions to change how they compensate auto dealers for arranging financing, based on the bureau’s allegation that dealer reserve poses a risk of disparate impact.

However, a November 2014 study by Charles River Associates found evidence that the CFPB’s analysis overstates the impact on minorities.

Law prohibits auto lenders prohibited from inquiring into or considering a consumer’s race or ethnicity.

In order to estimate the background of consumers for pricing comparison purposes, the CFPB

uses a proxy that is based on a statistical analysis of the consumer’s last name and residence.

The CRA study showed that the CFPB’s method overestimates minorities by as much as 41 percent.

T he CFPB’s own study of its proxy methodology revealed that it is subject to significant error.

In light of these findings, the coalition called on the CFPB in a letter to revisit its enforcement approach.

Signatories of the letter include the American Financial Services Association, American Bankers Association, Consumer Bankers Association, Financial Services Roundtable and the U.S. Chamber of Commerce.

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NHTSA Wants Used Car Dealers to Fix Recalls

U.S. Transportation Secretary Anthony Foxx and National Highway Trafc Safety Administrator Mark Rosekind joined elected officials, representatives from

Anthony Foxx

the rental car industry, and consumer safety advocates in calling on Congress to pass legislation that would require rental car agencies and used car dealers to fix safety defects before renting or selling vehicles subject to a recall.

The Grow America Act includes provisions that would require rental car agencies to remedy any safety defects under recall before renting a

vehicle, and require used car dealers to do the same before selling a vehicle.

Under current law, new cars must be fixed before sale.

However, no similar federal provision exists for rental car agencies or used car dealers.

In Richmond, major rental car agencies as well as a leading consumer group joined the department’s call for legislation to ensure rental cars with safety recalls are repaired before a consumer gets behind the wheel.

“Every vehicle under an open safety recall should be repaired as soon as possible,”

Foxx said.

“Requiring rental car agencies and used car dealers to fix defective vehicles before renting is a commonsense solution that would make our roads safer. Safety advocates and the rental car industry have taken a stand for safety, and we need Congress to do so as well.”

Foxx also announced a $14,000 per day fine against airbag manufacturer Takata for failing to fully

cooperate with the NHTSA’s ongoing investigation into the company’s defective airbags. Secretary Foxx made this announcement at his first stop on the last day of the Secretary’s Grow America Express bus tour, highlighting the importance of investing in America’s infrastructure and encouraging Congress to act on a long-term transportation bill.

“Safety is a shared respon-

sibility and Takata’s failure to fully cooperate with our investigation is unacceptable and will not be tolerated,” Foxx said.

“For each day that Takata fails to fully cooperate with our demands, we will hit them with another fine. But, it’s not enough. I am asking Congress to pass the Grow America Act which would provide the tools and resources needed to change the culture of safety for bad

actors like Takata.”

Late last year, NHTSA issued two Special Orders to Takata requiring the company to provide documentation and other material relating to the agency’s ongoing investigation. Takata has not fully cooperated with the investigation. Industry observers say the Takata situation is one of the reasons for Honda’s recent decision to replace its chief executive ofcer.

Dealerships Sell More Cars

Urban Science released statistics and insights from its 2014 yearend Automotive Franchise Activity Report, which projects that throughput – the average number of sales per dealership – has achieved another an all-time record of 921 units based on vehicle sales of 16.5 million.

This all-time high will mark the third straight year the U.S. dealership network set a new throughput record.

The most recent FAR shows a slight increase in the number of automotive dealerships since the end

SmokeLess Motor Oil SmokeLess Motor Oil

of 2013. As of Dec. 31, there were 17,953 dealerships (rooftops), a 0.6 percent increase from last December’s total of 17,838. The number of franchises (brands a dealership sells) also increased slightly by 0.5 percent – to 31,609 as of Dec. 31 from 31,440 on Dec. 31, 2013, . Data shows that 96 percent of local markets had virtually no net change over 2014. However, the most significant (net) dealership increases occurred in: Texas (18 dealerships), California and Florida (13 dealerships), Georgia (12 dealerships) and North Carolina (seven dealerships).

MOTORCYCLE SALES ENTER

NEW ERA AT AUCTIONS

The wholesale market for motorcyles is going through an evolution.

Bob McConkey, partner, McConkey Auction group, said the motorcycle market in the last decade was like the auto market 30 or 40 years ago.

He said DAA Northwest Auto Auction started out small with its motorcycle sale and it grew pretty rapidly.

“I look at the bike business like the car business 30 to 40 years ago,” McConkey

“So they are relatively new auction customers. As they see the value of the auctions, we’re seeing more dealer activity.”

In 2006, DAA Northwest in Spokane, Wash., partnered with Harley-Davidson Financial for motorcycle sales.

McConkey said under Dave Woods, Harley began using a diferent approach to selling their bikes. It moved from limited markets with general powersports sales, to dedicated

said. “The guys, especially Harley Davidson, were selling new and were not really interested in used. They weren’t seeing the value in used bikes and not managing used bikes aggressively.

After that, however, the recession hit and lending shut down across the board.

“The bike market really followed the car market in that volumes retracted,” he said. “So it hasn’t been a steady growth business, even though it started out with a lot of growth.”

Today, DAA Northwest is running about 100 bikes a month in a motorsports sale that is primarily motorcycles, but does include a few ATVs, snowmobiles and powersports.

powersports inventory sold, well over half of that for Manheim was sold over Simulcast,” Coutu said.

Bike sales will always have a “seasonality” to them, but

there is a mindset shift on that front, Coutu said.

“There used to be a large seasonal variance in pricing,” he said.

Continued on page 10

CONSIGNMENT STORE SELLS BIKES

“Now those guys are seeing the value of trade-ins and the value of remarketing used bikes. They see the value of wholesaling aged inventory through the auctions.

“It’s probably 85- to 90-percent motorcyles and the vast majority are Harley Davidson, with some metric bikes, too,” McConkey said.

Since wholesale bikes are made-up of trade ins or repos, they can range from first-payment repos to 10to 12-year-old models.

motorcycle sales in di ent markets.

DAA Northwest began with a “fairly small” motorcycle sale, anchored by Harley but including metric bikes, he said.

It expanded quickly.

“It started out with a lot of growth,” McConkey said.

“In 2007, 2008 and, especially 2009, there were a lot of repossessions and our volume was pretty big.”

“We see the whole gamut,” McConkey said.

Manheim’s Rich Coutu, vice president of commercial sales, said both commercial and retail sellers are “shoring up their remarketing strategies.”

Coutu said while auctions have always had strong inlane sales for motorcycles, the Internet gives buyers and sellers another option.

“The biggest trend we’re seeing today is the sizable increase in the use of online platforms,” Coutu said.

Improvements in condition reports and multiple photos have helped boost online sales in motorcycle sales as they did in auto sales.

“In 2014, for all bikes and

CarLotz is a quickly growing chain of consignment stores and its latest edition is a dedicated motorcycle shop.

The firm fell into motorcycle sales.

“We had a lot of folks who were selling cars with us and they asked if we could sell their bikes,” said CarLotz CEO Michael Bor.

The Richmond, Va.based company soon found a strong market for used motorcycles because riding is an activity people take up and then often drop.

CarLotz staff soon found they were running out of space to keep the motorcycles and started putting

them into mobile storage units.

Then a retail space became available next to the chain’s original store. CarLotz bought it and turned it into the Bike Shop by CarLotz. The facility can hold 40 to 60 bikes.

CarLotz sells a wide variety of bikes, from a $500 Buell to a 2014 Harley-Davidson. Most of the inventory is at the upper end, Bor said.

The chain treats motorcycle sales the same as car sales for buyers and sellers, except it doesn’t allow test drives for bikes. CarLotz charges $199 for the consignment and $699 for the sale.

Turning 90 – Continued from page 1

The National Independent Automobile Dealers Association asked the state group to give Van Collie a plaque honoring him as the oldest active dealer in the state and national groups.

“I didn’t expect this,” said Van Collie, who joked that he would have dressed up for the occasion if had known he was going to be honored.

“I’m kind of at a loss for words. It’s really an honor. I have to thank the good Lord for my health,” he said.

Van Collie said the business has changed a lot since he started.

“I lived on a farm when I got first got my license,” he said. “After I’d get done working in the field, I’d buy an old car, fix it up and sell it. Then I bought another one and

fixed it up and sold it.

“Finally, a man from the state came out to the farm and said, ‘Hey, you can’t keep doing this. You need a dealer’s license.’ So, hell, I got a dealer license right there on the farm. It worked for me.”

Cooper presented a selection of photographs of the types of cars that were selling in 1947, such as a 1947 Ford tractor, a Studebaker convertible and a Cadillac.

He also ofered his personal thoughts on Van Collie.

“He’s the epitome of what a car dealer is,” Cooper said. “He’s got integrity, he’s got honor and he works his (butt) of. He’s got everything you need to be a successful car dealer.

“And he’s been doing it forever.”

Motorcycles – Continued from page 8

“But we’re seeing that kind of diminish a little bit. The contributing factors are the online sales.”

Coutu said units need to be retailready for online sales, though.

Volumes at DAA Northwest have been flat in the last 18 months, though Harley Davidson expects those to rise as credit has loosened up, McConkey said.

“We’ll probably see an increase of inventory by the end of this year,” he said.

Coutu whose background is in financing, said lending for motor-

cycles is diferent that autos.

“With specialty products, credit will always be a little tighter than whole cars,” Coutu said, “because it’s, typically, discretionary spending.”

But he agreed with McConkey that volumes should increase.

He said retail demand and access to financing for both new and used product has increased, so volumes have remained strong for Manheim sales compared to last year.

“The paper is flowing, so to speak,” Coutu said.

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Chinese Cars Remain Years Away from Entering U.S. Market

DETROIT (AP) — Another Chinese automaker showed vehicles this year at the auto show in Detroit, raising the perennial question about when these companies might sell in the United States.

The answer: Years from now, according to carmakers and industry observers alike.

Chinese manufacturers have announced plans over the past decade to export to the U.S. only to postpone them when faced with passing U.S. safety and emissions tests and building a dealer network.

They also must overcome big hurdles in convincing U.S. car buyers that Chinese cars have the quality they demand.

Still, Chinese companies remain interested in eventually selling in the prestigious — and potentially profitable — market.

“The fact that they’re showing in Detroit doesn’t really signify that they’re coming soon,” said Michael Robinet, managing director of IHS’s automotive group. “They’re showcasing that they’re in the game, looking to expand beyond the home market.”

Any Chinese-made cars sold in the U.S. likely would come in at the bottom segment of the market for diferent types of vehicles, Robinet said, where they would compete in

the already lively market for used cars. Buyers would need to decide whether it’s better to buy a used car made by General Motors or Toyota, for example, or a new car from a company that just arrived on American shores.

John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates, said the quality of Chinese-built vehicles has improved, but they still generally lack the fit-and-finish that U.S. car buyers expect.

And consumers’ experience with waves of Chinese-made products that they encounter daily at stores would color their expectations about new cars.

“There’s a general perception of goods coming out of China, being fair or unfair, that they are relatively sub-par,” Humphrey said.

Chinese companies are in their first decade displaying vehicles at the North American International Auto Show.

In 2006, a lone Geely Automobile sedan sitting outside the main exhibit halls marked the first time a Chinese automaker showed a car in Detroit. Last year, the Chinese companies skipped Detroit.

This year, Guangzhou Automobile displayed vehicles including a fuelefcient small SUV that will be sold

in China starting in April and parts of the Middle East, Africa, South America and eastern Europe in late 2015.

The company known as GAC said 2017 is a possible year it would like to enter the U.S. market, but there is no concrete timetable.

“Before entering the North America market, we’ll have a full understanding of the culture and consumption features of the North America auto market and release according models,” Wu Song, GAC Group general manager, said in an email interview.

In 2007, Chrysler and Chery Automobile, China’s biggest independent brand, announced plans to produce a Chinese-manufactured small car for export to the U.S. as soon as 2010 under Chrysler’s Dodge brand. They ended the venture due to the global financial crisis.

Other companies pegged 2009 as a year where Chinese-made vehicles would be ofered for sale in the U.S., but that year passed without any coming on the market.

“It’s a massive undertaking and you can’t get it wrong,” said IHS’s Robinet.

PEOPLE IN THE NEWS

Auction Chain Names CFO

XLerate Group announced that Tom Schuler has joined the auction chain as its chief financial ofcer.

XLerate operates auctions with physical and satellite sale operations in California, Texas, Florida, South Carolina, Mississippi and Wisconsin.

Schuler is a graduate of Harvard College (B.A.) and UCLA (M.B.A.)..

Black Book Exec Retires

Black Book announced that Ricky Beggs, senior vice president and editorial director, will retire from the company efective April 1.

Beggs joined Black Book in 1981 as used-car editor. He was named Black Book’s managing editor in 1990.

A recipient of the Warren Young Jr. Scholarship Fellow Award, Beggs has delivered presentations to industry observers at many key conferences and events for manufacturers, dealers and remarketers, lenders and the media.

Beggs led his team to be the first guidebook to have its entire editorial staf become Certified Auto Remarketers.

Beggs was the third person to achieve CAR certification.

Veteran Joins Group

David Andrews, CEO of City Enterprise, LLC, announced that auction veteran Robin Treadway has joined the Dealer’s Auto Auction Group as managing director of auction operations.

Treadway has been in the automotive auction business for more than 35 years. He began his career as a ringman at the Nashville Auto Auction in 1982. His career took him throughout Tennessee and Kentucky as an auctioneer.

Treadway had a 20-year career with Manheim that started in 1994.

Northwood Salutes KAR CEO

Carmel, Ind.-based KAR Auction Services, Inc. announced that Jim Hallett, CEO of KAR Auction Ser-

vices, was recognized as one of six Northwood University Outstanding Business Leaders at its 35th Annual Outstanding Business Leader Awards Gala on Feb. 7.

Hallett was recognized for his longstanding track record of professional success and leadership in the automotive remarketing industry.

Northwood University annually recognizes a select group of men and women for their business achievements and for their support and exemplary leadership in the communities in which they live and work.

These individuals serve as role models for Northwood University students, all of whom are engaged in the study of business management, as they share anecdotes relating to the obstacles and challenges they encountered while on their personal road to business success, as well as remedies relating to how they overcame them.

In the 35 years since the program’s founding, more than 300 business leaders from more than 30 states and several countries, represent-

ing dozens of industries and fields of business expertise, have received the Outstanding Business Leader Award.

Service Contract Company Names Area Vice President of Sales

GWC Warranty announced that Joe Rodriguez has joined the company’s sales leadership team.

Rodriguez joined GWC in December as area vice president of sales.

In this role, he will work to continue driving growth of the mid-Atlantic and Southeast regions.

With more than 22 years of sales management experience in the auto finance and retail automotive industries, Rodriguez has worked for companies like Chase Auto Finance, Onyx Acceptance, NAL and the King Automotive Group.

Most recently he was vice president and credit executive for Chase’s Preferred Client Group.

Rodriguez holds a Bachelor of Science degree in business administration from the University of Florida and has an MBA from Nova Southeastern University.

GWC Warranty recently announced a strategic alliance with National Auto Lenders.

Through its dealer network, NAL now ofers GWC vehicle service contracts.

RETAIL MARKETS

ALABAMA

Henry Mullinax, president, Mullinax Auto Sales, Anniston, Ala.:

“I’ve been in business since 1979.

“We’re low on cars because of the season. I’d say we’ve got 54 or 55 cars. I usually keep 65 to 70.

“I sell about 35 a month. It’s tax time.

“We don’t do buy-here, pay-here, but customers have money and they’re spending it.

“Before I went through the Certified Master Dealer program, I’d carry anywhere from 95 to 100 cars.

But a dealer’s not profitable unless you turn your inventory eight times a year.

“So I cut my inventory in half. I’ve been a whole lot more profitable. That’s one thing I got out of the CMD program.

“I used to get my (inventory) from new-car dealer trades. I ran a wholesale operation for a number of years, so I had a good relationship with newcar dealers.

“But now that’s kind of

flipped since new-car dealers have become used-car dealers with a franchise sign. That’s pretty much eliminated them (as a source).

“I do very little subprime. It’s probably 20 percent. I try to find a local finance company to work with.

“The average price is probably $12,000. That’s pretty much the same. I haven’t seen that part of the market change.

“We do our own reconditioning, but I don’t do any service. I job that out.

“Our average recon is $2,270. That’s three times higher than the average dealer.

“What I have to buy is something that a newcar dealer cannot aford to recondition.

“A perfect example is I bought a nice Jeep Wrangler Unlimited Sahara. I brought it home and spent about $1,600 on it, fixing pinion seal and leaks you had to address.

“A new-car dealer would just let it go. Where it would cost me about $250

to fix, it would cost him around $700.

“I tried a certified program, but people would come in and say, ‘You sell a good car and stand behind it anyway, so I don’t worry about (certification).’

“It took me years to build that reputation. To do that, I had to exceed what most people would do with a CPO car. I have to have a vehicle that stands tall and has no apologies.

“I don’t have as high of a profit margin, but I do have a high margin of repeat business.

“I do a good mix of domestic and import.

“I began in the import business, so I’m more orientated to imports. Most of my high-mileage vehicles are imports.

“Three-year-old cars are my wheelhouse. I do have a couple of 2014s. Mileage varies.

“But a three-year-old car with 50,000 miles is my sweet spot. If I can find that, it always sells.

“The most recent sale was a 2006 Chevrolet Aveo with

60,000 miles. I sold that for $8,000.”

VIRGINIA

Sandra Moss, co-owner, Moss Motor Co., Dillwyn, Va.:

“We just celebrated our 30th anniversary in 2014.

“Currently we have about 60 cars on one lot. We have a pretty good size area. So we have one (section) that’s our ‘value center,’ where we put our less expensive cars. We still work it out of the same building, but it’s separate from our regular (inventory).

“We’ve always specialized in late model (vehicles).

“Sales are down to maybe 15 (units) a month. That’s not enough.

“After 2008, people became very cautious with their dollars. Even though employment has increased here, people are more careful.

“We also have an independent rental agency here. That’s been beneficial for us. We do the insurance replacement rentals. We get a good deal of business from our local body shops.

Compiled by Jeffrey Bellant

“I’ve got about 30 cars that are 2009 through 2013. We haven’t started buying 2014s yet. The other 30 would be older cars.

“The average mileage is in the low 40,000s. That has not changed from last year, but it has gone up from three years ago.

“We’re probably carrying 80 percent cars and 20 percent SUVs and trucks. Good used trucks are so difcult to find.

“(Inventory) is made up of 75 percent domestics.

“Fortunately for us, reconditioning costs in the country, where we are, aren’t very much. We would pay $150 to $200.

“We do that work here.

“A large amount of our population is made up of people who are retired, and we still use newspapers. We find we have a large following. The thing is, we never put in the same ad. It changes every week.

“We’ve actually had a run on Mustangs lately. One recent sale was a 2008 Honda CR-V Limited. It had 93,000 miles and sold for $13,200.”

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WHOLESALE MARKETS

FLORIDA

Doug Rodriguez, general manager, BSC AmericaTallahassee Auto Auction, Tallahassee, Fla.:

“This will be our 31st year.

“We have been up all year. Volumes have been excellent. We’ve been running between 500 and 600 cars weekly.

“This year, sales percentages have been awesome. We’ve been at 60 to 70 percent every single week.

“I think it’s because the economy is better. I also think the auto industry itself is going to be stronger this year than it was last year.

“Business was a little stagnant last year because of new-car sales, but we still did well. But I think this year is going to be a growth period and not just our company, but also the surrounding area dealerships. I just think it’s going to be a good year for the auto industry.

“There are 200 to 300 bidders every week. (During a recent sale) we had 305 bidders. So we’ve been very strong and the lanes have

been full.

“We draw dealers from all over the panhandle area, all the way from Jacksonville to Pensacola. But we also pull out of Dothan, Ala., and Enterprise, Ala., and southern Georgia area.

“I’m hearing positive things from the retail guys. They are all very excited and optimistic about 2015. We’ve already seen a big impact with the tax dollars. I think the electronic (filings) have allowed the market to surge a little earlier than in the past.

“Everyone that I’ve spoken to, their lots are full, they’re retailing cars. They’re pretty optimistic.

“Our fleet-lease-repo accounts are growing, we’re still about 90 percent dealer consignment. On the fleetlease-repo side, we get cars from ARI, Element, MK leasing and we now have taken on Westlake Remarketing. We also work with SRG remarketing and other local banks and credit unions.

“I think we’re going to see growth all year long on the commercial side. There

are additional lease units coming into the market this year. I expect that we’ll get our share of that. We’ll see an increase.

“Our average sale price is $5,500 to $6,500. It’s about a $1,000 up from last year.

“We do an in-op sale every week at the end of our regular sale. We’re running about 50 to 60 units every week.

“We also hold a monthly powersports and special equipment sale on the second Friday each month. Those numbers are starting to grow. It’s a 50- to 80unit sale. We’ll get jet skis, trailers, motor homes, motorcycles and some boats and quads.

“On the third Friday of every month, we run a Five Day Front Line Sale. It’s a later-model, lowermileage unit. We’ve seen some growth in that area, as well. Those are 2004 and newer, 75,000 miles and lower, and must pass a certified inspection.

“We’ve created a market in the panhandle that, maybe, wasn’t around before we got here and we’ve filled it.”

NEW MEXICO

Compiled by Jeffrey Bellant

Ray Vickers, owner, Farmington Auto Auction, Farmington, N.M.:

“February was a complete turnaround. We’ve had a fabulous February.

“January was off quite a bit. I’m not sure what to attribute it to. Our dealers in this area did not have a good January so as a result, we didn’t have a good month.

“Volumes have been up compared to this time last year.

“Normally around tax time we have a hard time getting inventory to sale. This year we’ve been able to get more cars and we’re selling more.

“Our percentages have been right at 60 percent. Even January our percentages were at 60 percent, but then we just didn’t have a lot of cars.

“I don’t have the average number of dealers in the lanes, but it’s been up. We’ve been growing, so we’re getting more dealers.

“Dealers have said that, for the most part, they

had a tough January, but business picked up starting the last week of January. So they have a little more confidence.

“We’re mainly a dealer consignment sale, but we do have some lease accounts that have been real good to us. Those are repos.

“I don’t think that the number of repos have changed from this time last year. The volume of repos is usually the same. The only thing that changes that is if we were to add a new client.

“In February we ran a GSA sale. The GSA (account) has been really good for us. We only had 43 cars.

“The GSA put their orders in late for the new cars, so it doesn’t look like we will have a sale in March.

“We’ll probably have our next GSA sale in April. They have a variety of vehicles.

“In our area, there are more work trucks and SUVs.

“Our average price is about $6,000 if you take out the GSA units.

“I think we’ll have a good year, but it’s not going to be a record or anything like that.”

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Disconnected Jottings From Tony Moorby...

I’ve had a sweet tooth ever since I was a kid and this desire continues unabated.

I wouldn’t go as far as to say that I’m a chocoholic but some things aren’t finished unless chocolate is the finish. A sandwich at lunch-

I’m told that this is because American milk chocolate makers use less cocoa butterfat and substitute a larger percentage of vegetable oils and sugar “products”.

European milk chocolate is richer in butterfat so it

Tony Moorby

• 40-year veteran of the industry

• President from 1997–2000 of ADT Automotive

• Served as ADESA’s executive vice president of sales and marketing

• Moorby & Associates 2006–present

• Awarded the Ring of Honor by NIADA

• NAAA Hall of Famer

time provides just such a trigger – it used to be a cigarette until 15 years ago.

But there’s chocolate and then there’s chocolate and I know I’m going to put a few noses out of joint but the mainstream American Hershey’s chocolate bar doesn’t do it for me.

First, it ofers a malodorous stinky feet smell when first opened followed by a soapy taste. The texture is akin to soft plastic with no glossy mouth-feel.

feels smooth and silky on the tongue – Cadbury is a typical maker, as popular in the U.K. as Hershey’s is here.

But here’s where things get complicated.

The good news is Hershey’s was given a license to market Cadbury’s Milk Chocolate. The bad news is they were allowed to use an American recipe.

The diference was obvious and I’ve avoided buying it since.

Until now there was some

respite, in that a company, LBB Imports (it stands for Let’s Buy British) sold genuine Cadbury’s chocolate from Great Britain for years and Hershey’s has contended that LBB has infringed Hershey’s right to sell Cadbury products.

They have now won a suit that bars (sorry about that) LBB from further U.S. distribution of the real thing.

I don’t suppose that we’re headed for the equivalent of another Boston Tea Party but there are plenty of folks who will rue its parting, including me. The person who crafted the license agreement should be fed Hershey’s for the rest of his or her life!

I prefer good old American competition to fight it out in the main street and the grocery store.

A brighter note is that there are many new chocolatiers around – there is a stunningly good local firm here in Nashville – and visiting some older ones like Toblerone will block (there it is again) any withdrawal symptoms.

The recent St. Valentine’s

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weekend brought a new influx of the delicious delectation. One of my daughters paid an arm and a leg for chocolate covered strawberries and my diet was dealt a blow when a Whitman’s Sampler turned up on the kitchen counter.

Half the fun is hovering over the box, trying to decide – Russian Caramel or Hazelnut Cluster, Cofee Crème or Coconut Crunch?

Then there’s the high! It’s been so cold lately; I thought I’d try making a mocha coffee using Starbucks hot cocoa and Verona blend cofee. My heart was tap-dancing like Fred Astaire and a sauna with birch twigs couldn’t have opened my pores further.

The last time I indulged in hot cocoa was probably

when I was at school. This will be the last.

The good news is that Mars’ products abound and M&Ms, in any of their guises, are equivalent to confectionary crack.

And when hunger overtakes a sweet tooth then a Snickers bar will see you through to the next meal.

I would gnaw on a Kit Kat bar like a beaver on a tree stump when Rowntrees, a company in York, England, made them until they were sold to Nestle, who then licensed their manufacture to, you guessed it, the Hershey Co.

Something as innocent as candy turns out to be a viciously competitive, worldwide business. If I took my diet seriously revenge would be sweet.

INSURANCE AUTO AUCTION S

By Miles Mellor

Across

1. They’ve made a 90, 100 and 200

3. They made a 300

10. “We __ family” Sister Sledge

11. E-mail address ending

13. They made a car called Marathon

15. ES 330 and GS 430

16. Dodge truck

18. Makes comfortable

19. Where concept cars are displayed

22. Gold in Spanish

23. Tire

25. Early French automaker 29. Price ___

Stylish and elegant

31. Tributes, for instance

33. Michigan time, for short

35. It’s not a popular car color

37. Top Gear cars often go by in a ____ (indistinct image)

38. Chrysler savior, frst name

39. ___ Doc Smith, Sci-Fi writer

40. West coast city

41. Prettify (2 words)

44. Antique

45. They made a T100

47. Scope

49. Abbreviation for all wheel drive

50. Company that made the 827 and the Bullet

51. It’s a shade of grey in car colors

Down

1. _____ Crosstour

2. Conk out

4. Type of pitch on a lot (2 words)

5. Rolls symbol

6. Demonstrates road rage, e.g.

7. Makers of the IS 250

8. Fix up

9. Corrodes (of metal)

12. Cadillac __ Ville

14. CCx makers

17. Mazda ___

20. Harley-Davidson owners group

21. Try to win an important client

24. VW’s “___ Auto”

25. Shade of white

26. It’s beneath the chassis

27. Sense of style

28. Honda model

32. Have none left on the lot (2 words)

34. There’s one for the baby

36. A Bentley model 37. Flat ____

Lotus

Porridge ingredient 43. MPG part 45. Deuce in poker 46. Tire’s need 48. Symbol for a light metal much used in car manufacture

April

April

May

May

May

August

September

September 21 - NAAA

Deadline

Sept.

Deadline

October 5 -

Compiled By Jeffrey Bellant

SERVNET ADDS FRESNO SALE

20TH ANNIVERS A RY I SSUE

The ServNet Auction Group announced the addition of its 32nd auction location: Brasher’s Fresno Auto Auction in California. The Fresno facility was recently purchased by the Brasher family, and held its first sale under the Brasher banner Jan. 16.

“It is with great pleasure that we welcome the newest member of the ServNet Auction Group,” said ServNet’s President, Patty Stanley. “Expansion from within is indicative of the strength and vitality of our member auctions, and we’re excited to extend our footprint into this thriving automotive market.”

The new auction facility is the eighth owned by the Brasher family, all of which are also ServNet auctions.

“With the opening of Brasher’s Fresno Auto Auction we’re delighted to expand our market presence,” said John Brasher. “We look forward to serving more dealers in California’s great Central Valley, making the service Brasher’s is known for available to them in their local community.”

Brasher said Larry Champagne will stay on as the general manager.

Manheim Supports Lake Erie Group

Manheim Detroit announced a $12,500 donation to Lake Erie Waterkeeper, an organization that serves Lake Erie’s waters and its tributaries through education, advocacy, outreach and collaboration.

As a part of Cox Enterprises, Manheim Detroit participates in the Cox Conserves Chairman’s Cup, an internal program that recognizes Cox field locations for implementing sustainable business practices.

“We’re excited to receive this contribution from Manheim Detroit and Cox Enterprises,” said Sandy Bihn, executive director of Lake Erie Waterkeeper.

“This donation will be instrumental in our eforts to keep Lake Erie clean and protect this Great Lake waterway.”

Manheim Detroit was recognized for their proactive and innovative green eforts and awarded $12,500 to donate to a local environmental nonprofit and selected Lake Erie Waterkeeper.

We invite news items and top-quality photos from our readers to be considered for “Around the Block.” Please include the name of a contact person and a telephone number. Send items and photos to: Jefrey Bellant Mail: Used Car News, 24114 Harper Ave., St. Clair Shores, MI 48080. Fax: (586) 772-9400 e-mail: jef@usedcarnews.com

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