The Manheim Used Vehicle Value Index fell to 123.8 in May, which represented a decline of 0.7 percent from a year ago. This is the fourth consecutive monthly decline.
According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in May averaged $10,440 –down 2.5 percent compared to April.
J.D. Power Buys Guide
J.D. Power and the National Automobile Dealer Association announced an agreement under which J.D. Power will acquire NADA’s Used Car Guide business.
New Car Dealers Sue TrueCar in California
The California New Car Dealers Association filed legal action against TrueCar for what they claim is the company’s noncompliance with various sections of the California Vehicle Code.
Dealer Brings Online Background to NIADA
(Frank Fuzy is the incoming president of the National Independent Automobile Dealers Association. Fuzy is the owner, along with his wife Gina, of Century Motors of South Florida Inc. in Pompano Beach, Fla.)
UCN: Could you tell us
a little about your background before you got into the car business?
Fuzy: I was born and grew up in the Bronx, N.Y.
We moved out when my dad, who was a restaurant manager, got transferred to White Plains, N.Y. He was running the ice cream shop
at a McCrory’s five-anddime store.
We moved to Lincroft, N.J., and then when I was 14 years old we finally moved to Florida.
I’ve been here 36 years, but I never lost the accent.
UCN: How did you get
into the car business?
Fuzy: My wife, Gina, and I dated four years – we carpooled to our local community college, working on business degrees. Her background was in travel. I was going to be an architect.
Continued on page 8
ADESA Renames Auctions, Acquires Inspection Service
ADESA continues to grow its operations both online and physically, and in some cases that requires changes.
The auction chain announced that two of the company’s auctions will change names. Both auctions are in the Pittsburgh area.
ADESA has two wholesale vehicle auctions: ADESA Pittsburgh in Mercer, Pa., and ADESA PA in York, Pa.
The company recently acquired a third auction in the state, Pittsburgh Auto Auction, which is located closer to the Pittsburgh city limits, so the company is renaming the Mercer location.
In June, the auction in Mercer, Pa., located about an hour
north of Pittsburgh, will change its name from ADESA Pittsburgh to ADESA Mercer.
In July, the recently acquired Pittsburgh Auto Auction will change its name to ADESA Pittsburgh.
Also, ADESA announced that its subsidiary, AutoVIN, has successfully completed the acquisition of the vehicle inspection business from DataScan Field Services, a JM Family Enterprises company.
The new AutoVIN leadership team is led by Richard Carpentier, chief operating ofce and senior vice president of operations. Carpentier will oversee all aspects of the company’s day-to-day operations.
Rush - Dated Material
Dealership Reaches End of Road After 100 Years
By Jenny King
WACO, Texas — The lot at 515 E. Waco Drive, site of Bill Miller’s Used Cars, is empty for the first time in 60 years.
The business retailed 27 cars May 15, disposed of the remaining vehicles and closed its doors.
A week later, Trey Miller, nephew of dealer Bill Miller, was busy cleaning out drawers and preparing to leave the car business to join his father’s bee control operation.
The cleanup was taking longer than anticipated.
“I found a contract my grandfather had written in 1941 for the sale of a 1939 Ford,” Bill said. “The buyer made a down payment of $33 and agreed to pay $5 a week.”
By 1941 the Miller business already had been around for just over 30 years. Bill Miller’s grandfather started selling new cars – when he could get them – in 1910, Bill said. He had been handling mules and wagons and likely continued to do so.
Back then, they would drive all the way to Detroit to buy new cars, towing them back to Waco.
“In those days it took a whole day just to drive from Waco to Dallas,” Trey Miller said.
“They were chased by Indians when they returned through Oklahoma.”
Chasing of late has been limited to the dealer seeking repossessions, something Trey and Bill worked hard to avoid whenever possible.
Ninety-five percent of sales at Bill Miller’s Used Cars have been buy-here, payhere sales in recent years; most vehicles on the lot were priced at under $4,000.
“A lot of people bought their first cars here, sometimes paying just $2 a week,” said Trey, 52, who started at the dealership when he 12.
Bill, now 78, has been recovering from cancer treatments and unable to work. The chance to get away from auto finance and into the shorter-season bee exterminating business was too good to pass up, Trey said.
“I don’t have anything against the car business,” he said. “It has been a good living for us and our employees.
“Now I’m ready to be responsible for me,” he said, referring again to the burden of keeping track of loan customers.
Bill said he thought the business over the years was
very generous with its customers, including those with payment issues.
He has contributed to Little League teams and has helped bury people whose families couldn’t aford it.
“Our repo rates have varied,” he said. “Tax season can be sad because people come in with their refunds as down payments
but don’t really understand that they will also owe regular payments.
“We’ve owned some cars eight to 10 times,” he said.
“At one time we had 10 people working here,” Bill said. “We began downsizing about four years ago. We found as older employees left us, they were irreplaceable.”
Photo by the Associated Press
THANKS FOR THE MEMORIES : This photo taken in April of 2010, shows long-time car dealer Bill Miller posing next to some of his cars at his dealership in Waco, Texas.
NEWS BRIEFS
Manheim Offers Second Chances
Manheim announced the nationwide rollout of 2nd Chance Sale, a new app that allows customers to access and make ofers on unsold vehicles after they cross the auction block.
At the conclusion of an auction, unsold vehicles are immediately listed on the 2nd Chance Sale app found within Manheim’s mobile application and on the web at http://2ndchance.manheim.com.
Customers can then view and sort vehicles by numerous criteria – including year, make, model, condition reports and auction lane – and make ofers to purchase those vehicles directly through the app.
In addition, Manheim is now able to deliver gate passes to customers using Manheim.com. Through the “My Purchases” tab on Manheim.com, customers can now download, view, print and even email a gate pass directly to transport carriers.
Enterprise Adds Retail Location
Enterprise Car Sales has opened a second location in the Minneapolis area.
The store – located in Burnsville, Minn. – celebrated its offi-
cial grand opening June 3-6 with specially priced inventory, financing promotions with local credit union partners and a Carfax booth to provide vehicle history information. Enterprise will house 140 vehicles at the new location.
Charges Hold Back Copart
Copart Inc. reported financial results for the quarter ended April 30.
For the three months, revenue, gross margin and net income were $297.1 million, $127.4 million and $57.6 million, respectively. These represent a decrease in revenue of $12.6 million; a decrease in gross margin of $4.8 million; and an increase in net income of $16.7 million from the same quarter last year.
Included in the operating results of the prior year is an impairment charge of $29.1 million recorded in the quarter resulting primarily from the abandonment of work previously capitalized in connection with the development of a third-party enterprise operating system.
Black Book Launches App
Black Book has launched Black Book Digital en Española, a Spanish language version of the mobile appli-
cation ofering vehicle valuation data.
The application’s design and features allow Spanish-speaking dealers, remarketers and other professionals to make smarter decisions to accelerate and amplify profit potential among the growing cadre of Hispanic auto shoppers.
GWC Hosts Dealer Council
GWC Warranty hosted its first ever Elite Dealer Council at the company’s headquarters in WilkesBarre, Pa.
Comprised of some of GWC’s top independent automotive dealers from across the country, the Elite Dealer Council was hand-picked to meet with GWC leadership and gain a deeper understanding of GWC Warranty’s history, values and outlook for the future while providing invaluable insight directly to GWC Warranty decision makers.
The council members will provide feedback several times throughout their one-year term that will be used to help GWC craft a more dealer-focused experience aimed at better serving automotive dealers nationwide with improved services and products to help them sell more cars.
FTC Finalizes Ad Settlements
Following a public comment period, the Federal Trade Commission has approved final consent orders involving two auto dealers that deceptively advertised the sale, financing and leasing of their vehicles.
Under the settlement orders, Jim Burke Nissan of Birmingham, Ala., and Ross Nissan of El Monte, Calif., are prohibited from misrepresenting in any advertisement the cost to purchase or lease a vehicle, or any other material fact about the price, sale, financing, or leasing of a vehicle.
The consent orders also require the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws.
The Burke Nissan order also prohibits the auto dealer from representing that a discount, rebate, bonus, incentive or price is available unless it is available to all consumers or the qualification terms are clearly and conspicuously disclosed.
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Subprime Auto Finance Shows Signs of Strain
There are warning signs for the subprime auto finance market, but still no signs of a bubble.
The two key metrics to keep an eye on are loan-to-value and 90-day delinquencies, S&P’s Amy Martin told attendees at the recent National Automotive Finance Association conference.
Average loan-to-value have reached an average of 115 percent for subprime financing, Martin said.
That remains below prerecession levels, but has been climbing for the past four years.
Sixty-day delinquencies have also been moving higher lately, as well. TransUnion reports that subprime delinquency rates increased to 5.19 percent in the first quarter from 5.14 percent in the first quarter of 2014.
Manheim chief economist Tom Webb, speaking at the same conference, said initial jobless claims are the biggest driver of delinquencies. Recent trends in that area are positive, with claims averaging below 300,000 a week since the spring.
A factor that concerns both Webb and Martin less than others is average FICO score.
Webb said these scores often reflect circumstances more than anything.
He gave the example of a person with a low score in 2007, when the economy was in full recovery, and 2011, when many consumers had lost their homes.
Webb said he remains optimistic about the economy, but worries about complacency.
Many subprime players came into the market after the 2008 financial crisis.
These new companies are growing quickly, which Martin said might mask losses.
Standard & Poor’s rates companies higher if they have been through a downturn.
One concern about subprime performance in another downturn is the length of finance contracts today.
More and more creditors are averaging 72-month terms and higher. This allows for higher transaction prices while keeping monthly payments at the same level.
Still, there remains little likelihood of subprime auto finance being a bubble like subprime mortgages, Martin said.
One reason is subprime automotive asset-backed securities deleverage more quickly than other types of credit. Even if there were a major collapse, the efects would be more limited.
The other reason is the subprime auto market continues to show strong performance overall.
S&P has already upgraded its rating on 36 auto finance securities through May.
The main advantage for auto
Source:
finance is consumers treat their cars diferently than their homes.
“People don’t speculate with their cars,” Martin said.
Martin also pointed out that most of the growth in auto finance has been in the highest credit tiers.
Webb said the industry today is in a better place than it was prior to its major downturns during the past 20 years.
“We have learned from every cycle,” he said.
Tom Webb
Winning Starts in Showrooms
DETROIT – If Bank of America
Merrill Lynch is correct, Honda stands to gain market share in the near future, the Detroit three will hold their own and Volkswagen, Hyundai, Kia and Nissan will sufer some loss.
Presenting results of its 25th Car Wars study here, Bank of America research analyst John Murphy told members of the Automotive Press Association that new product sets the tone for market success.
“Winning starts in the showroom,” Murphy said, adding that in light of sales in May and a generally robust new-car market, sales could peak at 20 million by 2018.
The most recent Car Wars study shows Honda replacing most of its current lineup (96 percent) with new product between 2016 and 2019.
The industry average for that four-year period will be 80 percent replacement.
Between now and model year 2017, Honda will replace 65 percent of its products, beginning with a new Pilot, Civic and HR-V.
When it comes to replacements, “Honda sticks out like a wild sore thumb,” Murphy said. “An increase in new product generates more sales.”
Consumers know the diference between refreshed and new, he said.
And new – either a complete redesign or an all-new product – works best.
The study suggests GM, Ford and FCA are likely to maintain their present shares of the market.
“They will be fairly unchanged over the next four years,” he said. Crossovers are popular everywhere, including China where consumers are “crazy” about them, he said. Pickups continue to do well.
The study’s profile of Nissan shows the company’s new model volume mix heavy in mid/large car and small cars (total of 68 percent) with just 28 percent for crossovers and light trucks. Overweight in less popular class sizes, Nissan “appears to be one of the OEMs most at risk of losing market share,” the study concludes.
European OEMs are heaviest in luxury and sporty cars, with 34 percent of new model volume mix in crossovers and light trucks. Market share may “collectively slip slightly” in the 2016-2019 period. The Korean automakers’ mix included 55 percent in small cars and 31 percent in crossovers and light trucks.
BoA expects “some market share erosion” with fewer new products coming on stream in model years 2017-2019.
Bank of America sees new product cycles requiring four to five years.
Photo by Jenny King
FORECAST: Analyst John Murphy shares his predictions with reporters at a recent event in Detroit.
FLORIDA DEALER READY TO LEAD NIADA
Her father, Ed Goodman, was a mentor to me. He’d been in the car business a long time. He was a wholesaler for 50 years in Detroit, and when he moved to Florida, he worked some in real estate and retired. But he always kept a dealer license.
So when I met him, he said, ‘You know, Frank, maybe you ought to be a car dealer. If you’re an architect, you sit in the ofce all day and wear a suit, but as a car dealer, you can make your own hours, you get to wear shorts every day and you’re your own boss.’
So here I was a young kid, and I thought, ‘Wow! That sounds great!’
He started me out by training me how to detail a car. So literally – and I didn’t see this coming – I’m cleaning all his cars in his driveway. I just want to date his daughter. He’s got me scrubbing his boat. He’s got me painting his house. He’s got
FROM PAGE 1
gle storefront in one of his warehouse complexes. So we started Century Motors of South Florida 31 years ago out of a single storefront with five-car parking. We did 15 years of wholesale. We started running five cars a week. The last time I ran an auto auction I got up to 45-50 cars a week. We were running the treadmill nonstop. It was exciting.
warehouses – I’m painting warehouse buildings. He put me to work like it was boot camp or something.
So I started with detail and reconditioning. Finally, he says, ‘Frank, the neighbors are complaining. We can’t do all this in the driveway. Let’s go partners in a business.’
He put 20 grand in a shoebox and I put 20 grand in a shoebox and we started buying cars. We rented a sin-
This was before the Internet had really caught on. So we had an abundance of buyers in the arena. We had hands in the air – 200-300 car dealers around the cars. We did well for many years.
UCN: You were one of the early adopters of using eBay and online selling. Can you explain how and why you went that route?
Fuzy: When Sept. 11 hit,
it took awhile before people would fly planes, and we went a month without selling any cars. I had four weeks’ supply of cars sitting at an auction and they weren’t moving.
So at that time we chose to go to an Internet block – basically, we put the cars online. From that point forward –it’s going on 16 years – we’ve become Internet sellers.
When someone first suggested that I start selling on eBay, I thought that would be a waste of time. I thought no one was going to buy a car on the Internet. But the first car we sold went to Tokyo. From there it just parlayed into more.
Now we put every car on eBay Motors. Since then, we have sold cars to people in England, Nigeria, Australia, Iceland, Greenland and all over the world. We have a map in our ofce with pins in it showing all the places we have sold cars.
The Internet has opened up a whole new world. Where else but the Internet can you instantly advertise worldwide? I am not going to just sit here and wait for customers to come to me.
We list about 100 cars on eBay Motors at a time and rank among the top five eBay Motors sellers.
We’re about to hit 3,000 positive feedbacks on eBay – all car sales. We have 2,990, so we need 10 more.
We’re trying to get our goal of 3,000 by the NIADA convention. That’s pretty good when you’re selling used cars with 10,000 mechanical components, and we have to check 9,999 of them.
UCN: How has the online market changed from when you first got involved? How is it easier and/or more challenging than when you first got into it?
Fuzy: It’s getting quicker and quicker and quicker, and the customers are more demanding and more educated. They want everything to happen yesterday. You have to put in a lot of time and efort.
You have to really know the car you’re selling. Consumers today, if you’re not there to meet their needs, they’re going to find somebody who is.
It’s constant contact. You need to keep them updated through e-mail when the car’s picked up, when the car’s shipped, when it’s in transit. You have to keep them in the loop, because they have the power of a feedback or a review. They can hurt your business or help it. So you make sure you stay in touch throughout the whole transaction.
UCN: Despite your focus on online selling, you have a state-of-the-art showroom. How does your focus on online selling make you diferent from a traditional brick-and-mortar business?
Fuzy: With online selling I don’t need a location every 50 miles, or every 10 miles. By going online, I can have one location and sell worldwide. I don’t need as much staf or overhead.
Frank Fuzy and his wife, Gina, enjoy all aspects of the car business. Their business is filled with automotive themed furniture and memorabilia. They even have four cats named after various car brands.
Lunch with Chevys on the Side
By Sheila McGrath
After a four-year hiatus from used-car sales, a Massachusetts restaurant owner will once again be able to sell Chevys along with the sandwiches at his eatery.
James P. Lavelle Jr., who runs JP’s Restaurant & Sports Bar in Holyoke, got permission from the city to resume selling used cars from the restaurant, something he had done on and of for years.
But the approval was a long time coming.
LaVelle went before the city’s Planning Board in March and again in April, then before its Ordinance Committee in May, before finally getting the go-ahead from the City Council.
LaVelle said he formerly had a city-issued license to keep up to four cars for sale at the restaurant, which has been open for 30 years.
But in 2011, the city put the brakes on the car sales.
“It was an issue with the license I had,” he said. “I was allowed to have cars, but after about 10 years, the building inspector would not sign of.”
The problem, he said, was that under the city’s zoning ordinance, selling cars was a nonconforming use on the restaurant property, some-
thing the previous building inspectors had never mentioned.
“No one else prior to that had even noticed it,” LaVelle said.
But now he has an incentive to get into the business of selling cars again: Just down the street from his restaurant at 200 Whiting Farms Road, a new, $10 million dealership will be built on 19 vacant acres formerly owned by the Holyoke Gas & Electric Company. The City Council approved a rezoning for the new Gary Rome Hyundai dealership on the same night they approved LaVelle’s request.
LaVelle told the Holyoke Planning Board that by ofering cars for sale at his restaurant, he’s hoping to attract some of the car shoppers on the street who are heading to the new dealership.
LaVelle received a zoning change. But he will still have to obtain a license from the city, according to Marcos Marrero, director of Planning and Economic Development.
“Any permits for the operations would entail the owner seeking a license or doing a special permit through the council,” Marrero said.
At that time, the city may impose conditions. LaVelle said he is waiting until the final approval is in place before he irons out the details of his used-car business.
Collections Grow As Issue
Collection of all types of credit remains a main focus for federal regulators, which in some cases are redefining the designation of “collectors.”
tor is extremely wide. Even lawyers who specialize in debt collection now face CFPB oversight.
“Anything you did yesterday that you thought was compliant might not be tomorrow,” said attorney Joann Needleman.
Two collections cases recently settled by the feds involved automotive creditors – Consumer Portfolio Services Inc. and Drive Time, a buyhere, pay-here chain.
CPS paid the Federal Trade Commission $5.5 million for various violations, including “spoofing” of local numbers.
Needleman said automotive creditors need to hire attorneys who will create policies and procedures designed to answer the CFPB when regulators come in to a business and ask how it handles collections.
This is when a collector buys local numbers and uses them to call the debtors. The idea is people are more likely to answer an unknown caller when the i.d. shows a local number.
Lucy Morris, an attorney with Hudson Cook who worked for the CFPB, said debt collection has long been a major consumer complaint.
Some of the CFPB’s actions show how little protection there is for creditors.
DriveTime paid $8 million to the Consumer Financial Proection Bureau for its violations, which included contacting customers’ employers and references.
Morris gave the example of a furniture store that sold to military personnel on credit.
These cases are diferent than past collection cases for two reasons.
One is the cases have been against creditors collecting on their own debt rather than third-party collection agencies.
The store had its customers sign contracts stating it could contact their commanding ofcers for the purpose of debt collection. The CFPB said the consumers failed to understand what they signed and so this was an unfair practice.
Morris recommends dealers and auto creditors pay attention to all CFPB decisions regardless of the field. The CFPB will likely issue a debt collection rule later this year, she said. “I
The other diference is the DriveTime case fell under the CFPB’s unfair, deceptive, or abusive acts or practices standard, rather than the Fair Debt Collection Practices Act.
The CFPB definition of a collec-
Joe Kaisk Magic City Motorcars
ADESA Boston July 3, 10, 17, 31
508-626-7000
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704-587-7653
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937-746-4000
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209-839-8000
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281-580-1800
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800-925-1210
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816-525-1100
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859-263-5163
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703-996-1100
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Brasher’s Salt Lake AA July 14
801-322-1234
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Manheim Pennsylvania *July 9, 23 800-777-2053
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ADESA Kansas City July 21 816-525-1100
Columbus Fair AA July 15 614-497-2000
Manheim Detroit July 9, 23 734-654-7100
Manheim Fredericksburg July 16 540-368-3400
Manheim Milwaukee July 15 262-835-4436
Manheim Nashville July 15 877-386-5004
Manheim Atlanta July 23 404-762-9211
ADESA Boston July 17
508-626-7000
Brasher’s Salt Lake July 14 801-322-1234
Columbus Fair AA July 8 614-497-2000
Manheim Dallas July 15 877-860-1651
Manheim New Jersey July 1, 15, 29 609-298-3400
Manheim Orlando July 7 800-337-8491
Manheim Pennsylvania July 10, 24 800-777-2053
Manheim Pittsburgh July 1, 29 724-452-5555
Manheim Riverside July 28 909-689-6000
Manheim Seattle July 22 206-762-1600
Manheim Detroit July 9, 23 734-654-7100
Manheim Fredericksburg July 2, 30 540-368-3400
Manheim Milwaukee July 1, 29 262-835-4436
Manheim New Jersey July 15 609-298-3400
Manheim Denver July 1, 29 800-822-1177
Manheim Orlando July 28 800-337-8491
Manheim Pennsylvania July 10 800-777-2053
Manheim Pittsburgh July 1, 29 724-452-5555
Manheim Seattle July 22 206-762-1600
Manheim Southern CA July 9 909-822-2261
Southern AA July 1 860-292-7500
GOT SKIPS?
State Busts Operations for Theft
Michigan Secretary of State Ruth Johnson summarily suspended the licenses of five Detroit used-vehicle dealers after her ofce identified and investigated a web of suspicious auto transactions.
analysis methods to identify suspicious activity, and then working with law enforcement to investigate and take action.
The Detroit dealerships were suspended efective May 28. The summary suspension, a step not often taken against dealerships, is used to protect the public.
Secretary of State staf also are cooperating with area law enforcement agencies, including the Detroit Police Commercial Auto Theft Section, to prosecute criminal cases against those involved in allegedly trafcking in stolen vehicles and auto parts.
The comprehensive investigation continues and could result in additional licensing action and criminal charges against other individuals involved.
“Most auto dealers are reputable business people, but if we discover illegal activity we will take swift action to protect Michigan consumers,” Johnson said.
The dealers are entitled to an administrative hearing to contest the suspension, but until then they are closed for business.
The dealers involved are:
• Hende Auto Parts, a used-vehicle and used-vehicle parts dealer, licensed since 2012
• Best Price Auto Sale, Inc., a usedvehicle dealer, licensed since 2014
• Sold Auto Sale, Inc., a usedvehicle dealer, licensed since 2011
• Big 3 Auto Sales, Inc., a usedvehicle and used-vehicle parts dealer, licensed since 2011
“We will not tolerate businesses that take advantage of unsuspecting consumers and will hold these bad actors accountable.”
The investigation and resulting suspensions are part of Johnson’s ongoing eforts to crack down on fraudulent activity that victimizes Michigan residents.
Johnson commended her newly formed Ofce of Investigative Services for using new transaction
• A One Auto Sales, Inc., a usedvehicle dealer, licensed since 2013
The investigation found that the dealerships committed multiple fraudulent acts in connection with dealing in vehicles as well asnumerous record-keeping violations.
In particular, the licensee of Hende Auto Parts was arrested by Detroit police during their investigation of Best Price Auto.
Feds Target Arbitration Agreements
By Ted Craig
The strongest protection for buyhere, pay-here dealers against class action lawsuits appears headed for extinction.
A group of 57 congressmen, led by Minnesota Sen. Al Franken, are calling on the Consumer Financial Protection Bureau to eliminate required arbitration agreements.
“These clauses force individuals into private binding arbitration as a condition of buying a product or service, and are designed to stack the deck against consumers and ensure that the final outcome of forced arbitration is unreviewable by courts,” the lawmakers wrote. “Forced arbitration clauses—often buried deep within the fine print of financial products and service contracts—harm American consumers by depriving them of their day in court even when companies have violated the law.”
The group of lawmakers included Sen. Elizabeth Warren, the CFPB’s chief architect; and Sen. Bernie Sanders, a candidate for the Democratic presidential nomination.
These agreements are usually part of retail installment contracts and dictate that consumers must seek relief through arbitration rather than the courts.
The CFPB completed a study of arbitration agreements in March and issued a 728-page document, the conclusion of which was that arbitration agreements were detrimental to consumers.
“We pretty much know where that’s going,” said attorney Mark Edelman, speaking at the recent National Automotive Finance Association conference.
The study was mandated by section 1028 of the Dodd-Frank Act that created the CFPB.
Edelman said the Act required a study to find if arbitration agreements were harmful to consumers and how to limit or prohibit them.
The language of the law made the findings of the study a foregone conclusion, Edelman said.
The CFPB will likely allow voluntary arbitration agreements, but experts agree few consumers sign those.
The study itself shows arbitration actions are fairly rare and usually brought by consumers, Edelman said.
However, trial attorneys oppose these agreements because the Supreme Court ruled the agreements acted as class action waivers.
Edelman pointed out that Franken’s two biggest donors were trial attorneys.
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State Mulls Title Fee Hike
BATON ROUGE, La. (AP) – Louisiana’s motorists could be hit with $79 million in fee hikes if budgetbalancing proposals become law.
Senators have attached a $60 million annual fee increase on two House bills that would have drivers paying $50 more in title fees when they buy a car.
Also being discussed in the Senate as a possible add-on to legislation is a nearly $40 hike to the cost of a driver’s license, to raise $19 million a year.
Supporters say the changes would cover the costs of providing services, noting the fees haven’t been raised in decades.
Whether lawmakers are willing to boost drivers’ costs in an election year remains unclear.
The big-ticket fee proposals come as lawmakers look for ways to scrounge up money for next year’s budget, and as they seek to stop diverting large sums of state gasoline tax revenue away from roadwork to instead pay for state police operations.
“We are clearly trying to figure out how to balance the budget, and for me, it’s about more than just balancing the budget. It’s about getting state police out of that transportation trust fund,” said Sen. Robert Adley, R-Benton.
More than $345 million in gas tax money from the state transportation trust fund has been steered to the state police in the past decade, and Gov. Bobby Jindal proposed shifting another $72 million next year even as Louisiana has a $12 billion backlog of road and bridge projects.
The Louisiana State Police and the Ofce of Motor Vehicles both fall under the Department of Public Safety, so lawmakers believe that if they raise drivers’ fees, those dollars could stay in the department and eliminate the need for the diversion of gas tax money.
State Police Col. Mike Edmonson, who heads the Public Safety Department, said if those dollars were stripped without a replacement, “It would be a major hit to state police. It would be layofs – it would be possible closure of troops.”
Edmonson said the fee increase proposals stem from conversations with legislative leaders who asked him to determine whether his agency’s fees covered the costs of providing the services.
So far, only the title fee has been attached to legislation, added in Senate committee to bills by Reps. Cameron Henry, R-Metairie, and Sherman Mack, R-Livingston.
PassTime Aids Agent in Need
PassTime raised more than $10,000 during this year’s National Alliance of Buy-Here-Pay-Here Dealers conference in Las Vegas.
Through its “mustache campaign”, PassTime ofered to make a donation for every photo taken at its booth with a mustache – real or fake. The money raised will go to the Terry Underkofer Fund, to help aid in Terry’s recovery from a major stroke last month.
Underkofer has worked in the auto industry for more than 20 years and has represented PassTime for the past eight years in Oklahoma. He is a father of two and grandfather of three.
With the tagline, “The GPS Solution that’s right under your nose”, the company handed out stick-on mustaches, set up a photo booth where visitors could put on fake mustaches and wear props to take a photo, and some PassTime employees even grew mustaches themselves.
As an additional gesture, CEO Stan Schwarz matched each personal donation to the fund.
“It was a great way to do something a little diferent at NABD this year and, of course, raise money to help Terry,” Schwarz said. “It is outstanding to see the outpouring of support from the industry.”
Used Prices Hit All-Time High
Prices are down for some of the most popular segments of used cars, even as overall used car prices climbed to an all-time high in the first quarter of 2015, reports Edmunds.com.
According to Edmunds’ Q1 2015 Used Vehicle Market Report, used car shoppers in the market for “near-new” (five years old and younger) subcompact and compact cars are paying 2.8 percent and 2 percent less, respectively, than they
did just a year ago.
Shoppers are also seeing lower prices for near-new used midsize cars (-1.6 percent), minivans (-2 percent), and entry sport cars (-2.1 percent).
The price decreases in these segments stand in stark contrast to overall used car pricing trends.
In the first quarter of 2015, Edmunds.com analysts noted a 7.1 percent year-over-year increase to an all-time high of $18,088 per vehicle.
Relationships Drive Satisfaction
It might seem odd that with so much focus on competition and regulation in the subprime market that the National Automotive Finance Association chose relationships as the theme for its annual conference.
But NAF Association President Steve Hall said relationships are the basis for the group’s goal – creating a healthy marketplace.
“A healthy marketplace is a reflection of the underlying health of its stakeholders,” Hall said.
Michael Buckingham of J.D. Power ofered some numbers to support Hall’s statement.
He showed the importance of relationships between dealers, consumers and finance companies using data from the firm’s satisfaction studies.
Dealers today can find credit for their customers. There are numerous finance companies filling every niche of consumers.
What attracts dealer business more than anything is service, Buckingham said.
“It’s not about your product,” Buckingham said. “It’s really about your service.”
One J.D. Power study shows half of dealers are willing to pay for improved service and a better relationship with a finance company. Today’s consumer demands a fast
turnaround on a credit application and dealers are more concerned than ever with cash flow.
Buckingham recommended that creditors look at ways to streamline the documentation process, such as using outside verification tools.
The finance companies with the highest dealer satisfaction are those in constant contact with the dealers. Representatives from these firms visit their dealerships on a monthly basis.
Once the deal is financed, the creditor should look at ways of making life easier for the consumer, such as allowing auto payments.
Finance companies must also have a procedure in place for when there is a problem.
Consumers rarely call a finance company, but when they do it affects their perception of the company more than any other factor, Buckingham said.
Hall said poor practices can ruin the relationships between consumers, dealers and finance companies.
Manheim chief economist Tom Webb warned attendees one such potential problem comes with longer finance terms.
“Long-term loans breed dissatisfaction because after paying for five years, consumers still have negative equity,” Webb said.
PEOPLE IN THE NEWS
Manheim Promotes GM
Manheim has promoted Eddie Laferty to general manager at Manheim Nevada. Lafferty assumed his new role on May 11.
Laferty, a seven-year veteran of Manheim, has worked as a commercial accounts manager and assistant general manager for the company.
Laferty comes to Manheim Nevada from Manheim Seattle, where he has served as assistant general man-
ager since 2012.
During his career with Manheim, Laferty helped Manheim Seattle earn more than 50 awards and accolades from many national commercial accounts.
With 27 years of experience in the automotive industry, Laferty has earned valuable experience in both the wholesale and retail industries.
Prior to joining Manheim in 2008, Laferty worked in the sales, finance and service departments of several auto dealerships throughout the state of Washington.
Exeter Hires CFO
Exeter Finance Corp. announced the appointment of Paige H. Wisdom to chief financial ofcer for the organization.
Wisdom has served as chief enterprise risk of-
ficer and executive vice president of Federal Home Loan Mortgage Corp. (FHLMC/Freddie Mac) since 2010.
Wisdom also functioned as a chief financial ofcer for key business units at Bank of America.
Prior to joining Bank of America, she served at Bank One/JP Morgan from June 2000 to July 2004.
Additional experience includes leadership positions with UBS/Warburg Dillon Read, Citibank Salomon Smith Barney, and Swiss Bank Corporation/SBC Warburg Dillon Read.
Wisdom holds a Master of Business Administration from The University of Chicago’s Booth School of Business and a Bachelor of Science in math and computer science from the University of Illinois, Chicago.
KAR Hires Tech Officer
KAR Auction Services Inc. announced the promotion of Carolyn Bogan to vice president of KAR IT Shared Services (ITSS).
Bogan is responsible
for the oversight and strategic vision of all workplace services and will be the main contact for all IT support needs.
She will also develop and implement programs to strengthen technical support operations.
Bogan joined KAR in September 2013 as director of support services. In this role she was responsible for building and driving all technical support and service desk initiatives for the KAR Auction Services group of companies.
Prior to joining KAR, Bogan served as director of the global service desk for Dublin, Ohiobased Smiths Business Information Services Inc., and was manager of the Technology Assistance Center at Houston-based Waste Management Inc.
Bogan earned her bachelor’s degree from the University of Houston.
Coastal Credit Adds Exec, Centers
Coastal Credit LLC announced the opening of a major operations center in Indianapolis and the addition
of Christine Brady, a proven industry veteran, to the company’s management team.
Coastal’s recently opened, 25,000-squarefoot, headquarters facility in Indianapolis will now also become the Eastern Operations Center, and the existing Denver facility will become the Western Operations Center.
All existing branch services will be consolidated into these locations.
Coastal will continue to provide personal service to its dealer customers in local markets through a network of account executives.
Additionally, Christine Brady has joined Coastal as chief information ofcer and chief customer ofcer.
Brady recently served as chief information ofcer of Dealer Services Corp./NextGear Capital.
Eddie Lafferty
Carolyn Bogan
RETAIL MARKETS
CALIFORNIA
Sandy Sanchez, owner, Mendocino Auto Sales and Repair Center, Parlier, Calif.:
“We’ve been in business about 15 years. We moved recently about six blocks from (our old location). We outgrew our original location.
“We don’t keep too many cars on the lot. We don’t keep a large inventory because we look for (vehicles) our customers ask for.
“We keep about 12 to 15 (vehicles). That’s about the max. We have a large inventory of cars that have to be reconditioned, so those are not on the lot.
“We sell anywhere from 25 to 30 cars a month.
“We buy mostly from auctions. My dad is the main buyer.
“We do buy-here, payhere, subprime and indirect financing. Within the last year-and-a-half, we’ve been doing more indirect financing. But we still do 40 to 50 percent in-house financing.
“Our average retail price is usually about $9,000 to $10,000. We used to sell a lot of lower-priced vehicles in the past. Last year was anywhere from $5,000 to $8,000.
“It’s been slowly transitioning (to higher-priced vehicles). The higher end would be from $15,000 to $18,000, though that’s not our normal (car).
“For buy-here, pay-here, I normally get about $3,000 to $4,000 down payment, including the pick-up note. Our minimum down payment is $1,500.
“Our average model years have been around 2010 to 2012. Usually the mileage is 50,000 to 70,000.
“The mileage is definitely one of the main factors we use to price our vehicles. They are more expensive, but customers have responded positively to it.
“We actually specialize in a few diferent makes: Honda, Toyota, Nissan, Chevy and some Ford (vehicles).
“We get a great deal of re-
quests for trucks, but it’s a little harder to find them in the condition we want and the lower mileage.
“Our biggest request is for the Toyota Tacoma along with Nissan and Chevy.
“The ratio for cars to trucks is that for every five cars we get, we’ll have one truck.
“We do our reconditioning here. It’s one of the reasons why we moved for more space. We do body work, detailing, paint and reconditioning on the mechanical side. Our service center is also open to the public.
“Our reconditioning costs are really high and one reason we can spend that is we buy our vehicles at a low price. So we’ll get cars that have come from a recovered theft or have been in an accident. The cost, with labor costs included (through our body and mechanical shops) is about $3,000.
“We recently sold a 2014 Nissan Altima with 26,000 miles. The price was $14,500.”
WISCONSIN
Ken Mueller, Jr., owner, Budget Auto Sales, Sheboygan, Wis.:
“We’ve been here since 1975 in the same location. My father opened the business then I started here in 1998.
“We keep 75 (units) in inventory. We buy them primarily from auctions and franchise dealers in the area.
“On average we sell 30 to 35 a month. It seems to be slowing down a little bit.
“We’re buy-here, payhere. The average down payment is $1,000. The average term length is from 16 to 24 months.
“Everything we sell is $5,000 and under. But it’s getting harder and harder to find that inventory to fill that niche.
“Average mileage is about 120,000. Some of these cars that have even 200,000 miles on them run like they’re brand new.
“So I’m not afraid to buy a car with 180,000 miles on it
from the auction.
“The average model year is about 2006.
“I primarily carry cars. Inventory is 50 percent domestic and 50 percent (import). We’re selling a lot of Hyundais and Kias lately. Actually, the dependability of those is really decent.
“With cars like the Chevy Malibus, the set-up fees are enormous, with the convertors and oxygen censors.
“The repair costs are definitely creeping up. They are going north.
Something has to change. I’m definitely looking for ways to cut expenses.
“I recondition vehicles. The average cost, I’m guessing, is between $300 and $600. We do a little work inhouse, but the bigger stuf we’ll send out.
“We use Internet advertising, repeat-and-referral and we do a little bit of newspaper during the holidays.
“One recent sale was a 2006 Hyundai Sonata. It had 130,000 miles. I got $5,995.”
WHOLESALE MARKETS
PENNSYLVANIA
Louis Craig, general manager, America’s Auto Auction – Pittsburgh, Washington, Pa.:
“We’ve been in business since the late 1970s. We’ve been with America’s Auto Auction since 2008.
“We have six lanes and we’re currently running five. We’ve noticed a steady increase in volumes over the last month or two. It’s been up about 30 units a week.
“In one recent sale we ran 855 cars.
“From this time last year, demand is up but volumes are down. I would say prices of cheaper income-tax cars are sufering at our sale. As far as nicer cars, prices are up.
“Our conversion rates are in the high 60s, but that’s where we usually are. They may be done a percentage (point) or two, but that’s all.
“The average price across the block for the year is about $4,500. It’s roughly the same as last year.
“About 95 percent of our
volume is dealer consignment. That’s the same as last year.
“(Non-dealer cars) are mostly repossessions. They come from banks and title lenders – places like that.
“We do an in-op sale (that also runs online). We sell anywhere from 30 to 50 (per sale). We run those online, but most of the guys will still show up in-lane to buy them.
“We also have a U.S. Marshal sale. It’s typically one every two months. We maybe sold 40 units in total last year. (Recently) we sold a 2011 BMW 750 li.
“We have weekly specialty sales. We’ll have a truck sale or a toy sale or convertible sale. We just try to do something diferently every week. We’ll run those before the regular sale.
“In honor of our seventh anniversary with America’s Auto Auction, we’re doing a special promotion for our buyers in June. We’ve noticed the lower-priced cars are vulnerable now. So if
anyone buys five cars in any week of June, the buy fee on the fifth car will be $7.
“We’ve also built a new reconditioning facility that we just opened last month. It’s state-of-the-art. We’ll do details, upholstery work. We’re not getting into any paintwork yet, however.
“I think it’s a great year so far. We anticipate volumes to be up with all the of-lease stuf (coming out). We’re anticipating more business. The biggest change this year is that the spring market was soft and I can’t account for that.
TEXAS
Charles Furr, general manager, Lubbock Auto Auction, Lubbock, Texas:
“We’re celebrating our 69th year. We’re the oldest independent dealer auction in Texas and second oldest in the nation. I’m also a member of the NCM twenty group for independent auctions.
“We’re running three lanes every week. Our vol-
umes have been very good.
“We’ve had an influx of fleet and lease units within the past 90 days. I don’t know if it’s because of the oil drilling companies slowing down. It was starting to slow up a little bit (in early June).
“Out consignment has been above normal for the past three to six months. Now, we’re running about 300 a week.
“Sales percentages are holding up good. They’re very good on repos and leases.
“We’ve been out promoting and beating the bushes for more franchise business. We’ve increased that a good 10 to 15 percent.
“That’s another reason our consignment is up.
“We draw as many as 140 bidders in the lanes. The average price (coming across the block) with repos is about $8,500. GM Financial and some of our late-model lease units are what bumps up that amount.
“The joke around here is
Compiled by Jeffrey Bellant
that we have anything you want, as long as it’s a white pickup. We’ve got acres of white pickups. I’m not the only one.
“I’ve talked to dealers from across the state and they say a lot of others have white pickups.
“Those are all coming out of the oil fields.
“Anything clean with decent mileage brings a premium. That’s like any other auction.
“From my sale, I think the rest of 2015 is looking good. Talking to the fleetlease/repo companies, they don’t see anything changing drastically.
If anything, consignment should increase. I don’t think the lease units will increase the rest of the year.
“There’s been lots of people laid of and lots of oil companies shut down.
“Normally, the repos don’t start showing up a good six months to a year later.
“I suspect that the repos will increase in the fourth quarter.”
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
My recent trip to the UK was wonderful, travel and health issues aside. It was an overdue visit to family and friends. The weather was cool and blus-
Tony
Other things are changing however. The English pub is fading fast. Landlords, who are typically not the owners these days, can’t pay rents as
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
tery, not unusual for May, but the countryside was a blaze of color and everything felt fresh and invigorating. It echoes all that Robert Browning, the poet, could describe.
The “dawn chorus”, a phenomenon of lusty birds looking for mates, all singing at once, starts around 4:45 am and continues unabated till around six. The solo act, normally performed by blackbirds, is a singularly English sound that hasn’t changed for millennia.
plunging sales and attendance can’t support the overheads anymore. The big brewery corporations who now own and operate these locals have put up prices to the point of diminishing returns. You can no longer enjoy a relatively inexpensive evening out at the pub as buying a round at the bar would require a loan. A cheap snack is a bygone whim, scotch eggs are now replaced by gourmet meals in what are now called “gastropubs” – it sounds like
CR R O O S S W D
By Miles Mellor
something that might send you to the hospital! The breweries consider that if you can’t make money on expensive beer, you can do it with expensive food.
Country pubs are no longer the cornerstones of village life. They used to say, “One church – two pubs.” Now both are under siege. Pubs in a town’s High Street are boarded up or now pizza parlors or kebab houses.
Owning a car in England now, especially around London, requires finding a parking space. Finding a parking space requires diligence, luck and a great deal of money. Just driving into London requires the payment of a congestion tax (currently about $20) before you find the parking space.
The side streets, once the bastion of the English front garden – terraces of roses, hollyhocks, gladioli and forgetme-nots – are now replaced by concrete slabs to house the family’s Range Rover and BMW. Joni Mitchell’s words about paving paradise, once prophetic, now everyday.
Driving in the “big smoke”
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around Marble Arch is more akin to a battle scene from “Braveheart” – the rougher you are, the more likely you are to win.
Nevertheless, the amount of posh, expensive cars is staggering. Granted, small cars are the most common, but Jaguars are there in gazillions, Bentleys abound alongside all the Italian exotica you can imagine. And it’s not just Arab oil sheiks or Russian oligarchs, but plain businessmen and women hotfooting it home from the City.
On the other hand, there are cyclists in droves. The city is abuzz as swarms of Lycra-clad people swirl around the trafc in a dance of death-defying acrobatics while expletives are hurled at the car drivers and back again. I learned a whole new language from Hyde Park Corner to Knightsbridge.
Luckily, my brother lives nearer to the countryside, but
even so, a trip to the supermarket for a weekly pantry stock-up requires breaking the piggy bank for enough change to feed the parking meters or multi-story garages’ hungry slots. It’s hard to shop in the High Street where menacing “Rangers” stalk miscreant old ladies who’ve managed to squeeze into a slot next to the hairdresser’s.
The old expression about an Englishman’s home being his castle is now a shaky tenet, at best.
With the price of houses now out of reach to most who live in the urban areas, it’s now just a pipe dream to young couples wanting to raise a family. Uncontrolled immigration from Europe and previous dependencies have now swamped the market for living space and social services. But that’s another story. Meanwhile my brother can’t wait to come and visit me here.
Across
1. New battery introduced by Tesla
5. Cadillac super sedan
7. Neighbor of Fla.
9. Road rage emotion
11. ___-roader
12. RX-8 maker
14. Cabrio successor
15. Light brown color
16. Button on a radio
17. Not often seen
18. Scion model
20. Dodge wagon
23. Driver’s compartment
24. Engine sound at Indy
26. Atlanta locale
28. Self-determination
29. Engine line
30. Rolls Royce model
31. Liquid you can get in a Jiffy
34. 1970 Plymouth (2 words)
37. Nissan full-size SUV
39. PC “brain”
40. Trademark, for short
41. Put down, slangily
42. Sport-____ (off-road vehicle)
43. Vehicle
44. It’s a “box” in an auto
46. German “the”
48. For that reason
49. Kia sedan
50. Full-size Chevys Down
1. Rolls Royce brand
2. S.U.V. alternative, informally
3. Car created by IMC from 62 to 64 that was used in “The Love Bug”
4. New luxury Italian sports car
5. ____ Z28 sports car
6. Mid or full
8. Big name in racing
10. Accelerates (2 words)
13. On the ___ (punctual)
19. Chevy’s all-new truck
21. Days past
22. It’s consumption is a big issue
24. Newport’s state
25. The “greatest” boxer
27. Manufacture
28. Fan sound
32. Alternative to buy
33. Hyundai subcompact 34. Element or S2000 makers 35. Lamborghini model
Increase
Radio band
Celebrated singers
Car adornments
Fed property overseer
Internet laughter
First letter in Maserati
July 6 -
July
2015 UPCOMING ISSUES OF USED CAR NEWS
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Deadline
October 5 -
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November 2 -
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November 16 -
Deadline Thursday, November 5
December 7 - Tax Season
Deadline Thursday, November 24
AROUND THE BLOCK
STUDENTS TOUR SOLAR FIELD
A group of more than 30 students and faculty members from Dighton Middle School recently toured Manheim New England’s 12,000-panel solar installation located on the grounds of the North Dighton wholesale vehicle auction. The tour was hosted by Manheim New England employ-
ee Mike Furtado with assistance from Christine Gabriel and Ed Tavares.
The attendees from nearby Dighton Middle School toured the entire solar field and engaged in an interactive presentation led by Furtado. Throughout the course of the
afternoon the students not only learned how the solar panels positively affected Manheim and the surrounding community, but also the logistics and science behind the panels.
The students also heard about the efforts of Manheim to preserve the surrounding eco systems that the field was built on, and enjoyed a catered lunch.
Manheim New England General Manager Tim Hoegler also greeted the students.
The installation at Manheim New England includes 10,000 solar panels mounted on the ground and 2,000 additional panels located on the roofs of the auction, vehicle reconditioning and body shop buildings.
The Manheim New England photovoltaic solar project includes a 3 megawatt ground mount installation and 509 kilowatt roof installation.
Compiled by Jeffrey Bellant
XLerate Group Adds Seventh Sale
XLerate Group (formerly known as American Auto Auction Group) added a seventh member to its auction family, announcing the acquisition of Greater Kalamazoo Auto Auction (GKAA). The highly respected Michigan auction joins XLerate’s established group of dealer-centric auctions with physical and satellite sale operations in California, Texas, Florida, South Carolina, Mississippi and Wisconsin.
“With the addition of GKAA, XLerate continues the objective of growing our business by acquiring quality independent sales to enhance our auction family ofering,” said XLerate’s CEO Cam Hitchcock. “This acquisition bolsters XLerate’s presence in the key Midwest market. We are honored that the Devries family entrusts us with its legacy and very much look forward to working with them over the coming years.”
We invite news items and top-quality photos from our readers to be considered for “Around the Block.” Please include the name of a contact person and a telephone number. Send items and photos to: Jeffrey Bellant. Mail: Used Car News, 24114 Harper Ave., St. Clair Shores, MI 48080. Fax: (586) 772-9400 e-mail: jeff@usedcarnews.com
SOLAR POWER: Manheim New England’s Mike Furtado addresses a group of students from Dighton Middle School.
When customers sell you to other customers, you’re doing something right. Sharing a passion for this business is what we’re all about. So we couldn’t have been more thrilled when we heard what David Kelleher did to help his friend Cass Burch reach his fullest potential: he flew to Cass’ store to sell him on the benefits of Ally SmartAuction®. Further proof that when you love what you do, it’s nothing short of contagious.
Your lender should know more than inventory finance – like how to treat customers as individuals
NextGear Capital supports your growth and success with custom floor plan options and best-in-class customer service. We go beyond what you’d expect from a financial provider with a consultative approach that puts relationships and people first. We know nothing drives business like the passion behind it, and that starts with what matters most to you. What matters most to you? Join the conversation at nextgearcapital.com/what-matters-most
