Greater Rockford Auto Auction is the newest member of ServNet, the independent auction group.
The announcement was made at ServNet’s owners’ meeting held recently in Dallas.
FTC Supports Direct Automotive Sales
Federal Trade Commission staff has submitted comments to the Michigan legislator on the possible competitive effects of a legislative proposal creating an exception to current law that prohibits automobile manufacturers from selling new vehicles directly to consumers. The comment, concerns Senate Bill 268, which would permit manufacturers of a category of vehicles, “autocycles,” to choose whether to sell directly to consumers, through dealers, or through some combination of the two.
Auction Goes Paperless
Effective June 1, Dealers Auto Auction of the Southwest will be “operationally” paperless in conjunction with the release of its new app.
Industry Veteran Seeks New Challenges
By Jeffrey Bellant
LAS VEGAS – Don Foss, founder of Credit Acceptance Corp., became the newest inductee into the Buy-Here, Pay-Here Hall of Fame during a recent conference at the Wynn Las Vegas.
Foss was honored by the National Alliance of BuyHere, Pay-Here Dealers for his careers as a dealer, lender and leader of the industry.
Ingram Walters, a North Carolina dealer, introduced and praised the newest member of the group’s Hall of Fame.
“This guy has a track record that is phenomenal,” Walters said. “He got into the used-car business in 1967 with a dirt lot that he rented for $35 a month.”
Foss’s growth was “systematic, diligent and amazing.”
Eventually, Foss would have 17 lots and sell 1,500 cars a month. Foss was billed as the world’s largest used-car dealer.
“He was at the top of the industry. But when he got to the peak, he didn’t rest, he didn’t withdraw,” Walters said. “He looked around at
Payment
By Ted Craig
other mountains he wanted to climb. He looked at other peaks that he wanted to reach.”
So Foss started Credit Acceptance, built it nation-
Assurance
wide and took it public.
“Once again, he found himself at the top,” Walters said.
Again, Foss sought other peaks and started a lease-
here, pay-here business. “Does anybody want to bet this guy won’t make it to the top again?” Walters said.
Continued on page 12
Providers React to Loss of 2G Networks
ready well under way, said Chris Macheca, chief operating ofcer for PassTime.
Dealers again face a situation where consumer demands for the latest technology are forcing them to spend money on upgrading their payment assurance devices.
The last time it was the mandated move to digital from analog to open up bandwidth for mobile devices. This time it is 2G that is being sacrificed due to the ever-increasing demand for online videos and other data hogs.
AT&T, the largest 2G provider, announced it will phase out its entire network by the end of 2017. The process is al-
“Large portions are coming down every single month,” Macheca said.
AT&T so far targets areas where it needs more bandwidth, such as large cities, or places where it needs to update infrastructure.
T-Mobile isn’t facing the same spectrum squeeze as AT&T. The company is guaranteeing 2G through 2017 and it will take a few years to shut down the network after that.
Continued on page 14
Photo by Jeffrey Bellant
RECOGNITION: Automotive entrepreneur Don Foss displays the cup he received in recognition of his induction into the National Alliance of Buy-Here, Pay-Here Dealers’ Hall of Fame.
NEW! Transportation Refund
Film Casts Automotive Sales in Negative Light
By Sheila McGrath In the film, he talks with several of his clients about
and done with,” he said.
And the people hurt most by unscrupulous dealers tend to be people who are already struggling, he said.
“Most of the people who are getting a bad deal or getting taken for a total ride are the people that can least af-
ford it,” Evans said. “They’re a little easier to persuade, and they’re often in a bind.” Also in the filmmakers’ cross hairs are add-ons, high-interest financing, and inflating buyers’ income to make them look more financially stable.
Can someone, for the love of profitability, tell me how to turn more of my subprime apps into cash?
: Attorney Vince Megna, the self-proclaimed “King of Lemon Law,” discusses what he sees as problems with auto finance for a new documentary. The title of the film, “Grossed Up,” means squeezing dollars out
NEWS BRIEFS
Edmunds Updates Texting Feature
Car-buying platform Edmunds. com released an update to its mobile app with a new feature that now makes it possible for shoppers to send text messages to car dealers with just a touch of a button.
Edmunds’ texting solution uses the phone’s native texting platform. That means all smartphones are capable of messaging dealers without relying on any other apps.
The new feature is a direct response to the 34 percent of car shoppers who told Edmunds that they would prefer text messaging with dealers instead of communicating by phone or email.
Users can also receive instant video and picture messages from dealerships for vehicles on the dealer’s lot. Edmunds’ app connects users with a live person at the dealership. In addition, users can opt out of a conversation at any time by typing “STOP.”
CarMax Adds Florida Store
CarMax Inc. opened its first store in Gainesville, Fla.
The store, located at 4185 North Main Street, is more than 40,000 square feet, occupies more than 12 acres and stocks more than 150 used vehicles.
In celebration of the Gainesville store opening, CarMax donated $2,500 to the Gainesville Fisher House.
Gainesville CarMax associates selected this nonprofit for its support of America’s Armed Forces, veterans, and their families by ofering free accommodations and support during a medical crisis.
Firm Finalizes FTC Settlement
Following a public comment period, the Federal Trade Commission approved a final consent order with a company that deceptively advertised its add-on biweekly auto payment plan.
National Payment Network, Inc. is required to issue $1.5 million in consumer refunds within 30 days of service of the order, and will waive another $949,000 in fees to current customers.
NPN customers who participated in the biweekly payment program for 48 months or more are eligible for refunds of cancellation fees. The company is required to provide these and other refunds and the fee waivers under the terms of the order without any need for consumers to apply.
Consumers with questions during
the refund period can contact NPN.
As part of the settlement order, NPN is also prohibited from making deceptive claims about its payment program or other add-on products or services.
The case was part of Operation Ruse Control, a nationwide and cross-border multi-partner law enforcement sweep announced in March that cracked down on deception and fraud in auto sales, leasing, and financing.
Creditor Announces New Program
Western Funding announced its Triple Pay program and reported what the company calls sustainable growth.
The Triple Pay program allows dealers to build a bankable portfolio and receive three diferent types of payments on the same deal – upfront checks, near portfolio closing, and back-end payment streams.
In order for the dealer to get their first check, the dealership must produce 50 deals.
Western Funding’s first quarter resulted in an increase to $68.9 million in principal loan balances from $28.7 million in the prior year.
Western Funding originated more than 2,200 loans in the first quarter of 2015, with the majority of loans
being sourced on DealerCenter.
The company’s static losses have continued to improve as a percentage of the amount advanced.
IAA Debuts Parts Search Tool
Insurance Auto Auctions Inc. announced the launch of its new search capability that enables buyers to efficiently search for specific parts in vehicles up for auction by the Hollander Interchange Part Number.
Hollander Interchange part numbers are integrated into the normal search functionality on IAA’s website, its mobile website and mobile app platforms.
Interchange part numbers are searchable for 14 diferent part types, including fenders, hoods, airbags, axle assembly, engine assembly and door assembly parts.
The chain also recently opened a location in Shady Spring, W.Va.
The Shady Spring branch is located at 4163 Pluto Road.
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Subprime Shrinks As Share of Automotive Finance
Auto finance remains strong with some indications that subprime finance is cooling off from its recent hot streak.
Experian Sees Less Subprime Finance
The percentage of automotive loans that fell within the subprime and deep subprime risk categories made up 19.7 percent of the market, reaching its lowest share since 2012, according to Experian Automotive.
According to the State of the Automotive Finance Market report for the first quarter of 2015, subprime loans made up 16.2 percent of the market, while deep subprime loans captured 3.5 percent.
“Over the last year, there has been a tremendous amount of conversation around the growth in subprime loans, and the concern over the automotive finance industry approaching a potential ‘bubble,’” said Melinda Zabritski, Experian’s senior director of automotive finance. “While it’s true that the volume of
subprime loans is up, the same can be said for the rest of the risk categories. It’s important to keep in mind that, while we should continue to watch them, the percentage of subprime loans make up a small portion of the market.”
Findings from the report also showed that automotive lenders continued to grow their overall portfolios, as total outstanding balances for automotive loans reached a record-high $905 billion in the first quarter, up 11.3 percent from a year ago.
Additionally, despite an increase in the numbers of loans put into play, both 30- and 60-day delinquencies saw slight decreases in the first-quarter report.
Thirty-day delinquencies were down 4.1 percent from a year ago, while 60day delinquencies dropped 3.2 percent over the same time period.
At a state level, the highest delinquency rates were found primarily in the South, while the states with the lowest rates were
typically found in the Midwest and Northwest.
Funding Still Available for Subprime
Individual subprime finance companies contin-
the facility.
As of May 13, Credit Acceptance did not have a balance outstanding under the facility.
Also, Exeter Finance Corp. announced the pric-
30-day delinquencies
ue to be viewed favorably by investors.
Credit Acceptance Corp. has extended the date on which one of its $75 million revolving secured warehouse facilities will cease to revolve.
The date has changed to April 30, 2018 from April 5, 2016. There were no material changes to the terms of
younger consumers’ ability to access and repay other consumer credit categories such as auto loans, when compared to their peers without student loans.
This is contrary to the
60-day delinquencies
ing of a $550 million securitization backed by automobile loan receivables.
Consumers Pay on Auto Credit Despite Student Debt
Despite an unprecedented rise in student-loan balances over the past decade, a new TransUnion study found that student loan obligations have not inhibited
Source: Experian Automotive
popular belief that burgeoning student debt is hampering access to credit for young adults.
In fact, consumers ages 18-29 with a student loan in repayment generally are able to gain access to new loans and perform as well or better on those new loans as similarly aged consumers.
Feds Charge Floor Plan Fraud
A Florida used-car dealer has been indicted for check fraud.
Roger Eugene Hagood, the owner of Coral Palm Auto Sales in Fort Myers, has been charged with 13 counts of bank fraud and two counts of obstruction of justice. If convicted, he faces a maximum penalty of 30 years in federal prison for each bank fraud count and up to 20 years’ imprisonment for each obstruction of justice count.
lease the vehicle title used to secure the loan back to Coral Palm Auto Sales.
In November and December 2011, Hagood allegedly engaged in a check-kiting scheme by writing 13 checks on his business checking account, made payable to the thirdparty lender, knowing that the account lacked sufcient funds to cover the checks.
The indictment also notifies Hagood that the United States is seeking a $1.6 million forfeiture money judgment.
According to the indictment, Coral Palm Auto Sales received financing through a third-party lender to purchase automobiles. Vehicle titles were provided as security to procure the loans, and loan payments were made using proceeds from the vehicle sales.
As a result, the third-party lender wrote new loan checks on its account, made payable to Coral Palm Auto Sales, based on Hagood’s worthless checks. According to the indictment, Hagood’s scheme caused federally insured financial institutions to sufer significant financial losses.
Once each loan was paid in full, the third-party lender would re-
The indictment also alleges that on March 29 Hagood concealed and attempted to destroy documents and records in an efort to obstruct an ofcial proceeding and federal investigation.
Bureau Suspends Accreditation
The Nashville Better Business Bureau suspended the accreditation status of Nashville Motor Cars LLC due to the company’s failure to honor BBB’s standards.
Nearly half a dozen consumers have complained alleging they purchased vehicles and did not receive the title.
“BBB is concerned about this company’s recent marketplace performance,” said BBB CEO Kathleen Calligan. “We reached out to assist Nashville Motor Cars in resolving these matters in good faith; however, consumers continue to report issues that remain unresolved.”
Consumers also complained the
Kathleen Calligan
One consumer stated, “On 1/27/15, I traded my BMW in for a Cadillac EXT. Part of the agreement was he would pay of my BMW for $8,500. It is now 2/24/15 and I have called 3 times ... No one has yet replied, called, or sent in a pay of.”
vehicles they used for trade-ins were not paid of leaving the consumer responsible for paying for a vehicle they no longer possessed. BBB recently learned that the Motor Vehicle Commission also took action against Nashville Motor Cars
NICB Warns of Scams
The National Insurance Crime Bureau has issued a warning about an organized scam involving sales of vehicles through Craigslist.
Working with law enforcement agencies in the Chicago area and across the Midwest, NICB has identified nearly 100 instances of sales of vehicles that went sour when phony bank checks were used to pay for the vehicle.
“These scams are well organized and have all the appearances of being legitimate.”
Joe Wehrle, NICB president and CEO
“These scams are well organized and have all the appearances of being legitimate,” said Joe Wehrle, NICB president and CEO. “But in the end, the criminal gets the car and the sellers or their financial institutions are left on the hook for thousands of dollars still owed on the car.”
Such was the case with Mike and Christy Childers of Elizabethtown, Ky., who sold their 2010 Corvette
Dealer Faces Money Laundering Charges
A federal grand jury has charged an Ohio used-car dealer with committing money laundering and with filing a false currency transaction report.
The indictment alleges that since February 2011, Bryan Barbarawi owned and operated a car dealership in Fairfield, Ohio, under the names Nationwide Credit Solutions, LLC d/b/a Auto Max, Extreme Imports and Falcon Auto Sales Inc.
Upon receiving more than $10,000 in cash in a trade or business, the trade or business is required to file a currency transaction report, specifically a Form 8300, with the Internal Revenue Service or the Financial Crimes Enforcement Network by the 15th day after the date the cash was received.
The authorities allege that Barbarawi committed money laundering in November 2014 by concealing the source and ownership
Police Nab Suspect in Car Store
HOUSTON (AP) - A Houston man has been charged with capital murder in a shooting at a used-car dealership that left two brothers and a son dead.
Houston jail records show James Tinsley was being held without bond in the Jan. 8 shootings. Police didn’t immediately release a pos-
Shooting
LEASE-HERE, PAY-HERE
LEASING BECOMES BETTER OPTION FOR SOME DEALERS
By Jeffrey Bellant
LAS VEGAS – The buyhere, pay-here business has many models, and leasing is one way dealers provide customers with better cars and more options.
M&S Auto Sales in Riverdale, Ga., is one dealership that has embraced a leasing model at its two locations.
Andrea Winkles, the stores’ general manager, attended the recent National Alliance of Buy-Here, Pay-Here Dealers annual conference at the Wynn Las Vegas.
She said the dealership carries 160 units overall and leases 45 to 50 per month.
“Leasing gives the customer more options and gives us more options,” she said.
In Georgia, a title ad valorem tax took effect in 2013, which made it more beneficial for dealers to lease, she said.
For example, customers who can no longer aford a car can end the lease by pay-
have with a typical buy-here, pay-here model, she said. They can terminate the lease, switch cars or buy the vehicles, which 20 percent choose to do.
Up front, they give the customer the lease terms as well as the residual at the end of the lease if they choose to buy.
The dealership upfront agrees to provide in-house financing if the customer de-
whole process.
“Because of that, they bring their friends. (We have a strong) referral business.”
The dealership tries to keep its contracts less than four years, with an average of two-and-a-half years.
Unlike many dealerships, M&S doesn’t pull a credit report, which is a big draw for customers who don’t want a credit check.
“The criteria is stability,”
ing a $500 early termination fee or they can switch cars at any time in the lease.
By allowing the customer to pay an early termination cost, it gives the customer options that they wouldn’t
cides to buy the vehicle at the end of the term.
“We focus on the customer,” said Ronnie Ranes, marketing director. “We work hard to make them happy with the purchase and the
Winkles said. “It’s two current check stubs and a current utility bill.”
Ranes said it’s important there’s an income and stability.
The minimum down payment is $800 and that rises
depending on the value of the vehicle.
Ranes said the average retail price of a vehicle is $8,000 to $12,000 and model years range from 2006 to 2015.
Some vehicles will be released two or three times, while others may go four or five times, Ranes said,
The other part of the M&S’s model is, in addition to regular vehicles, they also ofer highline units.
“Mercedes is a good line for us,” Ranes said. “We also have Corvettes, Camaros and even a Land Rover.”
Ranes said they have a customer who leases Mercedes, even though she’s never had a credit problem. She just likes to switch cars.
The dealership also went to all of the local businesses in their area and gave them “Preferred Purchase Power,” which gives them $10 a week of their payment on any vehicle in stock.
“So any time they have an employee that needs a vehicle, they can (qualify) for that deal,” Ranes said.
They also lease commercial vehicles to builders, construction workers or plumbers, for example.
“We try to keep a little of everything in stock” he said.
The other benefit with leasing is that customers come in to make their payments, which keeps the relationship close.
Even for dealers who have been in the buy-here, payhere business for decades,
leasing can be a fresh option.
Don Foss, at a time when most people think of retiring, has jumped into the used leasing market with a new venture he discussed at the conference.
Foss, who already solidified his success with Foss Motors and Credit Acceptance Corp., discussed his latest project during a speech at his induction into the Buy-Here, PayHere Hall of Fame in Las Vegas recently.
Foss said he had reflected on his past and asked himself a question.
“If I could do it all over again, starting today, how would I want to do it? The answer was that I’d want to have one brand. I’d want to sell better cars, newer cars, lower miles with a better customer experience.”
He said he wanted to provide better customer peace-of-mind with his leasing model and lifetime engine warranty.
The result is CARite.
“A few years ago, I started another venture called CARite. It’s a network of branded used-car dealerships with a captive subprime leasing company.
“We’ve grown into 13 stores and we’ve got 12 more stores that we plan to open this year.”
Foss said he’s proud of CARite, because it gives entrepreneurs a chance to participate with a national brand and compete with players like CarMax.
Credit Acceptance Corp. founder Don Foss, top, discusses his move into leasing during a panel discussion at the National Alliance of Buy-Here, Pay-Here Dealers annual conference. Andrea Winkles and Ronnie Ranes, above, of M&S Auto Sales in Riverdale, Ga., said the Mike Bell-owned store also succeeds with lease-here, pay-here.
NHTSA Sets July Hearing on Fiat Chrysler Recalls
The National Highway Trafc Safety Administration will hold a public hearing to determine whether automaker Fiat Chrysler has failed to remedy safety defects and issue required notices in 20 recalls.
During the July 2 hearing, witnesses from NHTSA, the automaker, and the public will be able to present evidence on Fiat Chrysler’s performance in each recall.
If NHTSA determines, based on the hearing and other evidence, that the company has failed its legal obligations under the Motor Vehicle Safety Act, the agency could order actions designed to improve the company’s performance, including the buy-back or replacement of affected vehicles.
“Any auto defect that compromises the safety of our driving public is unacceptable,” said U.S. Transportation Secretary Anthony Foxx.
“Auto manufacturers are obligated to efectively remedy safety defects when they are discovered, and if they fail in that responsibility, we are obligated to act.”
NHTSA also issued a special order to Fiat Chrysler ordering the company to provide information on its recall performance.
Meanwhile, the auto industry continues to be roiled by huge recalls.
Takata Corp. has determined that
equipment during service, may rupture from exposure to persistent conditions of high absolute humidity and/or due to manufacturing variability.
In the event of a crash necessitating deployment of the passenger side frontal air bag, the inflator could rupture with metal fragments
or replacement equipment during service.
As this work progresses, numerous vehicle recalls will likely be announced by the impacted vehicle manufacturers and NHTSA will supply this information as soon as possible.
The total number of vehicles afect-
This recall is being conducted in
tered in the areas of high absolute humidity and that have indicated the highest risk in testing and field experience. These areas include: Florida, Puerto Rico, the U.S. Virgin Islands, Hawaii, the outlying U.S. territories, Texas, Louisiana, Georgia, South Carolina, Alabama and Mississippi.
This recall is in addition to prior recalls 13V-132, 14V-349, 14V-353, 14V-700, 13E-017, and 14E-073.
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Hall of Fame
“Not me. I think he’s going to the top again. All his life he’s made it to the top.
“He didn’t just prevail in our industry, he revolutionized it. He’s a disruptor of massive proportions.”
Walters said Foss was one of a kind.
“There are a lot of mountains, but there is only one Everest. There are a lot of rivers in this country, but there’s only one Mississippi,” Walters said.
“And there are many great people in this industry, but there is only one like this man.”
Foss thanked Walters for his kind introduction.
“I want to meet that guy myself,” Foss said.
He said it was an honor to receive the award.
“I’ve always been proud to be a car dealer,” he said. “This marks my 48th year as a car dealer. My dad was a car dealer. His name was Les Moss and he opened his first car lot in 1947.
“I was three years old at the time, so I guess it was just destiny I would be a car dealer.”
– Continued from page 1
Foss began working after school and during summers. Later, he bought his own tow truck and started hauling cars to the salvage yards. He earned enough money to get a dealer’s license and rented the $35 lot, enough for 35 feet of frontage and room for three cars.
“It’s a lesson that stuck with me and became one of the inspirations for Credit Acceptance.”
“My dad was my mentor,” Foss said. “He taught me a great lesson early on. He said, ‘You can’t sell anything by saying no.’
Foss said he’s proud of the finance company, which expects to fund 300,000 deals this year.
“My wife would like nothing bet-
ter than for me to kick back, take it easy and live of the fruits of my labor,” Foss said. “But I still have fun selling cars.” Walters added that Foss is a legend who has focused on continuous improvement in his endeavors.
Photo by Jeffrey Bellant
LEGEND: Don Foss offers his gratitude as he accepts an award during the NABD annual conference at the Wynn Las Vegas. Foss discussed his father, his career and talked about his latest business venture called CARite.
Price Cut Spurs Spark Sales
DETROIT (AP) – It took a price cut to generate a run on Chevrolet’s 2015 Spark EV, with savvy car buyers realizing the lower price and federal electric vehicle tax credit can make for a super deal.
Chevrolet lowered the starting retail price for the plucky subcompact electric car to $25,995 last month, making it the lowest-priced 2015 electric car with two rows of seats ofered in the U.S. by a major auto manufacturer. With the $7,500 tax credit, the purchase price can wind up at just $18,495 - akin to the price of a gasoline-powered small car like the Honda Fit EX.
There also are the savings the Spark provides: $80 or more a month on gas, according to the manufacturer, because the car uses only electricity. Even buyers who would prefer to lease the Spark EV can get in on the deal with Chevrolet’s $139-a-month lease program that requires no down payment.
Now, the downside: It has a limited range of 82 miles on a full charge and can take seven hours to fully charge even with a 240volt charger.
The Spark EV is sold only in two states - California and Oregon, with Maryland to be added this summer. Still, the appeal was quickly apparent as the Spark EV outsold the better-known and widely available Chevrolet Volt (starting retail price: $35,170) in April. Total sales of Spark EVs in April were small, 920, but far more than the 97 sold in January and more than the 905 Volts sold in April.
The federal tax credit isn’t directly taken of the purchase price of the Spark EV, but instead from a buyer’s U.S. income taxes for the year the car is purchased. So, the tax credit generally won’t be seen until next income tax season.
The Spark EV’s starting manufacturer’s retail price and destination charge includes power windows and door locks, keyless start, cruise
control, air conditioning and Chevy MyLink entertainment system.
The best-selling electric car in the United States last year - the larger compact Nissan Leaf - has a starting MSRP, including destination charge, of $29,860 for a base S model. The Spark EV has a better gasoline-equivalent fuel economy rating than the Leaf - 119 to 114. But the Leaf, which has an 84-mile range on a single charge, is available in more states than the Spark EV.
Meantime, the second best-selling electric car in 2014 was the Tesla Model S, which has a $76,200 base retail price and a travel range of at least 240 miles on a single charge.
The Spark EV is not for everyone. The interior can seem spartan, even in the tested 2LT trim level. Front and rear seats were covered in faux leather that felt like thick plastic, and the seats seemed smallish and had flat cushions.
Rear door entryways were small, too, as the rear wheel wells cut into the doorways. But rear-seat legroom and headroom are decent, and there’s 23.4 cubic feet of cargo space when the back seats are folded down.
The driver has a pull-down center armrest, though there are no covered storage spots between the front seats and rear seats. All seat adjustments were manual in the test Spark EV.
The test Spark had good acceleration and merged well into traffic, thanks to a class-leading 327 foot-pounds of torque. Chevrolet puts the 0-to-60-mph time at 7.2 seconds.
The electric power steering gave the Spark EV a bit of a go-kart feel, as response was decently quick.
The tidy, 33.8-foot turning circle made U-turns a breeze, and the Spark’s diminutive 12.2-foot length from bumper to bumper meant it could fit into curbside parking spots that SUVs and large sedans had to pass up.
Carolina_UCN June5.pdf
Payment Assurance –
“The clock is ticking on all these networks,” said Brian Garrepy, national business developer for Kore/Raco Wireless.
Kore/Raco provides the SIM cards for many payment assurance devices.
T-Mobile claims to cover 90 percent of the U.S. population, although most of that is in metro areas.
It had covered another 6 percent of the population through agreements with AT&T and regional roaming providers.
The loss of the AT&T network cuts that coverage down to 93 percent. There is no guarantee of how long the nation’s 30-plus regional providers will continue to ofer 2G coverage.
Many of these companies are also shutting down their 2G networks, Macheka said, often with little or no warning.
This happened recently to PassTime in Montana. The company’s entire 2G network suddenly went dark. tinued to ofer 2G units through Dealers can also opt for devices cell phone coverage when selling
2G OR NOT 2G: Garrett Jacoby, left, said his company, SVR Tracking, plans to conitnue using 2G, while Chris Macheca of PassTime said his company stopped offering the option.
Average units sold per dealer (BHPH deals only)
Average cash in deal per vehicle sold
Average ACV per vehicle sold (includes recon)
Average reconditioning cost per vehicle sold
Average gross profit per vehicle sold
Average cash down payment
Average
financed
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2Jaguar and Land Rover, their respective logos, and the financial group names (Jaguar Financial Group and Land Rover Financial Group) are trademarks of Jaguar and/or Land Rover and any use by Chase is under license. Retail/Loan and lease accounts are owned by Chase.
3The tradename “Mazda Capital Services” as well as the Mazda and Mazda Capital Services logos are owned by Mazda Motor Corporation or its affiliates and are licensed to Chase. Retail/Loan and lease accounts are owned by Chase.
“I started out doing retail. But back when it slowed down a little bit, I thought, ‘Well there are a lot of people with bad credit, I’m going to get in and start doing buy-here, pay-here.’ So I started doing buy-here, payhere about eight years ago.
“I sell a lot more cars this way.
“About half of my sales are buy-here, pay-here and the rest are subprime.
“I keep 20 (vehicles) on the lot. I buy them at the auctions. I also buy from individuals and I have ads in the paper saying that we buy cars.
“I’ve had to go to more auctions than I have in the past to (get inventory). I’ve had to go as far as Pennsylvania to buy a car since I couldn’t find a specific car for one of my customers. He wanted a half-ton truck. I can get the one-ton all day
long here, but not the halfton.
“I probably buy 75 percent of my cars at auction.
“We’re selling an average of about 10 a month. It’s a little better than last year, when we were averaging eight.
“I think it’s the economy getting better here. We have lots of industry. We have Dow Chemical, a nuclear plant, a gas plant and Chevron Phillips – all billion-dollar companies.
“The cars I finance are $10,000 and under. The ones I retail go up to $35,000. I’d say the average would probably be about $15,000 or $16,000.
“The average down payment overall is $2,500 to $3,500. I turn down a lot of people.
“On the lower-priced vehicles I try to get the majority of the money down.
“Average term length is two years. I have gone three, but I try not to.
“I sell about 80 percent cars and 20 percent trucks.
“I carry about 60 percent domestic.
“I try to stay under 130,000 miles and not go over 10 years old.
“It’s a lot tougher to buy cars. Things are a lot more competitive. It’s harder to find the cars than to sell them.
“I spend an average of about $220 per car. I try to buy it frontline ready. I don’t have a repair shop.
“I sold a 2015 Nissan Frontier, with about 8,000 miles. I sold it to a repeat customer, who buys about 10 a year from me. So I only marked that up about $2,000. They are fleet buyers.”
WASHINGTON
J.T. Curry, general manager and dealer principal, Motors Northwest, Tacoma, Wash.:
“This is our 10-year anniversary. We have one location.
“I keep 75 vehicles on the lot. That’s a 20 percent increase from last year. We are growing. I’m very fortunate
to surround myself with excellent staf
“I sell about 62 a month, which is up from 49 last year.
“I get cars from local dealers and local independent auctions.
“There’s more competition (to acquire cars) with the economy improving. New guys are getting dealer licenses.
“The average retail price is $13,000. That’s increased a little bit.
“We do straight retail and we do subprime. Over the past 10 years, about 50 percent are cash deals and 50 percent are financed. Half of that (financed) is subprime.
“We don’t carry program cars. My sweet spot is a sixyear-old car with 80,000 to 120,000 miles. We like to carry newer models with higher than average mileage on them.
“The truth is today nobody builds a bad car.
“We used to carry 80 percent import to 20 percent
domestic. But we really dipped into the truck business, so now we concentrate on pick-up trucks. Now my domestics make up 70 to 75 percent, pickups.
“We put a lot into reconditioning to sell a really nice car for $7,995. Our average recon is $800, maybe $900. We sublet that work. But we just finished a garage so starting this month we’ll have a full service department.
“We probably spend 20 percent of our gross profit on advertising. But we watch it. You could be in every (media). But you need to make sure it’s paying of for you. Ten percent of our advertising is just branding and name recognition. We have spent hundreds of thousands to build a brand here.
“We had a man come in with his son who bought a 2006 Acura RSX with 140,000 miles. We got $11,995.
“I’m feeling very optimistic about the rest of 2015.”
WHOLESALE MARKETS
KANSAS
Bill Watkins, controller, Sunflower Auto Auction, Topeka, Kan.:
“We had a pretty good spring. The dealers are upbeat.
“Sales have definitely slowed down in the last few weeks now that tax season is over. It wasn’t as good as it was last year, either.
“We had a little downswing this year.
“I just don’t think there’s as much money out there during tax season.
“It mostly afected volume. It didn’t afect what the dealers were buying.
“There were a few weeks that were fast and furious, but it wasn’t as long or as big as usual.
“We average around $3,500 for our vehicles.
“We run two lanes.
“We get our cars from new-car dealers for the most part. They’ve been doing OK.
“The used-car dealers have seen their business slow down some.
“No one car or truck is especially strong now. Dealers are looking for vehicles with low miles at a low price.
“We handle some repos for buy-here, pay-here dealers.
“We’re an hour from Kansas City. We get a lot of our dealers from the rural area around Topeka.
“We get a few dealers from Nebraska and we’re getting a few more from Wichita.
“Our online sales have picked up quite a bit.
“We sell on OVE, SmartAuction and ADESA LiveBlock.
“We list higher-end vehicles from the dealers’ lots online.
“We don’t have the vehicles physically at the auction. It only comes here if they sell it.
“We think that’s the way the business is going. That’s absolutely good for a twolane auction like us.
“Usually the end of May isn’t very good, but after that we expect it to be normal.”
OKLAHOMA
Mike Clopton, general/ managing partner, Oklahoma Auto Exchange, Oklahoma City:
“We started our 11th year in January. We have four lanes.
“We’re up about 10 percent over last year, which was our best year.
“It’s been good because we really didn’t anticipate any growth this year.
“One of the interesting things here is what’s happening with the price of oil. We’re an oil-driven (economy) in this state. It actually didn’t start afecting us until May, when we were down a little bit in a sale. It will be interesting to see how it afects us (going forward).
The difcult thing is a lot of people have lost their jobs and won’t be back for a long time.
“There probably won’t be any more drilling in Oklahoma until 2016. We’ve fracked this whole state already. The big oil companies will do fine, but the lit-
tle guys will get swallowed up by the big guys as things get tough.
“Also, weather-wise, this has been one of the worst Mays in the history of the state. We’ve had tornadoes almost every day and flooding. We’ve had dealerships that were flooded and lost hundreds of cars.
“We’re running between 700 and 800 a week.
“Our sales percentage has been the highest it’s ever been. For most of the year, we’ve been in the mid-60s and low 70s.
“One of the things we do is feed the dealers breakfast. We have a commercial kitchen and restaurant.
“Nobody ever pays for a meal here. They pay for the cars. We pay for the food.
“My employees come first, because I can’t touch every customer. But I can touch every employee. If I’m treating them properly, if I’m compensating them right and if they’re treated like they matter, then they’re the ones that are going to
Compiled by Jeffrey Bellant
(take care of the customers). It’s a diferent mindset than most places. I can’t imagine there’s any auction in the country that has better employees.
“We’re probably 75 percent dealer consignment. Our two big national fleet accounts are LeasePlan USA and Automotive Solutions.
“The majority of what we have are the repos in Oklahoma. I’ve said from day one, we have to win at home. That’s what we have: the local banks, the local credit unions and buy-here, pay-here repos. That’s the majority of our fleet business.
“Our average sale price is $4,900 for the year, but the last month (May) it’s been $5,500. That’s a lot for us. We haven’t been that high before.
“For us, the 80,000- to 110,000-mile vehicles have been selling really well. That fits our market. We have a lot of buy-here, payhere guys.”
PICKUP
ACTUAL WHOLESALE AND PROJECTED RESIDUAL VALUES
2013 MODELS
SOURCE: BLACK BOOK
2012 MODELS
2011 MODELS
2010 MODELS
DISCONNECTED JOTTINGS FROM TONY MOORBY
The BBC program, “Top Gear,” has turned out to be a universal favorite, quite literally being syndicated to countries all around the
cars at high speeds on a local airfield or driving expensive of-road SUVs through places akin to the Patagonian desert. Ferraris in Farrakhan or
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
world. I, for one, have been a fan, watching on BBC America. Virtually everyone I know loves the show and follows it regularly. Why? Jeremy Clarkson, that’s why.
The main protagonist of the triumvirate of presenters, Clarkson leads James May and Richard Hammond on various adventures and escapades, some locally and some globally. The now, somewhat formulaic, layout of the program has the three variously driving exotic and exciting
Lamborghinis in Lebanon, Bentleys in Bahrain and Rolls Royces on the Riviera are all stuf of their everyday cavorting around. They are also known to do quite the opposite – finding the cheapest (and sometimes the oldest) vehicles and turning them into something they’re not or were never supposed to be; a 1965 Triumph Herald caused much hilarity when converted to a marine vessel. I would have said boat but it sank upon its
CR R O O S S W D
By Miles Mellor
first acquaintance with the wet stuf. Cheap travel trailers were put to the test, driven behind of-road trucks just to see how long they lasted – not long.
A celebrity is interviewed each week and given a timed test around a track in an everyday sedan and the results compiled on a list in the studio for all to see. Another regular feature is the introduction of a race car driver who remains anonymous but hails by the name of “The Stig” and he shows how much more inferior are the rest of the show’s participants when it comes to racing and handling any vehicle.
Clarkson has now been sacked; a result of his celebrity ego getting the better of him. His pomposity is the stuf of legend and is now a fully expected part of his persona. He writes a column every week in The Times and The Sun newspapers. The articles are anything but politically correct and he uses an incisive but amusing sarcasm to make his points with a
Sponsored by
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”
28. Self-determination
29. Engine line
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
Engine sound at Indy
Atlanta locale
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
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
pinpoint accuracy that most would dance around or avoid altogether.
After a Top Gear shoot on location in the north of England, the crew went to a pub, stayed late and were then helicoptered to their hotel.
The chef had gone for the night and Clarkson blamed the producer of the show for not ensuring that a steak was available for supper. His renowned temper exploded to the point where he clobbered the producer in the face, badly splitting his lip.
The BBC is a leftish institutional TV station and is paid for by license fees from the viewing public. They owe no allegiance to advertisers and are thus free to express opinions on products they test or handle. They cannot countenance such goings on, even from a star, and so Clarkson was summarily fired and his crewmates, Hammond
and May left of their own volition, ostensibly in support of Clarkson.
Everyone is now on the horns of a dilemma. While Clarkson has admitted that he rues his actions (he loved the show as much, if not more, than anyone) Aunty Beeb, the BBC, can’t be seen to be lenient in this case.
Other stations are said to be lining up to ofer similar programs hosted by the three but most are funded or sponsored by advertising so the program can’t be seen to denigrate the reputation of those paying for the show.
“Serves him right” is a popular reaction in the U.K. and, I suspect, elsewhere. And although the program was becoming predictable, it always felt current and on point. In the U.K., people admit that it would be impossible to replicate, certainly with other presenters.
35. Lamborghini model
Increase
Radio band 38. Celebrated singers
Car adornments 44. Fed property overseer 45. Internet laughter
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AROUND THE BLOCK
AUCTION DRIVES GOLF PROMOTION
Southeastern Auto Auction of Savannah held its annual Masters Sale and golf tournament.
The Masters Sale is named after the “Masters Golf Tournament” which is played in Augusta, Ga., a few hours away from the auction.
This year’s sale featured free breakfast, free golf visors and over 900 vehicles. At the conclusion of the sale over a dozen dealers were selected to putt on the auction’s putting green for a chance to win up to $1,000.
At the end of the day over $3,000 in cash was given away.
The following day was the golf tournament that featured a record number of teams.
The tournament had a $25,000 hole-in-one challenge along with closest to the pin and longest drive contests. Following the tournament was a free lunch and an award presentation for the top teams and individual challenge winners.
There was also a $2,000 check presented to Shriners Hospital for Children. This donation was raised from a 50/50 drawing and hole sponsorships for the event.
“It was a great week,” said Bill McCready, the auction’s vice president.
“We sold a lot of cars, had beautiful weather for the sale and golf tournament and raised money for children in need. The only thing not great was the way I played in the golf tournament.”
West Coast Sale Wins Top Award
ADESA Golden Gate was named Auction of the Year for 2014 by VW Credit, Inc.
This was the most recent of numerous honors earned by the San Francisco Bay auction.
VCI chose its Auction of the Year recipient based on year-round measurements of key performance indicators.
ADESA Golden Gate was also honored with LeasePlan’s 2014 Stellar Performance award and with General Motors’ Overall Achievement awards for December, January and March.
“We are honored that so many of our industry partners are noticing the outstanding level of service ADESA Golden Gate ofers,” said Stéphane St-Hilaire, ADESA president and CEO. “I want to congratulate General Manager Jef Hoyt and everyone at the auction for their commitment to our customers.”
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
GOLF WAR: A dealer draws a bead on the green during a putting contest at Southeastern Auto Auction of Savannah.
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