Gap Widens Between Car, Truck Prices
MANHEIM USED
ue was basically flat for the month at 126.9. The index adjusts wholesale prices for mix, mileage and seasonality.
The index was still up 2.1 percent from a year ago. Manheim chief economist Tom Webb said wholesale prices should finish higher on an annual average basis than 2015.
“Wholesale pricing in 2016 has been supported by a retail market that enjoyed higher volumes, stabilizing margins and respectable turn rates,” Webb said. “And, importantly, dealers have continued to increase efciencies in their used vehicle operations.”
VEHICLE
VALUE INDEX JAN. ‘95 TO AUG. ‘16
much longer dealer demand can stay ahead of the ever-increasing supply of vehicles at auction.
Webb said volume of rental risk units sold at auction was relatively high for an August.
“This could be a sign that stopsale/stop-use units (due to recalls) are finally being repaired and creating less demand for loaner vehicles,” Webb said.
Unadjusted auction prices for rental risk units remained near record levels in August because the age, mileage, mix, and condition of vehicles being ofered was much improved from a year ago.
down 1.2 percent from a year ago after adjusting for mileage and broad changes in mix.
While the overall wholesale market remains firm, there is plenty of softness.
When trucks are taken out of the mix, wholesale prices are already in decline.
For example, average auction pricing for midsize fleet cars is running below the prior two years, despite lower average mileage at time of sale.
Black Book reports that prices for cars fell at an even faster pace in August.
Cars overall saw depreciation of 3.1 percent in August, compared with 1.9 percent in July. Trucks as a whole finished down 1.8 percent for August.
Full-size pickups saw the strongest retention during August, declining only 0.6 percent.
The top six segments with the weakest retention during August were all cars.
This trend continued going into September.
“Most car segment values continued to decline at a steeper rate the first week of September,” said Anil Goyal, Black Book’s senior vice president of operations.
Used Car Financing, Leasing Reach New Highs
The automotive credit market has continued to show steady growth and remarkable stability quarter over quarter, according to Experian’s latest State of the Automotive Finance Market report.
Findings from the second quarter report show that while both 30- and 60-day loan delinquencies were up slightly, the combined subprime and deep-subprime share of new and used auto finance and leases dropped to 22.8 percent from 23.3 percent in the second quarter of 2015. Overall, automotive creditors made more than five times as many loans to super-prime customers (17.9 percent of total auto loans and leases) as to deep-subprime customers (3.5 percent of total auto loans and leases).
Melinda Zabritski, Experian’s senior director of automotive finance, said creditors were “keeping cool heads when it comes to how much risk they are willing to take.”
“Yes, subprime and deep-
subprime loans are growing, but the entire market is growing from a volume perspective across all risk tiers,” she said. “In fact, the subprime loans have actually dropped as a percentage of the total market. That, combined with only a slight uptick in delinquencies, makes clear that the sky is not falling.”
Thirty-day delinquencies were up to 2.22 percent from 2.19 percent in the second quarter of 2015, while 60day delinquencies moved to 0.62 percent from 0.56 percent.
Leasing continued its strong growth as the share of new vehicles leased jumped to a record-high of 31.44 percent from 26.92 percent in the second quarter of 2015. Even used vehicle leasing, which accounts for a small slice of the lease market, experienced growth, moving to 3.71 percent in the second quarter from 3.26 percent share in the second quarter of 2015.
Used vehicle finance also grew to record heights in
terms of average dollar amount and overall share during the quarter. The average used vehicle finance amount reached an all-time high of $19,101, up from $18,671 in the second quarter of 2015.
Used vehicle finance also reached a new peak, accounting for 55.61 percent of all vehicle finance during
the second quarter.
The growth was driven by jumps in prime and superprime consumers choosing used vehicles.
Specifically, 43.3 percent of super-prime consumers selected a used vehicle, which represents a 10 percent increase over 2015. For prime consumers, 59.9 percent chose used, a 6.6 percent
increase over the previous year.
This shift also helped push the average credit score for a used vehicle loan to 648 from 645 in the second quarter of 2015.
“One of the biggest trends we continue to see is the shift to used vehicles by customers with excellent credit,” Zabritski said.
NEWS BRIEFS
MSN Autos Taps Autotrader for Vehicle Listings
Autotrader is now the provider of new, used and certified pre-owned vehicle listings in the U.S. on the MSN Autos site.
This alliance provides MSN Autos’ users access to Autotrader’s dealer and private seller vehicle listings and creates a comprehensive automotive network.
This relationship expands Autotrader’s car shopping audience by enabling dealers to reach MSN Autos’ consumer audience. On MSN Autos, consumers can enter make, model and zip code information and be taken directly to a co-branded Autotrader search results page to view the matching inventory.
CPS Renews Credit Agreement
Consumer Portfolio Services Inc. announced that on Aug. 12 it renewed its two-year revolving credit agreement with Citibank, N.A.
Loans under the renewed credit agreement will be secured by automobile receivables that CPS now holds, will originate directly or will purchase from dealers in the future.
CPS may borrow on a revolving basis through Aug. 10, 2018, after which CPS will have the option to
repay the outstanding loans in full or to allow them to amortize for a oneyear period.
Chase Launches Online Platform
Chase has launched an online platform where users can specify and shop for new and used cars and secure a loan through their smartphone or computer.
The service enables customers to configure their preferred options for a new or used car, find matching cars online and get approved for their loan. Using technology from digital auto marketplace TrueCar, customers also can compare prices paid by other consumers and, via Chase.com, connect with one of 14,000 auto dealerships in the bank’s network that has inventory meeting the specified preferences.
Chase Auto Direct is currently available to customers in 30 U.S. states, and will roll out further in phases through early 2017.
Parent Set to Spin off Cars.com
Tegna Inc. announced it intends to spin-of Cars.com.
The company’s management team will develop separation plans for consideration by the board of directors over the coming months. Com-
pletion of the spin-of will be subject to certain conditions, including receipt of final board approval, receipt of an opinion from tax counsel regarding the tax-free nature of the distribution, and the efectiveness of a Form 10 registration statement, which was filed with the Securities and Exchange Commission.
The distribution to shareholders of shares of a new entity holding the Cars.com business is expected to be completed in the first half of 2017.
Following the spin-of, Cars.com will remain headquartered in Chicago and will trade under the ticker symbol CARS.
CarMax Opens Idaho Store
CarMax Inc. celebrated the grand opening of its first store in Idaho.
The store is located in Meridian at 4043 E. Elden Gray Street. The Meridian store will stock more than 200 used vehicles and has brought approximately 50 new jobs to the area.
During the grand opening celebration, CarMax announced that The CarMax Foundation will provide a $10,000 grant to Idaho Food Bank Warehouse.
The food bank created a backpack program to help provide food to
children who do not have access to regular meals. The grant will fund backpacks for 1,800 students during the 2016-17 school year.
CarMax associates chose the Idaho food bank to receive the grant after volunteering with the organization.
Car-Mart Reports Results
America’s Car-Mart Inc. reported net income of $7.1 million in the quarter ended July 31.
The buy-here, pay-here chain reported revenues of $146 million compared to $143 million for the prior year quarter.
Retail unit sales decreased to 11,957 from 12,244 for the prior year quarter with decreased productivity at 27.9 retail units sold per store per month, down from 28.9 for the prior year quarter.
Average retail sales price increased $428 to $10,393 from the prior year.
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Scam Website Takes Actual Dealer’s Name
The Tennessee Department of Commerce and Insurance is warning Tennessee consumers about a phony auto sales website that’s posing as an actual longtime Knoxville auto dealer in order to swindle potential customers.
Cupp’s Auto Sales is located at 1106 N. Broadway in Knoxville.
It is a small, family-owned business that’s been in operation for nearly 25 years.
The dealership, which is licensed by the Tennessee Motor Vehicle Commission, does not have a web-
However, scammers have created a website using some of Cupp’s Auto Sales actual information in order to trick unsuspecting buyers into purchasing nonexistent vehicles.
“Scammers are becoming more sophisticated every day, thanks to technology,” said Deputy Commissioner Bill Giannini.
son Cupp.”
It advertises discount prices on expensive, high-end autos and uses a phone number with a Knoxville area code that connects to a voicemail where callers can leave their information and have their call returned.
In reality, Cupp’s Auto Sales’ owner is Will Cupp, and he sells late-model used vehicles at the dealership – which does not have a website.
Will Cupp learned of the fake website when customers called and visited his lot to inquire about cars that they had seen on the fake website.
Cupp contacted local and state law enforcement authorities.
He also contacted the state Motor Vehicle Commission in order to raise awareness among Tennessee consumers.
“Consumers can combat these scams by always looking before they buy, and only buying from trusted, authenticated sources.”
The fictitious Cupp’s Auto Sales lists the dealership’s owner as “Ja-
“I’m just concerned about the victims,” Cupp said. “I don’t want people to be scammed and lose any money.
“It’s a pretty elaborate scam, and I want people to steer clear of the website.”
State Charges Dealership Staff with Conspiracy
Four defendants who ran two used-car dealerships in Indianapolis have been charged in connection with their illegal activities. The indictment charges the four with violations of the RICO statute along with a variety of other violations of federal law including conspiracy to commit mail fraud, conspiracy to commit wire fraud, money laundering and interstate transportation of stolen property.
the service manager and mechanic in charge of the chop shop the dealership used to disassemble vehicles that were later alleged to be stolen.
The indictment alleges that Noshi and other Elite managers engaged in three separate but interlocking fraud schemes on behalf of the business enterprise. The first was to procure fraudulent documents and submit them to lending and financial institutions to underwrite the purchase of cars, trucks and motorcycles on behalf of Elite’s customers.
The documents included Social Security numbers, dates of birth and paystubs from the shell companies that Elite employees or associates created.
“As is so often the case in these fraud cases, the ultimate victims are the ones that can least aford it,” said U.S. Attorney Josh J. Minkler. “Elite Motors abused processes in place that would allow citizens with subprime credit to get back on their feet through legitimate vehicle sales.”
Mohamed (Noshi) Mahoud was the principal leader and manager of Elite Enterprise, which operated two used-car dealerships and several “shell” companies in Indianapolis. Noshi allegedly directed other members and associates of the enterprise to engage in activity that assisted him in carrying out unlawful acts. Mahdi Kehlifi was a managing sales associate involved in the dayto-day operations of the dealership, Issa Kayyali was a sales associate and Hamza Dridi (AKA Alex) was
The second scheme was a conspiracy to defraud insurance carriers by submitting false claims of stolen vehicles. The defendants allegedly claimed that certain vehicles were damaged or stolen, thereby causing the insurance carriers to release claim money to the policy and lien holder benefitting Elite.
In many cases stolen vehicles and/ or parts were located in the chop shop storage unit leased by Noshi.
The third scheme allegedly involved theft from specialty financing companies who gave Elite short term financing and lines of credit for vehicles in inventory.
These specialty financing companies were defrauded through a series of steps including false representations made by Elite management.
Credit Union Violates Law
The Department of Justice Civil Rights Division and the U.S. Attorney’s Ofce for the Eastern District of Michigan filed a lawsuit to recover damages from the COPOCO Community Credit Union, alleging that it violated the Service Members Civil Relief Act by repossessing protected service members’ motor vehicles without obtaining the necessary court orders.
COPOCO Community Credit Union is based in Bay City, Mich.
The SCRA protects the rights of service members on active duty by suspending or modifying certain civil obligations. The law prohibits repossessing a motor vehicle from a service member during military service without a court order if the individual made a deposit or installment payment on the loan before entering military service.
The department’s complaint alleges that COPOCO’s vehicle repossession procedures did not include any process to determine custom-
ers’ military status – such as checking the Department of Defense’s database – prior to conducting repossessions without court orders.
The complaint also alleges that COPOCO illegally repossessed U.S. Army Private First Class Christian Carriveau’s car, along with his twoyear-old daughter’s car seat, out of his driveway in Lacey, Wash., near Joint Base Lewis-McChord. His wife, Alyssa Carriveau, initially believed that the car had been stolen, but she subsequently learned that it had been repossessed.
Private First Class Carriveau was away at military training at the time and Alyssa Carriveau was not able to get to work without the vehicle.
The suit claims that by failing to obtain court orders before repossessing motor vehicles owned by protected service members, COPOCO prevented court review of whether such repossessions should be delayed or adjusted in light of military service.
Josh Minkler
THE DEALERSHIP OF THE FUTURE
TOMORROW’S
DEALERSHIPS FUSE TECH WITH HUMANS
The future of auto retailing is more technology, but also more human contact.
Consumers want to handle the unpleasant parts of the car buying process, such as obtaining financing, through programs rather than people.
Chris Macheca, chief operating ofcer for PassTime, said he foresees a time when consumers use a kiosk at the dealership to handle everything from obtaining insurance to making payments.
Despite all the talk about a cashless society, these machines will take cash for payments just like an ATM.
“No one wants to handle cash any more,” Macheca said.
That will be good for dealers because they can employ less staf and avoid the hassles that come with handling cash.
“You’re seeing more streamlining of customer service,” Macheca said.
Streamlining doesn’t mean eliminating people from the process, but rather focusing them more on what really counts for
customers. A study by Autotrader. com on what consumers want from dealerships found that 84 percent of consumers still want to buy a car from a person.
“It’s not that they want the brick-and-mortar dealerships to go away,” said Michelle Krebs, senior analyst for Autotrader. “But they do want a lot of changes.”
What they want from dealership staf is guidance.
“They want salespeople to be more consultative about the products,” Krebs said. This is especially true for younger shoppers. About half of Millennials surveyed by Autotrader said they are more likely to rely on a dealership for education about vehicle details, special ofers, warranty and service information, financing options and just finding the best vehicle fit for their lifestyle.
Krebs said the best example of this kind of retail experience is the Apple Store, a place where people go to learn as much as buy.
Some dealerships are already ofering classes on topics such as setting up an in-car infotainment system.
This can pose a challenge for used-car dealers as they have to keep track of a wide array of products from dozens of manufacturers.
Krebs said one way to address this challenge is by looking for staf from non-traditional sources.
The local Best Buy might prove a better source for employees than another dealership, for example.
The industry also needs to promote auto retailing as a place where techsavvy young people want to work. This might mean creating a diferent atmosphere than the traditional dealership.
Dealers might not need to go as far as putting foosball tables in their stores, but they’ll probably have to ofer more flexible hours.
Another main demand from consumers is they want more test drives.
“They don’t just want the salesperson to take them around the block,”
Krebs said. “They want more extensive test drives and they want to test drive competitive models.”
Technology will help dealers provide those test drives. Macheca said dealers will use the devices from companies like his to track vehicles and turn them of if necessary for more than just collections.
These other uses can include test drives, but also short-term rentals and car sharing.
There are already European firms that finance vehicles based on how they are driven.
Good news for used-car dealers is that tomorrow’s consumer will probably be even less brand conscious than today. This creates an opportunity to gain customers by offering better service and more education about technology.
The biggest cost for creating the dealership of tomorrow then is hiring the right staf. This doesn’t require tearing up the bricks and mortar, but it might require tearing up the employee handbook.
Krebs is confident dealers can adjust to these new technologies and new ways of doing business.
“Dealers are adaptable,” she said.
> Currently tracking over 3M vehicles nationwide
> Dealers recovered $6.3 billion assets last year
Manufacturers Put Plenty of Science Behind Sounds
DEARBORN, Mich. (AP)
- Whether it’s the pleasant greeting when you slide into the driver’s seat or a loud, annoying beep that warns you of an imminent crash, there’s science behind the noises that your car makes.
Nearly all automakers have engineers and others assigned to special groups that make sure musical greeting sounds are pleasant and that warnings like forward collision alert are so annoying they get a driver’s attention fast.
“It’s critical,” said Sean DeGennaro, a vehicle harmony engineer at Ford Motor Co. “If we get it wrong, you don’t know that you have low tire pressure, you don’t know that you’re low on fuel, and all of a sudden you’re stuck on the side of the road.”
As recently as a decade ago, there wasn’t much research behind the chirps, bells and chimes inside cars. Most automakers had a dedicated speaker for the sounds, and some even used
the crude noise from electrical relays for turn signal clickers and other alerts. But as more features have been added in cars and trucks, the number of sounds has grown, and their functions have become more important.
The average car has 10 to 15 diferent sounds for anything from keys in the ignition with the door open to seat belt reminders. Some luxury vehicles, or even mainstream cars with a lot of advanced safety features,
can have as many as 20 noises. That’s only going to grow as more safety features are added on the way toward self-driving cars.
Teams at automakers, some with music backgrounds, come up with the sounds for the various devices. Then they are often tested with real drivers to find out if they’re annoying enough for emergencies and soothing enough for greetings.
And the cars have to be programmed so the sounds coincide with dashboard text alerts.
On Ford and Lincoln vehicles, the sounds run through the audio system to produce chords, said DeGennaro. The frequencies of major chords tend to be more soothing, while minor chords can be annoying.
ESTHIGH
VOLUME + LEVEL OF SERVICE IN 18 STATES
“It’s up to us to pick the right frequencies that can deliver either the harsh or positive sound that we want,” said DeGennaro, an engineer who sang in the choir and took music theory classes in high school.
It’s then up to field tests with real drivers. Ford, General Motors and other automakers play diferent frequencies for drivers in tests and ask them to rate how pleasant or annoying they are.
Sometimes, they want annoying, as in the case of the shrill staccato beeps that warn GM drivers to brake because they’re nearing a collision.
Currently GM can only do two single-frequency tones played over the audio system speakers, but it’s testing more sophisticated sounds across the globe, said Andy
Gellatly, the company’s technical fellow for user experience, who is in charge of sounds.
Multi-tone sounds can be more efective than singlefrequency ones, and they also can give owners the feeling of quality, Gellatly said. They can even help establish a brand identity, which is what German automaker Audi has done, he said.
“We’ve come a long way with external styling, and now interior styling has matched,” he said. “If you have a beautifully styled product, the sounds should match that.”
He wasn’t sure when the new sounds would be ready, but said initial research shows that many sounds convey the same meaning worldwide.
At Toyota, sounds are more regimented. Engineers have a choice of preselected noises, many coming from a central speaker, and they assign them to diferent tasks based on the urgency of the alert. As demand for louder noises has grown due to pre-collision and other warnings, the speaker had to be modified for more output, said Nathan Secord, engineer. Trucks generally have more sounds than cars because of four-wheel drive systems, Secord said.
“You’ll have a buzzer for any kind of system that may have a malfunction, and there can be multiple triggers for the same buzzer,” he said. When the buzzer sounds, text alerts flash on the dashboard to tell drivers what’s going on.
Manheim Names Manager
Manheim has promoted John Eriksen to general manager at Manheim Baltimore-Washington, from assistant general manager at Manheim Orlando.
Eriksen joined Manheim in 2007 as a sales representative at Manheim Orlando. He continued in various leadership roles within the organization.
“(Eriksen’s) background and well-rounded perspective will be a valuable asset to our team,” said Matt Trapp, Manheim’s regional vice president for the Northeast. “His intimate
knowledge of our clients, and overall leadership qualities, marries well with our priorities and goals as an organization.”
Eriksen returns to the Virginia-Maryland area, where he previously lived while working at Manheim as general sales manager for the Mid-Atlantic region.
“During the time I worked in the Mid-Atlantic region, I gained a great perspective of the diversity of our clients and the tremendous potential Manheim has to help dealer business grow in this area,” Eriksen said.
Women Want Luxury
DETROIT (AP) – Kelly Dahle remembers leaving work one day several years ago at the same time as the CEO of her company. When they arrived at her car, he was startled.
“Great car! But why do you need a BMW,” he asked.
Dahle didn’t respond – “I wanted to keep my job,” she says with a laugh – but she could have told her boss to get used to it. Women are buying more luxury vehicles than ever before, thanks to growing earnings, better marketing and a richer mix of products designed to appeal to them.
In the U.S., women bought 41 percent of luxury vehicles sold so far this year; up from 37 percent five years ago, according to car shopping site Edmunds.com.
Historically, women were considered the practical car shoppers. They needed family haulers and didn’t want to shell out extra cash for flashy, powerful Mercedes sedans or Porsche sports cars.
But the luxury market has changed. In 1998, Lexus introduced the midsize RX SUV and marketed it specifically to women, emphasizing its reliability, spaciousness and soft, quiet ride. Since then, sales of small and midsize luxury SUVs have exploded, with even die-hard carmakers like Maserati, Porsche and Jaguar joining the fray. The percent of women buying small luxury SUVs – like the BMW X3 or Acura RDX – has nearly tripled over the last five years.
erage.
Lexus remains the market leader, with 47.5 percent of its sales going to women so far this year, Edmunds says. Acura, Volvo, Lincoln and Mercedes-Benz round out the top five.
Meanwhile, makers of performance cars struggle to attract women. Women have bought only 9 percent of Ferraris and Lamborghinis. The growing number of small and midsize SUVs in the luxury market also has made the brands more affordable, helping women justify their purchases.
Caroline Eichholz, who works for a property management company in Savannah, Ga., bought a 2015 Mercedes-Benz GLK350 earlier this year for some very practical reasons. The Mercedes dealer is a family friend and the dealership is a few blocks away, so she can walk home when she drops of the compact SUV for service. She wanted a newer vehicle for its safety features and amenities, like wireless phone connectivity.
“It’s compact and cute. It fit me and fit my budget,” Eichholz said. Dahle, who lives in Downers Grove, Ill., recently bought her first new BMW after decades of driving used ones.
Automakers have grown more sophisticated in marketing to women. Gone are the days of the 1955 Dodge LaFemme, a pink car that came with a matching purse, lipstick and umbrella.
Luxury SUVs now outsell luxury cars, thanks in large part to women, who like their space, safety and taller ride height. Luxury brands see immediate growth in female buyers when they introduce SUVs. Ford Motor Co.’s luxury Lincoln brand, which recently introduced its small MKC and midsize MKX SUVs, says sales to female buyers have surged 13 percent so far this year, more than double the luxury industry av-
Ian Beavis, chief strategy ofcer at vehicle testing and consulting firm AMCI, says luxury car makers are increasingly advertising during television programs that appeal to women. Beavis said luxury brands also are hosting fashion shows, art exhibits and other things that help them interact with women.
“No one buys a luxury car for a rational reason,” Beavis said. “You really have to make sure you reach people at an emotional level.”
Your source for quality, selection and value: Chase.
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PEOPLE IN THE NEWS
KAR Services Promotes Optimizations Execs
KAR Auction Services Inc. promoted two enterprise optimization executives.
Stacey White has been promoted to se-
nior vice president of enterprise optimization.
In addition to her other responsibilities, White will now oversee transportation at the corporate level. She will continue to oversee the company’s procurement and sourc-
ing strategies, while still leading the team charged with standardization of operations and processes at all newly acquired auctions.
White joined KAR Auction Services in 2008 as an operational compliance auditor. Since then, she’s held a variety of positions, including director of process improvement and cost management and, most recently, vice president of enterprise optimization.
Tim Massingale has been named vice president of enterprise optimization.
In this role, Massingale will join the enterprise optimization team, which is responsible for maximizing resources and increasing synergies across all of the KAR business units. Additionally, he will oversee the company’s safety training
programs, including the Safe T. Sam series, and lead the team responsible for compliance with environmental, health and safety regulations.
Massingale joined KAR Auction Services in 2009, where he held a variety of management positions at PAR North America, including national remarketing manager, client relations manager, director of operations and, most recently, vice president of compliance and ancillary services.
Both will report to David Vignes, KAR executive vice president of enterprise optimization.
Cox Taps Financial Solutions President
Cox Automotive announced that Shane O’Dell has been named president of financial
solutions.
O’Dell will oversee NextGear Capital. He will report to Mark O’Neil, chief operating ofcer of Cox Automotive, and will begin his new role efective Oct.
1. O’Dell will relocate to Carmel, Ind. O’Dell currently serves as the senior vice president of vehicle solutions at Manheim responsible for setting and executing key business strategies around Manheim’s third-party logistics, including ve-
hicle transportation, reconditioning, imaging, purchase protection and inspections in addition to focusing on Ready Logistics, the company’s transportation company.
Prior to joining Manheim, O’Dell was chief operating ofcer for NextGear Capital, overseeing the execution of day-to-day operating activities and providing strategic direction on revenue growth and risk mitigation. O’Dell was one of the founding members of Dealer Services Corp. in 2005 and became chief operating ofcer in 2010.
DSC merged with Manheim Financial Services to become NextGear Capital in 2013.
CarMax CEO Retires
CarMax Inc. announced that Tom Fol-
liard retired as chief executive ofcer of CarMax.
As part of this previ-
ously reported management succession plan, CarMax’s board of directors elected CarMax president Bill Nash as chief executive ofcer, efective Sept. 2.
In addition, the board elected Nash to serve as a director of CarMax. The board named Folliard non-executive chairman of the board and Bill Tiefel lead independent director.
Tom Folliard
Stacey White
Shane O’Dell
DEAL-MAKING GOES DIGITAL.
Today’s car shoppers aren’t just researching online, they’re turning to digital for faster, easier purchase decisions. That’s why today’s top dealers increasingly demand the power to start and make deals online.
Only Dealer.com makes this possible. Through the industry’s most powerful Digital Retailing solution, you can initiate deals from your website, guide shoppers through fnancing, payment, and trade terms, or engage directly with them through the pioneering MakeMyDealSM personal communication and commerce system. The result allows you to arrange deals before shoppers even walk in the store. It’s the most effective way to streamline sales and exceed today’s shopper expectations, and it’s available now with Dealer.com.
RETAIL MARKETS
NORTH DAKOTA
Shanon Schauer, owner, Northern Motors Inc., Grand Forks, N.D.:
“We’ve been in business here for 21 years, but we’re the smallest guys in town. We have one location.
“We keep about 40 (vehicles) on the lot and we keep about 70 in inventory.
“We sell about 25 per month. We’re probably down from this time last year. The reason is tax time was of for us this year.
“We do a lot of retail and we do very little buy-here, pay-here. Customers use local banks (for financing).
“Our inventory comes from just about everywhere – auctions, of the street and other dealers.
“Average retail price is under $10,000. We try to keep it under $10,000.
“Our average model year is between 2005 to 2010.
“Mileage is in the hundreds, usually around 100,000. It’s always been a struggle to get cars with good mileage. You have to
take the high milers, too.
“(Inventory) is probably half cars and half trucks, which includes SUVs.
“The majority are domestics.
“I would say we average $1,000 in repairs and reconditioning to get a car on the lot. It’s probably up a hair from last year. The biggest expense is always mechanical, but tires are a big factor.
“We have other people do the service.
“We do very little marketing/advertising. Word-ofmouth is our main advertising.
“The oil boom did not affect us very much. We’re far enough away where we saw very little of that.
“We recently sold a 2003 Dodge Ram quad cab for $14,000. That one had 119,000 miles.
“We always wish for a great harvest in the fall, but it’s been very wet up here. We’ve got some farmers who are pretty wet, but we want to see them make money.”
TEXAS
Eddie Hale, general manager, Neighborhood Autos, Dallas/Fort Worth, Texas:
“We have eight locations in the DFW area – Azle, Bridgeport, Decatur, Denton, Gainesville, Lewisville, Sanger and Watauga. We’re owned by dealer principal James Wood and he’s been in business for over 50 years.
“With all our locations in total, we carry about 300 vehicles. We buy cars from a couple of wholesale groups.
“Also, James Wood owns two new-car franchise dealerships, so we have an opportunity to buy some (trades) directly from them.
“We sell on average right about 200 a month. Through August, we’re behind year-to-date from last year, probably around 7 percent fewer sales than last year.
“We’re directly afected by the oil-and-gas industry. We watch trends so we had
kind of forecasted a 10 percent downturn. So we’re doing better than that.
“One of the major employers in our local area is Devon Energy Corp. and they had a massive layof early this year. But even that has stabilized. It’s getting better.
“We are a buy-here, payhere business. It’s about 95 percent of our business.
“Our down payments are pretty good. The average down payment is better than $1,500. Right now, it’s around $1,800.
“We carry a little bit higher ACV than the typical buyhere, pay-here dealer.
“Average retail price for our vehicles is somewhere around $16,000. The average term length is 48 months.
“Our average model year is about four years old, so a 2011 or 2012.
“Mileage is somewhere around 80,000 miles, on average. We buy a lot of fleet/ lease return vehicles.
“We have a two-year,
Compiled by Jeffrey Bellant
30,000-mile limited warranty on all of our vehicles that have up to 125,000 miles.
“We’re probably at a 70-30 mix of domestics to imports.
“We sell a lot of trucks and SUVs, mostly Chevy Tahoes and Ford Expeditions, Yukons and then Chevy, Ford and Dodge (pickups).
“We carry 30 percent trucks and SUVs and we sell any of those that we can get our hands on.
“We do all of our own recon, but we don’t have a true service department.
“Our average recon, even with the high ACV, is still pretty high – about $1,800.
“Most of our marketing money is spent in the digital world. We also do goodwill marketing donate to school athletic booster clubs. We’ll donate to community parks and recreation. We support veteran events and Cinco de Mayo celebrations.
“We recently sold a 2015 Hyundai Sonata. The mileage was 39,000.
“It sold for $18,995.”
• CA SH f or y our auto notes – Bulk P urchase
• P ay ment Strip P rogram ( 3 to 15 months) Dealer collects.
• Reduce administratv e burden of collecton calls and taking cash.
• Build y our inv entory to sell more.
• We are y our source f or capital and serv icing solutons.
• Quick , simple and consistent f unding process.
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Kevin
Mike
Tony Moorby Industry Pundit (and former President of ADT Automotive) TECHNOLOGY Joe
WHOLESALE MARKETS
ARIZONA
Jim DesRochers, vice president, Dealers Auto Auction of the Southwest, Phoenix:
“We’ve been in business 13 years. We have six lanes and we’re running all of them.
“(August) has been the biggest month in the last five years.
“There’s no more tax market. We know that’s gone.
The Hispanic export market is 90 percent gone. But the month of August was the highest consignment and sales month week-toweek that I’ve seen in the last three to four years.
“When I was at a conference with a bunch of remarketing guys, we had talked about how the industry had flattened. The nature of cars, when people are buying them and the diferent streams they are buying them through, has flattened out the year.
“We consigned about 3,500 cars and sold 70 percent in August. I would suspect that’s 20 percent high-
er than August 2015. I’m shocked because we don’t do fleet-lease. We do a lot of repos and a lot of dealer cars, but we don’t do any rental cars.
“About 70 percent are dealer cars and 30 percent are subprime repos.
“Repo numbers have been absolutely steady. There’s been no peak.
“We’re pulling in more than 350 dealers every week. The thing is, we don’t get out of our niche. We’ve always taken cars that are under $10,000.
“Sellers know they have a buyer base. If a guy said to me, ‘I’m going to bring you 100 cars tomorrow,’ and I knew I didn’t have another 10 buyers for those cars, I’d tell them ‘no,’ because all that does is dilute those (sale) percentages and make me do more work. A guy is never going to come back if I’m selling at a 40- to 50-percent rate.
UCN-9x6-July.pdf 1 7/11/16 2:56 PM
“We also used to have about 25 percent (of our cars sold) exported to Mexi-
co. Forty percent of my staf is bilingual. When (the government) switched the regulations and fees and export rules, it changed the export dynamics. Mexico’s laws to protect the new-car business absolutely dropped the export business. The demand to go to Mexico is huge, but the ability to export is minimal.
“Our average overall price is probably $4,500 to $5,000. That’s up about 10 percent.
“We’ve partnered with Kelly Bianchi at AuctionVcommerce. She has absolutely helped us with our online presence.
“We’ve also literally built an airport-style concierge lounge. It’s limited to a certain number of dealer percentages and allows those dealers to relax, watch the sale from inside the lounge. There’s a simulcast screen if they want to bid and/or consign remotely. That’s been one of the biggest hits we’ve ever had. We have someone who gets their
meals, gets their run lists or they can print them of. It’s right in front of the lanes.”
FLORIDA
Joaquin Muvdi, general manager, South Florida Auto Auction of Ft. Lauderdale, Lauderdale Lakes, Fla.:
“We’ve been in business 15 years. I’ve been here seven years.
“We have four lanes and we’re running about 1,800 vehicles. It’s only going up from this time last year. We’ve been looking for land for the last five years (to expand).
“Our (conversion rates) are averaging 64 percent, about the same as this time last year.
“We draw about 700 people in the lanes. They are coming from Florida, Arkansas, Alabama, New York, Tennessee, Atlanta and California.
“We are 95 percent newcar trades and 5 percent fleet-lease.
“We don’t do any salvage or other special sales.
Compiled by Jeffrey Bellant
“Although we don’t do any simulcast, what we do after the auction is that we take all the no-sales and put them on SmartAuction, OpenLane and OVE.
“The average price in the lanes is $8,500.
“The (hot vehicles) are Tahoes, big trucks, Escalades and Jeep Wranglers.
“I try to keep everything positive, but the very lowend cars aren’t doing well. Metal is low, so you’re not getting as much for the cheaper cars.
“One thing I saw – related to tax season – is that last year our December was the best month of the whole year, which is shocking.
“You know what I think it is? I think it’s important for the auctions to market it and promote it.
“What happens is, everyone vacations in December, or tries to. The other thing is that Florida is diferent; you’re not getting snowed in.
“People are leaving the cold to buy from us.”
I write this on the 15th anniversary of the dreadful attacks on the U.S. at the twin towers of the World Trade Center, the Pentagon and Flight 93 over Shanksville, Pa.
I distinctly remember saying to my wife and kids, “The world will never be the same after this.” Events that have unfolded since can be laid at the feet of these acts of willful murder and violence –
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
To me, the ceremonies are as moving and emotional as ever, especially as real-life witnesses recount their experiences and even more so, the first responders.
This is one of those dates that sticks in your mind and you know exactly where you were and what you were doing when you first heard of or saw the events unfurl, live on TV. Like JFK’s assassination or the Rev. Dr. Martin Luther King’s.
our involvement in Afghanistan, fighting al-Qaida, the war in Iraq, the Arab Spring, radical Islam and the rise of ISIS, to name just a few. George Bush naively believed that the world should embrace democracy. That can only happen in a country where the people actually want democracy – not to have it forced down their throats. It’s now almost a rehash of The Crusades of the 11th century, just not dictat-
ed by the Pope this time. I was listening to the radio in the car today. There was a report of the knowledge and understanding of the Sept. 11 events by children under 15. For such awful, recent history their knowledge was horribly and woefully lacking. Some didn’t realize the Pentagon had been a target and even less so, that Flight 93 was involved.
It was stated that educators were “struggling how to deal with the subject or whether to even include it” in their curricula. What? Are we to be like the Russians or North Koreans or the Chinese and rip out pages of the history books as though things never happened? Fear of ofending students’ sensibilities was one position. What absolute drivel and hogwash!
References to racism and slavery are going that way as though denial of our very own history, as a country, will exonerate those ugly smears or make them go away completely. History is the passing of real events,
not some whimsical interpretation or partial recognition of what may have happened (or not).
Teachers should be able to tell what happened, plain and simple. Perhaps healthy debate and discussion would or should follow – that’s the way a child learns – hear the facts and digest them in his or her own way.
There is as much to learn about goodness, heroism, sympathy, human spirit and kindness among all kinds of other attributes within the scope of monumental, historical happenings such as those of 9/11. The more kids know about it, the better they will be able to deal with events in their lifetimes. A lack of knowledge spells ill for a prepared adulthood.
This must be another wave of political correctness –avoiding the elephant in the room – if we have a multi-
ethnic society, which we do, we should be able and willing to talk about world events in our own contexts without fear and quite openly.
If it’s acceptable to ‘take a knee’ during a rendition of the national anthem as a right to freedom of expression then that same right pervades schoolyards and classroom walls.
My nine-year old grandson, already an avid reader, brought home a library book called “Towers Falling” by Jewell Parker Rhodes, recommended by his language arts teacher. It tells of a young girl’s quest to find out why the two towers can’t be seen from her classroom window any more and all the things she learns on her way about herself, her family and many other broader issues. He said I should read it. I will, and maybe you will too.
To see past columns from Tony Moorby, visit www.usedcarnews.com/columnists/tony-moorby
Across 1. Nissan pickup
4. Company that owns Mercedes Benz
9. Airport abbreviation
11. Makers of the Bolt
12. Alfa ____
13. Cutlass or Delta 88
14. New Lotus model
15. Navy or azure
19. Liquid for autos used in cold weather conditions
20. Dodge truck
21. Firm, briefy
22. Current measurement
24. Place for a mechanic’s equipment
29. Decide
31. Starting letter of Maybach
32. Ofen a prerequisite to a car sale
By Myles Mellor
33. Fire
34. Get going
35. Buyer’s protection
36. Shelby _____ Mustang
38. White and yellow color
40. Some gas stations ofer a free one
41. GM technology that uses Remote Vehicle Shutdown to recover stolen cars
42. “Sure” Down
1. Hyundai SUV
2. Measure of tire wear
3. Average
4. Getting the car to the customer
5. 60s and 70s Jensen
6. Something that strongly attracts
7. 50s and 60s classic car built by Nash
8. Ace
10. Email address intro
16. Large tree
17. Upcoming auto technology, _____ vehicle access
18. Kia minivan
19. Start to use, new technology for example
21. Businesses,for short
23. British political head
25. Boat propellers
26. Electricity supplier
27. Prefx with acetylene
28. Jaguar model
30. Ford sedan
32. Te 405 and 110 and the 5 run through it, abbr.
35. Car with a big carrying capacity, informally
36. Kind of truck
37. Appropriate
38. Beetle or Jetta
39. GPS is the new form of it
Solution to the 9/5/2016 puzzle
AROUND THE BLOCK
ABC HELPS EMPLOYEES HURT BY FLOOD
Auction Broadcasting Co. has provided flood relief in several areas for its employees at ABC Baton Rouge.
The ABC Baton Rouge Auction did not suffer any flooding itself, but 13 of the auction’s employees lost everything.
“You just cannot imagine how devastating the damage is until you see it with your own eyes”, said Jason Hockett, president of ABC. “Pictures don’t show how horrible this really was. It just so happened that my wife, Paula, and I were moving my son, Joe, and
his wife into their new home that weekend and were able to see it all first-hand.
“As a family business, we discussed what we could do to help the 13 families and others that lost their homes and all of their possessions. Many of our employees at ABC Baton Rouge weren’t able to get to work with the roads closed, so we paid them for the week plus gave each of them a $1,000 Visa Gift Card.”
The National Auto Auction Association gave each of the 13 employees a $500 gift card. An ABC consignor offered to donate $10 a vehicle for every vehicle sold in the month of September at ABC Baton Rouge, Hockett said.
General managers at each ABC auction started a fund and raised nearly $40,000 in one week, with a goal to raise between $100,000 and $150,000 and have an ABC corporate match, Hockett said.
Compiled by Jeffrey Bellant
Auction Celebrates ‘Sizzling’ Summer
Buyers and sellers gathered in the lanes at Dealers Auto Auction of Oklahoma City for a Sizzling Summer Sale on Aug. 18.
The event was the highlight of the season, with consignment topping 1,000 units, more than 500 bidders in the lanes and joining the sale online, and a sale percentage of 56.7 percent recorded by the end of the day. A GM Factory closed sale followed the regular consignment sale, with 250 units and 70 dealers in attendance buying 62 percent of the vehicles.
Customers received a catered barbecue lunch while they previewed and bid on vehicles from Santander Consumer USA, AvisBudget Group, Ally Auto, GM Financial (open and closed), Hertz Corp., and ARI, along with car dealers.
Prize drawings included a Las Vegas trip, barbecue grills, catered luncheons and gift cards.
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
COME TOGETHER: The auction staff at ABC St. Louis (above) shows support for ABC Baton Rouge. They joined other ABC auctions in raising funds for flood relief victims.
