Used Car News 8/15/16

Used Car Market Sends Mixed Signals

As with much of the rest of the economy, the used-car industry sent mixed signals in the second quarter, which now raises questions for the rest of the year.

Penske Automotive Group Inc. best reflected the market in its second-quarter results.

Used unit retail sales rose 6.8 percent, but same-store used unit retail sales declined 2.6 percent.

Same-store used retail revenue rose 0.2 percent.

Average transaction price per unit was $27,936, up 0.2 percent, but average gross profit per used unit was $1,697, down $85 per unit.

Overall, the seven public dealer

groups ended their streak of 27 consecutive quarters of same-store retail used unit sales gains, reports Manheim chief economist Tom Webb.

Webb attributed that slide, in part, to their inability to sell many recalled units.

Repairs on those units should speed up in the third quarter, Webb said, putting them back in the market.

The Manheim Used Vehicle Value Index rose throughout the second quarter and rose yet again in July. It now stands at 127, up from 122.5 in March.

The Index adjusts for mix, mile-

age and seasonality. Other measures of the wholesale market have shown more downward movement in the last few months, but have been stronger than many predicted.

“Although there was a near-universal expectation that wholesale prices would sufer in 2016 due to growing wholesale supplies, current auction values are not abnormal relative to several long-term historic relationships,” Webb said.

Ford Motor Credit Co. was one consignor that warned about residual performance during its recent second-quarter conference call. And the potential for lower wholesale prices going forward is creat-

ing some concerns for the finance market.

BB&T Corp. reported that it increased credit loss allocations due to higher net charge-ofs at its Regional Acceptance subsidiary. This move was driven by portfolio mix and an increase in loss severity.

Fitch Ratings expects losses to increase for more subprime creditors due to weaker collateral credit quality and pressure on wholesale vehicle values, which will pressure recovery rates.

The good news, Fitch reports, is that delinquencies and losses on prime auto loan ABS remained historically low through June.

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Consumers Want Vehicles with Safety Technology

Driver-assist technologies help make vehicles considerably more appealing to their owners, according to the J.D. Power 2016 U.S. Automotive Performance, Execution and Layout Study.

The study finds that new vehicles equipped with safety features such as blind spot monitoring and low speed collision avoidance have overall APEAL scores substantially higher than similar vehicles without the technologies.

Overall APEAL scores are higher among the 41 percent of owners whose vehicles have blind spot monitoring than among those whose vehicles do not have this technology (821 vs. 787, respectively).

Similarly, APEAL scores are higher among the 30 percent of owners whose vehicles have collision avoidance technology than among those whose vehicles do not have this technology (828 vs. 790, respectively).

The overall industry APEAL score improved by 3 points to 801, helped by the launch of many new vehicles.

In 2016, 22 of the 30 allnew or major redesigned models included in the study scored higher than their respective segment average.

Over the past 10 years, newly launched vehicles have scored an average of 29 index points higher than their segment average.

“The key to successful models is to launch with very high appeal and limit the decline that often comes in subsequent years,” Stephens said. “As automakers con-

“Technology-enabled safety features help drivers feel more comfortable and confident while driving their vehicles,” said Renee Stephens, vice president of U.S. automotive quality at J.D. Power. “These features are also ‘gateway technologies’ to autonomous driving capabilities, so the continued level of consumer interest in them will be a critical metric to watch as the industry evolves toward including more automation in new vehicles.”

tinue to add more content, including advanced technologies, to their vehicles, one key way to maintain appeal is to design technology that is easily upgradeable and intuitive.

“Intuitive designs never go out of style. For example, for infotainment systems, intuitive design may mean simplification: bigger buttons,

bigger screens and menus that are laid out in a manner that is easy for the driver to understand.”

Among owners whose vehicles have average or aboveaverage APEAL scores (801 or higher) and who report no problems with their vehicle in the first 90 days of ownership, 90 percent say they “definitely will” recom-

mend their vehicle to others. In contrast, among owners whose vehicle has low APEAL scores (800 or lower), even when their vehicle is problem-free, advocacy drops to 64 percent. Among those who report one or more problems with their vehicle, advocacy plummets to 49 percent.

Continued on page 6

NEWS BRIEFS

Cars.com Acquires DealerRater

Cars.com has entered into an agreement to acquire DealerRater.

The transaction is subject to regulatory approval and customary closing conditions, and is expected to close by the end of August.

Terms of the transaction were not disclosed.

CarMax Auctions Add NextGear Capital

NextGear Capital has announced a new agreement with CarMax that will allow dealers to use their NextGear Capital lines of credit at all 68 CarMax auction locations.

NextGear Capital floor plans are currently accepted at over 1,000 live and online auctions, and may be used with inventory sources such as trade-ins, of street purchases and loan payofs.

NextGear Capital floor plans started to be accepted at all CarMax auction locations as of Aug. 8.

Spireon Reports Growth

Spireon Inc. announced it has achieved its 20th consecutive quarter of year over year revenue growth.

The record revenue growth arises as the company added over 1 million new connected devices in the

past year across all major vehicle telematics segments, including new- and used-car dealers and lenders, small and medium sized fleets, transportation and trailer, rental car companies and consumer markets.

Spireon grew revenue 20 percent year over year for the first half of 2016, and more than doubled its profitability.

Company Sees Boost in Digital Use

Manheim recently released its second quarter Digital Trends, showing a 22 percent increase in vehicles sold through its digital channels in the second quarter compared to prior year.

With the launch of new features such as Daily Sales and Text Notifications, OVE has experienced double-digit growth over prior year. New programs such as Outside-theGate Inspections have also contributed to an increase in OVE vehicles listed with a condition report, helping to drive greater confidence in online buying.

Leasing Sets Record

More new vehicles were leased in the first half of 2016 than during the first half of any other year in history, according to the latest Lease Market

Report from Edmunds.com.

Lease volume has doubled in the last five years.

The Millennial generation is driving this change, with a higher rate of lease penetration than any other generation (34.2 percent), but the strongest growth has come from shoppers over the age of 75.

During the first six months of this year, more than 32 percent of cars sold to this age group were leased – a growth rate of 74 percent compared to five years ago when lease penetration of this group was only 19 percent.

Bank Launches Floor Plan Program

Republic Bancorp Inc. recently rolled out its new dealer floor plan lending platform.

The bank made the move to further diversify its loan product mix and complement its indirect autolending platform.

Republic reported $18 million in indirect auto finance in the second quarter.

KAR Reports Higher Revenue, Profit

KAR Auction Services Inc. reported revenue of $771.8 million in the second quarter, as compared with

revenue of $658.3 million for the second quarter of 2015.

Net income for the second quarter increased to $61.8 million, as compared with net income of $59.5 million in the second quarter of 2015.

The company also announced a cash dividend of $0.29 per share on the company’s common stock.

Black Book Partners with GoGoCar

Black Book announced an agreement to be one of the trade appraisal resources for GoGoCar, an online car-buying platform that facilitiates the entire car-buying experience online.

GoGoCar will leverage Black Book appraisal and valuation data for its customers. Powered by Black Book, GoGoCar enables car dealers to obtain trade appraisal data on any vehicle ofered during the customer car buying experience.

Published By General Media LLC USED CAR NEWS (ISSN 1555-7413) is published at 24114 Harper, St. Clair Shores, MI 48080 Phone: 586-772-5200 or 800-794-0760 Fax:

Charles M. Thomas - Founder (1947-2002) Lynda R. Thomas, Publisher Colleen Fitzgerald, General Manager

Editorial: Ted Craig, Managing Editor Jeffrey Bellant, Staff Writer

Contributing Writers: Ed Fitzgerald, Jenny King, Sheila McGrath

Advertising: Shannon Colby, Account Manager Marie Hingst, Account Manager

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Production: Josie Godlewski, Media Manager Cee Lippens, Web Master & Graphic Designer Used Car News is published the first and third Monday of each month.

Subscribers: We print advertisements as sent to us by auctions and other advertisers. It is not possible to verify the correctness of listed vehicles in auction ads. Most lists are partial and all lists are subject to last minute changes by auto auctions, so before travelling a long distance for a particular auto auction event, contact the auction by telephone for a fax of vehicles in the sale. Used Car News assumes no guarantees or liabilities concerning the accuracy of any advertisements. All Rights Reserved. Reproduction in any form is prohibited without the written consent of the publisher.

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Late Recall Notifications Create Public Outcry

LOS ANGELES (AP) – High profile recalls and the issues around notifying drivers about them continue to make news.

The parents of “Star Trek” actor Anton Yelchin have sued the makers of the Jeep Grand Cherokee, an SUV that was under recall when it crushed and killed the 27-year-old.

Victor and Irina Yelchin filed the wrongful-death and product-liability lawsuit against Fiat Chrysler in Los Angeles Superior Court roughly six weeks after their son was killed. The suit contends that the gear selector in the actor’s Jeep was defective and poorly designed and manufactured.

“Anton Yelchin was crushed and lingered alive for some time, trapped and sufocating until his death,” the lawsuit says.

The actor’s Jeep rolled backward down the driveway of his Los Angeles home June 19, pinning him between a mailbox and a security fence. The SUV was among 1.1 million vehicles recalled in April because its gear shifters have confused drivers, causing the vehicles to roll away unexpectedly and leading to dozens of injuries.

The suit does not say how much Yelchin’s parents are seeking in damages.

Yelchin received a safety recall

notice in May, and another notice was sent to the actor seven days after he died notifying him that the company had a fix for the gear shifter, said Gary A. Dordick , the family’s attorney.

The lawsuit says Yelchin’s SUV did not engage or maintain its “park” gear and that led to the vehicle crushing the actor.

Drivers of the Jeep under recall have complained that they had trouble telling if they put the transmission in “park” after stopping. Many reported the vehicles rolled of after the driver exited.

A government investigation into the gear shifters found 266 crashes that had injured 68 people as of late June.

Fiat Chrysler has said it is speeding up its recall of the vehicle. Both the company and the National Highway Trafc Safety Administration have urged drivers of vehicles subject to the gear shift recall to set their parking brakes before getting out of their vehicles.

Meanwhile, a new public service announcement featuring a man named Corey Burdick, who was injured by a recalled Takata airbag, launched on several social media platforms including Facebook and Twitter. The PSA was created by ConsumerWatch.com and is mod-

erated by Richard Newsome, a consumer advocate and product safety attorney.

In the PSA, a disfigured Burdick speaks into the camera stating, “I lost my eye because of a defective airbag...take your car in today so that this doesn’t happen to you.”

On May 29, 2014, Burdick was involved in a trafc incident while

driving to work in Lake County, Fla. During the incident, the Takata airbag in his 2001 Honda Civic ejected sharp metal shrapnel into his right eye, leaving him disfigured and permanently blind in that eye.He later found out that his Civic had been previously recalled multiple times for the dangerous airbag defect, but he never received a recall notice.

APEAL

- from page 3

Factory-installed navigation systems remain a challenge for vehicle owners. Two of the lowest-rated vehicle attributes are related to the navigation system: usefulness of the navigation features and ease of using the vehicle’s navigation system.

Nine of the 10 categories improved in 2016, with fuel economy posting the largest gain (14 points) year over year. Audio/communication/entertainment/navigation and visibility and safety also made notable gains of 6 points and 4 points, respectively.

Engine/transmission is the only category to decline (-1 point) this year, with the largest attribute decline in transmission smoothness when shifting, as penetration of 8- and 9-speed automatic transmis-

sions increases.

Porsche ranks highest overall in APEAL for the 12th consecutive year, with a score of 877 index points. BMW ranks second with 859, Jaguar and Mercedes-Benz rank third in a tie at 852, and Land Rover, Lexus and Lincoln rank fifth in a tie at 843. Volkswagen (809) ranks highest among non-premium brands, followed by Mini (808), Kia (807), Ford (803), Ram (803) and GMC (802).

General Motors received six segment-level awards, followed by Hyundai Motor Co. with five and BMW AG and Volkswagen AG with four each. Nissan Motor Co. Ltd., and Toyota Motor Corp. each have two models that rank highest in their respective segments.

BACK TO SCHOOL

BACK TO SCHOOL SEASON OFFERS OPPORTUNITY

By Jeffrey Bellant

For many independent dealerships, August doesn’t just mean the start of school; it means a new opportunity for sales for dealerships in a college town.

Eddy Del Real, manager of Del Real Auto Sales in Lafayette, Ind., knows that nearby Purdue University is one market for the dealership.

“Usually, a lot of students I get in are looking for something under the $10,000 price and mostly imports,” Del Real said.

Del Real Auto Sales has been in business for 29 years and carries 40 to 50 units on its lot near the home of the Boilermakers.

August, as expected, is the busy time for Del Real when it comes to student customers as they are starting the new school year.

“We’ll do some school ads and advertise for first-time drivers,” he said. “We’ve (advertised) in The Exponent, which is the local college newspaper.”

Del Real Auto Sales uses traditional online advertising like Cars.com and Autotrader.com.

“But there have been cases where we’ve targeted international students in our advertising,” Del Real said.

“We try to get our name into

their resources within the international community. We try to get our name out there.”

As a result, the store has had a lot of people in the Asian community contact the dealership for business, Del Real said.

The biggest diferences with being in a college town, he said, are targeting advertising as school starts and the buy-backs when school ends.

He said students – international students especially – often sell back cars at the end of the year making them a source of inventory.

He’s often checked Carfaxes of vehicles purchased from non-international students and many times they are cars originally purchased in Chicago or other places.

“The out-of-state students typically buy cars from where they are from and then sell them to us,” he said.

“So I think they go to college with a car and then leave it here when they (go back home).”

Although Del Real Auto is a buy-here, pay-here dealership, that doesn’t come into play much with college students.

Most of the time these are cash deals where students have already acquired their financing or saved enough cash.

“The biggest challenge for students is price points. Plus, as a buy-here, pay-here dealer, it’s difcult to do that advertising cash prices.”

The challenges of a college town don’t change, whether it’s a Big Ten town like Lafayette, or near an Atlantic Coast Conference school like Wayne Andrews, general manager/co-owner of Used Car Supermarket in Tallahassee, Fla.

The dealership, in its 42nd year, is near Florida State University and carries about 40 vehicles.

“We sell about 25 to 30 a month,” Andrews said.

Most of the sales come through credit union financing, with some secondary financing and the rare buyhere, pay-here deal.

“We actually have three colleges nearby,” Andrews said. “We have Florida State, Florida A&M University and Tallahassee Community College, which is huge.”

The community college alone has about 12,000 students, he said. Continued on page 11

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City Honors Auction for Community Contributions

Manheim Seattle won the City of Kent “Best of Kent” award for the fifth consecutive year, qualifying the auto auction for the Kent Business Hall of Fame.

The award is presented to local businesses that continue to display innovative growth, a sharp focus on community relations and customer feedback.

“Manheim Seattle Auto Auction is a direct reflection of our customers and our employees,” said Ray Priest, general manager. “The value we share doesn’t just drive revenue but it also makes a diference in those around us through our community eforts.”

Manheim Seattle places its primary focus on the needs of employees, strategic customers and the surrounding community. The auction is particularly recognized for its community involvement, which includes support of the following organizations:

• Auburn Youth Resources. This organization provides shelter for thousands of homeless and abandoned children in South King and North Pierce County. They also provide other valuable services to children in the area, including school backpacks and supplies, as well as substance abuse prevention and outpatient chemical abuse treatment and counseling. In 2015, Manheim Seattle donated over $15,000 from a silent charity auction in conjunction with area auto dealers and franchises to

food items.

• Kent Fire and Rescue. In May, Manheim Seattle participated in a

ployees, families, dealers, automobile franchises and other local influencers to support these organizations.

Chains Add New Locations

Used-car chains continue to add stores.

Sonic Automotive Group Inc. continues to move ahead with its EchoPark used-car superstore strategy despite a large loss in the second quarter.

Sonic opened two additional Denver area EchoPark used-car stores in late June.

The firm also reported a pre-tax loss of $4.1 million related to its EchoPark operations in the second quarter.

Sonic remains active with its property acquisitions in the Carolinas and Texas for more EchoPark stores. The company said it is beginning to see store-level profitability at the existing locations.

“The guest feedback at EchoPark is remarkable, further supporting our strategic entry into this part of the pre-owned market,” said Jef Dyke, Sonic’s executive vice president of operations.

“We have listened to our guests’ needs and are delivering on those expectations.”

Asbury Automotive Group Inc. opened a new Q used-car store in the greater Tampa, Fla., area in the second quarter.

Carvana launched its latest store in Washington, D.C.

With the addition of Washington, D.C., Carvana can now provide delivery to nearly 103.5 million customers nationwide, including more than 13.2 million residents in the Washington, D.C. area alone.

“Washington, D.C. is the largest market we’ve launched in to date, so we’re tremendously excited to be here,” said Ernie Garcia, founder and CEO of Carvana.

To date, Carvana has delivered cars to customers in 46 states, and additional markets enable Carvana to ofer faster and more afordable delivery options. Currently, Carvana ofers as-soon-as next-day delivery to local residents in 15 markets.

Carvana is ofering a full refund of any delivery fee paid by consumers who purchased a vehicle prior to Carvana’s expansion into the market.

School – Continued from page 8

“The community college is made up of local kids, so a lot of their parents have bought from us – actually some of their grandparents, too –over the years,” Andrews said. “So we’ve kept an open line of communication with them.”

The dealership’s proximity to colleges influences its inventory mix.

“We try to keep a good selection of small gas-sippers and stuf that’s not overly expensive,” Andrews said.

“You know, the parents of most college kids want them to be in something that’s inexpensive and safe, but also gets good gas mileage.”

The company targets students in diferent ways.

“We change up our marketing a little bit when the kids come back to school,” Andrews said. “We try to appeal to things they might like and that their parents might like.

“We keep a selection of cash cars, for those parents who might want to spend $5,000 on a car to get their kid through school.”

While the dealership may carry a few of those cars seasonally, such as during tax time, they will boost that amount during the back to school period in August.

Andrews said the key is product placement.

“We look to (place an advertisement) in a publication that you know is going to reach the kids and is going to get their attention,” he said.

That could include a school publi-

cation “if there’s a deal out there to be had,” he said.

Andrews said there is a local shopper guide that he uses to advertise and may enhance that by getting a full front page or back page to draw attention.

Dealers in college towns have to keep in mind one of the challenges that comes from being near a college or university.

“You know, the students bring your median income down,” Andrews said. “So if you have a lender that comes in and wants to see every person with a $2,400 a month income or better, we know we’ve got 70,000 to 80,000 students here, which is almost a third of our county’s population. So that gets figured in.

“We have to beg our lenders to flex a little. Most of our kids are working part-time, so if they don’t have a parent to co-sign or buy for them, (it’s difcult).”

Andrews said his dealership has one feature that brings parents some peace of mind.

“One big thing that I’ve found over the years is that parents really appreciate the fact we have a fullscale service department,” he said. “I could take a parent’s credit card over the phone to help pay for their kid’s repair if they’re out of state.”

Andrews, as a father, can relate to that situation.

“My kids went to FSU, so I understand the trials and tribulations of having kids in college,” he said.

Spanish Language Issues Land Store in Trouble

A Washington State usedcar dealer will pay $250,000 for discriminating against Spanish-language speakers at its dealerships.

Auto Sales and Independence Auto Center, and also known as ZAG Auto Group, ran ads in Spanish-language media, promising financ-

Most of the salespeople at Zein’s dealerships spoke Spanish, and half the dealerships’ sales were conducted in Spanish. The dealerships

“I won’t tolerate this attempt to exploit the Latino community.”

Bob Ferguson

ing even for those without a credit history.

orally ofered Spanishspeaking customers one set

of terms, but presented a different set of terms in documents written in English.

As a result, the state’s attorney general said Zein Automobiles and its employees misrepresented loan terms, interest rates, title branding issues and warranties in violation of the Washington Law Against Discrimination and the state Consumer Protection Act.

The Attorney General’s Office estimates that as many as 3,000 customers may be eligible to receive money from the settlement.

For example, all of the documents one customer signed for the car he purchased were in English, and he relied on the salesperson to orally communicate what he was signing. He believed his interest rate was 3 percent, when it was actually nearly 30 percent, a fact he did not find out until later.

Spanish speakers by spending the vast majority of its advertising budget on Spanish-language airtime. Some of its Spanish-language advertisements suggest Zein Automobiles is a “miembro activo de la comunidad hispana local” — an “active member of the local Hispanic community” — to attract Spanish-speaking customers.

The AGO’s Wing Luke Civil Rights Unit began investigating Zein Automobiles in the spring of 2015, after advocates from the Northwest Justice Project referred complaints to the AGO.

In a consent decree filed in Snohomish County Superior Court, Zein Automobiles Inc. agreed to:

• Pay $250,000 in restitution, costs and fees;

• Make Spanish-language contracts available whenever it advertises in Spanish and provide them to customers when the sales transaction is conducted in Spanish;

Another customer, also brought in by Spanishlanguage advertising, purchased a previously totaled vehicle, despite being told in Spanish that the dealership didn’t sell cars that had been in accidents.

• Honor all warranties promised in its advertisements, including six-month and one-year warranties; and

“I won’t tolerate this attempt to exploit the Latino community,” said Attorney General Bob Ferguson. “This dealer lured these customers in by targeting the Spanishspeaking community, and then exploited the language barrier.”

Investigators found that Zein Automobiles targeted

• Cease any deceptive or misleading practices in its advertising or sales, including making any statement that creates a false impression regarding the premise of a sale, the warranty available, the monthly payment, the interest rate or any other term of payment.

Camaro Killer Gets

Parole Hearing

death of 49-year-old Robert Carl Hartman.

The then-20-year-old Akers, of Boaz, was on leave after finishing boot camp with the U.S. Air Force when he killed Hartman in his ofce at Hartman Motors.

HUNTSVILLE, Ala. (AP) – A man serving life in prison after killing a Huntsville auto dealer when he couldn’t get a car loan nearly 20 years ago has a chance at freedom next month.

Al.com reports a Sept. 20 parole hearing has been set for 40-year-old Burman Lee Akers Jr. who was convicted of murder in the 1996

Authorities said Akers slashed the auto salesman’s throat repeatedly after a bank loan didn’t come through for him to buy a Camaro on Hartman’s car lot.

Hartman then tried to hide Hartman’s body before stealing the victim’s wallet and the car.

BBB Warns About Problems at Public Auction

The Better Business Bureau serving Chicago and Northern Illinois is alerting consumers about First Marshall Auto Auc-

raised my paddle and bid for me. He then pressured me through the rest of the process. I eventually got my $700 back through

“The company has not responded to six of these complaints”

tion LLC, which holds an “F” rating from the BBB (on a scale of A+ to F) in its BBB Business Review.

This rating is due to the company’s number of complaints, failure to respond to all complaints, failure to resolve all complaints, and an underlying pattern of actions causing consumer complaints.

“In the past three years, 31 complaints from consumers have been filed with the BBB against First Marshall Auto Auction,” said Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois.

“Our data shows that there have been 23 complaints, or 74 percent of the

total complaints, in the past 12 months. The company has not responded to six of these complaints. Three complaints have not been resolved.”

Among the specific comments about First Marshall Auto Auction from complainants to the BBB, one involved a defective engine.

“I paid over $3,000 for a car and it caught fire less than a week later,” said Cadesiah Anderson of Maywood, Ill.

“I was driving and it felt like some part dropped out of the car and then smoke came out of the hood. I pulled into a gas station and jumped out of the car as it caught fire.”

Another claims aggressive tactics by auction staf

“I came to look at cars and ended up with one I did not want,” said Zannie Bowen of Country Club Hills.

“An auction employee

Dealer Defrauds NFCU

The co-owner of a Virginia used-car dealership was sentenced to 74 months in prison, followed by 4 years of supervised release, and ordered to pay $980,541.43 in restitution for conspiracy to commit financial institution fraud and filing a false tax return.

Andysheh Ayatollahi pleaded guilty on March 14. According to court documents, in July 2007 Ayatollahi purchased a 50 percent interest in the Car Store, a used-car dealership located in Virginia Beach.

From then until May 2008, when the Car Store closed, Ayatollahi conspired with others, including Car Store personnel, to defraud Navy Federal Credit Union (NFCU).

Ayatollahi and his coconspirators engaged in fraudulent practices that included using individuals as straw buyers/borrowers to apply to NFCU for car loans

because the actual buyers were not sufciently creditworthy to qualify for a car loan.

Ayatollahi also submitted fraudulent car loan applications to NFCU with false supporting documents; made telephone calls to NFCU impersonating buyers applying for car loans; provided false employer telephone numbers to NFCU and then impersonated the employer while verifying the applicant’s employment and wages; and fraudulently inflated the true purchase price of vehicles and split the excess with the buyers.

In total, Ayatollahi fraudulently caused NFCU to issue 61 car loans with a total loan amount of $1,168,904.97. Most of these loans went into default, resulting in a loss to NFCU of approximately $867,448.43. Additionally, Ayatollahi filed false tax returns.

Steven J. Bernas

small claims court.”

Bernas said a recent re-

view of BBB complaints shows a pattern of consumer allegations against First Marshall Auto Auction. In the most recent three-year period there have been 21 complaints about problems with product or service, seven complaints about advertising/sales issues, and three complaints about delivery issues.

In their complaints to the BBB, consumers allege that consumers were charged additional fees, which were not mentioned prior to giv-

ing a down payment, which increased the total amount due.

The BBB also claims that First Marshall Auto Auction failed to disclose their no money back policies and that consumers were not allowed to test drive or inspect a car prior to purchase.

As of the end of June, the BBB has not received a response from First Marshall Auto Auction concerning the pattern of consumer allegations.

Hackers Target Jeeps

HOUSTON (AP) – Two men jailed in Houston and accused of using pirated computer software to steal more than 100 vehicles may have exploited an electronic vulnerability to advance auto theft into hightech crime.

Michael Arce, 24, and Jesse Zelaya, 22, focused on new Jeep and Dodge vehicles, which attract big money on the black market in Mexico, authorities said. The men allegedly used a laptop computer to reprogram the targeted vehicles’ electronic security so their own key worked.

“As you get more and more computers installed in vehicles – if somebody has that knowledge and that ability, they can turn around and figure out a way to manipulate the system,” Houston police ofcer Jim Woods said.

The stolen vehicles had common software that’s used by auto technicians and dealers, he said.

“If someone has turned around and pirated that software and uses that software for other, illegal purposes, that’s something we can’t control,” Woods said.

Berj Alexanian, a spokesman for Auburn Hills, Mich.-based Fiat Chrysler, which makes Jeeps and Dodges, said the company and police are investigating how the thieves got access to a computerized database of codes used by Fiat Chrysler dealers, locksmiths and independent auto repair shops to replace lost key fobs. He said the code database is national and includes vehicles in areas outside of Houston, although he wasn’t aware of similar thefts elsewhere.

“We’re looking at every and all solutions to make sure our customers can safely and without thinking park their vehicles,” Alexanian said.

The company was looking at how to better secure the key fob database and other potential solutions, but any steps would have to be tested and validated, he said, meaning Fiat Chrysler vehicles could remain

vulnerable. The company is recommending they always be locked and parked in a secure place.

That may not be enough, though, according to Woods.

“No matter what you do, if somebody has the ability and the knowledge to steal your car, they’re going to be able to take it,” he said.

Arce and Zelaya, who each have criminal records, were arrested driving a stolen Jeep Grand Cherokee after police had been concentrating on an area of Houston that had been hit previously by auto thieves. Police also recovered electronic devices, keys and other tools believed used in the thefts, along with drugs, firearms and body armor.

Arce’s lawyer, Joe Ray Rodriguez, said it was too early in his review of the case to discuss it and that he was awaiting evidence to show how Arce, who he said was accused of stealing only one vehicle, could be tied to as many as 100. Arce remained in jail without bond on charges of unauthorized use of a vehicle, felony possession of a weapon, and possession with intent to deliver a controlled substance. He was set for a court appearance Aug. 26.

Zelaya did not yet have an attorney, according to court records. He’s being held on $500,000 bond on a charge of unauthorized use of a vehicle.

The Houston police investigation began in late May with the theft of a Jeep Wrangler near downtown. Leads in that case had been exhausted when investigators received information from federal Homeland Security and Immigration and Customs Enforcement officers about vehicles being stolen using a laptop. Arce and Zelaya then were identified as suspects.

In the Jeep Wrangler case caught on a surveillance video, the suspect got under the hood, cut wires to the horn to disable an alarm and then got inside the SUV.

PEOPLE IN THE NEWS

CarMax Elects Board Member

CarMax Inc. announced that its board of directors has elected John T. Standley to membership on the board, bringing total board membership to 12.

Standley will serve on the Audit Committee.

Standley is the chairman and chief executive ofcer of Rite Aid Corp. He has served as CEO since 2010 and chairman of the board since 2012.

Standley was president of Rite Aid from 2008 until 2013 and its chief operating ofcer from 2008 until 2010. He previously served as CEO and as a director of Pathmark Stores from 2005 to 2007.

Cox Salutes Minority Dealer

Cox Automotive, in partnership with the National Association of Minority Automobile Dealers, awarded its inaugural Rising Star Award to Emanuel D. Jones II, dealer director of Legacy Automotive Group, in recognition of his strong leadership and commitment to the automotive industry and his surrounding community.

Legacy Automotive has been serving Georgia since 1993 and now has three dealerships representing four

franchises throughout the state – Legacy Chevrolet and Cadillac of Columbus, Legacy Ford of McDonough and Legacy Hyundai of McDonough.

Jones got his start in the automotive industry as a summer employee with Legacy Automotive, which was founded by his father, Emanuel Jones. He began changing oil, sweeping the shop and performing odd jobs with his father in 2005, at just 14 years old.

After graduating high school in 2008, Jones went on to earn a bachelor’s degree in public health and entrepreneurial studies from The Johns Hopkins University. Soon after graduating, Jones decided to join the family business and returned to Legacy Automotive to hone his management skills.

Cox Automotive is

donating $5,000 to a national diversity partner in the winner’s honor. Jones chose 100 Black Men of America, a non-profit organization that endeavors to improve the quality of life of African Americans, particularly youth; in the communities it serves and enhance their educational and economic opportunities. Cox Automotive supports the organization’s Collegiate 100 program that engages college students and prepares them for educational and economic success. Jones supports the C100 and attends events that boost connections and business growth.

Dent Wizard Promotes Sales Director

Dent Wizard International recently promoted Matt Trudeau to the position of direc-

tor of national sales for Dent Wizard’s finance & insurance programs.

In his new role, Trudeau will work closely with Dent Wizard’s major national accounts and develop new opportunities with national F&I companies, dealer groups, OEMs and other strategic product partners.

Since starting at Dent Wizard 19 years ago, Trudeau has held numerous management positions in the company, including sales manager, regional sales manager and district manager for New York State. Since 2011 he has served as regional F&I director for the Northeast region.

Trudeau will continue to work from his ofce in Wilbraham, Mass., and report to Lindsey Bird. Trudeau has a degree in business management from Post University.

NADA Taps Operations Executive

Peter L. Fong has joined the National Automobile Dealers Association as senior vice president of dealership operations.

Fong brings more than 20 years of industry experience to NADA, having held numerous executive-level sales, marketing and brand management positions at Ford Motor Company and Chrysler Group LLC. Fong also guided Carmoza, an auto transport start-up company, through its merger and acquisition. Immediately prior to joining NADA, Fong was executive vice president and chief marketing ofcer at The Judge Group, a global firm specializing in technology consulting, stafng solutions and corporate training. Fong replaces John Lyboldt.

OPEN SALES EVENT

RETAIL MARKETS

KENTUCKY

Don Sears, sales manager, Sears Superb Auto, Corbin, Ky.:

“I’ll be open 14 years in October.

“We normally keep around 30 cars on the lot. We normally sell about 18 per month. So we do have a good turn. It’s a good average.

“We try to stay around $10,000 – in that price range. That’s typical of this time last year.

“We get our vehicles from auctions, such as ADESA Lexington and ADESA Knoxville. Then I’ll get some from the public, though not many. We’ll buy maybe one or two a month (from the public).

“We do not do any buyhere, pay-here or subprime. It’s straight retail.

Compiled by Jeffrey Bellant

“Plus, vehicles are much better now than they were. People aren’t as concerned about the mileage as they used to be.

“Costs of (acquiring) cars are about the same as last year.

“Primarily, we carry trucks, minivans and SUVs. It’s trucks if we can find them, which is no doubt the hardest part. We’re probably 80 percent trucks, SUVs and minivans. Cars just don’t sell as much for us. That mix is about the same as it’s been.

“The majority of our inventory is domestic.

“Reconditioning costs are right around $500 on average per unit. It’s about the same as last year.

“We have one detail person who does work inhouse. Besides that, we send (everything) out.

“With advertising, we’ve gone away from print ads totally. We use Carsforsale. com. We’ve recently added

“Average model year is usually around 2008. Average mileage is around 110,000 miles, somewhere around the 100,000 mark. We’re carrying higher mileage cars than we’ve ever been, but that’s just like everyone else.

Carfax.com and we’ve seen good results with that.

“We’ll use Facebook. We find we’re getting good results with that.

“Trucks and SUVs are doing really well, as they are with everybody. In our area, it’s four-wheel drive. Twowheel does not sell here.

“I just sold a 2005 GMC crew cab k1500. It had 98,000 miles. It sold for $14,000.

“It’s been a much better year than last year. I think it’s social media. About two months ago, we (hired) a young lady that’s sort of taken that on and is keeping our web site more up-todate and adding more pictures.

“Also, we’ve been tracking our repeat and referral business each month and 50 to 60 percent are repeat and referral.

“I hear all the time that there is no loyalty out there. But there is loyalty out there. You just have to cater to your customers and maintain it.”

NEW YORK

Louis Katz, president, Ideal Auto Exchange, Jamaica, N.Y.:

“The place has been here for 80 years. It was started by my grandfather.

“We keep between 60 and 80 vehicles (in stock). That’s typical of this time last year.

“We sell about 40 a month. It’s similar to last year.

“We get our inventory from new-car-dealer tradeins. We do still have those relationships (with new-car dealers) or I have relationships with wholesalers who have those relationships with new-car dealers.

“We actually have a subprime finance company that’s under a diferent name. We’re licensed in New York State and Michigan. So we actually finance vehicles both at the dealership and other dealerships.

“The average price is about $8,000, which is about the same as 2015.

“Our average model year, I would guess, is about 2008.

The mileage is around 80,000.

“About 60 percent (of our inventory) is cars, 40 percent is SUVs, minivans and utility vehicles.

“Domestics are constantly gaining strength. Having said that, I would say we’re about 50-50 foreign and domestic. I have very few German cars. That’s the only thing we discriminate against because selling eight-year-old German cars is not my favorite thing to do.

“We have our own twobay service shop right on the premises. So we do our own reconditioning right here. It’s probably $300 to $400 a car and that’s a wholesale price.

“We do online marketing and advertising, like Cars. com and Carfax.com. I also use a product called Autorevo, which pushes your car around to some free sites.

“We recently sold a 2007 Nissan Altima. It had 109,000 miles. We got $7,500.”

WHOLESALE MARKETS

MISSOURI

Kevin Brown, owner/ general manager, Missouri Auto Auction Inc., Columbia, Mo.:

“We’ve been here 16 years.

“We have five lanes and we run four every week.

“Our volumes are about 500 a week. We’re about right where we were last year.

“We run about 65 percent to 66 percent (conversion). Again, we’re pretty consistent. That’s about the same as last year.

“We get probably, on average, 325 dealers in the lanes every week. That’s up right now. We’re probably up 15 percent from this time last year.

“I think it’s because people are starting to notice our volume and fleet. Some are coming for those fleet vehicles. We’re also getting the right new-car trades in and certainly having a high percentage sale (helps). It’s making sure it’s not a waste of their time.

“The best sales that we

have are (a result) of referrals. We get more business of referrals than anything else.

“Retail business has been really up and down. It seems like it’s in a two-week cycle. They’ll have two good weeks and two terrible weeks of the month. That’s what we’re hearing. But they’re still selling cars.

“I would say we’re 70-percent dealer to 30-percent fleet. Last year it was more like 80 to 20. The diference is, we’ve had some one-of sales this year with Chrysler through Santander. That’s three of those, so that’s an additional 300 cars that we didn’t have last year.

“We also hosted the World Automobile Auctioneer Championship this year, so that was a huge draw. We sold for Honda at that sale and others. We’ve also had a few sales for Avis this year.

“So I would say our fleet business has helped us.

“Because of that our average price in the lanes is probably up $500, maybe a

little more, from last year. It’s about $6,500.

“We also have a GSA sale. We’ve held a few of those this year. We have one coming up in September.

“GSA has a little bit of everything, things like Fusions and other domestic products. They’ll have Hyundais, too. We run about 75 to 100 cars in that sale. They do very well here. We have a good following.

“We run 15 to 20 in an inoperable sale that runs at 9:30 a.m. before our 10 a.m. regular sale.

“The last Friday of the month, we do what we call our public equipment sale. That has a lot of municipal items, so we’ll sell for the City of Columbia, Missouri Department of Transportation – those types of agencies that require you to be open to the public.

“It’s not just equipment, though. We’ll have cars and trucks as well.

“We average about 75 pieces in an equipment sale.”

WISCONSIN

Kristi Goben, president/ founder, Greater Milwaukee Auto Auction, Milwaukee, Wis.:

“We’ve been in business 12 years. We run five lanes.

“Volumes have been up. We’re averaging between 800 and 900 cars per week. Our marketing campaign has been strong.

“Sales percentages have been 61 percent to 63 percent consistently. We’ve never had a year like this.

“We celebrated 12 years in July and in that one sale we sold 647 cars. It was a record-breaking sale.

“We’re drawing about 400 to 425 dealers in the lanes every week. (Many are) coming from Milwaukee, Chicago – the entire tristate area of Illinois, Wisconsin and Minnesota.

“I think the market remains steady for our retail dealers around here.

Compiled by Jeffrey Bellant

• 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

“We’ve had online bidding in our open sale for more than five years. We’re seeing heavy action.

“We are 80 percent dealer consignment. We have 10 percent of-lease with Ally Financial and 10 percent donations.

“We had a GM sale last year. We lost it in July 2015. But as devastating as it was to lose it, our bottom line has skyrocketed. GM taught us processes and efciencies that have just been invaluable to the growth of our open sale. So now we focus all of that attention on our open sale.

“Our average price is $4,000 a car. It was $8,000 when we had the GM sale.

“Our open sale has just been growing exponentially.

“We’ve also noticed that trucks are hot right now and we think that’s derivative of the gas prices. Those are our four-wheel drives. Everything seems to be firing on all eight cylinders.”

“We have online simulcast in every lane. So we’re seeing bidders from out of state regularly. We use AWG. They are fantastic and userfriendly.

TRUE C OS T OF INCENTIVES (T

A CTUAL WHOLES ALE AND PROJECTED RESIDUAL

DISCONNECTED JOTTINGS FROM TONY MOORBY

I feel sorry for true Olympic athletes. Years of dedication to be the world’s absolute, unquestioned best in the fields of so many sports now leave

questions hanging.

this year’s Olympic games, the country is fraught with problems from the state of its economy to the state of its environment. When it was awarded

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

A pall of suspicion now surrounds many of the athletes as to whether they have taken performance-enhancing drugs. Nearly a quarter of the contestants from Russia have been banned. Unfortunately assumptions are made that this corruption has spread far and wide. As usual, no doubt that it’s money that has spurred this much rule bending and breaking.

Mind you, you couldn’t pay me to go to Rio. As host for

the games in 2009, Brazil was the world’s sixth largest economy but downturns in the demand and prices for sugar and gas have sent the country into a whirlpool of fiscal and political unrest including a vote to impeach the president for orchestrating the largest corruption scheme in the country’s history.

Promises made to create and build all the necessary facilities to host the games have been broken left and right and the quality of construction has

By Myles Mellor

Auto efciency measure, abbr.

Boston’s state

Subcompact crossover from Jeep 9. GPS is one

They help when parking, 3 words 12. Not running, as an engine 13. Former family car from Austin 15. “Moves like a butter fy, stings like a __”

17. Spanish for gold

18. Car setting race speed on the track

19. Well-known blue book

20. XK or XKE, for short 21. Flat___ truck

23. Golden state

Purchase 25. Buick sports car

Rough terrain vehicles

Gear-___

The EPA mandates them _____s

Compact Dodge models from the 70s

Complain

JD Power compliment

Nissan SUV

Executive, for short

been called into question. A scenic coastline bicycle path recently collapsed, killing two people. A light rail system to serve the complex won’t be finished and people will have to use buses instead. The company who had the contract to build the velodrome where the cycling events will take place, has declared bankruptcy. Many early visitors report a ‘mańana mentality’ in the hope that it’ll be all right by the start.

Perhaps the most disturbing things are those that afect the health, safety and well being of competitors and visitors alike. The Zika virus, whether or not it grows to a pandemic, is still a major concern despite the Brazilian authorities’ protestations that “only 2 percent of visitors will contract the virus”. Would you want to be one of those 2 percent?

Violent crime is raging all around with shootings and kidnappings keeping the underfunded police departments so busy that they held a protest at the airport displaying signs that read “Welcome to hell!”

Rio de Janeiro’s acting governor declared a state of financial emergency facing a ‘collapse in public security, health, education, transport and environmental management’.

Meanwhile the bodies of water around Rio are nothing more than fecal soup. Scientists have discovered a drugresistant super virus in Guanabara Bay where the maritime events are scheduled to take place. Corpses of cats, dogs and even human remains have washed up on shore where the volleyball arena is (still) being built.

Then there are the security concerns regarding international terrorism.

This litany is merely the tip of a disastrous iceberg. So many badly needed funds for Brazil’s people are being squandered in billions on facilities destined to become white elephants and a testimony to greed, corruption and hubris. Just like the Sochi

games in Russia.

To me it begs a question as to why the Olympics should be hosted by diferent counties every four years, especially those without the necessary infrastructure. Why not have permanent buildings in an attractive venue, purely for the purpose of serving the contestants, the public, observers and all the supporting necessities including state-of-the-art communications for worldwide distribution.

As the games originated in Greece, it strikes me that it would be an ideal country to permanently host the games.

The people are wonderful, the food is even better, their economy could use the on-going boost and access is easy to a beautiful setting in the Mediterranean Sea.

But then the Olympic selection committee wouldn’t get to go on boondoggles or be subject to other temptations like the folks at FIFA.

see past columns from Tony Moorby, visit

Chrysler minivan

VW passenger van

Brought back for fxing

Driver’s panel

Old vinyl record

Numerical, for short 6. NASCAR great, Jef

Former Toyota compact car

Lamborghini model 16. Work measure

19. ____ fob 21. Older VW 22. iM and iA

24. Oil company

26. Nissan model

27. Well-known pick-up truck

28. Depletes, 2 words

29. Soccer ___, often drives a family SUV

31. Smooth, like a ride with good suspension

AROUND THE BLOCK

CHARITY WINS WITH AUCTION EVENT

ADESA and PAR North America sponsored the 5th Annual American Credit Acceptance charity golf tournament at the Spartan-

burg Country Club in Spartanburg, South Carolina, in June. They hit a hole in one, raising $30,000 for local charity Hope

Center for Children. Hope Center for Children provides safe, around-the-clock care for young children who are victims of neglect or abuse.

“The American Credit Acceptance golf outing is a wonderful annual event that we’re proud to sponsor,” said Vince McNeal, executive director of sales for ADESA.

“It gives us the opportunity to raise needed funds for a worthy local organization.”

Jerry Kroshus, president of PAR North America, praised the work of Hope Center for Children.

“Both PAR and ADESA are dedicated to strong corporate citizenship.

“We’re thrilled to have raised and contributed $30,000 to an organization that is making a real difference in the lives of children.”

Compiled by Jeffrey Bellant

Firm’s Workers Put Safety First

XLerate Group announced that nearly 800 employees and managers completed the National Auto Auction Association’s Auction Safety Certification and Lane Safety Training initiatives.

Since April 2016, those employees and management team members have completed NAAA’s online series, representing more than 30 percent of the total industry participation to date.

“The NAAA’s ‘Safe T. Sam’ campaign offers our industry a proactive training tool,” said XLerate CEO Cam Hitchcock.

“Educating ourselves is the first and most important step in preventing injuries and overall workplace safety.”

Robert Sullivan, vice president of operations and best practices for XLerate, said he came away with a new appreciation for safety in the auction.

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

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