READING THE SIGNS: A series of charts presented by Cox Automotive show, clockwise from top left, that
2015, but incentives are also rising steadily and so is the volume at auction, causing the forecast for retained value to decline at
the previous two years.
DETROIT – Rising incentives and of-lease volumes are starting to place more and more pressure on residual values.
Several experts from Cox Automotive detailed the current environment during a media event before the North American Inter-
national Auto Show.
Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book, said new-car incentives have been rising steadily and now average $3,000. That is a level last seen before the recession.
Guiterrez said the average trans-
action prices of new vehicles are greater today, so the incentives are lower as a percentage of the sales price.
“We are not seeing unhealthy behavior from the manufacturers, but the risk is there,” Guiterrez said.
The residuals are greater for some segments than others and so is the efect of increasing of-lease volumes, said Eric Ibara, Kelley’s director of residual consulting.
Ibara said the projected residual values for trucks are 10 percentage points higher than cars because of higher retail demand.
NHTSA Fines BMW $40 Million for Slow Recall
The National Highway Trafc Safety Administration has imposed a $40 million civil penalty and several performance requirements on automaker BMW North America for a series of violations of the Motor Vehicle Safety Act and NHTSA regulations.
Under terms of a consent order issued to BMW, the company acknowledges that it violated requirements to issue a timely recall of vehicles that did not comply with minimum crash protection standards, to notify owners of recalls in a timely fashion, and to provide accurate information about its recalls to NHTSA.
The government imposed a $3 million civil penalty to BMW in 2012 for similar violations.
The consent order resolves a NHTSA investigation into whether the company failed to issue a recall within five days of learning that 2014 and 2015 Mini Cooper models failed to meet regulatory minimums for side-impact crash protection.
In October 2014, a Mini 2
Door Hardtop Cooper failed a crash test.
The company responded that the vehicle was listed with an incorrect weight and would pass the test if conducted at the proper weight rating.
BMW still agreed to conduct a recall to correct the
Manufacturers
Several manufacturers recently announced a variety of recalls.
Volkswagen Group of America Inc.
Volkswagen Group of America Inc. is recalling 21,074 model year 2012-13 Audi A6 vehicles manufactured March 28, 2011 to March 25, 2013, and 2012-13 Audi A7 vehicles manufactured Jan. 25, 2011 to March 19, 2013.
In vehicles with heated and cooled seats, the Passenger Occupant Detection System (PODS), used to enable the front passenger air bags, may malfunction and prevent the passenger-side air bags from deploying in a crash. An air bag that does not deploy as intended increases the risk of occupant injury in a crash.
Volkswagen will notify owners, and Audi dealers will install a PODS system repair kit, free of charge. The recall is expected to begin in February. Volkswagen’s number for this recall is 74D1.
American Honda Motor Co.
American Honda Motor Co. is recalling 1,825 model year 2010, 2012 and 2013 VFR1200F and VFR1200FD motorcycles.
Manufacturing or assembly errors may result in the afected motor-
incorrect weight rating on the vehicle’s tire information placard and to conduct a voluntary service campaign, short of a recall, to add additional side-impact protection.
In July, NHTSA conducted a second crash test at the corrected weight rating on
a vehicle with the additional side-impact protection, and the vehicle again failed.
At that time, NHTSA learned that BMW had not launched the service campaign it had agreed to conduct.
The order’s $40 million civil penalty includes $10
million due in cash, a requirement that the company spend at least $10 million meeting the order’s performance obligations, and $20 million in deferred penalties that will come due if the company fails to comply with the order or commits other safety violations.
Recall Luxury Sedans, Motorcycles
cycles having driveshaft universal joint bearings that may prematurely wear, which can cause the universal joint to separate or break.
If the universal joint separates, the motorcycle would stall. If the universal joint breaks, it may interfere with the swing arm and lock the rear wheel. Either condition could increase the risk of a crash.
Honda will notify owners, and dealers will replace the driveshaft, free of charge. The recall is expected to begin soon, however parts may not be available until mid-2016. Honda’s number for this recall is JW2.
Mitsubishi Motors North America Inc.
Mitsubishi Motors North America Inc. (MMNA) is recalling 25,185 model year 2014-15 Mitsubishi Mirage vehicles manufactured Aug. 7, 2013 to Sept. 2, 2015 and originally sold in, or ever registered in, Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, Wisconsin and the District of Columbia.
If the driver enters an afected
vehicle with their boots covered with snow mixed with road salt, the melting snow may soak through the carpet and cause corrosion to a wiring connector located in a junction box behind a kick panel to the left of the driver’s footrest.
In the event of a crash, corrosion of the connector could delay deployment of the frontal air bags, increasing the risk of injury to the
driver and the front seat passenger. MMNA will notify owners, and dealers will inspect the afected connectors, replacing any found to be corroded. A waterproof sheet will be installed over the connectors to prevent future corrosion.
The manufacturer has not yet provided a notification schedule. MMNA’s number for this recall is SR-16-001.
NEWS BRIEFS
FTC Looks at Auto Finance, Sales
The Federal Trade Commission is seeking public comment on a proposed survey of consumers to learn about their experiences in buying and financing automobiles at dealerships.
The comments will be considered before the FTC seeks clearance for the survey from the Ofce of Management and Budget, in compliance with the Paperwork Reduction Act.
The survey would assist the FTC by providing insights into consumer understanding of the automobile purchasing and financing process at the dealership.
The FTC invites comments on whether the proposed survey, which would include consumer interviews and receipt of consumers’ purchase and finance documents, is necessary and useful; the accuracy of estimates of the burden on consumers to be surveyed; ways to enhance the quality of the information to be collected; and ways to minimize the burden of
collecting information.
The FTC will also host a workshop on “Automobile Distribution: Current Issues and Future Trends” on Jan. 19.
The aim of the workshop was to create a “better understanding how state regulations impact the current market for these important products.”
CarMax Hires for New Stores
CarMax Inc. is currently hiring employees for the company’s two new stores.
CarMax is currently hiring more than 80 employees for the company’s new store in Buford, Ga.
The store is scheduled to open in February.
This location is CarMax’s 10th store in Georgia, and is more than 14,000 square feet.
CarMax is also hiring associates for the company’s new store in Springfield, Ill.
GETTING IT STRAIGHT
In the Dec. 21 issue, David Vignes should have been identified as the executive vice president of enter-
prise optimization of KAR Auction Services Inc. Also, the Safe T. Sam program includes all KAR divisions.
The store is scheduled to open in April.
The new store is CarMax’s 6th store in Illinois, and is more than 7,000 square feet.
Leasing Reaches New High
NADA Used Car Guide forecasts the share of leased new-vehicles will reach an all-time high if the final quarter of the year is able to meet or exceed the 27.8 percent lease rate of 2015’s first three quarters.
The record was set at 27.4 percent in 1997.
Lease maturities are expected to increase 4 percent (95,000 vehicles) year-over-year in 2015, totaling 2.3 million for the year. In 2016, there will be a 33 percent (about 800,000 vehicles) lease maturity increase, which will push annual totals to 3.1 million.
The numbers keep climbing in 2017 with an additional 285,000 lease maturities resulting in a total of 3.4 million maturities for the year.
Bank Sells Prime Notes
California Republic Bancorp successfully completed a prime automobile loan securitization transaction in which $380 million in notes were
sold through a private placement transaction to qualified institutional buyers.
All of the Class A notes received “AAA” credit ratings from two separate nationally recognized statistical rating organizations, Standard & Poor’s and DBRS.
The bank will continue to service the underlying receivables on behalf of the trust.
For servicing the portfolio, California Republic will receive an annual servicing fee of 1 percent.
The bank also announced that it sold all remaining residual interest in the securitized receivables through a cash sale of the underlying ownership certificates of the securitization trust.
J.D. Byrider Moves into Market
J.D. Byrider recently added two stores.
The stores are located in Manchester, N.H., and St. Cloud, Minn.
The St. Cloud location is the first Minnesota store for J.D. Byrider and the first Byrider store for franchisee Destini Molitor.
Including these two locations, J.D. Byrider opened a total of 12 new dealerships in 2015.
The company now has 171 locations in 37 states.
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: 586-772-9400 www.usetdcarnews.com
Charles M. Thomas - Founder (1947-2002)
Lynda R. Thomas, Publisher Colleen Fitzgerald, General Manager
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.
Columnist: Tony Moorby
Circulation: Helen Thomas
Production: Josie Godlewski, Media Manager Jessica Wolski, Graphic Designer
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. OUR ADVERTISING APPROVAL
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Vol. 21 • No. 20
Wholesale Prices Rise in 2015, Market Remains Stable
The Manheim Used Vehicle Value Index rose to 125.7 – its highest level since July 2011 and only 1.6 percent below the peak reached in May of that year. The Index is up 1.5 percent from last December.
The Index adjusts prices for mix, mileage and seasonality. Cox Automotive economist Tom Webb said prices rose on an unadjusted basis, as well.
On an annual average basis, the Manheim Index rose 1.2 percent in 2015, after a 1.5 percent increase in 2014.
Adjusted auction prices for rental risk units (adjusted for broad changes in mix and mileage) were up 0.9 percent from November, but down 1.3 percent from a year ago.
Average mileage in December was 44,375 miles, down from November and also down from December 2014. December’s auction volume for rental risk units was down from last
Manheim
December’s very high level, but fullyear 2015 auction volumes were up.
Wholesale pricing for used pickup trucks eased in December, but Webb said that was after exceptional strength in recent years. On a mileage-adjusted basis, pickup prices have risen nearly 23 percent over the past three years.
The flipside of that are compact cars, which underperformed the overall market in December, as they
have for the past few years. That segment was down more than 7.2 percent in the past year, and 9.4 percent over the past three years.
Webb said the wholesale market has been more stable in the past four than at any time the past two decades.
Webb said the challenge going forward would be maintaining this stability in the face of ever-increasing volume at auction as more cars
come of-lease and another year of new-car sales around 17 million produces plenty of trade-ins.
He said remarketer would use every tool at their disposal to keep up residuals.
“Outside the control of remarketers, however, will be the overall health of the retail used vehicle market,” Webb said. “Right now, it appears that the favorable environment has longer to run.”
§ Longer terms
§ Broader funding policies
§ Newer vehicles
§ Higher advances
§ Compliance checking
§ Contract printing
§ Fast funding
§ Quick approvals
“I opened my business in 1998 with about 15 diferent lenders and selling around 30 cars a month. In 2004 most of the lenders dried up and so did my volume and cash fow. My frst Portfolio Proft Express check was $47,000. Credit Acceptance not only saved my dealership, it’s allowed me to increase my sales. The program has been life-changing for me and my customers.”
Joe Kaisk Magic City Motorcars (OH)
Used Vehicle Index
Hedge Fund Targets Ally
Ally Financial Inc. received a notice of nomination from hedge fund Lion Point Capital proposing two candidates to stand for election to Ally’s board of directors at the company’s 2016 annual meeting, scheduled for May 3.
Lion Point, formed in 2014, informed Ally that it holds less than 1 percent of Ally’s common stock. On Dec. 23, Lion Point sent Ally a letter outlining various demands; including that Ally’s board create a strategic alternatives committee. This demand was repeated in a proposal contained in a notice delivered Jan. 4.
Ally’s compensation, nominating and governance committee and its full board previously concluded that Ally stockholder value would not be enhanced by the creation of such a committee, that Ally’s business and financial fundamentals and prospects are strong, and that it would be a highly disadvantageous time in the business, market and regulatory cycle to pursue a sale transaction. The formation of such a committee would be widely regarded as a decision to pursue a sale of the company.
In other news, Ally announced a pair of partnerships that move the
company into new territory.
One is online listing site Beepi. Through Beepi, qualified customers across the credit spectrum are presented a finance option from Ally. Upon acceptance, the consumer finalizes the transaction with Beepi and completes their purchase.
Ally and Beepi are also exploring other opportunities to expand their relationship.
Beepi is now fully operational in 15 major metropolitan areas across the U.S.
Ally also announced a new preferred financing relationship with McLaren Automotive North America, which includes the availability of retail financing and competitive leasing options for McLaren’s two best-selling models, the McLaren 570S and 650S.
McLaren and Ally worked together over several months to develop this bespoke program for the unique McLaren client base. Retail financing and closed-end leases are available to qualified customers immediately throughout the entire U.S. McLaren dealer network.
Leases are available for the 2016 McLaren 570S Coupe for as low as $2,200 per month.
Craigslist Sellers Face Prison Time
Florida authorities arrested three people for allegedly using Craigslist to defraud used-car buyers.
According to the investigation by the Florida Highway Patrol’s Bureau of Criminal Investigations and Intelligence, Denis Kutsayev and Tamara Kutsayeva, with the help of Renat Kutsayev, advertised used cars on Craigslist and manipulated vehicles’ odometers and other features to make the vehicles appear more valuable, before selling them
to unsuspecting consumers.
The investigation claimed the defendants removed the word “rebuilt” from the title of salvaged vehicles, altered the mileage on titles or rolled back the odometer. Each defendant faces charges of title fraud and odometer fraud. If convicted, Denis Kutsayev faces up to 85 years in prison, Tamara Kutsayeva faces up to 55 years in prison and Renat Kutsayev faces up 10 years in prison.
FAST MONEY: Ally Financial recently entered into a partnership with sports car manufacturer McLaren to fnance its vehicles.
FLOORPLANNING
AUTOMOTIVE FINANCE CORP. MAKES ITS STAFF AVAILABLE TO DEALERS ONLINE, IN PERSON
UCN: What efect do you expect from the Federal Reserve’s recent interest rate increase?
Neill Waters: The Fed made a minimal rate change in December. Dealers will likely be building any added interest costs, like they do other acquisition costs, into the retail price of vehicles. A rate increase hasn’t happened in a long time. It’s hard to say if rates will continue to rise or if this is it for now.
UCN: What impact has technology had on your business?
Waters: There’s certainly a growing need for dealers to buy online so they can find the right vehicles to fit their business models. They can’t always find those vehicles in their local markets.
As a result, AFC is continuously working on flooring integration initiatives with partner auctions so that when they do buy online the check out process is quick, easy and seamless. That’s only going to become more important for our business. The auctions like it because they’re receiving guaranteed funds direct from AFC plus it improves their processes as well as those of our mutual customers.
We have a network of 117 brick-and-mortar
branch locations throughout North America; that face-to-face, in-branch interaction remains very important to the independent dealer body according to our customer feedback studies. Technology is influencing the way dealers do business, but there’s still a need for physical offices.
However, not every dealer has easy access to a branch. And some dealers don’t necessarily care about that face-to-face interaction. So we’re making a concerted efort to make ourselves available to dealers however they want to do business with us. Essentially, we’ve developed a hybrid model.
If a dealer wants to visit a branch to conduct his financing business, he or she can do that. If a dealer wants to do business with us online –no problem. That can be done via the website, via mobile application, whatever they want. Our key service oferings are available to dealers electronically (via Web or mobile) – dealers can make payments to vehicles on their line –payofs or curtailments, check the availability of their floor plan, look up information on financed vehicles and even request financing of vehicles by scanning a VIN and uploading pictures. Technology is making our dealers’ lives easier.
Our core customers are independent dealers who oftentimes don’t have a large staf
Continued on page 10
Neill Waters is the vice president of marketing and business development for Automotive Finance Corp., a subsidiary of KAR Auction Services Inc.
NEXTGEAR CAPITAL LOOKS AT IMPACT OF RISING RATES ON BOTH FLOOR PLANS AND CONSUMERS
Dave Horan is the chief financial officer for NextGear Capital, the floor planning subsidiary of Cox Automotive.
UCN: How will higher interest rates afect floor planning?
Dave Horan: It’s been almost a decade since we had to think about a rising interest rate environment. The cost of floor planning is relatively small for the dealer’s overall inventory cost. However, any time holding costs are rising, we need to think about the impact.
The biggest impact will come on the consumer side. If the rising interest rate puts the monthly payment out of reach for consumers, the dealer will have a hard time retailing his vehicles and the cycle will ultimately slowdown. That’s the biggest risk to our business at this point.
The initial 25 basis point increase shouldn’t have much impact on the consumer at this point. The Fed indicted a very slow but consistent method to these increases. There’s more than just the interest rate to consider, though. There’s growth in employment and in wages, there’s consumer sentiment, there’s global events.
I doubt we’ll see an 8 percent prime rate any time soon, but it’s something we’re paying attention to.
UCN: How is technology impacting your business?
Horan: Technology is changing the way the whole world interacts and the auto business is not immune to that. Consumers are walking onto dealers’ lots today armed with more information than they have ever had before. They have really deep insights into the inventory, sometimes better than the salespeople.Dealers are no diferent. They want quick access to information and technology that makes their lives easier. NextGear Capital is investing millions of dollars every year toward the goal of helping our dealers get that information. A huge focus of ours is a remodel of our mobile app. Today, our dealers can transact 100 percent of their business online with NextGear Capital if they choose to.
Continued on page 10
AFC - Continued from page 8
UCN: Is floor planning still growing or is the market at a peak?
Waters: There are a lot of small inventory financing providers that are targeting diferent segments and availability of capital is making it an attractive business to be in.
I’m interested to see what happens now. With interest rates still low, inventory financing appears to be an attractive portion of the automotive segment. AFC processes new dealer applications every day which leads me to believe that there’s a growing population of dealers and more of those dealers need financing not only to start but to grow their businesses.
UCN: How was 2015 for AFC?
Waters: Dealers had more financing options in 2015 than they have ever had before. We have been working on building additional services for dealers that don’t always directly generate revenue for AFC. Some of the items in our dealer services suite are valueadded – things we do at no direct cost to our customers. We’re attempting to build value that will in turn, lead to increased customer loyalty and retention. For example, we’re looking to manage specific
NextGear -
UCN: How much room for growth is there in the floor plan market?
Horan: I was part of the team that started up Dealer Services Corp. in 2005. Industry watchers wondered then if there was room for another player. We saw a need for independent dealers that was not being met. They did not have the tools they needed to be competitive. We introduced technology like electronic financing.
Our business can easily get boiled down to the product we sell – cash. There’s plenty of cash available to dealers today.
The new entrants to the market need to ask themselves if they’re bring anything new to the table for dealers. Are they introducing anything innovative or unique to the industry?
NextGear Capital has the utmost respect for the competition entering the market today, but they’re not our focus.
Don’t get me wrong, we don’t lose sight of them, but our main focus is staying innovative ourselves and making sure our dealers have the tools they need.
processes that take away some of the administrative burden that comes with running a business and using our business model to manage these processes on dealers’ behalf. We’re also finding they’re willing to pay for some of these services – it depends on the function.
UCN: What are you expecting for 2016?
Waters: It’ll be much of the same. We don’t anticipate a slowdown in the number of competitors entering the market or in what our primary competitors are doing.
We’re going to continue listening to our customers, interpret and understand what their unique needs are and build solutions around those needs.
UCN: What sets AFC apart?
Waters: At the end of the day, AFC is part of a larger enterprise in KAR Auction Services and plays an integral role in the support oferings available to independent dealer customers. AFC continues to partner with the diferent business units within KAR in order to provide the best possible solution to the dealer market.
Continued from page 8
We serve over 22,000 dealers in the U.S. We have a responsibility to them.
The free market will ultimately dictate if there is room for more competition. It’s our job to be the best at what we do.
UCN: What do you expect for this year?
Horan: Our dealers are not in the business of floor planning inventory. They are in the business of selling inventory. We want to do everything we can to help them toward that goal. With that in mind, we are extremely optimistic about 2016.
There’s a large wave of of-lease inventory about to hit the remarketing cycle. And all those record 17 million new cars sold last year are now used cars.
We’re working with our sister companies at Cox Automotive –Manheim, vAuto, Autotrader – we firmly believe we can help our dealers win.
We have a big growth agenda for 2016, but that will only come if we focus on the success of our dealers.
Car-Mart Adds to Board
America’s Car-Mart Inc. recently added a new independent director and opened a new store.
The buy-here, pay-here chain announced that its board of directors elected Jim von Gremp as a new, independent director.
Von Gremp is a real estate investor, communication consultant, and former Wal-Mart executive.
Like Wal-Mart, Car-Mart is headquartered in Bentonville, Ark.
While with Wal-Mart, he served in various areas including accounting, auditing, treasury, employee benefits, training/development, and public/corporate afairs. He has been a member of the board of trustees of the University of Arkansas System since 2005, serving as chairman in 2014 and has been a board member of Arvest Bank-Benton County
since 2004.
Von Gremp was chairman of the Arkansas Public Service Commission from 1999-2000, and served as executive director of governmental operations for the State of Arkansas, Governor’s Ofce under Gov. Mike Huckabee from 1996-1997, and represented Arkansas District 2 (Benton County) from 1993-1996 as a State Representative.
Shortly after his election, von Gremp purchased 5,000 shares of Car-Mart stock.
America’s Car-Mart Inc. also announced the opening of its 147th dealership.
The dealership is located in Milledgeville, Ga. Milledgeville is the tenth Car-Mart dealership in Georgia.
The Milledgeville dealership will be managed by Brian Campfield.
Cox Expands Cash Program
Cox Automotive is expanding the Instant Cash Ofer program to include Kelley Blue Book.
The Kelley Blue Book Instant Cash Ofer was previously known as the Autotrader Instant Cash Ofer.
Consumers visiting either Kbb. com or Autotrader can enter the vehicle’s specific features and con-
dition and receive a redeemable offer from participating dealerships across the country.
Participants can use the ofer toward the purchase of a new car, or simply walk away with a check.
The ofer is valid for 72 hours and redeemable that same day upon verification of the car’s condition.
ADESA Boston February 12, 19, 26
508-626-7000
ADESA Charlotte February 4, 18
704-587-7653
ADESA Cincinnati/Dayton February 16
937-746-4000
ADESA Golden Gate February 2, 16 209-839-8000
ADESA Houston February 3, 17 281-580-1800
ADESA Indianapolis February 2, 16 800-925-1210
ADESA Kansas City February 2, 16 816-525-1100
ADESA Lexington February 25 859-263-5163
ADESA New Jersey February 4 908-725-2200
ADESA Tulsa February 12 918-437-9044
ADESA Washington DC February 10 703-996-1100
America’s AA-Chicago February 17 708-389-4488
Brasher’s Salt Lake AA February 23 801-322-1234
Columbus Fair AA February 17, 24
614-497-2000
Manheim Atlanta February 3, 4, 18 404-762-9211
Manheim Dallas February 10, 24
877-860-1651
Manheim Denver February 10 800-822-1177
Manheim Detroit February 4, 18
734-654-7100
Manheim Fredericksburg February 11, 25 540-368-3400
Manheim Milwaukee February 10, 24 262-835-4436
Manheim Minneapolis February 3 763-425-7653
Manheim Nashville February 17, 23, 24 877-386-5004
Manheim Nevada February 19 702-361-1000
Manheim New Jersey February 10, 24 609-298-3400
Manheim New Orleans February 3, 24 985-643-2061
Manheim Orlando February 2, 9, 16, 23
800-337-8491
Manheim Pennsylvania February 4, 5, 18, 19 800-777-2053
Manheim Phoenix February 4, 11, 18, 25 623-907-7000
Manheim Pittsburgh February 10 724-452-5555
Manheim Riverside February 9, 11 909-689-6000
Manheim Seattle February 3 206-762-1600
Manheim Southern California February 4, 18
909-822-2261
Southern AA February 10
860-292-7500
ADESA Boston February 19 508-626-7000
ADESA Golden Gate February 2 209-839-8000
Manheim Atlanta February 3 404-762-9211
Manheim Dallas February 10 877-860-1651
Manheim Milwaukee February 10 262-835-4436
Manheim Nashville February 17 877-386-5004
Manheim Orlando February 9 800-337-8491
Manheim Pennsylvania *February 4, 18 800-777-2053
Mazda Capital Services
ADESA Boston February 12, 26
508-626-7000
Manheim Riverside February 11 909-689-6000
Choose Chase on ADESA.com and OVE.com for quality bank-sourced vehicles. Contact auctions directly for current sale information.
ADESA Golden Gate February 16 209-839-8000
ADESA Houston February 3 281-580-1800
Columbus Fair AA February 24 614-497-2000
Manheim Detroit February 4, 18 734-654-7100
Manheim Fredericksburg February 25 540-368-3400
Manheim Milwaukee February 24 262-835-4436
Manheim Nashville February 24 877-386-5004
Manheim Atlanta February 4 404-762-9211
ADESA Boston February 26 508-626-7000
Brasher’s Salt Lake February 23 801-322-1234
Columbus Fair AA February 17 614-497-2000
Manheim Dallas February 24 877-860-1651
Manheim Orlando February 16 800-337-8491
Manheim New Jersey February 10, 24 609-298-3400
Manheim Pittsburgh February 10 724-452-5555
Manheim Riverside February 9 909-689-6000
Manheim Seattle February 3 206-762-1600
Manheim Detroit February 4, 18 734-654-7100
Fredericksburg February 11 540-368-3400
Milwaukee February 10 262-835-4436
Manheim New Jersey February 24 609-298-3400
Manheim Orlando February 9 800-337-8491
Manheim Pennsylvania February 5, 19 800-777-2053
Pennsylvania February 19 800-777-2053
/ Loan and lease accounts are owned by Chase. *The Jaguar word mark, the Jaguar logo, and Jaguar Financial Group are trademarks of
lease accounts are owned by Chase. *The tradename "Mazda Capital Services" as well as the Mazda and Mazda Capital Services logos are owned by Mazda Motor
The Consumer Financial Protection Bureau is taking action against CarHop, one of the country’s biggest buy-here, pay-here auto dealers, and its afliated financing company, Universal Acceptance Corp., for providing damaging, inaccurate consumer information to credit reporting companies.
CarHop has about 50 retail locations in more than a dozen states.
Universal Acceptance, on behalf of CarHop, furnishes consumer account information to all three major consumer reporting companies on a monthly basis.
CarHop and its afliate also failed to provide accurate, positive credit information that it promised consumers it would supply to the credit reporting companies.
The CFPB’s investigation found that the companies inaccurately reported information for more than 84,000 accounts on a widespread and systemic basis.
The CFPB is ordering the companies to cease their illegal activities and pay a $6.5 million civil penalty.
Minnesota-based CarHop is also known as Interstate Auto Group.
The CFPB found that the company reported information that it knew or had reasonable cause to believe was inaccurate.
The company inaccurately furnished information for more than 84,000 accounts from about January 2009 until September 2013.
Almost all the information the companies inaccurately furnished to the credit reporting companies could potentially harm customers.
The CFPB found that CarHop and Universal Acceptance Corporation violated the Fair Credit Reporting Act and the Consumer Financial Protection Act.
Vandals Play Demolition Derby
WESTBURY, N.Y. (AP) — Authorities say a Long Island car dealer’s auto lot turned into a kind of demolition derby when a suspect or suspects started driving the cars into other parked vehicles.
Police say it happened sometime between Jan. 3 and Jan. 4, at a
dealer on Bond Street in Westbury. Whoever was involved got into the gated lot and started driving cars that were unlocked and had the keys inside.
The cars were used to also hit other parked cars. Authorities say there was more than $120,000 in damage.
PEOPLE IN THE NEWS
KAR Hires HR Execs
KAR Auction Services Inc. has hired Toby Hahn as the vice president of total re-
wards and promoted
Brad Jokovich to the role of vice president of human resources.
As the vice president of total rewards for KAR, Hahn will lead all activities pertaining to the company’s compensation, benefits and human resource management systems. He will also manage a team of professionals
responsible for planning, designing, developing and executing strategic compensation and benefits programs across KAR’s multiple business units and locations.
In his new role of vice president of human resources, Jokovich will lead the human resources team throughout North America. He is responsible for the talent management, succession planning, training and development, and organizational and operational
efectiveness as related to human resources.
Hahn was previously the vice president of global compensation benefits and human resources systems at Remy International Inc. Hahn holds a bachelor’s degree from Butler University and a master’s degree from University of Indianapolis.
Jokovich most recently served as director of human resources for Automotive Finance Corp. Jokovich earned a bachelor’s degree from the University of Cincinnati and a master’s degree from Xavier University.
Exeter CEO Steps Down
Exeter Finance Corp. announced that Tom Anderson has resigned from his role as chief executive ofcer to pursue other interests. Anderson also resigned as a member of
the board of directors.
Mark Floyd, a member of Exeter’s board of directors who formerly served as Exeter’s CEO has been appointed interim CEO.
Ally Names Risk Officer
Ally Financial Inc. has named David Shevsky as chief risk ofcer for the company, efective immediately.
In this role, Shevsky will have responsibility for the risk framework, processes and oversight for the company.
Prior to this position, Shevsky served as the chief risk ofcer for the Ally Bank subsidiary beginning in 2011.
Shevsky joined Ally in 1986 where he began his career with a series of positions supporting the auto finance operation from a credit analysis and risk perspective, During his career, he supported both the domestic and interna-
tional auto finance operations, and in 2004, he became a senior vice president of enterprise risk for the company and began to take a company-wide view of commercial credit risk and capital management.
When Ally became a standalone company in 2006, Shevsky played a key role in establishing a more robust risk management function, and when the company became a bank holding company in 2008, he was responsible for establishing a loan review function, which he did until becoming the chief risk ofcer for Ally Bank in 2011.
Prior to joining Ally, Shevsky served in the U.S. Air Force from 1979 until 1984.
LeasePlan Promotes VP Dawn DevonshireMcAleer has joined LeasePlan USA as stra-
years of professional fleet management experience from her previous role in LeasePlanUK.
In her new role, Devonshire-McAleer will be responsible for key accounts where she will deliver strategic value and work in partnership with clients to identify areas of greater fleet efciencies.
Toby Hahn
Brad Jokovich
Dawn Devonshire-McAleer
RETAIL MARKETS
MASSACHUSETTS
Alfred Moschetto, owner, Moschetto Brothers Inc., Methuen, Mass.:
“This is a third-generation dealership.
“We have just one location. It’s a small place.
“We keep anywhere from 50 to 75 (units) in stock. It’s similar to last year.
“I get most of my vehicles from diferent auctions –mostly ADESA auctions.
“We’re selling anywhere from 20 to 30 a month, but it depends (on the month).
Last year, we got hit really hard with snow at the end of January and it stayed below freezing for about six weeks.
“One of the things I’ve noticed is that prices haven’t softened much. The lowmileage stuf that you’re looking for seems to be bringing in strong money. Yet, if you have something edgy, those prices are dropping a lot.
“We’re a small place that does mostly repeat and referral. No buy-here, pay-
here and very little subprime.
“We have a three-bay (service) shop and three techs, a service manager and a detailer. Service has been strong. We were up 35 percent in 2015.
“We also added a Bosch alignment system in here. We used to send that work out. It’s really helped our customers and our own cars. Every one of our cars gets aligned before it goes out.
“I don’t have an exact price of average reconditioning, but my business manager would say ‘too much.’ We do a lot.
“Most of my stuf that I buy is probably 2011 and up. They are mostly 2013s.
“Average miles would be about 40,000. It’s still been a little more difcult for me to get (lower mileage vehicles).
“I’m very, very light on trucks right now. Trucks have been really strong still. In the last few months, there have been some
JUMP START THE NEW YEAR WITH FRESH VEHICLES
major incentives for new (vehicles). I don’t know if it’s going to soften the truck market, but, man, it’s been strong.
“We use our website, Cars. com, Cargurus.com and our local newspaper. People still read our local newspaper. We also use the local coupon-type (mailer).
“We recently sold a 2013 Lincoln MKX all-wheel drive with 26,000 miles. I sold that for $27,000.”
UTAH
Troy Smothers, owner, Premier Auto, American Fork, Utah:
“I have one location. I’ve been in business 13 years.
“I didn’t come from a car dealer background. I just jumped in. I was doing construction.
“I was asked to remodel (a car dealer’s house). It was apparent he was living better than I was. So a year later, I got my dealer’s license.
“The first (vehicle) I bought was a 1994 Chevy, 1-ton manual transmission 454 with 150,000 miles. I
paid about $4,500 for it. Right after I bought it from auction, I was using it to load some lumber and a lady asked me if it was for sale. Her daughter bought it from me and I cleared $2,495 on that. It blew my mind and changed my world.
“I keep 80 cars in inventory. We’re selling 25 to 35 per month. We advertise buyhere, pay-here, but we typically just try to find them a loan.
“I get 99 percent of my inventory from auction.
“The average model year is probably 2006 and average mileage is 130,000. As long as the price reflects the mileage, I’ll buy anything. I’ve bought a $300 car at auction and a $27,000 car at the same auction. I sold the $27,000 car and cleared $29,000. Then I got the $300 car, put $300 into it and sold it for $2,000.
“I’ve never doubled my money on a $10,000 car, but I’ve doubled my money on a $2,000 car many times.
“I’m just looking for good
Compiled by Jeffrey Bellant
value or good eyeball. I’m not afraid to buy anything. It can be cars or trucks.
“I carry both domestics and imports.
“I don’t have back-end products. I’ll ofer a warranty to everybody, but that’s about as sophisticated as it gets.
“It’s important to keep reconditioning costs to a minimum.
“Average recon is probably $350, between the details and the repairs. But we can get pretty heavy into diesel trucks. The detail is inhouse and the mechanical work is outsourced.
“All of our advertising is online. No print anymore. No radio or TV either.
“Online we use our website and we use KSL, it’s like Craigslist for our region.
“We’re just now getting into (developing repeat/referral) business.
“I recently sold a 2000 Ford extended cab F-350 V-10 lifted truck. It had 35inch tires. It had 130,000 miles on it. I got $7,500.”
WHOLESALE MARKETS
GEORGIA
Ross Nix, vice president, South Georgia Auto Auction, Albany, Ga.:
“We’ve been in business 20 years. We’ve been running two lanes for the past year.
“We’re running 200 to 300 units a week.
“I would say it’s probably a little better than this time last year. We’ve seen some good activity, even over the holidays.
“We had a great sale that came right before Christmas. So we were kind of surprised about it. It was kind of a gift, I guess.
“Cars have been a little short. Decent cars that come in haven’t had any trouble selling.
“People are lining up to buy nice cars.
“The junk has been a little slow. Some of these cars are just obsolete anymore.
“If you have a little car from the late 1990s or 2001, nobody wants that car anymore.
“I really kind of fault the independents or note-toters for these old cars (losing their value).
“The buy-here, pay-here business has changed so much. They’ve kind of spoiled their customers over the past couple of decades by putting them in a nicer or higher-dollar car.
“I mean you’ve got these old Tauruses and Bonnevilles – cars like that –which would give people with marginal credit a decent ride. But customers feel like they need to be in an SUV.
“We’re running strong percentages. We’re still in the 60- to 70- percent range. We’re expecting that to get pretty stout (by the end of January) with tax season coming up.
“Bidders are coming pretty much from the tri-state area – Georgia, Florida and Alabama. I do see some folks from as far away as Texas.
“I would say consign -
ment from (independent) dealers is around 50 percent. The rest is from franchise cars and repossessions from banks and credit unions.
“Probably about 40 percent of our vehicles are repos. We’ve been selling a lot of repos over the past six months.
“The average price is kind of hard to gauge. We’ve had a lot of highdollar repos coming through the lanes. I would probably say it’s somewhere around the $7,000 mark.
“We’ve seen a lot of late-model repos coming through.
“I’ve seen a lot of banks loosening up on their lending. It could be detrimental to the car business at some point.
“Dealers are seeing a lot of retail activity. If that’s any indication of how it’s going to be this year, I’m pretty excited about it.
“I think business is as good as you can make it.”
LOUISIANA
Steve Chiasson, managing partner, Greater ShreveportBossier Auto Auction, Shreveport, La.:
“We’ve been around nine years this month.
“We have three lanes and we’re averaging just more than 300 (units per sale).
“Our upper-end stuff seems to be selling more than the lower-end stuff – and junk is junk. I mean pig iron is just pig iron. They want to give 6 cents a pound for it because that’s what they’re getting at the crushes.
“We’re hovering around the 52- to 54-percent mark for sales percentage. We wound up at 54 percent in 2015.
“The number of cars presented and sold was also up. We’re up about 11 percent this year, compared to last.
Compiled by Jeffrey Bellant
“The average number of dealers (in the lanes) is between 165 and 170. They are uncertain.
“The economy has tanked in our area. We’re finally suffering the same recession that the rest of the country experienced years ago.
“About 85 percent of our volume is dealer consignment, 10 percent captive finance and 5 percent rentals. The rentals are Budget, Enterprise and Avis. Those numbers have been steady.
“The average price for 2015 was $6,617. That was up from 2014.
“It’s a little bit scary this year because it’s an election year. Anyone in the position to make a major investment is wondering, what’s going to happen?
“But we’re a customerservice-oriented business. We have to provide the best service and easiest atmosphere to do business.
“We not only have to hold on to what we have, we have to get new customers and new buyers.”
MONTHLY DEALER CONSIGNMENT AVERAGES
COMPACT CAR
Jan 2015 $5,633 100,087
Feb 2015 $5,760 100,448
Mar 2015 $5,839 100,800
Apr 2015 $5,851 100,410
May 2015 $5,680 101,407
Jun 2015 $5,418 102,032
Jul 2015 $5,372 101,084
Aug 2015 $5,147 102,741
Sep 2015 $4,932 104,230
Oct 2015 $4,933 103,050
Nov 2015 $4,923 103,246
Dec 2015 $5,017 101,933
YTD AVG: $5,391 101,751
FULLSIZE CAR
Jan 2015 $4,267 108,590
Feb 2015 $4,009 113,963
Mar 2015 $4,240 114,926
Apr 2015 $3,982 115,393
May 2015 $4,103 112,477
Jun 2015 $3,879 113,940
Jul 2015 $3,753 115,209
Aug 2015 $3,866 114,420
Sep 2015 $3,809 113,866
Oct 2015 $3,862 112,994
Nov 2015 $3,733 114,003
Dec 2015 $3,753 114,282
YTD AVG: $3,949 113,716
LUXURY CAR
Jan 2015 $12,359 95,856
Feb 2015 $11,599 99,187
Mar 2015 $12,384 98,339
Apr 2015 $13,143 96,598
May 2015 $12,656 96,794
Jun 2015 $12,182 98,552
Jul 2015 $12,134 98,026
Aug 2015 $11,543 99,066
Sep 2015 $11,175 100,399
Oct 2015 $11,708 98,420
Nov 2015 $11,412 99,303
Dec 2015 $11,861 97,772
YTD AVG: $12,049 98,133
MIDSIZE CAR
Jan 2015 $6,158 108,770
Feb 2015 $6,212 109,104
Mar 2015 $6,389 109,530
Apr 2015 $6,479 108,671
TRUE COST OF INCENTIVES (TCI)
Compact Car
Subcompact Car
Midsize Car TCI
$11,465 4.83% 5 $9,013 $8,753 -2.88% Compact Crossover SUV
14.72%
-3.15%
-1.69%
Midsize Crossover SUV TCI $2,545
Minivan
Edmunds.com’s monthly True Cost of Incentives (TCI) report takes into account all of the manufacturers’ various United States incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used. TCI data (and other Edmunds.com data products) can be viewed industrywide, import vs. domestic, by country of origin, by make, by model and by segment. True Market Value (TMV) is the transaction price for vehicles.
DISCONNECTED JOTTINGS FROM TONY MOORBY
When my brother was here last year, he observed that there were many more styles of cars and trucks than there used to be and that, in Eu-
member those Ford minivans in purple back in the nineties? Beautiful in a well lit, grey showroom – an embarrassment with forty thou-
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
rope, vehicles now all look alike and have about the same performance.
I reflected on that for a New Year and look forward to what the stylists would bring next.
While more colors are now creeping back into the new vehicle palette, black, silver, white and red still share the top spots. I think the manufacturers now recognize that cool colors in a showroom can provide disastrous value declines as used cars. Re-
sand miles on a rainy day in a parking lot. The same goes with dark metallic greens –trendy and cool as new but a bedraggled mess a couple of years later and the devil’s own job to keep clean. My wife has a metallic black car – sexy and sinister when it’s newly cleaned and polished – a day later it looks like an old fleeter. Styles are getting edgier and lines cleaner and more distinct unless you look at the Infiniti range which, to
By Miles Mellor
me at least, look like mobile sofa pillows, especially the large SUV – it seems to acquire more lumps and bumps as the model nomenclature changes – every two weeks, it seems.
Nissan’s designs are a bit sleeker and less proletarian than they used to be, that is until you get to the Juke and the Leaf – no doubt the design products of the French side of the house (Renault) after a weekend on Absinthe. Cadillac has shed its church-going carriage image to become mean and nasty with the exception of their “crossover” SRX that, like all crossovers, lacks a real style definition and end up looking like a pile of a dog’s curbside gift. The same goes for Honda’s Crosstour – it’s harder to imagine an uglier rear end – on anything. The Escalade still stands out like the Rock of Gibraltar, making no excuses to anyone – I love it – preferably supercharged. Mercedes saloons have all taken on that AMG snarly look, the same going for the
G Wagen – a look that’s worthy of any Russian oligarch. I used to own a yellow ’97 Land Rover Defender (I rue the day I sold it as the worst day’s work I’ve ever done) and considering that it has its DNA in a design that was hatched in 1948, still carries the panache of the landed gentry. They’ve now ceased its production at the height of its popularity thanks to the EPA and their European counterparts. It had such low production numbers it would make not one jot’s worth of diference to global warming. The early designs of its replacement look namby pamby at best and that’s being kind. GM seems to be getting some designs right at last. Even the new Impalas look hefty and purposeful and the new Corvette stands against any sports car in the world, no matter what the price.
The latest Mustang GT, although an evolution of design, absolutely nails it for me and probably supplies the most fun for the money – in French Blue or Bright Yellow – with black stripes – yeah. I’m normally a fairly conservative sort of chap – until it comes to cars – and then I really show my backside.
A Bentley Mulsanne Turbo in white over light beige and an Aston Martin DBS in metallic yellow with black hides could stand next to one another in my imaginary garage. Maybe an old Harley (I miss mine) or Indian Motorcycle to keep them company too.
High performance doesn’t automatically mean dangerous or extravagant. A great deal of clever engineering is giving us back a bit of fun and joy on the way to the grocery store or the school pick-up line.
from Nissan 14. Measure of current 15. Nissan compact SUV 16. Ford muscle car 18. Engine inventor 20. Durant made this car in the 20s 21. Air-pressure meas.
St Petersburg’s state, abbr.
Ford model
Letter postscript
Detroit
AROUND THE BLOCK
AUCTION DONS PINK FOR CHARITY
Pink was the color of the day as employees at Flint Auto Auction took to the streets for the 2015 Making Strides Against Breast Cancer Walk, in Flint, Mich., late in 2015.
Wearing long-sleeved workout shirts that carried a custom-designed Flint Auto Auction logo, 40 people from Flint Auto Auction and its sister company, Inviso, walked the 5K course in
support of the American Cancer Society. George Rashi, a customer from Dort Federal Credit Union, joined them.
Backed by Flint Auto Auction owners Bill Williams and John Luce, who matched funds raised by their employees, the team made a total donation of $1,210 to the American Cancer Society as a result of their efforts.
“Teamwork is something we see every day at Flint Auto Auction,” said Luce.
This year marked the 13th year that the auction’s employees have participated in the “Making Strides Against Breast Cancer Walk.”
Luce notes that in addition to the event, employees at Flint Auto Auction participate throughout the year in a variety of activities to support Big Brothers and Big Sisters and the Flint Boys and Girls Clubs.
Compiled by Jeffrey Bellant
Sale Awards Cash Prizes to Dealers
Charleston Auto Auction hosted its annual dealer appreciation sale Dec. 18, with $15,000 in cash and prize awards.
Dealers in attendance received free breakfast and lunch, along with individual gifts for all.
Top buyers and sellers for the 2015 season were recognized and awarded Charleston Auto Auction jackets and plaques.
ARI and JC Lewis joined the celebration by awarding $2,000 and $750 respectively.
Four dealerships were awarded VIP parking spaces for 2016 based on their sale and purchase history with the auction during 2015.
Attendees and employees carried the festive spirit throughout the day and into Dec. 22 with the celebration of the annual Ugly Sweater contest.
Winners of the contest were awarded cash prizes of up to $500.
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
PINK POWER: Employees of Flint Auto Auction pounded the pavement in Michigan for the auction’s “Making Strides Against Breast Cancer Walk” late last year.
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