Used Car News 4/4/16

Industry Faces Challenge in Recall Response

ROGUE: Nissan North America Inc. is recalling 46,671 model year 2014 Nissan Rogue vehicles because improper nickel-plating

it failing.

By Ted Craig

The National Highway Trafc Safety Administration wants higher completion rates for recalls even as the number of units covered grows and despite the fact that used-car owners often ignore notices.

There were 51 million vehicles recalled in 2015, surpassing the record for recalls set in 2014.

The Takata airbag issue created a sizeable portion of these recalls, but there were plenty of other large events, such as Toyota’s recalls of 1.8 million units for problems

with windows.

NHTSA also assessed $500 million in fines.

These trends will continue this year, said Neil Steinkamp, managing director at Stout Risius Ross Inc.

The FAST Act, passed last year, expands the period for which a manufacturer is required to make recall repairs to 15 years from 10. That means even older used cars will be covered in recalls.

But the older a car is, the harder it is to reach the drivers, Steinkamp said.

The average recall repair rate for

newer cars is 80 percent.

It falls to 50 percent for cars that are more than three years old.

“It might take some new solutions to get these older cars to where the newer ones are,” he said.

The manufacturers have moved beyond just sending out letters in recent years.

They have turned to everything from call centers to social media in some of the biggest recalls.

SSR studied the wording of recall letters to see which proved most efective.

They found more dramatic words

have less of an impact.

“Accident/crash” ranked the highest as a call to action, while “fire/ explosion” ranked the lowest.

Steinkamp said some used-car drivers even view these words as scare tactics designed to get them into dealerships.

The biggest issue for drivers is inconvenience.

They don’t want to lose use of their vehicle.

Steinkamp said manufacturers might need to consider some sort of incentive for these drivers to bring in their vehicles, such as a gift card.

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Quest for Corvette Leads to Career in Auctions

By Jeffrey Bellant

LAS VEGAS – Bob Rauschenberg won the 2016 Circle of Excellence Award from the International Automotive Remarketers Alliance here last month.

In accepting the award, Rauschenberg said that he got into the business as a young man because he wanted a Corvette.

“So I kept buying and selling cars until I got one,” he said. “I just learned from the time I was 13, 14 years old that I was a wholesaler.

“I still love cars. How blessed can a guy be to be interested in something that he ends up making a living doing it?”

Kia’s Dave Alfonso presented the award and offered some remarks about Rauschenberg’s career.

“Bob Rauschenberg is a classic example of success,” he said.

“He began early, ran fast, continued to climb the mountain to the next level and never looked back.”

Alfonso said Rauschenberg worked as a model in television commercials, magazine ads and billboards before he entered the remarketing business.

Rauschenberg graduated from college with a marketing degree and was hired as a fleet manager for Alllstate. He later moved to Florida as manager of operations for Econo Car International, a car rental company.

From there he entered into the remarketing business under Roger Penske.

He later worked for ADT Automotive and Auction Broadcasting Co.

He now works at ADESA as executive vice president of sales, marketing and special services.

“Bob’s many contributions to the remarketing and auto auction industries over the years, have greatly contributed to the enhancement in those industries that benefit all of us today,” Alfonso said.

Rauschenberg supports

Focus on the Family, a ranch for troubled youth, Special Olympics and other charities.

Rauschenberg said the

other benefit of his job is being able to work with friends, such as his mentor, Jim Hallett.

He thanked his wife,

Jana, as well.

“My life has been surrounded with my friends,” he said. “Another great blessing.”

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Navy Removes Dealer from Off-Limits List

The U.S. Navy has removed a Virginia used-car dealership from its of-limits list.

The commander of the Navy’s Mid-Atlantic Region placed Carafello’s Auto Sales of Norfolk on its list for allegedly bird-dogging sailors.

This means the dealership paid a fee to have it recommended to others.

The decision to remove Carafello’s from the list was made after a hearing before the Armed Forces Disciplinary Control Board. The removal is efective immediately.

Carafello’s has been of-limits for Navy personnel since November.

Auction Edge Rebrands Management System

Auction Edge has announced the rebranding of its recently acquired auction management system from Auto Auction Solutions.

Automated Auto Auction System will now be rebranded as Edge AuctionOS.

The Edge AuctionOS brand sits nicely alongside Auction Edge’s other products including Edge ASI, Edge Pipeline, Edge Lookout and Edge Simulcast.

Edge AuctionOS was acquired in the fourth quarter of 2015. Since then, Auction Edge has added six new auctions – bringing the total to 86 – which are now also Edge Pipeline, Edge Simulcast and Edge Lookout customers.

Chain Enters New Market

Consignment chain CarLotz opened its first store in Charlotte, N.C.

The store is located at 6501 E. Independence Boulevard. It is the company’s fifth retail location and first in North Carolina.

The Charlotte store will have room for 100 consigned vehicles and will hire five to six full-time associates.

ADESA Adds Florida Auctions

ADESA has signed a definitive agreement to acquire Sanford Auto Dealers Exchange (SADE) in Sanford, Fla.

This location joins four other ADESA auctions in the region: ADESA Sarasota, ADESA Tampa, ADESA Jacksonville and ADESA Ocala.

The 70-acre facility is located just north of Orlando. It has six fully automated auction lanes, along with full-service reconditioning facilities,

including a body shop and mechanic shop.

The auction will be renamed ADESA Orlando, and Mike Tumminello, president of SADE, will remain as general manager.

This transaction includes the Ocala Auto Dealers Exchange (OADE) in Ocala, Fla.

This auction will merge with and move to the ADESA Ocala location.

The closing of this transaction is subject to customary conditions and is expected to close in the second quarter of 2016.

Black Book Partners with Drivin

Black Book announced a partnership with Drivin to be the inventory management system’s exclusive vehicle valuation service provider.

Additionally, Black Book will power the vehicle valuation service of Drivin Insights, a dealer tool that combines consumer shopping trends, local market supply/ demand, optimal inventory levels, and dealer behavior. Drivin Insights is currently in pilot and available to Drivin dealer partners without a subscription fee.

As part of the collective agreement, Black Book will integrate Drivin’s Buy Confidence and negoti-

ated inventory widgets into its Black Book Digital mobile application.

Finally, Black Book and Drivin will partner to produce used-car trend reports available to dealer partners.

CalAmp Completes LoJack Deal

CalAmp announced completion of its acquisition of LoJack Corp. and provided a business update on its operations and financial outlook.

On March 18, CalAmp completed its previously announced acquisition of LoJack by efecting a short-form merger between its wholly owned subsidiary, Lexus Acquisition Sub Inc., and LoJack, with LoJack surviving the merger. As a result of the merger, LoJack became a direct, wholly owned subsidiary of CalAmp.

The company expects to report consolidated revenues in its fiscal fourth quarter ended Feb. 29 of approximately $71 million.

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

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Used Car News is published the first and third Monday of each month.

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Teens Still Want to Drive, Own Their Vehicles

By Jenny King

DETROIT – Vehicle ownership is here to stay – at least for the foreseeable future – and dealerships are not going away.

These sweeping statements summarize a recent Autotrader/Kelley Blue Book survey that studied the attitudes of the youngest generation, Gen Z, when it comes to cars.

Of some 1,200 respondents, those between the ages 12 and 17 showed a lively interest in cars: 93 percent said they plan to own a car and 97 percent will seek a driver’s license.

But while the young people, who number about 80 million or close to one quarter of the population, may represent $3.2 trillion in purchasing power, they “would rather save than spend,” said Isabelle Helms, vice president of research and marketing intelligence for Cox Automotive, parent company of Autotrader and Kelley Blue Book.

“Generation Z sees the car as a gateway to experience,” Helms told members of the Automotive Press Association here in March. They cited freedom, responsibility and excitement as reasons to own and drive a car.

They value vehicle safety above infotainment, they see alternative fuel cars as less expensive to op-

erate rather than as environmentfriendly and they are less likely to see cars as extensions of their personalities, he said.

They will be price-conscious and, at least according to their answers as teenagers, favor brands including Chevrolet, Ford and Honda.

Generation Z, Helms said, is not of-put by technology failures. As a whole, they do not trust autonomous vehicle technology to work. Two thirds see this lack of trust as a barrier to adopting self-driving vehicles.

At the same time the young respondents said autonomous vehicles would ease concerns about distracted drivers and many thought they would lead to fewer accidents.

Respondents said they would look for convenience in a car shopping experience. Most would like a face-to-face conversation at a dealership about cars of interest and test drives.

Alternatively, 26 percent said they would buy a car online, sightunseen.

“We see this as a very positive outlook for the industry,” Helms said.

Sales won’t take the “hit” some have predicted based on stories about lack of interest in driving

and owning cars among younger consumers.

“Dealerships must appeal to the budget-consciousness of young buyers,” she said. Embracing a new consumer experience and ofering superior test drives will be keys to

sales success.

Dealers who can ofer test drives in competing brands will have an advantage, she added.

“Vehicle ownership is a practical decision for Generation Z,” Helms said.

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AEB Set to Become Standard

Some 20 automakers, representing more than 99 percent of the U.S. auto market, have committed to making automatic emergency braking a standard feature on new cars no later than Sept. 1, 2022, the National Highway Trafc Safety Administration and the Insurance Institute for Highway Safety announced jointly.

new cars three years faster than could be achieved through the formal regulatory process. During those three years, according to IIHS estimates, the commitment will prevent 28,000 crashes and 12,000 injuries.

“It’s an exciting time for vehicle safety,” said Anthony Foxx, transportation secretary. “By proactively making emergency braking systems standard equipment on their vehicles, these 20 automakers will help prevent thousands of crashes and save lives. It’s a win for safety and a win for consumers.”

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Automakers making the commitment are Audi, BMW, FCA US LLC, Ford, General Motors, Honda, Hyundai, Jaguar Land Rover, KIA, Maserati, Mazda, MercedesBenz, Mitsubishi Motors, Nissan, Porsche, Subaru, Tesla Motors Inc., Toyota, Volkswagen and Volvo Car USA. The unprecedented commitment means that this important safety technology will be available to more consumers more quickly than would be possible through the regulatory process.

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NHTSA estimates that the agreement will make AEB standard on

Based on mounting evidence that AEB efectively reduced crashes and injuries in the U.S. and around the world, NHTSA and IIHS issued a challenge to industry in September 2015 to encourage automakers to voluntarily make AEB a standard feature. A series of meetings followed to establish details of the commitment.

“IIHS member companies strongly support the adoption of efective safety technologies,” said Jack Salzwedel, IIHS board chairman and CEO of American Family Insurance.

“Deploying AEB on a wide scale will allow us to further evaluate the technology’s efectiveness and its

Continued on page 15

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COLORADO OPERATOR LEADS FRANCHISE DEALER GROUP NADA CONVENTION

Jef Carlson is president of Glenwood Springs Ford and Glenwood Springs Subaru in Glenwood Springs, Colo., and co-owner of Summit Ford in Silverthorne, Colo. His term as chairman of the National Automobile Dealers Association ofcially began in January.

The ceremonial event of the “passing the gavel” will occur at the 2016 NADA Convention and Expo in Las Vegas.

“This is a great honor, and I’m eager to lead NADA as we continue the important job of protecting the interests of America’s 16,500 franchised new-car dealerships, and the more than 1 million people they employ nationwide,” Carlson said.

An estimated 10,000 dealers and managers will attend the National Automobile Dealership Association’s annual convention.

This year’s event will feature round-table discussions and short presentations on industry topics such as em-

ployee generational gaps, pre-paid maintenance, grassroots engagement and online sales strategies, among others.

Speakers at this year’s NADA convention include Republican strategist Karl Rove and former Vermont governor and Democratic presidential candidate Howard Dean; 2016 Super Bowl-winning quarterback Peyton Manning; and comedian Jef Foxworthy.

One of Carlson’s first acts as NADA chairman was to represent the group before the Federal Trade Commission on auto sales.

This was his reaction:

“It has been no secret that while some government regulations are necessary, many have adversely afected local dealerships. In the course of a year, NADA leaders and industry allies met with elected ofcials and federal regulators to discuss mutual concerns.

And a recent Federal Trade Commission (FTC) panel showcased that dealers have a tough job ahead of them.

“On Jan. 19, the FTC held a one-day workshop in Washington, D.C., on the topic of auto distribution and the state laws that regulate it. Unfortunately, the proceeding was not a balanced one. Many of the FTC speakers, as well as the supposedly neutral academics and economists invited by the commission to participate, brought preconceived attitudes that were hostile toward the franchise system –and counterproductive to the dialogue. The panel quickly revealed an imbalanced agenda that resulted in an exceedingly one-sided discussion.

“Still, that did not deter NADA and those speaking on

behalf of our franchise system.

The dealer representatives who were permitted to speak, including NADA President Peter Welch, were very well prepared and ready to openly engage with the FTC. They all presented informed, credible and efective counterarguments to every point raised by the FTC and its manufacturer invitees.

“Respected auto analyst Maryann Keller, the managing partner at Maryann Keller & Associates, cited empirical evidence showing that intrabrand competition significantly lowers new-car prices.

The valuable input rebutted claims that a direct-sales mod-

el would benefit consumers. Keller also explained the importance of franchise laws to the preservation of intrabrand competition. Moreover, NADA’s media relations team did a stellar job of balancing out the coverage by generating a series of positive articles about the franchised dealer system.

“The process now moves to the written comment stage. To combat this FTC action, NADA will be preparing and submitting a comprehensive set of comments. We will continue to work closely with (association executives), dealer lawyers, dealer accountants, and other third parties to ensure that the record is both balanced and reflective of the reality of the retail-auto industry. NADA is also developing an appropriate Congressional oversight strategy and will continue to engage with the media so that the truth about the benefits of the franchised system is what the public hears.

“It falls on our shoulders to educate government ofcials about the dealer business. While regulators may have good intentions, they cannot enact ‘good’ rules that benefit our customers unless they are informed and willing to listen. NADA will continue to work on a multi-platform, multifaceted efort to engage the FTC in the future, and challenge false information that comes out of any agency in the federal government.

“When it comes to harmful regulations, know that NADA is poised to defend its dealers.”

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A former used-car dealer and employees face charges of a loan scheme involving luxury cars.

Patsy Galasso

Patsy Galasso, along with three employees and a bookkeeper, have been charged by the New Jersey attorney general with conspiracy, money laundering and other ofenses in connection with a bank financing scam that allegedly netted $1.4 million in fraudulent loans for luxury

The owner and staf of D.I.B Leasing in Teterboro, N.J., were indicted on first-degree charges of conspiracy, financial facilitation of a criminal activity, and trafcking in personal identifying information pertaining to another person for allegedly submitting numerous fraudulent car loan applications between August 2012 and February 2015.

The dealership’s finance ofcer was charged previously with financial facilitation and misconduct by a corporate ofcial in connection with the alleged scam.

Prosecutors allege the defendants created fake employment records,

inflated incomes, and supplied false pay stubs and fictitious employee verifications to dupe banks into approving auto financing for customers whose income levels did not qualify them for loans on the pricey vehicles.

Four of the loans were taken out in the names of customers who had submitted personal information to apply for financing but ultimately did not buy cars from the dealership, prosecutors allege.

In one case, the victim had never been to D.I.B. Leasing or applied for a car loan there, prosecutors claim.

Charged in the scheme, along with Galasso, were:

Hector Marquez, the general manager of the dealership; Paul Russo, the finance manager of the dealership; Lisa Ghobrial, title manager; Jennifer Perez, who assisted with loan applications; and Michael Ricciardi, who did bookkeeping for the dealership.

In addition to the charges above, Galasso, Marquez, Ghobrial, and Ricciardi were all charged with second-degree identity theft and 62 counts of theft by deception – two in the second degree and 60 in the third degree. Marquez, Galasso, and Ghobrial were also charged with seconddegree misconduct by a corporate ofcial.

Scam Involves Luxury Cars AUCTIONS AND ACES

KEN SHOEMAKE

Used Car Manager McCurley Integrity Dealerships Pasco, WA

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Trades Drive Used RV Market

By Jenny King

In spring, many minds turn to thoughts of vacation travel.

And in the spirit of you-can-takeit-with-you, sales of trailers and of motor homes – those apartments on wheels – begin to trend upward along with the thermometer.

At least that’s the case at Camping World of Atlanta, where staf member Chase Chapman says it’s “full speed ahead from March through September.”

That includes models dating from the 1990s through 2016. Camping World’s website inventory of used RVs ran the gamut from a 1991 Holiday Rambler Monitor 31 Class A marked down from $9,999 to $7,950 to units like a 2011 Damon Daybreak with a sticker of $49,995.

Chapman said the dealership cleans up trades but doesn’t do a thorough detailing until the unit is sold. The dealership also does consignment contracts with sellers.

While outlets specializing in trailer and motor home sales are the obvious place to shop, some car dealers are adding RVs to their inventories. Compared with RV specialists, their numbers are small, said Phil Ingrassia of the National RV Dealers Association: “fewer than 10 percent” are also in the car business.

Ingrassia said in 2014, 70 percent of RV revenue was from the sale of new units; 30 percent was from used vehicles and trailers.

According to 2012 Census Bureau numbers, there were 2,132 used RV dealers in the U.S. in the $3.8-billion used RV and parts and accessories industry.

“Most are strictly RV dealers with some also doing boats and power sports,” Ingrassia said.

Goshen Motors, an established Buick GMC Hyundai dealer in Goshen, Ind., added RVs to its inventory in late 2014. Dealer Dzung Nguyen said it has been a challenge to stock the right mix.

“We were short of Class C motor homes last year,” he said. Thor, Forest River and Jayco products have accounted for 80 percent of new RV sales, he said.

The veteran car dealer said he expects the highest growth this year to be in trailers. The large Class A motor homes are likely to continue selling at the same pace as last year.

Goshen Motors at its Goshen RV Supercenter sells used RVs on the lot or through RVTrader, he said.

In early March the dealer had a 29-foot 2015 Thor Motor Coach with 19,000 miles on its Ford gasoline engine for which he was asking $67,500.

Fitch - Continued from prior

As a result, residual gains in Fitch’s auto RV lease index declined steadily over the past 18 months. The index recorded a gain of 0.51 percent as of the fourth quarter of 2015, the lowest level since 2009 and down from 3.16 percent in the third quarter of 2015 and 3.91 percent at year-end 2014.

loss expectation is determined by isolating only the RV losses an issuer observed during the worst 12-18 month period, typically during the weakest 2008-2009 period.

The average yearly gain in 2013 was 8.52 percent.

It decreased to 5.75 percent in 2014 and dropped further to 3.97 percent in 2015. The index reports a gain of 1.12 percent as of February 2016 data.

Further haircuts are employed as rating categories increase. This usually amounts to roughly 2832 percent in loss protection as a percent of returned residuals for ‘AAAsf’ ratings, providing ample support even as RVs continue to decline in 2016.

However, auto lease transactions have quickly delevering structures and ample credit enhancement levels, and therefore Fitch expects ratings to be stable and anticipates upgrades to subordinate classes where appropriate in 2016.

Fitch’s base case or ‘BBsf’ RV

Moody’s

Transaction loss levels would have to be magnified above those levels before having a ratings impact.

Fitch’s auto lease RV index tracks the performance of 96 U.S. auto lease transactions totaling $27.4 billion of collateral as of February 2016 data issued from 12 auto lease ABS platforms, with data beginning in January 2007.

Upgrades CarFinance

Moody’s Investors Service has upgraded one and afrmed six tranches issued from CarFinance 2013-1 and 2013-2 securitizations, originated and serviced by CarFinance Capital LLC.

The actions were prompted by the build-up of credit enhancement due

to the sequential pay structures and non-declining reserve accounts.

The lifetime cumulative net loss expectations were increased to 12 percent from 11 percent for both transactions, reflective of worse than previously anticipated performance.

Dealers Miss on Service

Dealers are allowing billions of dollars of service revenue to drive past their locations with only 30 percent of total service visits occurring at dealerships, according to the 2016 Maintenance and Repair Study from Cox Automotive.

“Dealers that focus on the service experience have the potential to add millions of dollars of revenue,” said Cox Automotive president Sandy Schwartz. “This study highlights key drivers of customer satisfaction that dealers need to address – value, trust and convenience.”

Pricing is one of the top reasons study respondents give for not returning to the dealership for service. Fifty-eight percent cite cost as the reason for not returning to the dealership, and 34 percent feel the dealer will overcharge them. As a result, car owners are choosing to go to the service provider where they feel that they are getting better value for money and have established a positive relationship.

With purchase information and an existing relationship, dealers are uniquely positioned to provide con-

AEB

– Continued from 6

impact on insurance losses, so that more insurers can explore ofering discounts or lower premiums to consumers who choose AEBequipped vehicles.”

“We’re getting these safety systems into vehicles much faster than what would have been otherwise possible,” said Mark Rosekind, NHTSA administrator.

“A commitment of this magnitude is unprecedented, and it will bring more safety to more Americans sooner.”

“With roadway fatalities on the

sumer notification of vehicle service intervals and manufacturer recalls.

Nearly one-third of respondents relied on maintenance, service or recall notifications from the dealership or the manufacturer.

However, more than one-third of consumers are unaware of their vehicle service schedule or recalls, according to the study. Luxury and import owners rely more on dealer notifications than non-luxury and domestic vehicle owners.

Dealers have an opportunity to create a more seamless service experience. Eighty-five percent of respondents indicate that the service department experience impacts their likelihood to purchase. However, 72 percent who purchased did not return to the de alership for service in the following 12 months.

Customers who are introduced to the service department at the time of purchase are not only 1.5 times more likely to return to the dealer they purchased from for service, but also more likely to purchase another vehicle from the dealership.

rise, this commitment has the potential to save more lives than almost anything else we can accomplish in the next six years,” said Deborah A.P. Hersman, president and CEO of the National Safety Council.

“Including all models in the agreement ensures that safety isn’t for just those who can aford it.”

NHTSA and IIHS also announced that Consumer Reports will assist in monitoring automaker progress toward meeting the AEB commitment.

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1Subaru, the Subaru logo, and Subaru Motors Finance are trademarks of Subaru of America, Inc. (“Subaru”) and any use by Chase Bank USA, N.A. (“Chase USA”) and JPMorgan Chase Bank, N.A. (“Chase”) is under license. Retail / Loan accounts are owned by either Chase or Chase USA and lease accounts are owned by Chase.

2Jaguar and Land Rover, their respective logos, and the financial group names (Jaguar Financial Group and Land Rover Financial Group) are trademarks of Jaguar and/or Land Rover and any use by Chase is under license. Retail/Loan and lease accounts are owned by Chase.

3The tradename “Mazda Capital Services” as well as the Mazda and Mazda Capital Services logos are owned by Mazda Motor Corporation or its affiliates and are licensed to Chase. Retail/Loan and lease accounts are owned by Chase.

© 2014 JPMorgan Chase Bank, N.A. Member FDIC. All rights reserved. (14-221) 06/14

Hybrid Sales Take New Tack

NEW YORK (AP) – When Toyota aired a Super Bowl television ad featuring a surprisingly quick Prius gas-electric hybrid eluding police, it marked a turning point for the auto industry.

For years, automakers pushed fuel efciency to sell hybrid and electric vehicles. Now, in an era of cheap gasoline, the message is: These cars are faster and quieter than their gas-powered counterparts. And, yes, you still save on fuel.

“They’ve graduated out of the class of something that’s a bit of an

oddity to drive,” says Mike O’Brien, vice president of product planning for Hyundai. “It’s all about making these cars better.”

Until now, hybrids and electrics have largely appealed to the environmentally conscious crowd. The vehicles cost thousands of dollars extra, and although drivers eventually recoup their money in fuel savings, the vehicles lacked the power and handling of gas-powered rivals. Electrics also sufered from driver concern that the battery could run

Continued on next page

Hybrids - from prior

out of juice on a trip.

Now, the tide is slowly turning. General Motors and Tesla will bring electric vehicles to market next year priced around $30,000, including a $7,500 federal tax credit. Battery range has improved significantly, experts expect gasoline prices to eventually climb higher, and the advent of autonomous vehicles favors motors powered by electricity over gas.

At the recent New York International Auto Show, Hyundai and Toyota showed of new electric and hybrid vehicles, with presenters from both companies touting them as “fun to drive.” Hyundai unveiled battery, gas-electric hybrid and plug-in versions of a new car called the Ioniq, while Toyota showed the plug-in Prius Prime, which can go 22 miles on electricity before the gas-electric power system kicks in. The electric range is double the old version.

The Prius hybrid, powered by gas and electric motors, started the alternative fuel movement in the U.S. in 2000. Toyota deliberately made it look diferent than other cars, knowing that buyers wanted to make a statement about being environmentally friendly. Other companies set their green cars apart

as well.

Even though sales grew as manufacturers added models, they never really caught on, partly because of the improved fuel economy of gaspowered vehicles. At their peak in 2013, with gas averaging $3.50 per gallon, Americans bought only 341,000 hybrids and electrics, about 2.2 percent of total U.S. car sales, according to Kelley Blue Book.

Companies spent millions developing the cars, taking losses to meet government fuel economy standards that gradually increase and require the new-car fleet to average 54.5 miles per gallon by 2025.

As gas prices fell below $2 per gallon, sales of hybrids and electrics dropped further. Last year, automakers had 16 hybrid and electric models on sale, but sales sank to just over 274,000.

All of this makes for a bad environment to roll out more hybrids and electrics. But automakers will press on, now selling them on style, acceleration, handling and reliability.

Electric vehicles have few moving parts.

“They require far less service,” said Carlos Ghosn, Renault-Nissan CEO. “No oil changes, and they are extremely reliable.”

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Zoning – from page 7

The discussion then turned to the duties of various council members, whether they were adequately doing their jobs, and whether everyone on the commission actually understood the zoning question.

After the council voted against the car lot, council chair Theresa Gabriel voiced frustration with the way the vote was handled.

“Right now I believe ‘yes’ meant ‘no’ and ‘no’ meant ‘yes’ – I don’t know if everyone else is as confused as I am,” she said.

She urged a reconsideration of

the vote to clarify the council’s intentions, but a second vote wasn’t taken.

Kareem appealed the council’s decision to the Lucas County Court of Common Pleas, but a ruling upheld the vote.

On March 17, Kareem filed an appeal of Bates’ decision to the Sixth District Court of Appeals, alleging the trial court had erred in upholding the council’s vote. His attorney, Howard Hershman, said he hoped his client would have a better chance at the District Court level.

Shoppers Use Third Parties

Consumers spend more than five hours researching and shopping for cars online using third-party sites or apps. That is 60 percent of their total car-buying process, according to the inaugural Car Buyer Journey study commissioned by Autotrader and conducted by IHS Automotive.

The study found that of the 88 percent of shoppers using the Internet for vehicle shopping, 78 percent use third-party sites or apps during the car buying process.

Consumers that research or shop on the Internet use Autotrader or Kelley Blue Book 73 percent of the time.

“The study findings reinforce why it is so important for dealers to communicate on experience in addition to product and price,” said Jared Rowe, president, Cox Automotive Media.

“Dealers have less than a 30 percent chance of changing a purchase decision once a customer is on the lot. Today, car shopping is all about matchmaking – uniting sellers and buyers online.”

In fact, 71 percent of consumers say that they purchased the vehicle they initially intended to purchase once they visited a dealership. However, when starting the shopping process, 6 in 10 consum-

ers say they are open to considering vehicles across makes and models.

When asking consumers that research or shop on the Internet about their dealership experience, 46 percent say they visited a single dealership, and 52 percent drove only one vehicle.

On average, consumers visit 2.7 dealerships. The main frustrations for consumers at the dealership are filling out paperwork and contracts followed by negotiating the purchase or lease.

Combined, these two steps accounted for 55 percent of the time spent at the dealership. Additionally, dealership satisfaction sufers as more people get involved, with satisfaction dropping nearly 20 points if the consumer has to interact with four or more people at the dealership.

Prior to purchasing a vehicle, 46 percent of respondents that are Internet users access automotive information using their smartphones.

Of all buyers, 23 percent used a smartphone to do research or shop while at a dealership.

The top five uses of a mobile device at a dealership are: comparing prices for vehicles at other dealerships (59 percent); finding prices for vehicles at the dealership where the consumer was (41 percent); comparing inventory at other dealerships (38 percent); check inventory at the dealership where the consumer was (36 percent); and research trade-in pricing (33 percent).

Store Staff Scams Credit Union

A former used-car dealer pleaded guilty to charges of conspiracy to commit financial institution fraud and filing a false tax return in a conspiracy to defraud one of the nation’s largest auto creditors.

In July 2007, Andysheh Ayatollahi purchased a 50 percent interest in the Car Store, a used-car dealership located in Virginia Beach, Va.

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 co-conspirators 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 im-

personating 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 with the IRS that underreported his income for tax years 2005-2007, resulting in a tax loss of $113,093.

Ayatollahi will be sentenced on July 13 and faces a maximum penalty of 30 years in prison on the financial institution fraud charge and three years in prison on the charge of filing a false tax return.

PEOPLE IN THE NEWS

KAR Expands Exec Roles

KAR Auction Services Inc. and TradeRev, a Toronto-based provider of mobile vehicle appraisals and an auctioning system for dealers, announced that Keith Crerar has been hired by TradeRev as executive vice president for the U.S. He will report directly to Mark Endras , president of TradeRev. Crerar will continue in his role

as ADESA vice president of dealer services until a successor has been appointed.

Previously, he managed ADESA’s online field sales team and was promoted to regional dealer sales director and then executive director of dealer sales.

Before joining ADESA, Crerar spent the first nine years of his career with dealership groups in Ontario, where he was recognized through Nissan’s Club Excellence as one of the top three sales managers in the country for five straight years.

KAR acquired 50 percent of TradeRev in August 2014.

In other news, ADESA announced that its subsidiary Recovery Database Network (RDN) has named a new CEO.

Michael Briggs, president and CEO of ADESA subsidiary CarsArrive Network (CAN), will expand his role within the company to also oversee RDN.

Briggs will continue to report to Peter Kelly, president of KAR Digital Services Group and chief technology ofcer of KAR Auction Services.

RDN will now be headquartered out of the CarsArrive Network’s Mesa, Ariz., ofce.

Manheim Names GMs

Manheim has named four to general manager roles in Florida, Georgia, North Carolina and Utah.

The general manager placements include: Butch Herdegen III (Manheim Jacksonville and Manheim Daytona Beach), Ellie Johnson (Manheim Statesville), Doug Kramer (Manheim Atlanta) and Cade Rindfleisch (Manheim Utah),

each bringing at least 20 years of experience in the automotive remarketing industry.

Herdegen joined Manheim in 2006 but grew up in the auto auction business, starting as a ringman, then moving on to a condition report writer, fleet-lease coordina-

tor, vehicle registration clerk and other roles before he started taking on management responsibilities.

He held roles as dealer services manager of Manheim Lakeland, Manheim Central Florida and Manheim Palm Beach.

Most recently, Herdegen was general manager of the Orlando Dealer Auto Exchange.

Johnson is a 30-year veteran of Manheim.

She has a family legacy of auto auction experience, serving early in her career at her family’s auction, processing vehicle registrations, then as business manager and controller.

Johnson most recently served as general manager of Manheim North Carolina.

She is currently board chair of the National Auto Auction Association and also previously served as president of the organization

Kramer has been with Manheim for 21 years and has more than 30 years of experience in the automotive remarketing industry.

Under his leadership as general manager of Manheim Central Florida, that location won the 2015 Dealer Services Excellence Award, the GE Remarketing award in both 2014 and 2015, the VW/Audi Auction of the Year award in both 2014 and 2015, CPS Top Online Sales award in 2015 and the President’s Award for the Florida Market in 2015.

Rindfleisch is a new addition to Manheim, with his role as general manager of Manheim Utah as his first position within the company.

He has more than 20 years of experience in the wholesale auto and remarketing industry, and most recently worked with Cox Automotive on the Go Auto Exchange auction operation.

Rindfleisch has owned and operated three auction start-ups.

RETAIL MARKETS

NEW HAMPSHIRE

Jake Aleksa, president, Aleksa Auto Inc., Salem, N.H.:

“We’ve been here since 1995, so it’s our 21st year in business.

“We usually have between 100 and 125 vehicles. We have multiple sources. We’ve been here a long time, so we buy a lot of vehicles of the street.

“We also buy a fair amount of of-lease vehicles. Sometimes we buy those at auction or we’ll buy them online before they get to auction.

“We get some decent trades, since we sell a lot of late-model cars. We’ll occasionally buy some new-car dealer trades.

“The inventory levels go up and down depending on the market. Sometimes when the wholesale market is pretty tight, it’s tough to maintain what you want to maintain.

“We average about 55 units a month.

“It’s pretty much straight

retail. We don’t really do any buy-here, pay-here or (subprime).

“Our average retail price is somewhere in the mid- to high- teens (thousands). We try to stay with late model vehicles.

“The average model year is probably 2013.

“Average mileage is between 50,000 and 60,000.

“We have a decent mix among cars, trucks and SUVs. It might be a little higher in SUVs and trucks.

“Our mix is probably 60 percent imports and 40 percent domestics.

“We go above and beyond what most people do (in reconditioning). We have a full 12-bay service department and a four-bay auto body shop. We don’t cut corners at all.

“Our average cost is somewhere between $1,000 and $1,200. Our service shop does 60 percent retail service and 40 percent is for our wholesale cars.

“We do a lot of online advertising through

Autotrader and Cars.com. We also do Carfax listings and use other online sources. We’ve gone away from print lately. We do occasional TV spots.

“Right now is a popular time for Jeep Wranglers. We recently sold a 2014 Jeep Wrangler Sahara. It had about 40,000 miles. I don’t have the sale price in front of me, but I believe that probably sold for somewhere in the low $20,000s.

“I’m hoping this year will be as good as last year, which was probably one of our best.”

TEXAS

Robert Beck, president, Stop N’ Drive Motors, San Antonio, Texas:

“We started in April 2005. We’re 100 percent buy-here, pay-here.

“(Inventory amount) depends on the time of the year. Now we’re at the end of tax season, so we’re low on inventory. Right now we’ve got about 40.

“We average about 15

(sales) a month.

“In the last two or three years, the tax season has been down. Actually, the whole business has been down because of subprime.

“In Texas, we have initial down payments and deferred down payments. The average (total) is probably $3,000.

“(Average term length) has been creeping up. That’s somewhere around 40 to 45 months.

“The average retail price is around $13,900.

“Average model is probably 2007. Average mileage is right around 100,000.

“When we first opened, the average sale price was probably about $9,995. But over time, these vehicles have gotten more expensive and, for us, we’ve also moved up the food chain a little bit.

“SUVs and trucks are our bread-and-butter. Cars are (a smaller percentage).

“We sell very few imports. We carry a few. But our customers like their Fords,

Compiled by Jeffrey Bellant

Chevys and Dodges.

“We average around $500 for reconditioning. It goes up every year a little bit. We do some of that work inhouse. We change the oil, put new plugs and filters on cars. I’ve got a full-time mechanic. If there’s a paint touch-up that needs to be done, I’ve got a guy who can come by and do it at our place. We detail them all right here. We don’t do any outside service.

“We don’t do any print ads or radio. We do very little advertising. We do a little on Google and Facebook, but that’s it.

“Our location draws a lot of people. We have a nice place. It’s neat and clean, paved with concrete. It looks like we’re serious about our business.

“We do a pretty good chunk of repeat-and-referral business.

“We recently sold a 2009 GMC Acadia. I think it had around 120,000 miles. I think that one sold for $6,900.”

WHOLESALE MARKETS

CONNECTICUT

Peter Saldamarco, president, Central Auto Auction, Hamden, Conn.:

“We just had our 10-year anniversary a couple of months ago.

“We have three lanes and we’ll soon be running four. Our volume is up. Our consignment is up and we’re doing a little more in the commercial area. The building always accommodated four, but we hadn’t grown into it yet.

“We’re running roughly 400 cars a week. Our sales percentage has been at a solid 60 percent. We’re happy with that. Last year, it was 55 percent.

“We’re about 70 percent dealer consignment and 30 percent commercial, but trending toward more commercial. We do a lot with donation vehicles. We tend to specialize in that area. We also have smaller repo companies, credit unions, (sources) like that.

Compiled by Jeffrey Bellant

“At the moment things are pretty good. Dealers seemed enthusiastic with tax time.

“The average price (across the block) is $3,500. It’s relatively the same as this time last year. We do a lot of donation vehicles, which brings that average down a bit.

“We did see a spike during tax time, but not like in the old days. It’s a smaller window and not as big.

“All vehicle and all lanes are on simulcast. AWG is our provider, but we do promote our simulcast sales through Auction Pipeline. That’s a good combination that’s worked out great.

“We also do a lot on OVE. com. We were No. 8 in the United States on the dealer side for OVE in the last calendar year.

“We’re a GSA contractor. That sale is usually once a month, the third Tuesday of the month.

“We usually get 100 (units) and they sell out. Those are

“We’re getting about 200 dealers in the lanes. That’s a little bit better than last year.

Baton Rouge

Thursday @ 9:00 AM

Wednesday @ 10:00 AM Bowling Green

Friday @ 8:45 AM

Wednesday @ 8:45 AM

@ 10:00 AM

a combination of passenger vehicles and light trucks, for the most part. That’s a good sale.

“We also have 33 municipalities that do business with us. We run those as a part of our regular sale.

“I’m generally positive about the rest of 2016. But it’s not the like the old days. Today you have to work harder and plan – you have to fight for every dollar. I’m not complaining, but it’s a little more difcult than it used to be.”

FLORIDA

Doug Rodriguez, general manager, Tallahassee Auto Auction, Tallahassee, Fla.:

“We’ve been around 32 years this year. We run three lanes.

“Volumes have moved up consistently for the past six years. The market is still good. It’s strong, especially in the Tallahassee area. We just increased our exposure and I think that makes a diference.

“We run between 500 and 600 vehicles every week.

“We have seen an increase (due to tax season), but I tell you it was short-lived. I think ours lasted maybe three weeks.

“Conversion rates have been 50 to 55 percent on average, except during those tax times when we hit about 60 to 65.

“We’re about 80 percent dealer consignment. But the fleet-lease side has increased. I expect that to continue to grow.

“We draw between 200 and 250 dealers in the lanes and another 60 to 80 online.

“We use Manheim Simulcast, the only independent in the country that does. We use OVE. (The online) area is a place where we’ve seen an increase in exposure and attendance over the years. It always can be better. It can be a good benchmark. You can look at how you’re growing based on that. If your online presence is growing, then you’re probably doing something right.

“We do a salvage sale. We have 40 to 60 pieces every week. Those are hard to sell.

“We do a powersports sale once a month on the second Friday. We’re doing 50 to 60 units in that particular sale. Not great, but not too bad. It’s the same as this time last year. We sell a lot of motorcycles in that sale. We also sell boats, quads and some jet skis. We do a little bit on the RV side, but not a lot.

“We also hold a frontlineready sale on the third Friday of every month. That’s (vehicles) that are five years and newer and 75,000 miles and under. We’ve done that every year. It’s a very successful sale. It’s a unique buyer. We’ve done a lot to develop that. The average price in those sales is $12,000 to $15,000.

“For our regular sale, the average price is $6,000 to $8,000.

“We welcomed some new clients last year. One is Avis Budget and we’ve also gotten a huge impact from DriveTime.”

@ 9:00 AM

2012 MODEL S

2011 MODELS

DOMESTIC CARS

Chevrolet Cobalt LS 4D Sedan

Chevrolet Impala LS 4D Sedan

Chrysler 300 Touring 4D Sedan

Chrysler Sebring Touring 4D Sedan

Ford Focus SE 4D Sedan

Ford Mustang base 2D Coupe

Ford Taurus SEL 4D Sedan Lincoln Town Car Signature Limited 4D

4D Sedan

Lexus ES 350 4D Luxury Sedan

Mercedes-Benz E Class E350 4D Luxury Sedan

Mitsubishi Lancer ES 4D Sedan

Nissan Altima base 4D Sedan

Nissan Altima S 4D Sedan

Nissan Sentra base 4D Sedan

Toyota

DISCONNECTED JOTTINGS FROM TONY MOORBY

I saw a trailer for a TV show the other day – it was called “Naked and Afraid.” Now, I know nothing about it nor do I intend to watch

LSD did it for the sixties! Where do these programmers come up with this idea for mass entertainment? I wonder which

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

it. Apparently it’s been going for a while which just shows how limited my TV surfing really is. But according to the trailer, they cover the ‘naughty’ bits up, so the point is…? I suppose one can be an ersatz voyeur, peeping at people doing silly things in even sillier places.

If this qualifies as reality TV then someone’s on LSD. Maybe that’s it – this is the trip into the unreality of the 21st century where

advertisers take spots in these programs – obviously not Hanes or Fruit of the Loom, as it seems no one needs Y-fronts in their world.

I realize, of course, that TV, with the exception of the news, is a form of escapism – even the educational programs take you away from the everyday to enlighten or expand horizons like cooking programs expand my waistline.

I fail to see what is to

be gained by keeping up with a family whose name seems to indicate a connection to Armenia and literally means “stone carver.”

The Kardashians keep receiving low critical reviews as a reality show but has been awarded a number of “viewer” awards, according to Wikipedia. It must do something for someone – it’s the longest running “reality” TV show out there. I love this country.

“The Real Housewives of…” you name it, they’re everywhere these days, still make my jaw drop. Nothing’s real about these women, up to and including their teeth and their relationships are as flimsy as their clothes. But they always seem to be on one of the TVs in our house. Remember when everyone used to watch one program on one TV in the den or rec room?

Now it’s like going to the multi-screen movie the-

By Miles Mellor

5. Ford subcompact since 1976 6. Part of a coffee service 7. Takes in

Q50 or Q70 9. Engagement

15. Letters of debtors

16. Class of car launched by Ford Mustang. 2 words 17. Acidity factor

Thanksgiving dishes

Gear” host

Loud auto honker of old

Abbreviation for utility vehicles

Details

Corolla and Prius

____ Esperante

BMW i3 ____

Cavalier or Impala

Accessory for James Bond on the Aston Martin DB 2/4, 2 words

atre. Yes, we have popcorn too! Maybe the newly created Caitlin Jenner should become a real housewife of somewhere.

There really seems to be nothing to these programs; take “Dating Naked” for instance, stripped of any sense, let alone clothes.

Yet VH1, I’m assured, has signed up for season three. Ironically it seems that any sense of decency has expired in these so-called politically correct times.

As for “The Bachelor” and “The Bachelorette,” words are hard to find.

After what seem to be an eternity of episodes and so many broken relationships, can anyone take this seriously?

It’s about time the limo turned into a pumpkin and the roses wither to thorny

reminders of real reality. The likelihood of marital bliss surviving the sharpened fingernails of the harem in the case of the bachelor or the barrage of blockheads for her is as slim as their figures!

Of course I like the car programs on the cable end of the guide, but this is low rent territory for TV shows so the re-runs are incessant and on certain days and times of the week they rerun the same shows over and over, instead of mixing up a potpourri of diferent ones.

Some of the auction shows are two years old, so prices mean nothing.

Now that “Downton Abbey” is finished I guess I’ll have to make do with “Antiques Roadshow,” after all I nearly am one.

The Senators, on score tickers

Half- __

AROUND THE BLOCK

CONSIGNOR AWARDS AUCTIONS

LAS VEGAS – Credit Acceptance Corp. recently honored Wolfe’s Evansville (Ind.) Auto Auction and 166 Auto Auction in Springfield, Mo., with its top remarketing awards here.

“Credit Acceptance/VRS measures our auctions really on just one thing – money – the net sale amount as a percentage of the market value,” said Mike Kreider, remarketing manager for Credit Acceptance Corp.

Kreider presented the awards during the Conference of Automotive Remarketing at Caesar’s Palace.

“First off, (we had) regional winners that didn’t quite make it but did very good in their region,” he said.

Manheim auctions were recognized in the West Coast and Northeast regions. Manheim Nevada and Manheim Harrisonburg (Virginia) were tops in those regions, respectively.

Compiled by Jeffrey Bellant

Group Honors Industry Leader

The National Auto Auction Association named Karyn Wrye, senior director of government afairs at Cox Automotive, a Warren Young Fellow during the 2016 NAAA/CAR convention in Las Vegas in March, for her eforts serving as co-chair of the National Auto Auction Association Legislative Committee.

NAAA represents 341 auto auctions in North America, and will donate $2,500 in Wrye’s name to the foundation. The award recognizes those who have made significant contributions to the NAAA.

A Warren Young Fellow is an individual who consistently demonstrates dedication and commitment to the auto auction industry. Wyre has served in various roles in her career.

The company gives two awards. One award is for the small volume auction that may not get great numbers of cars, but one that the company wants to spotlight. That award went to 166 Auto Auction.

Honors for the Southeast region went to ADESA Knoxville. In the Southwest region Dealers Auto Auction of the Rockies took the prize.

The top award for overall auction went to Wolfe’s Evansville Auto Auction.

“(Wrye) has been a bridge connecting people to accomplish difficult tasks,” said NAAA President Mike Browning.

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