Used Car News 7/31/23

IARA’s New Leader Preps for Roundtable

By Jeffrey Bellant

As the International Automotive Remarketers Alliance looks toward its Summer Roundtable event in Chicago in August, it also prepares to begin a new era.

Industry veteran Mark Coleman took over the post of executive director last month, following the retirement of Tony Long.

President Jeff Bescher explained what the board saw in Coleman.

“Mark has extensive experience within our industry and all the intangibles that have made him a success in his career will be a great fit for the leadership position within the IARA,” Bescher said. “Mark is a 25-year veteran of the wholesale automotive industry. He was cofounder and President of Title Auctions, which developed a bespoke online auction primarily for credit unions and, most recently, with GE Fleet / Element Fleet.”

In 2008, Coleman joined Paul Seger’s team at GE Fleet as co-leader of national sales for the company’s then newly formed third-party remarketing services. GE Fleet is now Element Fleet, and the thirdparty remarketing service is among the largest in North America. Coleman lives in Portland, Ore. with his wife of 33 years. They have one daughter who recently graduated from college.

“This industry has been so good to me,” he said with a laugh. “Just opportunity after opportunity to pursue in this industry.”

As an employee at Element, Coleman wasn’t a stranger to IARA before he took his new post.

“Paul Seger, who was a former IARA president and now board chair, was very committed to ensur-

ing his remarketing team was involved in IARA,” Coleman sad. “He also was a real advocate of all of us getting CAR (Certified Automotive Remarketer) certified.”

So, Coleman has been an IARA member, served on a committee and taken CAR certification courses.

Coleman has a clear direction for the future, three top priorities developed by IARA leadership.

“The first priority is getting even better at communication with our members and the industry,” he said.

That means engagement through social media with enhancements through the website and IARA’s smart phone app to help deliver messages to members and others in

the industry.

“The second priority we talked about was delivering even more value to our members and we’ve got some plans underway to do that,” Coleman said. “The idea is to create content hubs that IARA members can access to get the latest information on issues and insight on best practices.”

This will be a work in progress over the next several months.

“A third priority we talked about was laying a foundation for an even bigger membership tent,” Coleman said. “That means reaching out to some folks in the remarketing industry who might not be well represented, such as women.”

IARA recently formed a relationship with a brand-new organization called GROW (Global Remarketing Opportunities for Women), which promotes the careers of women, Coleman said.

The group will be hosting a reception at IARA’s Summer Roundtable in Chicago on Aug. 22-24 at the Westin on Michigan Avenue.

The other part of that is reaching out to younger people new to the industry, such as Gen Z and Millennials. Offering training or mentoring would help expand that IARA membership tent.

Those interested in hearing more about IARA’s future can do so at the Summer Roundtable.

Ann Fandozzi, chief executive officer of RB Global, will be one of the keynote speakers, along with Steve Greenfield, CEO of Automotive Ventures, Melinda Zabritski of Experian Automotive, Alex Yurchenko of Black Book, speakers from Autotech Ventures and several others.

MARK COLEMAN

7/31/2023

Reconditioning Strong Recon Shops Need Productivity, Efficiency

By Jeffrey Bellant

LAS VEGAS – Experts from the National Independent Automobile Dealers Association discussed ways to save on reconditioning costs during a presentation at NIADA Accelerate.

Ben Goodman and David Brotherton, both senior 20 Group moderators for buy-here, pay-here service groups, led the discussion.

“We have to understand a cost center mindset,” Brotherton said.

A cost center is a department within an organization that does not directly add profit to the company but still costs money to operate.

It’s about balancing time and cost in the “reconditioning cost equation,” and reviewing a service department’s KPIs (key performance indicators) that improve workflow and efficiency, Brotherton said.

Using a group of his clients as an example, their average purchase price jumped to $8,269 in 2023 from $6,777 from 2021. Average recon costs from that same time for the group rose from $1,353 to $1,615 in 2022 before easing to $1,584 in 2023.

The other issue is average mileage, which also went up 30,000.

“With the right focus, you can reduce recon costs,” Goodman said.

Brotherton said it takes a special mindset and set-up to do the “MacGyver- type” repairs.

“You’ve got to have someone who really knows their stuff,” he said. “You’ve got to have someone that you’re OK with in taking the time to do it.”

For example, if your plan is to rebuild transmissions, you’ll need specialized equipment and someone who knows how to do it.

For a dealer who’s selling a lot of cars but has few service bays, Brotherton generally recommends farming out the bigger, more complicated service jobs.

Knowing when it makes sense to repair something yourself – which can be much cheaper in certain cases – or simply replacing the part is a critical part of the decision making process.

“If you know how to do it and you can find the parts and components you need, it’s going to be cheaper in most cases,” Brotherton said. “In many cases, it’s much cheaper.”

Also, dealers with service departments need to determine whether they are going to set up a shop for both reconditioning and customer

pay service.

“Does it make sense for us to do this or am I going to tie up too much time, because time is money,” Brotherton said.

The time where a lift or tech is tied up does limit what you can do.

“You have to think about return on investment (ROI) he added. “That’s where you have to balance out, is your shop prepared to repair and can you afford to tie up a bay 16 hours, when the replacement time might only be eight?”

The key is understanding the difference between servicing outside customers or simply doing recon/ service for a BHPH business. A recon job means that the dealer is paying a commission to himself.

Reconditioning work is all about efficiency, Brotherton said.

“It’s about getting as many vehicles to the frontline, the fastest (way) for the least cost, with the greatest amount of consistency,” he said.

KPIs in the service business include efficiency, or how well the tech beats the book. The equation is flat rate hours produced/hours worked. The target range is 125% to 130%, depending on whether you’re using factory time or non-factory time.

Dealers don’t need to pay techs on a flat rate, but it is used for the equation.

But it’s also about productivity, which equates to actual (clock) hours worked/total (clock) hours available. The target range is to have techs actively working on a job at 80% to 85%. It means techs have to clock in and out on the job.

Goodman warned dealers that any tech can be busy but still slow roll the job. That’s why dealers have to look at both productivity and efficiency.

This flows into the issue of “proficiency,” which involves hours worked vs. hours available. The equation in this case is flat rate hours produced/actual (clock) hours worked.

The pair said this is the best mea-

sure of a tech’s time and target range should be 100% to 120%.

Brotherton said the bottom line is this:

“There is a cap on how much time is available

without extending hours,” he said.

Goodman and Brotherton both stressed that none of these are hard and fast rules. Dealers have to find the right balance for themselves.

“You’re going to find a difference of opinion, even between Dave and I,” Goodman said. “Dave is more of a fan of efficiency while I’m more of a fan of productivity.”

For Goodman, if a dealer is working in a retail service shop, efficiency is key. But running a BHPH shop means you have to keep techs busy, so productivity is king.

Brotherton said the key to keeping a tech productive – outside of measurement – is communication.

“Does your service manager sit at his desk all day on the phone or is he on the floor like he should be, directing traffic and helping the team?” Brotherton said.

Still, it’s about what works for you, he added.

For dealers whose techs are better at just replacing parts, then that’s your focus because that’s the skill level of your techs.

“It’s always going to boil down to your people,” Goodman said. “Do

you have the right people in place to perform the duties within your dealership that you need to get done?”

Leadership is critical in making this work, he said.

If a service manager is not engaged with what’s happening on the service floor, it’s going to be difficult to have an efficient shop, Goodman said. Separating customer work from reconditioning work is a good best practice, but it doesn’t work for everyone, Brotherton said. Recon shouldn’t start until all parts are ready. Time and money is lost when a car is put on a lift, but all the parts are not ready for the work.

“It is frustrating and time consuming,” Goodman said.

“You have to run your recon department like an assembly line.”

The optimal set-up is multiple lifts with multiple techs.

Brotherton added that for techs doing customer work, it is critical to have people with better diagnostic skills to prevent customer comebacks.

Service businesses also need inventory tracking tools so techs know what comes next.

Last, dealers should post productivity, efficiency and proficiency metrics daily, weekly and monthly for accountability, Goodman said.

BEN GOODMAN

DAVE BROTHERTON

Milestone

ST. CLAIR SHORES, Mich. – Used car dealer Maurice VanCoillie, who had been the oldest known licensed independent dealer in the country, died on July 17.

He was 98.

“Mr. Van,” as he was known to friends and fellow dealers, was a colorful character and one of the most dedicated dealers in the industry.

VanCoillie had received just about every honor and award a car dealer could get. Every year, it seemed, he was honored by the Michigan Independent Automobile Dealers Association.

It was appropriate since VanCoillie was one of the founders of the organization. He also was a tireless supporter of the group, whether lobbying the legislature on behalf of dealers or encouraging people to buy tickets to the annual dinner dance or strong-arming others to buy raffle tickets for the group’s fundraisers.

He served on the board of directors for many years, as well.

In 2016, the MIADA gave VanCoillie the Michigan IADA Dignity

Award. Previously, he had won the state Quality Dealer award and the association’s President’s Award.

In September 2021, the city of St. Clair Shores – where he did business – even named a street after him and dedicated a historic plaque at the site of his dealership.

People in the industry said he will be missed.

“What a special guy,” said Otto Hahne, MIADA president and Na-

tional Quality Dealer winner.

Annette Chapman, MIADA executive director, said VanCoillie loved to buy, sell and talk about cars.

She joked about how proficient he was at selling the MIADA raffle tickets, but that wasn’t what made him special.

“One of the nicest, down to earth, energetic people you will ever meet,” she said.

Former MIADA board member Joe Kuhta visted VanCoillie in hospice before he died.

“A true legend in the industry,” he said.

Chapman and Hahne were at the ceremony when the city named a street after Mr. Van. They joined about 60 people that day who stood in the pouring ran to honor their friend and colleague.

Late last year, VanCoillie was honored yet again. He received an envelope in the mail from the Secretary of State, a special dealer license plate and a congratulatory letter from Douglas E. Trutzl, the manager of the state’s Business License Section.

In 2020, the state issued new permanent plates and Trutzl pulled a special plate out of production to give to VanCoillie, with the special number “000 D 095,” in honor of VanCoillie, who turned 95 that year.

Trutzl praised VanCoillie for his commitment to his community and customers.

He described VanCoillie’s record as “extraordinary,” especially since he received his first dealer license in 1947.

VanCoillie said the letter and recognition gives credibility and honor to the dealer community. He said many dealers do this type of charity but nobody knows about it.

At press time, a public viewing and funeral service were scheduled for VanCoillie on July 24 and 25, respectively.

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

Editorial: Jeffrey Bellant, Managing Editor Ed Fitzgerald, Staff Writer

Advertising: Shannon Colby, Account Manager Tony Moorby Columnist:

Circulation: subs@usedcarnews.com

Production: Tom Savage, Production Manager Cee Lippens, Web Master

Used Car News is published every third week.

Subscribers: We print advertisements as sent to us by auctions and other advertisers. It is not possible to verify the correctness of listed vehicles in auction ads. Most lists are partial and all lists are subject to last minute changes by auto auctions, so before travelling a long distance for a particular auto auction event, contact the auction by telephone for a fax of vehicles in the sale.

Used Car News assumes no guarantees or liabilities concerning the accuracy of any advertisements. All Rights Reserved. Reproduction in any form is prohibited without the written consent of the publisher.

OUR ADVERTISING APPROVAL POLICY

Payments from first time advertisers must accompany the insertion order. Distribution is guaranteed by the USPS. The advertising reservation deadline is 12:00 noon Thursday, 11 days prior to the issue cover date.

Ad materials are due by 5 pm Friday, 10 days prior to issue cover date. For advertising specifications please email colleen@usedcarnews.com.

LEASE-HERE, PAY-HERE

7/31/2023

LHPH Market Offers Tax Advantages, Other Benefits

By Jeffrey Bellant

LAS VEGAS – Mississippi dealer Stan Sumrall and Arkansas dealer Dustin Kerr offered insights into the lease-here, pay-here market during NIADA Accelerate 2023.

The discussion was moderated by Trevor Watson, vice president of business development for LHPH Capital based in San Diego, Calif.

Watson said the session was developed to demystify LHPH as more dealers show interest and ask questions about this emerging market.

Kerr, owner of Car Solutions 4 U in Rogers, Ark., has been in buy-here, payhere (BHPH) since the early 2000s. They got into LHPH about six or seven years ago.

“We have about 700 accounts,” he said.

Sumrall, owner of Nuway Auto and Southeast Autoplex, has been in the car business for about 36 years. He’s been in franchise stores, independent dealerships, transport companies and tire stores. He first got into BHPH years ago but started shifting into LHPH after hearing about the tax advantages.

“We’re just shy of 6,000 contracts on the books between the stores,” Sumrall said.

Watson presented some LHPH benchmarks going back to 2019.

In 2019, the average benchmark LHPH dealer had an ACV of $7,143 and leasing out that car with a gross capitalized cost of $12,058 (sales price plus adds).

“Sounds like a familiar structure,” Watson said.

The down payment was $1,116 in 2019 and the term was 35.1 months.

“When it comes to subprime lending of any sort, the shorter you can keep your term, the more likely that the customer will be successful,” Watson said.

The residual value on that example was $3,130, which left the customer with a payment of $93 per week.

The pandemic started to change those benchmarks, with 2022 creating a huge spike in used car values, Watson said.

In 2022, the average ACV for an LHPH benchmark dealer was $10,153, a $3,000 jump from 2019. It made the gross cap cost $16,050 – a 33% increase from 2019. With a residual value of $4,177, the dealer

The reason is, as the market experiences disruptions, traditional lenders start to bail, as they have started to do recently, he said.

But being able to control your destiny is a big competitive advantage,

states are as high as 9%

In a lease, the customer is only paying the tax as they go, not all up front.

“You are actually able to put customers in a car with less exposure on the street, because of the lesser down payment,” Sumrall said.

He’s watched BHPH dealers leave the market because they can’t afford to put so much money on the street.

Sumrall said the bigger advantage is income tax.

“Income tax is a huge deal when you can accelerate the depreciation on the lease,” Sumrall said. “We went from paying anywhere from $250,000 to $400,000 a year in income tax to zero. Credit rolling forward every single year.

“Now, eventually we’re going to have to pay the piper, so we’ve got to continue to grow the actual business to stay ahead of that curve.”

had to stretch out the deal to 38.3 months, with a payment of $107 per week, Watson said.

It’s a big difference between the LHPH deal and a typical retail installment contract on that same $16,000 car.

“You’re going to have probably a $650 a month payment,” Watson said.

On a BHPH version of this deal, you’d have to stretch out the term to 60 months to get a similar payment.

On a LHPH deal, the huge jump in ACV only affects the customer by an extra $14 per week. That’s a 15 % increase when the car price increases by 33%, Watson said.

Leasing also allows the dealer to adjust the residual to affect the payment.

“There’s a lot of flexibility in the lease structure,” Watson said. Bumping the residual value could lower the payment, for example.

It’s similar to leasing a new car –getting a more expensive car, for a lower payment on a shorter term, Watson said.

One question posed to the panel was whether a leasing program has added resilience to the business.

“The short answer is yes,” Sumrall told the crowd.

Sumrall said, especially with the ability to adjust everything in the contract.

That’s not the case with BHPH.

Sumrall said he’s gone through the bad turns as a franchise dealer and “it’ll take everything you own.”

Now he is able to grow through the downturns as he gets the customers that the traditional lenders have abandoned.

Kerr agreed and explained that it helped especially during the supply shortage coming out of the pandemic.

“One of the things that we couldn’t have predicted is that we’re getting a lot of cars back off-lease that we could not go buy at the auction,” Kerr said.

He added that the leasing program enabled him to stretch his ACV and get the quality of car he needed for the customer.

Kerr said another benefit in Arkansas is that since the consumer in the state is responsible for the sales tax, Kerr includes the sales tax with the lease.

Sumrall said the tax advantages are the biggest bonus in LHPH. For example, if you sell a $10,000 car in Mississippi, with a 5% sales tax, that’s $500 out of pocket and some

Sumrall also explained that if he didn’t have repossessions and leases coming back in, he would not have been able to grow the business during the pandemic.

Sumrall pointed out that his competitors were pulling back from buying anything at that time, while he was buying a “huge amount” of vehicles from the Hertz and Enterprise companies, straight off lease.

“Nobody else was buying,” he said. “We were buying them by the hundreds and just stacking them, getting ready for when they went back to work. We knew we could handle it.”

One attendee asked how dealers treat service in LHPH. Does the customer pay for the repairs or the dealer?

Kerr said he treats it in the same way he did in a BHPH deal.

“If the customer was trying to take care of the car and there was a breakdown they couldn’t afford,” he said, “we would help and try to keep them in the car.”

Sumrall said if it breaks down the customer won’t pay, and he will have to repo it and repair it anyway.

The pair both have annual mileage limits on their cars but admitted there’s no way to control it.

STAN SUMRALL

DUSTIN KERR

20 Groups Boost Profits

By Jeffrey Bellant

LAS VEGAS – The National Independent Automobile Dealers Association made a big pitch for its 20 Groups during its convention here in June.

The 20 Group concept brings together groups of dealers from noncompeting markets to crunch their numbers, share ideas and push each other to success.

Originally started as a concept for franchise dealers, the independents have made it their own with groups that focus on all types of dealer models.

NIADA’s top 20 Group moderators talked about the opportunities available to members. Those included Jeremy Beck, vice president of dealer development, who joined NIADA’s senior 20 Group moderators Bill Elizondo, Ed Curry, Ben Goodman and David Brotherton, who also serves as a consultant.

They are not just general dealer groups, Beck said.

“There are those that specialize in finance groups, service-only groups, lease-here, pay-here groups, buyhere, pay-here groups and retail groups,” Beck said.

Elizondo said dealers can benefit from participation in a 20 Group. One reason is dealers may realize they are not doing as well as they could – once they start comparing their business with a similar noncompeting business.

Looking at a fellow dealer’s operations, from the financial side and/or the operations, can help a dealer find tips to do things better themselves.

“A lot of times, the sharing of knowledge, information and insight between dealers within that group is so powerful,” Elizondo said. “We always get the comments, ‘I wish I had done this 10 or 15 or 20 years ago.’”

Goodman said one area where dealers have blinders on is that as the principal owner: “You don’t really have anyone to hold you accountable when you have a bad idea.”

One of the biggest benefits of the 20 Group process is that you will get “blunt honesty,” Goodman said, something every dealer needs.

Goodman has a group that’s been together 27 years and has met 87 times.

“You’ve got second and third generation in the room with a first generation,” he said. “That environment (allows) for open and honest conversation not only about your (deal-

ership) but other business you have.

“It’s a powerful tool.”

It allows you to share best practices, benefiting from each other with ideas that boost profits.

Brotherton said a typical 20 Group will meet every four months, but with an enormous amount of communication among members between those meetings.

A typical 20 Group will meet for a day and a half, 12 hours of dedicated meeting time, Brotherton said.

There is also a reception time to allow for an information social time.

The meeting is structured around the dealer composite, which is the key tool for 20 Group success.

Brotherton will start his 20 Group meetings with the composite, with four to six hours of time. For example, with a buy-here, pay-here dealer group, they will discuss and compare not just sales and expenses, but also compare and contrast collection performance, charge-off performance, financial ratios that matter to a dealers and their lenders, etc.

“We’re going to hit that stuff pretty hard,” Brotherton said. “That’s our job, to stay on top of your data so we can draw conclusions from the data and present opportunities.”

Groups also do site visits to look at their fellow dealer stores, which often gives ideas and new perspectives to other members, he said.

“By engaging in the 20 Group process, you are exposing yourselves to the best of the best – the highest performing, the most data savvy and the most in-tune dealers you will find in your space,” Brotherton said.

“Ultimately, you’re going to make more money in your business. That’s the reason to be in a 20 Group and that’s what you should expect from your experience.”

Curry, who moderates retail groups, pointed out one way dealers have profited from a 20 Group membership.

He had a group that had long-term members, very successful. But they generally, as a group, did a poor job on F&I products (finance and insurance).

So, during the year, Curry kept hammering the issue, pushing dealers to improve.

“That particular group went from $1,080 per retail sale (in F&I) to $1,860,” Curry said.

After he did the math, he calculated that over the months of improvement the gross profit from that change has been in the millions of dollars, Curry said.

ADESA Boston

August 4, 18

508-626-7000

ADESA Charlotte

August 10, 24

704-587-7653

ADESA Chicago

August 18

847-551-2151

ADESA Cincinnati/Dayton

August 22

937-746-4000

ADESA Golden Gate

August 22

209-839-8000

ADESA Indianapolis

August 8, 22

317-838-8000

ADESA Kansas City

August 8, 22

816-525-1100

ADESA Lexington

August 3, 31

859-263-5163

ADESA New Jersey

August 10, 24

908-725-2200

ADESA Salt Lake

August 15

801-322-1234

ADESA Tulsa

August 11

918-437-9044

ADESA Washington DC

August 16

703-996-1100

Columbus Fair AA

August 2, 23, 30

614-497-2000

Manheim Atlanta

August 9, 10, 16, 24

404-762-9211

Manheim Dallas

August 2, 15, 16, 30

877-860-1651

Manheim Denver

August 16

800-822-1177

Manheim Detroit

August 10, 24

734-654-7100

Manheim Fredericksburg

August 3, 17, 31

540-368-3400

Manheim Milwaukee

August 2, 16, 30

262-835-4436

Manheim Minneapolis

August 9

763-425-7653

Manheim Nashville

August 1, 29, 30

615-773-3800

Manheim Nevada

August 25

702-730-1400

Manheim New Jersey

August 2, 16, 30

609-298-3400

Manheim New Orleans

August 2, 16, 30

985-643- 2061

Manheim Orlando

August 1, 8, 15, 22, 29

800-822-2886

Manheim Palm Beach

August 2, 3, 30, 31

561-790-1200

Manheim Pennsylvania

August 4, 10, 11, 18, 24, 25

800-822-2886

Manheim Phoenix

August 3, 17, 31

623-907-7000

Manheim Pittsburgh

August 16 724-452-5555

Manheim Riverside

August 1, 3, 15, 17, 29, 31

951-689-6000

Manheim Seattle

August 23

206-762-1600

Manheim Southern California

August 10, 24

909-822-2261

Manheim Tampa

August 10, 24

800-622-7292

Manheim Texas Hobby

August 10, 24

713-649-8233

Southern AA

August 16

860-292-7500

Manheim Atlanta

August 9

404-762-9211

Manheim Dallas

August 15

877-860651

Manheim Milwaukee

August 16

262-835-4436

Manheim Nashville

August 30

615-773-3800

Manheim Nevada

August 25

702-730-1400

Manheim New Jersey

August 16

609-298-3400

Manheim Orlando

August 15

800-822-2886

Manheim Palm Beach

August 2, 30

561-790-1200

Manheim Pennsylvania

August 10, 24

800-822-2886

Manheim Riverside

August 3, 17, 31

951-689-6000

Manheim Seattle

August 23

206-762-1600

Manheim Pittsburgh

ADESA Boston

August 4

508-626-7000

ADESA Charlotte

August 24

704-587-7653

ADESA Salt Lake

August 15

801-322-1234

Columbus Fair AA

August 23

614-497-2000

Manheim Dallas

August 2, 30

877-860-1651

Manheim Denver

August 16

800-822-1177

Manheim Fredericksburg

August 17

540-368-3400

Manheim New Jersey

August 2, 30

609-298-3400

Manheim Orlando

August 8

800-337-8491

Manheim Pennsylvania

August 11, 25

800-833-2886

August 16

724-452-5555

Manheim Seattle

August 23

206-762-1600

Manheim Southern California

August 10, 24

909-822-2261

Southern AA

August 16

860-292-7500

Manheim Atlanta

August 9

404-762-9211

Manheim Dallas

August 15

877-860-1651

Manheim Milwaukee

August 16

262-835-4436

Manheim Nashville

August 30

615-773-3800

Manheim Palm Beach

August 2, 30

561-790-1200

Manheim Pennsylvania August 10, 24

800-833-2886

Manheim Riverside

August 3, 17, 31

951-689-6000

Manheim Seattle

August 23

206-762-1600

Manheim Atlanta

August 16

404-762-9211

* The tradename Jaguar Financial Group and the Jaguar logo are owned by Jaguar Land Rover North America, LLC (JLR) or its affiliates and are licensed to JPMorgan Chase Bank, N.A. (Chase). Auto finance accounts are owned by Chase.

* The tradename Land Rover Financial Group and the Land Rover logo are owned by Jaguar Land Rover North America, LLC (JLR) or its affiliates and are licensed to JPMorgan Chase Bank, N.A. (Chase). Auto finance accounts are owned by Chase.

* The tradename Subaru Motors Finance (SMF) and the Subaru logo are owned by Subaru of America, Inc. (Subaru) or its affiliates and are licensed to JPMorgan Chase Bank, N.A. (Chase).Auto finance accounts are owned by Chase.

* The tradename Maserati Capital USA and the Maserati logo are owned by Maserati North America, Inc. (Maserati) or its affiliates and are licensed to JPMorgan Chase Bank, N.A. (Chase). Auto finance accounts are owned by Chase.

* The tradename Aston Martin Financial Services and the Aston Martin logo are owned by Aston Martin Lagonda of North America Inc. (Aston Martin) or its affiliates and are licensed to JPMorgan Chase Bank, N.A. (Chase). Auto finance accounts are owned by Chase.

Neither JPMorgan Chase Bank, N.A. nor any of its affiliates are affiliated with ADESA, Inc. or Manheim, Inc. Each auction is solely responsible for their website content, sales events, promotions, fulfillment and operation of the auction.

©2023 JPMorgan Chase Bank, N.A. Member FDIC 8/23

Used Car News

Former Addict Leaves Prison, Finds Success as Car Dealer

By Jeffrey Bellant

LAS VEGAS – Luke Lunkenheimer seems like a guy with an interesting story. He’s burly – like a bouncer at a high-end nightclub – and he sounds like he could be Vin Diesel’s brother.

The founder and owner of CNY Drives Inc., a dealership group in Syracuse, N.Y., has had a rollercoaster life that’s ripe for a Hollywood film.

But last month, he was just a car dealer standing in front of his peers at NIADA Accelerate, a dealer convention at the Wynn Las Vegas.

“I like to tell stories,” Lunkenheimer said. Not surprisingly, the first story he told took place inside a gym. The story involved a cocky guy he butted heads with and how it reminded him that “malfunctions of character” can get you in trouble. He used that run-in as inspiration.

“The cornerstone of any self-improvement is identifying there’s a problem in the first place,” he said.

Before his problems began, he was a high school football player in a graduating class of 82 in the small town of Cato, N.Y.

Lunkenheimer played for the Cato-Meridian Blue Devils as an “iron man” – both sides of the ball – quarterback on offense and free safety on defense.

He was sitting on a scholarship but things started to go south after he tore up his throwing shoulder in a game.

The injury cost him what was supposed to be an academic scholarship.

His whole life was football, but that one moment put his dream on hold. Initially, he took a year off after school and got into the car business, a business his grandfather and father had been part of.

Lunkenheimer’s plan was to earn some money to pay for shoulder surgery, bank some money for college and play football again.

Within three months, he was a top salesman. He got good insurance and eventually had his surgery. Despite big promises, the surgery failed to restore his shoulder.

“It was devastating,” he said. “I went to some very dark places.”

They couldn’t fix the shoulder, but they did provide him with narcotics for the pain -- hydrocodone.

“It is euphoric,” Lunkenheimer said. “I would leave people I love to find a place to get high.”

His addiction led to buying the

drugs off the street and that led to buying other drugs.

“I did whatever I could to stay high,” Lunkenheimer said.

This went on for 10 years, with multiple stints in jail for everything from petty larceny to driving while intoxicated.

“I was a salesman making $100,000+ a year, and by Wednesday I was asking my friends if I could borrow some money,” Lunkenheimer said.

After a decade of “lying, cheating, stealing, burning bridges, hurting family and friends” Lunkenheimer decided to rob a bank.

His hope was to use the money to go to an exclusive rehab facility in Malibu and come back a new man.

He threw on a hoodie, sunglasses and bandanna – and robbed a bank.

“The amount of anticipation that builds before you knock over a bank is really quite incredible,” Lunkenheimer said. “It was one of the first times I understood natural high.”

Yelling at the tellers, he collected the money and headed for the door.

“I turned around and tripped over the red velvet rope at the door,” he said.

Eventually, he was caught, arrested and sentenced to two years in prison. Lunkenheimer said the judge showed mercy on him because of his drug addiction.

Eventually, Lunkenheimer received his N.Y. State Corrections DIN number: 14B1959

“That’s what you become, a number,” he said. “That’s it. That is all. You are nothing more.”

He ended up in the Lakeview Shock Incarceration Correctional Facility, which is a place for men who are mostly drug and alcohol offenders who express a desire to reintegrate into society.

Lunkenheimer described it as a “paramilitary boot camp” with a drill sergeant “screaming at you, spitting on you, kicking your bed at two in the morning,” and “telling you you’re a maggot.”

But he was grateful that he went through it, even if it included horrific withdrawal.

Lunkenheimer eventually went back into the car business and within seven years, he has achieved success again.

The key is passion for what you do, he said, pointing to Michael Jordan, Warren Buffet, Elon Musk and Oprah Winfrey, who all extolled “passion” as a key to their success.

“It becomes easy when your job is

not a job anymore,” he said. Finding a job that brings you passion is critical to meet your potential.

Lunkenheimer said when he started to treat people the right way and do the right things, doors started to open.

“A slight change in behavior can move the needle in a significant way in your life,” he said.

People who may be going through a personal struggle – whether physical, personal or relational – can see real change.

He said, “just treat people right and move throughout your day trying to be kind.”

He appreciates the little things now.

“Waking up in the morning to a sunrise, it’s very valuable,” Lunkenheimer said.

During his time in prison, he talked to a priest who urged him to

make three good decisions, but he didn’t mean a list of rules.

The priest told him that when he has to make a decision, he should choose the hard one. The hard one will be uncomfortable, and maybe cost more in time and money.

“He said to me, ‘You do those good decisions, I promise you by the third one, you’re going to be blessed,’” Lunkenheimer said.

Doing things the right way and the hard way brought good things back to him. After following the priest’s advice, a few days after the third decision, he got an offer of investment in his car dealership. Lunkenheimer said he wants to show people they can change. It takes courage to change and there is no barrier to entry. It worked for Lunkenheimer.

“I’m at peace with myself, because I’ve been to hell and I’ve come back from it,” he said.

Photo by Jeffrey Bellant COMEBACK: Luke Lunkenheimer, a former drug addict and failed bank robber, tells dealers at NIADA Accelerate 2023 in Las Vegas about how he turned his life around to become a multi-store dealer.

Retail Markets

IOWA

Darren Farmer, owner, David A. Farmer Inc., Center Point, Iowa

“We’ve been in business here for 38 years.

“We were doing a lot online before COVID hit. We were one of the first usedcar dealers in Iowa to put our cars on Autotrader. We’ve been on there for 25plus years.

“We normally carry about 25 cars and we sell 20-25 a month. We do 100 percent turnaround every 30 days, though some cars take longer than others.

“We sell 80 percent cars and SUVs. Trucks are really hard to come by.

“We don’t do any buy-here, pay-here.

“We spend an average of $650 reconditioning per car. We send out the detail work, but we do most of the mechanical stuff in our shop.

“I haven’t been to a car auction physically in seven years. I buy a lot from BackLot cars. I’ve had good luck with them on arbitration.

“Anything under $10,000 works well for us. I try to keep it around 100,000 miles, give or take a little bit. I don’t do good with highmile stuff at all.

“We have three or four credit unions we work with, all of them for at least 20 years. Sometimes these credit unions don’t want to work with the small guys.

Ten years ago, we had 15 credit unions we worked with. And they’d drop us for not doing enough volume for them.

“Here’s a story: there was a used car dealership that opened here in Center Point.

Three guys went into a partnership to buy this building to do a dealership and repair shop. They lasted six

months. Obviously, I bought my dad out when he retired, so it’s considerably cheaper starting that way. Start out small. That’s what my dad did. He always said: stay as small as you can, as long as you can. I’ve adhered to that, it’s just me, my wife, and a part-time mechanic. I don’t have a car on my lot that I didn’t personally drive myself.

“Someone just drove five and a half hours from Nebraska to buy a 2010 Nissan Altima. It had 100,000 miles and we sold it for $7,500.”

NEW YORK

Rick and Dana Bress, owners, Galaxy Auto Place, West Seneca, N.Y.

“We started the business in 1996, 27 years ago.

“We keep an average of 120 cars, trucks and SUVs. We currently average between 60-80 sales a month. We sell

10% trucks, 40% cars, 50% SUVs.

“While we have seen a decrease in overall inventory after COVID, our gross profit per unit has increased. We are currently selling more products with the sale of each vehicle to maximize the profitability of each unit. We have always had a significant online presence and that was very helpful during the peak of COVID. Our customers appreciate the ability to build their deal on our website along with the stability of having a brick-andmortar store that they can rely on for all of their sales and maintenance needs.

“All reconditioning is done in-house and supervised by our operations manager. All details are done in-house, but we do outsource our collision work.

“Most of our vehicles are purchased at auctions, gen-

erally online. This has been a major change for us post COVID. Previously most of our inventory was acquired by attending several auctions in person each week, as well as utilizing online auction platforms. Now we almost exclusively buy through online auctions.

“Our average model year is 3-5 years old with an average of 50,000 miles.

“Our average down payment is 10% and our average term is 66 months.

“We strongly recommend new dealers getting involved with your state association. On the sales and buying side it’s so important to know your market, be an expert and focus on the vehicles that will work within your market.

“The last car we sold was a 2018 Jeep Wrangler Unlimited Sahara with 55,000 miles. We sold it for $35,995.”

Compiled by Ed Fitzgerald

Wholesale Markets

CALIFORNIA

David Aahl, vice president, North Bay Auto Auction, Fairfield, Calif.

“We’re going to have an anniversary sale Aug. 24. It will be our 29th.

“We’ve seen the volumes creeping up. They’ve been going up about 5% a month. With the fleet/lease that we’re carrying, we expect to have some big months coming. It seems like volumes are coming back.

“On July 21, our regular Thursday sale, we ran 450 cars and that was coming off a five-Thursday month in June.

“Our volumes are probably 50/50 (dealer vehicles and fleet/lease).

“We’ve been averaging in the high 70s, even low 80s for sales percentages. I think a lot of it, we have smaller sales with more thoughtful consignors. The people that

sell cars for us are typically good sellers who sell at the top of the market. Bidders see the action in the lanes.

“Retail has been good and solid here. Dealers seem optimistic about what’s coming. But guys are carrying some large inventories right now. They are worried about values dropping. That’s the No. 1 elephant in the room.

“We’re getting a couple of hundred bidders in the lanes, close to what we had pre-COVID. But we’re also seeing the same number online, which was not normal pre-COVID. We use Auction Edge.

“Our average price – the last time I looked – was around $9,400. We have nicer cars in the lanes now.

“We should have pretty good volumes in the lanes for at least the next three months. We’re also starting a new lane, an ‘X’ lane, as a

credit-union-only lane.

“We have a GSA sale. It’s usually about twice a month. Our average sale is probably 150 cars and we’ll do at least one, or possible two a month. There’s a lot of government cars out there.”

MISSOURI

Justin Brown, general manager, Missouri Auto Auction, Columbia, Mo.

“We’re rounding out our 23rd year in business. We have five lanes and we’re running four.

“(Our volumes) are in the 400 to 450 range. I will say, those numbers – for us at this time of the year – are getting pretty close to normal. But we’re pretty heavy in dealer consignment, so we’re not dependent on manufacturer or lease volume.

“Our conversion rate is running at about 65%. That’s actually close to normal,

what we were before COVID. During COVID, we jumped to 85%, which is not normal.

“Out average price in the lanes is about $10,000. Last year it was about $11,500, so pretty close to that. PreCOVID it might have been $8,000.

“We’re getting about 300 to 350 bidders in lane and online. It’s about a 50/50 split.

“Dealers in the lanes –across the board – are saying that retail is holding pretty solid. I think they expected that it would have dropped off. They’re getting more new vehicles in, though I don’t think they’re necessarily the exact ones they need. At a point, I think anything is better than nothing.

“Edge Pipeline is what we use for online sales.

“We have a scratch and dent sale, sort of inoperable,

whatever you want to call it, on Friday morning before our main sale. We’ll get 30 to 50 (units).

“We also have a pretty strong equipment sale that we do quarterly. Our next equipment sale is Aug. 25, the last Friday in August. We’ll run utility-type of equipment. Utility trucks, backhoes and bucket truck, that type of equipment.

“We usually run about 100. We have a contract with Ameren Missouri, an electric utility. It’s an absolute sale. It’s a big draw.

“Heading into the fall, I don’t anticipate a major market shift. I think we’re still in a basic supply-anddemand model. It’s going to take a lot of inventory to change a lot of these things. I think it stays pretty stable through the rest of the year and for a while. I think it will be pretty stable.”

7/31/2023

Compiled by Jeffrey Bellant

Tony Moorby Disconnected Jottings From

I’m back on the Eastern Shore of Maryland and Delaware for a summer break, relaxing, fishing with my eldest grandson and going to the beach.

A favorite pastime for Terry and me, along with her sisters’ families who live nearby, is picking freshsteamed crabs. Maryland Blue Crabs, doused in seasoning such as Old Bay or a local version are delicious beyond description.

Learning to ‘pick’ or dismember them and choose the edible nuggets within, is a rite of passage if you live anywhere near the Eastern Shore. A daunting task at the outset, but once a pattern is established it’s easier than you think. We can demolish ‘two dozen large’ in short order, leaving the detritus and tools strewn around the brown paper table cover with paper sacks

full of the now discarded bodies and empty appendages. Lips buzz to the savory spices in the seasoning. No self-respecting home kitchen around here is without a set of wooden hammers called knockers and old knives to help crack the pincers and knuckles. The major prize is the backfin meat, white as the driven snow and sweeter than a mother’s heart.

Terry is an expert at making Maryland crab cakes using only the jumbo lump backfin meat. The lump meat is in large sections because it comes from the muscle that drives the back fins, which work the hardest. It’s highly sought after and therefore quite expensive. The cost is forgotten during the rapture of polishing off this gift from the sea!

Of course all the other

seafood on offer is as fresh as a daisy and being a seafood lover, I’m thoroughly spoiled. Oysters, clams of all kinds and mussels are local and lovely.

It’s early in the season and Aiden hasn’t furnished anything to qualify as a keeper for the dinner table – it’s been catch and release so far. Time may bring its own reward. Actually the real reward is just being out there with him, his mastery of the angling arts has improved enormously since last year. He’s fished at home throughout the winter so his techniques are as varied as the places he fishes from; docks, piers, inlet rocks or the beach. He’s a joy to watch.

One of my daughters arrived with her three kids –all under five and between the beach and the community pool they’re already as

brown as berries.

Just for a change, the other morning we took them to a peach and blueberry ‘pickyour-own’ farm. They were fascinated to see where the real things come from. I know they learn in school that fruit grows on trees and bushes but seeing, touching and picking the stuff is very affirming.

Not surprisingly, we came home with far too much and now the challenge of making the most of this abundance sits obviously in the kitchen and dining room. I’ve already made a monster batch of blueberry jam so jars have replaced bowls of the stuff. As soon as I finish writing this article it’s on to make the most of the peaches. Jam, pies, cobblers for breakfast, lunch and dinner. The Georgia crop wasn’t so good this year due to hard frosts and freezes so we’ve

made up for it in this fruitful part of the world.

If we don’t pick things ourselves, the roadside fruit stands are cornucopias and look like Charles Wysocki jigsaw puzzles.

I can truly say I’m indulging in farm-to-table cooking and enjoying life at the beach.

Myles Mellor

Tony Moorby