Used Car News 10/20/14

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October 20, 2014

ON THE WEB: Fitch Reports Growth in Captive Auto Finance

Fitch Ratings reports ending growth in captives’ portfolios continued in 2014 driven by increased demand from a gradually improving global economy, improved supply of liquidity in funding markets, and slight loosening in lending standards. Fitch expects the captive landscape to get more competitive as banks increase their focus in growth areas such as auto finance, which will likely put pressure on pricing/margins and may lead to further loosening of lending standards.

Firm Buys Cars.com

Gannett Co. Inc. completed its previously announced acquisition of the remaining 73 percent interest in Classified Ventures LLC, which owns Cars.com, for $1.8 billion on Oct. 1.

Car Transporters Form Strategic Partnership

MetroGistics LLC announced strategic partnerships with Precision Motor Transport Group LLC and McNutt Automotive Logistics LLC.

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NADA Chairman Defends Business Model By Ted Craig

DETROIT – Franchise dealers seem attacked on numerous fronts these days. Tesla threatens their legal protections while the Consumer Financial Protection Bureau wants to change their relationship with finance sources. And then there’s the matter of how to handle all the recalls issued by manufacturers this year. Forrest McConnell, chairman of the National Automobile Dealers Associations, spoke about these issues at a recent Automotive Press Association event. McConell said many recent stories about franchise dealers use terms like “monopolistic,” “middle man” and “protectionist.” Nothing could be farther from the truth, he said. “Dealers are so busy competing with each other that it leaves no room for complacency,” McConnell said. Manufacturers constantly measure customer satisfaction today and this drives that competition. A main way dealers compete with each other, McConnell said, is through financing. Now, the CFPB

COMPETITOR: Forrest McConnell, chairman of the National Automobile Dealers Association, explains the benefits of the franchise system to consumers during a recent speech at the Automotive Press Association in Detroit.

wants to change that by having finance companies switch to a flat fee for reimbursement rather than dealer participation. “The government is trying to take away a customer’s right to get a discount,” Mc-

Connell said. Dealers will choose the finance sources that pay the highest flat fee, he said, and those finance sources will pay for those fees with higher rates for the consumers. Another way to eliminate

competition, McConnell said, is through direct sales from the manufacturers. This is the model Tesla Motors Inc. is pushing in several states. Continued on page 3

Wholesale Prices Moderate; Truck Prices Remain Strong The long predicted moderation in used-car prices is finally happening. The average price of a used vehicle for model years 200913 saw the largest monthly depreciation of the year so far at 1.7 percent during September, according to Black Book. Domestic cars declined the most, falling by 3.4 percent. Import cars fell by 1.8 percent. Domestic trucks fell by 1.2 percent, and import trucks fell by 1.5 percent. Average prerecession depreciation is historically between 1 percent and 2 percent monthly. Black Book expects overall 2014 depreciation of 13.5 percent. After seeing lower-than-normal depreciation of 1.3 per-

cent in August, overall depreciation realized its typical seasonal fall pattern of accelerated value decreases. The average segment price at the end of September was $11,601, a 13.7 percent change from year-ago levels ($13,438). A continuing trend over the last several months, trucks represented the vast majority of segments with the strongest performing monthly retention. Eight of the top nine segments were trucks. In another sign of a weaker market, the Manheim Used Vehicle Value Index declined to 121.4 in September, down 1.1 percent from a year ago. This was the fifth consecutive monthly decline.

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