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11/10/09

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November 16, 2009

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HUSTLE AND FLOW

Dealers Turn to Payment Streaming As Funding Options Shrink

By David Piestrzynski

Lines of credit remain difficult to find for in-house finance dealers.

According to Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers, many banks and other lenders remain hesitant about lending capital.

“There’s no question about it, many dealers in this industry are hungry for capital,” he said.

Don Fincher, owner of Fincher Motors in Houston, said the banks in his area remain hesitant.

“You walk into a bank, and it’s as if you’re in the Mafia,” he said. “It’s tough for all dealers.

Especially guys just getting into the business.”

Fincher was told by one bank manager that dealers were still considered a high risk, and that he was unable to approve a line of credit.

Dealers need alternatives to raise capital.

Some lenders are seeing an increased demand for payment streaming.

“As lines of credit tighten, we’re seeing a larger cry for (payment streaming),” said Gary

Rush - Dated Material

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Shannon, vice president of sales and marketing for Western Funding Inc., a Nevada-based lender .

Shannon said his company is purchasing 6-12 month streams of payments from contracts chosen by the dealer.

“...many dealers in this industry are hungry for capital.”

— Ken Shilson

Western Funding is also offering an upfront advance to help dealers pay flooring costs or replace inventory. Shannon said dealers can stream first-time buyers, as long as the deal meets the company’s credit criteria.

Gary Page, president of Small Dealers Assistance, an Atlantabased lender, said he’s also had an increase in demand for his company’s payment streaming program.

He said many of his dealerclients who did half their sales through in-house financing are doing as many as 90 percent because of the lack of traditional financing.

But Page said his company has not wavered on its basic criteria despite the increased demand.

“We still like to see dealers who have been in business for at least a year and have good collectors,” he said.

Page and Shannon both said their companies have also remained constant in their underwriting criteria for dealers.

“We’ve tightened up on our due diligence,” Page said. “We’re

pickier, but we can afford to be a little pickier with the demand out there.”

He still requires underwriting that includes a bank statement, credit check and solid references among other criteria.

Western Funding’s criteria includes time at residence, monthly income, employment history and references.

There are a few potential drawbacks for payment streaming.

Shilson said streaming can hurt a dealer’s cash flow, especially if the streams come from his best contracts.

Fincher said it can seem like having a partner when you have streams of payments taken out of contracts.

“When you’re an independent, you probably don’t want someone telling you how to do things,” he said. “That goes against the grain.”

But Fincher said payment streaming may be a solid option for some dealers.

“We have to get creative because the banks just aren’t lending,” Fincher said.

Photo by Francisco Hernandez ROLLING ALONG: Houston dealer Don Fincher uses payment streaming to fund his buy-here, pay-here operation.

Cash for Clunkers Cost $24,000 per sale

The final results are in and Edmunds.com claims the so-called Cash for Clunkers program cost taxpayers $24,000 per vehicle sold.

Edmunds.com puts the number of incremental sales at 125,000 of the nearly 690,000 vehicles sold through the program.

The White House disputes that number, saying the economic benefit went beyond just the vehicles sold directly through Cash for Clunkers.

Cars traded in through the program were supposed to be scrapped. But there are reports of a number of these vehicles turning up for sale. Both AutoCheck and Carfax, the leading vehicle history providers, set up programs to flag these vehicles.

“Whenever there is the chance that the used car one hopes to buy isn’t reliable or safe, all trust in the sale is lost,” said Scott Waldron, president of Experian Automotive, AutoCheck’s parent company.

For more on Cash for Clunkers, turn to page 12

IN THIS ISSUE • Economic outlook improves despite high unemployment. – Page 3

• A consulting group helps the auctions develop new standards. – Page 7

• Lease-here, pay-here offers alternative for some dealers. – Page 5

• Online retailing continues growing in importance. – Page 8

Q:

HOW DO YOU SELL HARDER

WITHOUT HARD SELLING?

Find the answer on the back cover.

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USED CAR NEWS

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IMPROVING ECONOMY

Wholesale Prices Moderate as General Economy Shows Strength The outlook appears improved for car dealers as wholesale prices show some signs of letting up and the economy seems to be on more sure footing.

After nine consecutive monthly increases, the Manheim Used Vehicle Value Index moved down 0.9 percent.

The index adjusts prices at auction for mix, mileage and seasonality. Without the adjustment, prices were off 4.4 percent. The index remains up on a year-over-year basis.

“Given that wholesale prices had reached record levels, October’s pullback was neither unexpected nor alarming,” said Manheim chief economist Tom Webb. “In fact, if there is no freefall in values or a plunge in conversion rates, the moderation in pricing should be welcomed.”

Tom Kontos, ADESA’s executive vice president of industry analysis, said the price decline was more than the usual seasonal adjustment.

Kontos expects the short supply to keep prices from falling much farther.

“These supply-demand conditions will support used vehicle prices as we enter this year’s Thanksgiving-Christmas holiday and next year’s tax seasons, creating a more favorable environment for consignors who need to sell vehicles before yearend,” he said.

Retail Sales

Used retail sales in October were down at a double-digit pace from even last year’s low level, according to CNW Market-

ing Research. At the same time, higher new-car sales meant more trade-ins were coming into the market. Certified sales were off by almost 5,000 units in October, even with an extra sales day, according to AutoData Corp.

Sonic Automotive Inc. reported overall used vehicle unit volume was up 25 percent and total used vehicle revenue was up over 18 percent for the third quarter of 2009 compared to the third quarter of 2008. The company’s used-to-new ratio was at 80 percent for the third quarter.

“Our used vehicle volume continued to grow throughout the quarter despite the heavy emphasis on new vehicle sales stemming from the (Cash for Clunkers) program,” said Jeff Dyke, Sonic’s executive vice president of operations.

“We are growing our used-vehicle business by continuing to expand our presence across the entire spectrum of the used vehicle market.”

Higher wholesale prices proved a mixed blessing for the groups. Group One Automotive reported that same-store used vehicle gross profit improved $228 per wholesale unit from the prior-year quarter, as limited supply increased valuations, while retail gross margins fell 30 basis points, to 10.3 percent, as more vehicles were sourced at auction.

Higher prices, a lack of supply and store consolidation affected inventory strategies for the groups.

Lithia improved samestore used vehicle retail

sales 3.9 percent while maintaining used vehicle inventory of $67 million, a 15 percent reduction from Sept. 30, 2008.

“We continue to produce solid gross margins and strong used vehicle retail sales,” said Lithia CEO Sid DeBoer.

October 2008 – October 2009

119 117 115 113 111 109 107 105 103 101 99 Oct 08

Nov 08

Dec 08

Jan 09

Feb 09

Mar 09

Apr 09

May 09

Jun 09

Jul 09

Aug 09

Manheim Used Vehicle Value Index categories based on 2001 J.D. Power and Associates Vehicle Segmentation

WWW.USEDCARNEWS.COM

Employment

unemployed persons increased by 558,000 to 15.7 million, according to the Bureau of Labor Statistics.

Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points.

The largest job losses over the month were in con-

struction, manufacturing and retail trade. Among the major worker groups, the unemployment rates for adult men (10.7 percent) and whites (9.5 percent) rose in October. The jobless rates for adult women (8.1 percent), teenagers (27.6 percent), blacks (15.7 percent), and Hispanics (13.1 percent) were little changed over the month.

The biggest drag on the economy remains unemployment, which topped 10 percent for the first time Recovery since June 1983.

The economy overall In October, the number of improved in the third quarter. % Change Used Units Retailed – Same Store Basis “In a clear sign of eco(Publicly-traded Dealership Groups) nomic recovery, third quarter real gross domesWeighted average for KMX *, AN, PAG, SAH, GPI, ABG, and LAD tic product increased at an 10% annual rate of 3.5 percent,” 5% said NAAA economist Ira Silver.

0% Silver said he considers the recession over. He -5% cites the Institute for Supply Management’s pur-10% chasing manager’s index as evidence.

-15% The index rose to 55.7 in October from 52.6 in Sep-20% tember. The ISM production index rose to 63.3 3Q 2004 3Q 2005 3Q 2006 3Q 2007 3Q 2008 3Q 2009 from 55.7 and the employment index rose to 53.1 Source: Manheim Consulting based on company SEC filings *KMX shifted forward one month to correspond with calendar quarter from 46.2.

“Production appears to be benefiting from the continuing strength in Autodata Corporation new orders, while the imOctober 2009 Certified Pre-Owned Retail Sales provement in employment is due to some call2009 2008 backs and opportunities Oct '09 Share Oct '08 Share for temporary workers,” Ford/Lincoln/Mercury 9,369 8.1% 10,871 9.1% said Norbert J. Ore, chairFord 8,003 6.9% 9,273 7.7% Lincoln/Mercury 1,366 1.2% 1,598 1.3% man of the Institute for 19,784 17.2% 29,167 24.3% GM Supply Management’s 1,461 1.3% 2,102 1.8% Buick manufacturing business Chevrolet 13,096 11.4% 19,277 16.1% survey committee.

GMC 2,565 2.2% 3,785 3.2% “Overall, it appears that 0.0% Oldsmobile 3 0.0% 11 3.3% Pontiac 2,659 2.3% 3,992 inventories are balanced Hummer 176 0.2% 228 0.2% and that manufacturing is 2.5% 2,022 1.8% 3,051 Cadillac in a sustainable recovery Saturn 324 0.3% 783 0.7% mode.”

GM Total 22,306 19.4% 33,229 27.7% 7.1% Chrysler/Dodge/Jeep 6,884 6.0% 8,528 This is the third consec2.0% Chrysler 1,828 1.6% 2,419 utive month of growth for 2.9% Dodge 2.4% 3,448 2,818 the manufacturing sector.

2.2% Jeep 1.9% 2,661 2,238 It’s the highest rate of Total Domestics 43.9% 33.5% 52,628 38,559

Manheim Used Vehicle Value Index

97

growth since April 2006.

In October, 13 of the 18 manufacturing industries reported growth, the ISM study found.

Sep 09

Oct 09

Honda Acura Nissan Infiniti Toyota Lexus Hyundai Kia Mazda Mitsubishi - EST Suzuki Subaru Total Asian Audi Bentley - EST. BMW Jaguar - EST Land Rover - EST Mercedes-Benz MINI Porsche Saab Volkswagen Maserati Volvo Car Total European Total

12,633 2,862 5,699 939 20,845 5,640 1,383 376 367 40 1,500 52,284 1,848 30 10,467 375 350 5,433 139 548 362 3,023 15 1,745 24,335

11.0% 2.5% 4.9% 0.8% 18.1% 4.9% 1.2% 0.3% 0.3% 0.0% 0.0% 1.3% 45.4% 1.6% 0.0% 9.1% 0.3% 0.3% 4.7% 0.1% 0.5% 0.3% 2.6% 0.0% 1.5% 21.1%

11,326 2,598 4,931 893 19,738 4,289 707 281 404 93 850 46,110 2,016 60 7,937 597 677 4,807 151 390 506 2,458 1,669 21,268

9.4% 2.2% 4.1% 0.7% 16.4% 3.6% 0.6% 0.2% 0.3% 0.1% 0.0% 0.7% 38.4% 1.7% 0.0% 6.6% 0.5% 0.6% 4.0% 0.1% 0.3% 0.4% 2.0% 0.0% 1.4% 17.7%

115,178

100.0%

120,006

100.0%

November 16, 2009

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USED CAR NEWS

M I L E STO N E S

Finance Solution Adds GPS

Thomas Spartan Bruce, 92, of Greenville, S.C., died on Nov. 6 at his home. Bruce was a founding member of the National Auto Auction Association, recipient of the 2004 Pioneer Award and was inducted into the Hall of Fame in 1985.

Bruce was a past president and director of Southern Auto Auction Association.

Bruce attended Furman University and, with his father, owned P. L. Bruce Livestock Company and founded Bruce Automobile Auction in 1938. In later years, he partnered with his son, Tom, in Bruce Implement Company, Bruce Construction Machinery Company and Auction Recon Center Inc. He also partnered with his son, Gary, in

Advanced Business Computers of America, Inc. announced an enhancement to their DMS software, Deal Pack. Deal Pack now offers a fully integrated GPS solution through Ituran.

By partnering with Ituran, Deal Pack now provides all of the necessary tools to properly handle asset-tracking processes, while upholding its trademark user-friendly design and customer support.

Advanced Business Computers of America, Inc. has provided software solutions for the Manheim announced the crebuy-here, pay-here and finance ation of a new Operational Exindustries since 1983. cellence group.

The organization will be led Finance Company Issues

by David Young, group vice Subprime Securitization AmeriCredit Corp. announced president. Young will report to the pricing of a $227 million of- Jim McKnight, Manheim’s fering of automobile receiv- strategic execution officer.

Young will lead a team ables-backed securities under charged with the AmeriCredit Prime Autocontinuing to mobile Receivables Trust enhance (APART) platform, which repM a n h e i m ’s resents loans originated operating through distribution channels processes. the company has suspended.

Based on inThe lead managers are J.P. Morput from cusgan, RBS and Wells Fargo Secutomers and rities. the growth of David AmeriCredit will use the net M a n h e i m ’s Young proceeds from this securitizaonline sales, tion transaction to pay off debt the group will outstanding on the company's further refine some in-lane and prime/near-prime warehouse online vehicle processes.

These facility. The securities will be issued via an owner trust, processes include inbound AmeriCredit Prime Automobile transportation, check-in, colReceivables Trust 2009-1, in six lecting vehicle condition inforclasses of notes. The weighted mation, lot logistics, customer average coupon on the notes to check-out and vehicle pick-up.

“The goal for our team is to be paid by AmeriCredit is 2.7 ensure that processes at every percent. location work seamlessly and The APART 2009-1 transaction will have initial credit en- efficiently for our customers hancement of 23.75 percent, consisting of a 1 percent cash deposit and 22.75 percent overMore small-business employcollateralization. Total required enhancement level will build to ees can expect no end-of-year 31.25 percent of the then-out- bonuses or gifts for 2009.

A recent survey of small busistanding receivable pool balance, which includes the initial ness owners or managers showed fewer of them planning 1 percent cash deposit. gifts or cash for their workers.

“Business owners are still feelInventory Management ing pinched cash wise,” said Tool Offer Upgrades CDMdata, Inc., a Kelley Blue American Express business adBook company, launched its all- viser Alice Bredin. AmEx’s new AutoOffice and AutoOffice small business division conducted the survey.

Plus offerings.

Last year, 44 percent of those AutoOffice is a Web-based inventory management solution surveyed said employees would for pricing, managing, market- get an end-of-year bonus. This ing and selling inventory online. year, only 31 percent did. Even The tool simplifies the collec- fewer are planning raises: 16 tion of vehicle information, de- percent, compared with 30 pertailed seller's notes and multiple cent last year.

Meanwhile, in 2008, 46 perphotos, and distributing the listings to online advertising Web cent of owners or managers said sites. AutoOffice Plus builds on employees would get holiday these features by giving dealers gifts. This year, it’s 35 percent.

The business owners or manaccess to the Market Pricing tool and ability to post inven- agers surveyed oversaw companies with fewer than 100 employees. tory on Craigslist.

According to the govern-

Bruce Auto Auction.

He was a past president of Carolina Farm and Power Equipment Dealers Association. He also served on the Greenville County Planning Commission, Greater Greenville Sanitation Commission, past president and charter member of Goodwill Industries of South Carolina. The Goodwill facility on Poinsett

Manheim Charges Group With Improving Operations anytime, anywhere,” said Young.

“Achieving operational excellence is about looking at our processes through the eyes of our customers. This helps us understand how we can improve their experience, while identifying new and better ways to make doing business with us easier.”

Reporting to Young will be Diane Barton, vice president of customer experience; Stephen Brown, senior director of the corporate project management office; Mike Nikolich, director of pricing management; and Pam Cadigan, vice president of operational processes. Cadigan will transition from her role as vice president of inspection operations to this newly created role.

A 30-year veteran in the wholesale and retail automotive industries, Young most recently served as group vice president of service businesses for Manheim. He began his career at Manheim in 2000 and held various senior leadership positions in operations, sales and reconditioning.

No Bonuses Paid This Year

November 16, 2009

ment’s Small Business Administration, companies with under 500 workers employed about half of all private sector employees as of 2006.

The survey also found that, of those still giving a present, 42 percent said they’ll give fewer or cheaper gifts to customers and employees.

The businesses are cutting back on employee compensation and presents before client gifts, Bredin said, because customer presents can be important marketing tools.

“If there are no customers, there is no discussion about employees,” he said.

– The Associated Press

PAGE 22

by Myles Mellor

Highway is named in his honor.

Bruce was also a member of the Elks, a past president of the Executive Sertoma Club, Hejaz Shrine Club, a past director of the Royal Order of Jesters, and director emeritus of the Shriner’s Hospital for Children.

Bruce was was married to the late Mary Frances Bruce for 69

years.

He is survived by his sons: Thomas Spartan Bruce, Jr. and his wife, Brenda, of Hendersonville, N.C.; Dan Ellis Bruce and his wife Brenda; daughter Sandra Bruce McDonald and her husband, Ralph (Pat); Gary Francis Bruce and his fiancée, Melinda Holland, all of Greenville, S.C.; and 10 grandchildren.

Published By General Media LLC USED CAR NEWS (ISSN 1555-7413)

is published at 24114 Harper, St. Clair Shores, MI 48080 Phone: 586-772-5200 or 800-794-0760 Fax: 586-772-9400 www.usedcarnews.com Charles M. Thomas Founder (1947-2002) Lynda R. Thomas, Publisher Colleen Fitzgerald, General Manager Editorial: Ted Craig, Managing Editor Reporters: Jeffrey Bellant, Julie Dawso, David Piestrzynski Editorial Intern: Valbona Kociaj Columnist: Tony Moorby Advertising Account Managers: Shannon Colby, Pam McNamara Classifieds: Marie Hingst Marketing: Megan Frump, Marketing Coordinator Circulation: Linda Dulworth, Helen Thomas Production: Cliff Bennett, Production Manager Graphic Designer: Josie Godlewski Layout Design: Cassie Fennell, DesignWorks-AMG Vol. 15 • No. 16 Used Car News is published the first and third Monday of each month.

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

Used Car News assumes no guarantees or liabilities concerning the accuracy of any advertisements. All Rights Reserved.

Reproduction in any form is prohibited without the written consent of the publisher.

OUR ADVERTISING APPROVAL POLICY Please submit clear, legible copy. Payments from first time advertisers must accompany the insertion order. Distribution is guaranteed by U.S. Postal Carriers.

The advertising reservation deadline is 5:00 p.m. Friday, 10 days prior to the issue date. Camera ready ads must be received by noon on Monday prior to the issue date.

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USED CAR NEWS

November 16, 2009

LEASING

Lease-Here, Pay-Here Draws Interest

Photo by Jeffrey Bellant LEASING USED: Accountant Dave Keller, from the firm LarsonAllen, discusses the benefits and challenges of a lease-here, pay-here business model during a recent conference in Las Vegas.

By Jeffrey Bellant

LAS VEGAS – Industry veterans praised leasehere, pay-here as a good option for dealerships during a discussion at the recent 15th annual Leedom Group National Buy-Here, Pay-Here Convention.

Jim Garvin, Leedom Group’s chief financial officer, said there are positives and negatives that go with lease-here, pay-here.

One advantage over traditional buy-here, payhere is the dealers keeps ownership of the vehicles.

“So from a collateral perspective, you’re in a lot better position,” Garvin said.

Banks will view the dealer is in a better position for lending against the portfolio once they understand the ownership advantage, he said.

One negative is there are nearly a dozen states that accelerate the sales tax under a lease-here, pay-here operation. But in the other states, the sales tax is paid at the end-of-term.

In buy-here, pay-here, the tax is due when the contract is executed.

Garvin said a dealer is in a stronger financial situation over the life of the business in a lease-here, pay-here operation.

“We like the fact that you’ve got both lease contracts and a fleet of vehicles that you own,” Garvin said.

“The depreciation against the income is a good thing, because you’re building your own personal tax shelter that the government blesses.

Even the Obama administration hasn’t messed with that.

Dave Keller, dealership principal for LarsonAllen, a St. Louis-based accounting firm, said dealers must treat leasing differently than buyhere, pay-here.

“There are a lot of different accounting issues out there,” he said.

“There’s a big difference in the way your financial statements look if you’re buy-here, pay-here as opposed to lease-here, payhere.

“The banks are going to look at you a lot differently.”

One of the biggest differences is in the receivable category, because there technically are none, Keller said.

He said there’s a huge depreciation expense on the financial statement and other issues that require a dealer to do a little more work to stay on top of the business.

Dave Huber, president of Finance Express, has sought out a lease-here, pay-here tool to offer for dealers.

He expects the Web site to offer one by the first quarter of 2010, if not sooner.

“The bottom line is that it’s cash flow,” Huber said. “If you’re not in a state that accelerates the sales tax – and you’re col-

lecting that sales tax out over the course of the loan – it makes a significant cash flow difference for your dealership.”

Huber said in today’s market cash flow is even more important than a financial statement.

Attorney Emily Marlow Beck agreed with the panel on the benefits of that business model.

She said there fewer laws that affect a leasehere, pay-here business, but there are some negatives.

“The biggest risk of lease-here, pay-here is the risk of re-characterization,” she said.

Beck said in any dispute, a plaintiff lawyer or attorney general is not going to care what type of business a dealership is called., whether it’s lease-here, pay-here or buy-here, pay-here.

She suggests sitting down with an accountant and lawyer to make sure the deals are true leases for consumer credit purposes, which are different when what accountants use for tax purposes.

“The worse thing that can happen would be to have a transaction that you think is a lease get re-characterized (in a c o u r t r o o m ) to a credit sale,” Beck said.

“Then, all of the sudden, you have failed to comply with all the alphabet soup of laws that apply to credit sales.

“That’s kind of like a compliance Armageddon.”

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USED CAR NEWS

November 16, 2009

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LEGAL FOCUS Proposals Could Challenge Industry

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LEGAL EAGLE: Attorney Emily Marlow Beck, from the firm Hudson Cook, discusses the challenges dealers face on the legislative front in the coming year.

By Jeffrey Bellant

LAS VEGAS – The federal government has proposed several changes that would make a dealer’s life more difficult.

Attorney Emily Marlow Beck, with the Marylandbased firm Hudson Cook LLC, discussed these challenges during the recent Leedom Group 15th annual Buy-Here, Pay, Here Convention.

Beck, who once worked in her father’s car dealership, said things have changed a lot in the last decade.

“When the Safeguards Rule passed (2003), I remember being so offended by the fact that the federal government was going to tell me how to run my business,” she said. “All we wanted to do was sell cars and now we had to worry about locking up information.

“But I tell you what, now I ache for those days when all we had to do was (comply with) the Safeguards Rule.”

Beck said one law being proposed would eliminate a dealer’s ability to use arbitration agreements in car deals. These agreements have been one tool that dealers can use to fend off class action suits.

There are also proposed laws coming down the pike that would challenge dealers’ spot delivery practices and those that create a buyer’s remorse period to allow a customer to bring their car back.

“These laws haven’t passed yet, but if they did, they would have some pretty big impact on the way you do business,” Beck said.

She said it’s important for dealers and others in the industry to lobby state and national lawmakers, even if the industry already has professional lobbyists.

Lawmakers have staffers who do much of the research and leg work on legislation and they often don’t have knowledge of the industry.

“I live in Washington,

D.C.,” Beck said, “and the reality is most of these decisions are being made by 24-year-olds who maybe never bought a car, much less sold a car. So they really are relying on you to inform them about how your business works.”

Trade associations need to tell lawmakers how potential legislation will impact the business, she said.

Getting the right forms and paperwork is also important, Beck said. State dealer associations and other businesses provide them, but it’s up to the dealer to make sure they are up to date.

“You really need to know the laws yourself,” Beck said. “For example, if you don’t have a written ‘red flags’ policy, you’re not in compliance with the rule. If you don’t have a written ‘safeguards’ policy, you’re not in compliance.”

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USED CAR NEWS

November 16, 2009

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STANDARDS

NAAA Gets Outside Help

By Ted Craig

The National Auto Auction Association finally created a set of standards for arbitration it believes will work for the entire industry.

The association struggled with this issue for years, but appears to have finally found success by going outside for help.

The NAAA hired the firm Adjility Consulting to help develop these and other standards.

A client suggested to NAAA that rather than following the usual process of putting together a committee to establish standards, they go outside and have a consultant run the process.

Adjility has people with the right background and was willing to do the project at a competitive rate, said CEO Alan Crowcher.

The consultants’ most important contribution was they provided fresh eyes, Crowcher said.

They had nothing in-

vested emotionally in what was written already.

Adjility’s consultants found the arbitration documents difficult to read.

The first step was organizing the information in easy to understand format.

They organized the standards into categories such as buyer responsibilities, seller responsibilities. This made it easy to find relevant sections.

Adjility is working with the NAAA to improve other standards, such as wholesale certification.

It is also working on more offerings for the remarketing industry.

“We just felt it was a niche that was underserved by people who really understood the uniqueness of the industry,” Crowcher said.

One product Adjility expects to roll out soon is a recovery application that serves all components of the business, including large buy-here, pay-here operations that have to manage a lot of

repossession agents.

There’s plenty of opportunities for the remarketing business to take advantage of technologies, Crowcher said. Adjility wants to drive that innovation.

The firm’s name is derived from “agility,” which Crowcher said represents what they do – work efficiently and fast.

“Really at our core, we’re a bunch of efficiency freaks,” Crowcher said.

Starting a company during an economic downturn may seem risky, but Crowcher said it’s the second time he’s done it and he enjoys it.

When times are tough, people are only willing to pay for true value. The NAAA feels that’s what it received from Adjility.

“The folks at Adjility understand the industry and give 110 percent when working on our projects,” said Frank Hackett, the NAAA’s executive director.

“They know how to start a project strong and finish it stronger.

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PAGE 8 – ONLINE RETAILING IN FOCUS

ONLINE GROWTH

Consumers Continue Going onto the Internet When Car Shopping Internet shopping has reached parity with visits to dealer lots as the primary method for used-vehicle buyers to locate used vehicles, according to the J.D. Power and Associates 2009 Used-Vehicle Market Report.

The report finds that the percentage of used-vehicle buyers who rely on the Internet as a method for locating vehicles for sale has increased from 40 percent in 2008 to 46 percent in 2009-equal to the percentage of buyers who visit dealer lots as their primary shopping method.

Furthermore, 31 percent of buyers found the vehicle they ultimately purchased on the Internet, compared with 28 percent of buyers who found their vehicle by just walking into dealerships.

“Internet shopping provides prospective buyers with the opportunity to search through enormous amounts of specific vehicle information without ever leaving home, allowing for a more efficient medium of matching buyers with unique used vehicles in the market,” said Arianne Walker, director of marketing and media research

at J.D. Power and Associates.

“In light of this, dealers should expect the Internet to continue to increase in importance among used-vehicle shoppers and adjust their online presence accordingly.”

The report also finds that awareness of certified preowned (CPO) vehicle programs is strong, with more than 60 percent of used-vehicle buyers indicating they intend to purchase certified pre-owned vehicles at the start of their shopping process.

“Automotive marketers have worked intently to provide information to the public about certified pre-owned programs, but the benefits of these programs can be very complex to explain,” Walker said. “However, explaining the value of CPO programs to prospective buyers may carry long-term benefits.

“There has been a slight increase in the number of repeat buyers of certified vehicles-up from 22 percent in 2008 to 24 percent in 2009. This indicates that buyers of CPO vehicles are increasingly loyal and should be considered an important seg-

ment of used-vehicle buyers in their own right.”

One-half of all buyers of CPO vehicles say they used the Internet to locate used vehicles, while a slightly lower percentage (45) shopped primarily by driving to dealer lots.

The percentage of buyers who visited dealer Web-sites specifically for CPO vehicle information has increased considerably to 29 percent in 2009, compared with 19 percent in 2008.

Other traditional sources of used-vehicle information such as newspapers, television and radio have low usage rates among buyers seeking CPO-vehicle information.

Among used-vehicle buyers who use the Internet in their shopping process, third-party sites are visited during the shopping process much more frequently than other types of sites, including dealer Web sites.

More than nine in 10 buyers (91%) say they visited at least one third-party Web site during the shopping process.

Slightly more than threefourths (78%) of used-vehicle buyers report visiting a dealer Web site.

THE COMING SHIFT

Focus of Internet Moves Toward Individuals, Changing Social Values

By Jeffrey Bellant

Futurist David Houle believes the world is transitioning out of the information age and into what he calls “the shift age,” changing the way businesses will operate in the 21st century.

Houle said this new era will be filled with uncertainty, but also opportunities.

Buy-here, pay-here dealers are in prime position to take advantage of current trends, he said.

“I cannot think of a better time to be in your business,” he said.

“This is a time where being flexible and being adaptable (will be important).”

Houle said transition periods like the current one are inherently disruptive.

He compared it to the 1970s, when the United States was transitioning from the industrial age to the information age.

Dealers are benefiting from what he calls “the thrift factor.” He said a

year ago that “thrift would be the new cool.”

So buying a used-car seems like a good proposition in this new era.

Houle said American consumers are scarred by the recession and know all they can control is what they don’t spend.

He believes this attitude will affect American consumers for a number of years.

“In other words, the ‘recovery’ that’s going to happen next year will not be on the back of the consumer,” Houle said.

Houle said the new-car industry will look more like it did 100 years ago than it does now.

At the beginning of the 20th century, there were dozens of American car companies. At the end there were just three, which were all on shaky ground.

“I think that in the next five to 10 years, there will be 50 to 75 car companies,” he said.

Houle points out how even now, a company like

November 16, 2009

California-based Tesla Motors, is a profitable business selling 30 electric cars a week. Companies like this could be the new model.

He said innovation in the internal combustion engine will also lead to a new era in automobile manufacturing.

Houle predicts that 2010 to 2015 will be the age of the electric automobile.

Houle pointed to Tesla and the Chevrolet Volt as two examples of this shift.

He said these innovations will lead to segmentation in the new-car market as each specialize in different technologies.

Used-car dealerships will then end up with a product base that will be more different from new-car companies, as new cars will lean more heavily on alternative power supply.

Houle said the big picture trends of the shift age include: flow to the global; the flow to the individual and the use of accelerated electronic connectors.

Instead of globalization

referring simply to economics, we now have a globalization of culture and global politics.

At the same time, Houle said, the individual has become much more powerful than in other times of history.

“If you think about the Internet,” Houle said, “It’s all about ‘me.”

My Facebook page, my Twitter page, my Web site. It’s all about ‘me.’”

Because of that, institutions don’t have the same value as they used.

Declining memPhoto by Jeffrey Bellant bership in unions, service organiza- FORESIGHT: Futurist David Houle discusses his theory about how tions and country the world is entering the “shift age,” where technology will have a clubs shows this, growing effect on businesses and culture.

Houle said.

The use of accelerated denced by the definition new mindset.

“Don’t tell me what electronic connectors, like of “friends” in the past to the Internet and cell “friends” on Facebook, worked in the 20th century,” he said. “What are phones, are expanding Houle said.

Houle said businesses you going to do in the 21st rapidly which provide an alternative reality, as evi- will have to adjust to a century?”

WWW.USEDCARNEWS.COM

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November 16, 2009

New Product Combines Credit Education, Used Car Shopping

By Emily Caswell

What if a dealer could pass out a tool that would not only remind visitors of their name, phone number and the fact that they care, but a product that could actually help them become customers?

That is the idea behind Recreditpair.

Recreditpair is a software product that teaches customers how to improve their credit.

Developed in the late 1990s by Jim Longacre, the logic behind Recreditpair is that auto dealers are in the businesses of credit improvement.

Any financed sale requires acceptable credit and dealers are often in the business of reminding current customers that paying on time will have a positive effect on their credit.

The idea of combining credit education with car shopping was something Longacre developed while working for a dealer in California. Instead of going with a typical marketing campaign, he convinced the dealership’s owner to send out 20,000

mailers to consumers who were discharged from bankruptcy and invite them to a free seminar on how to re-establish and improve their credit.

“It’s a cool way to assist our customers” — Tim McCulloch

About 200 people showed up and in three weeks Longacre had sold 48 cars.

It was then that Longacre realized everyone at the seminar needed help in improving their credit but lacked the thousands of dollars that credit repair companies often charge. Recreditpair was born.

Dealers who use Recreditpair can offer a free copy of Longacre’s credit education system to visitors.

Potential customers will

learn through Longacre’s system the benefits of buying a vehicle as it relates to credit improvement.

The system cost for dealers ranges from $4,000 to $13,000 depending on how many aspects of Recreditpair dealers choose to use.

Tim McCulloch, sales manager at Neal Suzuki in Fort Worth, Texas, has been using Recreditpair for about seven months.

While McCulloch didn’t have any exact figure citing the number of cars his dealership had sold as related to Recreditpair, he believes it helps customer relations.

“It’s a cool way to assist our customers,” he said.

McCulloch said the Recreditpair system is a great way to reassure customers that you’re building a lasting relationship.

Sales manager at Curtsey Chevrolet in San Diego, Calif., Mark Rodriguez believes in the Recreditpair system so much that he even worked for the company for a time.

Back in car sales, he’s promoting the system to his new boss.

•

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Ford Motor Co. came out on top of an influential study of auto reliability.

About 90 percent (46 of 51) of Ford, Mercury, and Lincoln products were found to have average or better reliability, according to Consumer Reports’ 2009 Annual Car Reliability Survey.

Ford’s sustained production of vehicles that are as dependable—or better than—some of the industry’s best dispels the notion that only Japanese manufacturers make reliable cars. Other than the Toyota Prius, the reliability of the 4-cylinder Fusion and Milan ranks higher than that of any other family sedan. Both of those Ford Motor Company products continue to beat the Honda Accord and Toyota Camry, while the upscale Lincoln MKZ tops its rivals, the Acura TL and Lexus ES. “It’s rare for Consumer Reports to see family sedans from domestic carmakers continue to beat

the reliability scores of such highly regarded Japanese models as the Camry and Accord,” said David Champion, senior director of Consumer Reports’ Automotive Test Center. The last domestic sedan that had better reliability than the Camry and Accord was the Buick Regal in 2004, he noted.

Ford’s position as the most reliable domestic carmaker includes good scores for its new Ford Flex SUV. But the Lincoln division has had mixed results; some models score below their Ford equivalents. All-wheel-drive versions of the Lincoln MKS, MKX, and MKZ, essentially high-end versions of the Ford Taurus, Edge, and Fusion, respectively, are all below average.

A large margin separates the best from the worst.

The least reliable vehicle, the Volkswagen Touareg, is 27 times more likely to have a problem than the most reliable car, the Honda Insight.

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In addition to the Insight, small car reliability scores stood out. Twenty of 37 small cars have above-average predictedreliability including the Honda Fit, Scion xD and Volkswagen Golf. Family cars fared nearly as well, with 21 out of 42 scoring above average. Five of the eight most reliable family cars are hybrids, including the Toyota Prius, Ford Fusion Hybrid, Mercury Milan Hybrid, Nissan Altima Hybrid and Toyota Camry Hybrid.

Even good brands falter.

Among the least reliable vehicles in their respective classes are the allwheel-drive Lexus GS, the Nissan Versa sedan, and the Subaru Impreza WRX. GM Improves

Some newer GM products are bright spots.

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USED CAR NEWS

November 16, 2009

Consumer Reports – Continued from prior page while the Chevrolet Malibu V6 has shown betterthan-average scores and is on par with the most reliable family sedans. The Buick Lucerne did well in Consumer Reports road tests, and it scores average in reliability.

The Chevrolet Traverse SUV also makes the cut, as does its cousin, the Buick Enclave, but only in the all-wheel-drive version.

The Chevrolet Silverado and GMC Sierra 1500 pickups are good performers and earn Consumer Reports’ Recommendation.

CR only recommends vehicles that have performed well in its tests, have at least average predicted reliability based on the Annual Auto Survey, and performed at least adequately if crash-tested or included in a government rollover test.

GM has a number of strong contenders either just released or in the pipeline, but they are too new for CR to have reliability data on them.

Chrysler continues to struggle. More than onethird of Chrysler products are much worse than average, including its new

car-based SUV, the Dodge Journey. Last year, Consumers Reports couldn’t recommend any of its products either because of mediocre performance, poor reliability scores, or both. However, this year CR can recommend one important vehicle in Chrysler’s lineup: the four-wheel-drive version of the redesigned Dodge Ram 1500 pickup. It did well in CR road tests and rates average in reliability.

Asians Still Tops

Of the 48 models with top reliability scores, 36 are Asian—Toyota accounts for 18; Honda, eight; Nissan, four; and Hyundai/Kia and Subaru, three each.

With only a few exceptions, Japanese vehicles are consistently good. All Honda and Acura products have average or above average reliability.

Although, Toyota, with its Lexus and Scion brands, provides a broader product range, the Lexus GS AWD is the only Toyota model with below average reliability.

Models from Nissan and its Infiniti luxury division have mostly been very reliable.

The once-troublesome

Infiniti QX56 and Nissan Armada are now average, as is the four-wheel-drive Nissan Titan, although its rear-wheel-drive version is still troublesome. The Nissan Versa has produced uneven results.

Over the last two surveys, the hatchback has been average while the sedan has been far below average. The Nissan Quest minivan also remains troublesome.

Hyundai and Kia continue to make reliable cars. The Hyundai Elantra and Tucson, and the Kia Sportage get top marks.

The new Hyundai Genesis V6 is better than average; the V8 version is average.

Only Kia’s Sedona minivan and Sorento SUV score below average.

Europeans Rally

European brands continue to improve. Mercedes-Benz has significantly rebounded, with most models average or better, and the GLK did exceptionally well in its first year in CR’s survey.

Scores from rival BMW are more mixed. The 535i sedan and X3 SUV declined in reliability, and the 135i, debuting in this survey, scores below average.

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USED CAR NEWS

November 16, 2009

HEAVY METAL Scrappage Scheme Sells Trucks WASHINGTON (AP) – The most common deals under the government’s $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

The single most common swap – which occurred more than 8,200 times – involved Ford F150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius.

The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

Owners of thousands more large old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only

barely improved mileage in the middle teens, according to AP’s analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state.

Those deals helped the Ford F150 and Chevy Silverado – along with Ford’s Escape midsize SUV – climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-fortruck and truck-for-SUV deals totaled at least $911 million.

In scores of deals, the government reported spending a total of $562,500 in rebates for new cars and trucks that got worse or the same mileage as the trade-ins – in apparent violation of the program’s requirements.

The government said it is investigating those reports and said in some cases they were probably entered incorrectly by dealers or based on outdated fuel economy figures.

The National Highway

Traffic Safety Administration is still reviewing the reports, and any dealers that submitted invalid trade-ins will be directed to return the government rebate, spokesman Eric Bolton said .

The new data, obtained by the AP under the Freedom of Information Act, include details of 677,081 clunker trade-ins processed by the government through Oct. 16.

More than 95,000 of the new vehicles purchased under the program – or about one in seven – got less than 20 mpg, according to the data.

The new figures, requested four months ago by the AP, represent the first substantial outside accounting of the clunkers program, lauded by the White House and the Transportation Department for improving fuel economy, stimulating sales and taking the dirtiest vehicles off the road.

The data show the average fuel economy was 15.8 mpg for the old vehicles and 24.9 for the new ones.

Continued on next page

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Scrappage – Continued from prior page

Cash for Clunkers Trade-Ins New car Ford F150 Ford Escape Chevrolet Silverado Ford Focus Chevrolet Silverado Honda CR-V Chevrolet Silverado Toyota Camry Honda Civic Dodge Ram Toyota Corolla Ford Fusion Ford Focus Nissan Altima Toyota RAV4 Hyundai Elantra Ford Edge Ford Ranger Toyota Tacoma Honda CR-V

But plenty of consumers bought relatively lowmileage trucks and SUVs with the help of government checks.

“If we’re looking for the environmental story here, we’re going to be disappointed,” said Jeremy Anwyl, chief executive at Edmunds.com.

“It might have started out from the perspective of improving the environment, but it got detoured as a way to stimulate the economy.”

Popular high-mileage commuter cars including the Toyota Corolla, Honda Civic, Toyota Camry and Ford Focus also were among the Top 10 most popular new vehicles bought under the fourweek program, with 105,280 of those models sold for a total of about $2 billion.

Bolton, the NHTSA spokesman, said the program “proved to be a win for the economy and the environment” because it helped financially struggling dealerships and auto manufacturers and because, under the pro-

Replaced car Ford F150 Ford Explorer Ford F150 Ford Explorer Chevrolet K1500 Ford Explorer Chevrolet C1500 Ford Explorer Ford Explorer Dodge Ram Ford Explorer Ford Explorer Ford F150 Ford Explorer Ford Explorer Ford Explorer Ford Explorer Ford F150 Ford F150 Jeep Grand Cherokee

gram’s rules, clunkers necessarily were replaced with vehicles that got better mileage.

The $3 billion program, known officially as the Car Allowance Rebate System, ran from July 27 to Aug. 25 and generally required that new vehicles get better mileage – at least 22 mpg for cars and either 15 mpg or 18 mpg for trucks depending on class – and that trade-ins get no more than 18 mpg. The tradeins were required to be destroyed in exchange for either $3,500 or $4,500 rebates.

“The value that the customer got for a lot of these vehicles was just a gift, no question,” said Scott Pundt, sales vice president for the Dorschel Group of Rochester, N.Y., the No. 4 dealership in the U.S. with 592 vehicles sold under the program. “We were appraising 220,000-mile vehicles that were really rough, and they were getting $3,500 or $4,500 for them.”

Four out of five old cars turned in there exceeded 100,000 miles.

Total Sold 8,248 5,441 3,250 2,777 2,500 2,345 2,310 2,285 2,283 2,192 2,019 1,978 1,922 1,717 1,646 1,576 1,565 1,442 1,426 1,423

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Some deals raise eyebrows: • In at least 145 cases, mostly involving trucks, the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. The government said it was continuing to investigate.

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• In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.

• A driver in Arlington, Va., traded a 1999 Ford Explorer with 15 mpg in July for $3,500 toward a new $28,000 Jeep Commander that weighs about 4,700 pounds and gets 16 mpg.

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USED CAR NEWS

November 16, 2009

Tough Times Prove Right Time For Negotiating New Lease NEW YORK (AP) – While small businesses are still struggling in this weak economy, many are catching a break when it comes to negotiating with landlords.

The weakness in the commercial real estate market comes in part from high vacancy rates in many parts of the country.

And many landlords are increasingly willing to cut a deal with renters so they can keep their buildings occupied.

“The balance of power in negotiating a lease or renegotiating a lease in some areas is now with the tenant,” said Janet Portman, an attorney and co-author of “Negotiate The Best Lease for Your Business.” “If the market is awash with space, then you can assume the competition will be tight for rents and you’re going to have some real clout.”

Even companies whose leases aren’t up for renewal can get better terms, Portman said. She noted that in many states, a commercial tenant breaking a lease ends up responsible only for the months that a property is

vacant. So a business that breaks its lease and moves to a much cheaper space can end up saving money.

That’s likely to make many landlords willing to lower rents or agree to other terms to avoid losing money.

But Portman also said owners need to be careful about properties where landlords may be too eager to lower their standards to get tenants. A building that is filled with struggling companies that ultimately can’t pay their rent is going to turn into a ghost town and be a less desirable location for the remaining tenants.

Portman also warned that small businesses that are struggling probably won’t be able to cut a better deal.

“Even a landlord who’s desperate to rent isn’t going to take a chance on a tenant who’s got a bad track record,” she said.

Owners who are searching for space learn to develop a strategy, especially when they’re dealing with landlords who still think they can get the rents they want.

Matthew Higbee’s law

firm, Higbee & Associates, is renting space while it waits for sales prices to stabilize in Orange County, Calif.

“We looked at properties, and at the end of the day, we decided we might save money by renting, and buying commercial real estate in two years, when prices are lower,” he said.

Higbee said landlords in the area didn’t seem very willing to negotiate, and many he dealt with were trying to hold out for higher rents. His firm ended up renting 3,700 square feet for $1.10 a square foot after turning down demands for as high as $1.95.

“They hurt themselves by not taking less,” he said.

“Now they’re getting nothing.”

Higbee’s advice to other small business owners is to hang in as long as they can before agreeing to lease terms.

“The longer we were able to make it in our space, the better a deal we were able to get,” he said.

Business owners also find that being creative can save them a lot.

•

15

There is no better time than the holidays to express our appreciation for your commitment to our Auction.

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from the Carolina Auto Auction Owners and Staff

Dealer Appreciation Sale Thank You!

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UCN_16

11/9/09

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USED CAR NEWS

November 16, 2009

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State Court Rules Dealers Responsible for Defects OMAHA, Neb. (AP) – Car dealers must inspect used vehicles for safety defects and either make repairs or warn potential buyers before they are resold, the Nebraska Supreme Court ruled.

The high court said that an “as is” sticker does not absolve dealers of their duty to look out for public safety.

“There is a relatively great magnitude of risk of injury in the circumstance where an unknowing buyer drives off the dealer’s lot in a used vehicle which has a patent safety defect, such as defective brakes or steering,” the court said.

“The dealer is better equipped than the purchaser to perceive such a defect before it causes harm.”

causing her to fall and hit her head.

A federal regulation requires vehicles with automatic transmissions be made so that the key must be in the ignition to shift out of park.

An automotive engineering consultant said in court documents that there were problems with the van’s brake shift interlock system, transmission shift cable and key shift interlock that allowed the Wilkes’ van to shift out of park.

Woodhouse has said in court documents that Elizabeth Wilke’s injuries could have been prevented if Mark Wilke had used the emergency brake and if the girl hadn’t pulled the gearshift. The high court ruled that the Wilkes could not sue

“The dealer is better equipped than the purchaser to perceive such a defect before it causes harm.”

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The decision is similar to those handed down by courts in other states, including Kentucky, Minnesota, Montana and Ohio, that recognize dealers’ obligations to ensure the safety of used vehicles.

With the ruling, the high court overturned the dismissal of a 2006 lawsuit filed in Douglas County District Court by an Omaha couple who alleged that Woodhouse Ford Inc. was liable for injuries caused when their van shifted out of park.

The high court said that while Woodhouse sold the van “as is” and disclaimed all warranties, the Blair dealership may have been negligent for not inspecting the vehicle.

It ordered the case back to the lower court for trial.

Woodhouse has said in court documents that it has such a high volume of used vehicles that it is unable to inspect all of them.

The Wilkes sued Woodhouse for negligence and breach of implied warranty of merchantability over the “as is” sale of a 2002 Ford Econoline on Sept. 18, 2004. They said the dealership should have known the vehicle was defective at the time of the sale.

The couple said in court documents that Mark Wilke drove the van off the lot, parked it at a friend’s house and removed the keys. The couple’s then-3-yearold daughter pulled the gearshift out of park and the vehicle rolled over Elizabeth Wilke’s right foot and thigh,

for breach of warranty under the Uniform Commercial Code because the van was sold “as is.”

But it said the couple could sue for negligence because car dealers have “a duty to conduct a reasonable inspection of the vehicle prior to sale in order to determine whether there are any patent defects existing at the time of sale which would make the vehicle unsafe for ordinary operation.”

Woodhouse has said in court documents that it did not inspect the van before it was sold.

But the high court said it would be up to a jury to determine whether the van’s safety defects would have been found during an inspection.

Also in Nebraska, a Lincoln used-car dealer has been sentenced to prison for fraud.

Chance Hanshaw had pleaded guilty to title fraud, sale of secured property without consent and attempted theft by deception.

Authorities say Hanshaw received replacement titles to five cars, owned by the banks, by claiming the titles had been lost or destroyed. Authorities say he then sold the vehicles, for a loss of nearly $74,000 to two banks.

Hanshaw's attorney, James Hoppe, told Lancaster County District Judge Paul Merritt Jr. that financial problems led Hanshaw to carry out the scheme.

Hanshaw was seeking probation, but Merritt said he wanted to send a message that there are consequences for such crimes.

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PEOPLE IN THE NEWS Hudson Cook LLP, announced that Thomas J. Buiteweg, a partner at the firm’s Ann Arbor, Mich., office, has been elected to The American Law Institute.

ALI engages in intensive examination a n d analysis of legal areas thought to need reform.

Tom Their Buiteweg w o r k generally culminates in extensive recommendations for change in the law.

Buiteweg’s practice focuses on helping financial institutions, sales finance companies, motor vehicle dealers and manufacturers to establish and maintain national consumer automobile finance and leasing programs, including helping them address issues arising under the UCC. Before joining the firm, Buiteweg worked on the GMAC legal staff, where he served as general counsel of GMAC’s wholly-owned servicing subsidiary and managed

the practice group responsible for regulatory and legal compliance matters relating to GMAC’s consumer automotive finance and lease operations.

Tom is also a Uniform Law Commissioner for the State of Michigan and lecturer at the University of Michigan Law School on secured financing.

Auction Broadcasting Co. announced that Joe Mappes will serve as the new vice president of sales for the auction group.

Mappes, and his team, will be responsible for driving strategic national sales and growth opportunities for both ABC and Diversified Vehicle Services.

“Joe will be a tremendous asset to our organization as we continue to grow our business,” said Jason Hockett, senior vice president of sales and marketing for ABC. “He has such a unique understanding of our industry; sales, operations, dealer and fleet/lease accounts, and third-party servicing.”

Prior to joining ABC, Mappes served as vice president of sales for PAR

North America and executive director of sales, national accounts for ADESA. PAR North America, a subsidiary of ADESA, today announced that Thomas “Sim” Shambeau has been named executive sales director.

In his new role, Shambeau will oversee national accounts for the company and work closely with Susan Gordon, also an executive sales director for PAR. Both Shambeau and Gordon directly report to PAR North America President Jerry Kroshus.

“With the rising trend of lenders outsourcing their portfolios for servicing, it’s critical to have seasoned professionals, such as Sim and Susan, continually working with our clients to achieve optimal performance and efficiencies,” said Kroshus.

Prior to joining PAR North America, Shambeau held management roles for a number of auto finance companies. He spent 14 years with Wells Fargo and also worked at CitiFinancial Auto and Flagship Credit Corp.

•

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RETAIL MARKETS CALIFORNIA

Mike Macaulay, owner, Car Systems, Roseville, Calif.: “I have been in business for over 30 years. I keep mainly trucks and SUVs on my lot. I have 60 to 80 vehicles at any one time.

Surprisingly, the dollar value of my inventory has gone up but the numbers are about the same.

“I think that can be attributed to the Cash For Clunkers program. A lot of the vehicles I would use to round down the inventory price went out of commission. A lot of the cheaper stuff is no longer available. Now I am finding my inventory value is going up.

“That is not necessarily good, I am spending more money on the inventory and making the same amount of money. It is taking some customers out of the market too because the lower priced cars that they want are not there.

“I mainly do ‘A’ and ‘B’ financing. I have Credit Union Lending Systems. I do not do any creative financing. You have to have

pretty good credit or cash to do business with me.

“I buy the vehicles for my business. Ninety percent of our vehicles are from auctions in the California, Nevada and Oregon area.

“We have 80 percent domestic vehicles and 20 percent imports.

“I do a lot of Internet advertising, probably 70 percent Internet and 30 percent print ads. I do not do any television or radio advertising. I was one of the first car dealers to have a Web site.

“You have to post your Web site with search engines, and AutoTrader, Cars.com and different places that draw customers to your Web site, for it to work. Also I list the Web site address in the print ads.

“When someone goes on to Autotrader.com, they will look at a lot of cars, and the way you get the better listings is to pay AutoTrader a higher rate. If you pay for it, your vehicles will be on the first page.

If the customer doesn’t see your car in the first

few tries, they will move on (to something else).

“The average selling price of our cars is about $10,000. I just sold a 2002 Excursion Diesel for $18,500. It had 120,000 miles.

“Dealers need to take maximum advantage of the Internet. As a dealer you also get a lot of advice and direction through your state’s automobile associations. You get a lot of mentoring and they help new dealers coming into the business. In California we just had our convention and we had many hours of dealer education where we were showing dealers what is new in financing or the Internet or warranties.”

OREGON

Liesl Carter, assistant, Affordable Auto Rental & Sales Inc., Oregon City, Ore.: “We have been in business for 11 years. We keep a variety of vehicles on the lot. There are about 25 vehicles on the lot right now.

It is about the same number as last year. Business is probably a little bit better

Compiled By Valbona Kociaj than last year. The state of Oregon has one of the highest unemployment rates in the nation.

“The inventory is constantly fluctuating so it is hard to tell the percentage of cars/trucks/SUVs that we keep. We sometimes sell four vehicles, sometimes eight vehicles. We have a few more imports than domestics.

“We do different types of outside financing and we also do a lease-to-own program.

“Cynde, the owner, does the buying of vehicles. She gets the cars at local Oregon auctions. The prices were going up but as far as I can tell, the prices have started to go down a little bit at the auctions.

The Cash For Clunkers program definitely hurt what was out there as far as what we were able to buy.

“We do advertising, primarily with AutoTrader.

We also have a Web site that we advertise our inventory on. A lot of people do see our Web site because it is linked to the other advertising we do.

“The average selling

price is probably between $6,000 and $7,000.

“One of the last vehicles we sold was a 2001 Infinity, with 62,600 miles on it. We sold it for $8,000.

“One thing that I would tell car shoppers is to look for a dealer that checks their vehicles out and bothers to repair them.

Look for somebody who offers Carfax. It is always good to work with a small independent business.”

TEXAS

Randy Reynolds, owner, WTAA Auto Sales, Odessa, Texas: “I’ve been in business for about 25 years. I keep all kinds of cars in my inventory – Chevrolets, Dodge, Chrysler. I mostly keep domestic cars. I mostly keep late models, 2007 to 2009. Sometimes we will have 15 or 20 cars and sometimes we will not have any. The number of cars we keep really depends because we sell them as soon as we get them. We buy everything we can and by the end of the week we sometimes will not own any cars.

“We sell about 60 cars a

month. The last year has been slower. Before that we were selling 80 to 100 vehicles.

“We sell a lot to dealers too. I guess if they cannot sell cars they will not buy cars from us. We do not do any financing. We buy cars from auto auctions and trade-ins. We mostly go to the Manheim auto auctions. Myself and my son do the buying.

“The prices at the auctions have been going down in the last 30 days. I am sure that they will start to go up in the next 30 days though. Usually around October they go down.

“I do not do any advertising. There are a few dealers around here, but not many. Most dealers have gone out of business.

“The selling price for our cars differs. I sell some cars for upwards of $30,000.

“But if I get a trade-in that is only worth $2,500 I will sell that too. I do not have an average.

“The last car I sold was a 2009 Ford Expedition with 28,000 miles on it and it sold for $31,000.”

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USED CAR NEWS

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WHOLESALE MARKETS ALABAMA

Keith Graham, general manager, Dealers Auto Auction of Huntsville, Athens, Ala.: “Sales have been good.

They’ve been steady.

“They are starting to get a bit weaker, but they’re still running over 50 percent (conversion rate).

“We’re still consistently running between 400 and 480 vehicles per week.

“We’ve been running three lanes and sometimes four. If we get up to 480 or 500 vehicles, we’ll run all four lanes.

“Our run volume is probably up about 10 percent right now.

“The first part of the year, we were running fewer cars. But during the Cash for Clunkers program it picked up. It’s been keeping pretty steady.

“Our sold numbers have been at least as high as they were this time last year and probably 10 to 15 percent higher.

“Year-to-date, we have an average sales rate of 61 percent.

“We’ve got some pretty

aggressive local new car dealers that have been getting a lot of new-car business. Of course, during the Cash for Clunkers program, they brought in lots of trades.

“Even the used-car lots have been bringing in trades. That made the market grow quite a bit.

“But Cash for Clunkers took (hundreds of thousands of units) out of the market, so people still need cars and they’re still trying to buy them.

“We’ve had a real consistent bidder base of 270 bidders.

“The majority of our bidders are coming from out of the north Alabama area. Some are also coming from southern Tennessee and central Tennessee. I’ve got a couple coming out of Memphis, Tenn., and some coming from as far away as Ohio.

We also get some from south Alabama.

“We have been signing up, on average, about four new dealers a week.

That’s 20 dealers a month.

“There are a lot of local new-car stores that are coming here and buying,

too.

“Things must be going pretty good overall (for dealers), because they’re buying cars.

“The dealers that survived the onslaught from October of last year up to this past summer are still thriving. They still need cars.

“Our largest buyers last year are still our largest buyers this year.

“I’ll have dealers that come in from Texas every other week and they’ll buy three truckloads of cars and bring them back to Texas.

“The independents are happy to see the franchise guys here, because they know the franchise dealers have to turn their trades. The franchise guys are selling their cars, and their seeing credit somewhat open up for the buyers – in our area, anyway “I’d about say about 25 percent of our volume is fleet-lease, including consignors like PHH, Avis and Thrifty. Avis is basically a 98-percent seller.

Those $20,000 cars are bringing the money in our lanes. We’ve also got quite

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“Overall, I’d say the dealers are little cautious about what’s going on and what the future will bring.

But that great fear at the beginning of the year is gone.

“We run about 100 to 150 fleet lease every week.

PHH has been a great consignor at our sale and Eastman Credit Union, too. We’ve got a lot of great fleet-lease accounts.

“We also run an RV/marine sale the third week of every month. Surprisingly, it’s been very strong all year. It’s been averaging a 90 percent sales rate. Our consignor for that is U.S. Bank. We’ll get everything from the big expensive motor homes to travel trailers, fifth wheels, ocean-going boats and regular boats.

“We’ll run what we call a ‘premier prospector’ sale the second week of every month. That’s for units $2,000 and under and includes runners and nonrunners. We’ll run about 60 to 70.

“Our average overall price is about $6,000.

That’s up from low $5,000s last year.”

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Mark Halseth, general manager, East Tennessee Auto Auction, Fall Branch, Tenn.: “Things are fabulous here. We’ve had a record year in volume and growth.

“We run four lanes and we average about 475 to 550 vehicles per week.

“Last year, we were consistently running about 350 units.

“I attribute that improvement to an excellent

staff that understands our job. That job is customer service and we’ve got two customers – buyers and sellers – that we have to take care of.

“Sales percentages have dropped a little bit from this time last year, but they’re in the low 60s, close to 60 percent.

“Right now, there is a shortage of cars. Where the new-car stores use to be suppliers, they’re now buyers. More franchise dealers are buying older used cars than they have in the past.

“Having the volume of cars that we’ve got, our buyer base is coming from farther every week.

“We’re right on the border of Tennessee and Virginia, so we’ll get bidders from Tennessee, Virginia, the Carolinas, Kentucky, West Virginia and we even have some dealers coming up from Georgia. We even have one dealer who comes down from North Dakota.

“We probably average one to three new dealers every sale. We’re averaging between 280 and 320 dealers in the lanes.

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a few repossessions.

“Rental volumes have picked up because last year they were holding on to them a little longer.

“We also run two in-ops sales a month. Those sell consistently well.

“The average selling price overall at a recent sale was $4,893. That’s up from $3,763 from this time last year.

“All of the mid-line price fleet cars, the four-door sedans, are doing well.

The small SUVs are still selling well.

“The only thing struggling is the higher-mileage stuff.”

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UCN_20

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USED CAR NEWS

November 16, 2009

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Photo Courtesy of Manheim DIG THIS: Heavy construction equipment like these units were part of Manheim Imperial Florida’s recent first heavy equipment auction.

Manheim Imperial Florida’s hosted its first heavy equipment auction business on Oct. 15.

Jerry North, manager, equipment division, said he was pleased with the turnout.

“We had a good showing of consignments with late-model, quality used equipment for sale,” he said, “and bidder registration exceeded our expectations for our first effort.”

The sale, which offered 138 units – everything from smaller generators and lifts to six-yard wheel loaders and a 30-ton articulated end dump truck – attracted more than 250 customers. Over half of the bidders were on site, while the remainder participated online.

“Anytime you have more than one bidder for every piece of equipment offered, you know it’s going to be a good sale,” said North. “We were pleased to be able to generate such a large bidding audience for our consignors, and we expect this strong showing – both units offered and registered bidders – to continue and even increase for our next sale.”

Manheim Imperial Florida also hosted an exclusive pre-sale reception on Oct. 14, giving customers the opportunity to meet the staff and view the inventory.

“We wanted to make an unforgettable first impression, and I believe we accomplished that goal and then some with the reception and sale,” said Kelly DiNicolantonio, marketing manager.

Manheim Imperial Florida’s second heavy equipment auction will be held in February 2010. The operating location also will feature units at Manheim Lakeland’s Dec. 9 heavy truck and equipment sale.

ADESA RAISES CASH FOR CURE ADESA announced that ADESA Cincinnati/Dayton contributed $2,100 to breast cancer research.

“We’re showing our support for this important cause,” said ADESA Cincinnati/Dayton General Manager Geoff Parker.

“Almost everyone knows a friend or family member fighting this disease, and we want to do our part to help.”

During a recent sale, many employees wore pink shirts, along with the wellknown looped pink ribbons recognized as the emblem of breast cancer awareness.

Both dealers and ADESA employees contributed funds. Money was collected

through general donation jars as well as loose change jars.

ADESA Cincinnati/Dayton also posted banners with dealership names in the auction lanes when a dealer donated $200 or more to the charity.

All proceeds will be given to the local Breast Cancer Foundation in Dayton, Ohio.

We invite news items and top-quality photos from our readers to be considered for inclusion in “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

UCN_21classified

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USED CAR NEWS

November 16, 2009

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MELB, FL Call 321-543-9980 MOVE TO FLORIDA. Used car lot BHPH with strong book.

Great reputation. $25,000 a month income. 6 lane highway.

Great location.

Includes much,much more. 863-453-7673

POMPANO BEACH, FLORIDA CAR LOT. Approx. 1 acre. 4,000 sq. ft. bldg., 2 lifts.

For sale or lease. Contact Brian, 954-797-9660.

Indoor VIDEO SALE located at Cone Rd. Proudly featuring: Ford Credit, Progressive, All State, Geico, State Farm, and various Fleet Lease

FREE Breakfast 8:30 am

(813) 247-1666 5109 Cone Road Tampa, FL 33619

TEXAS PUBLIC AUCTION

E & J Auto, Truck & RV Serv 1225 N. Commercial, Aransas Pass, Texas 78336.

361-758-8286.

Over 30 Cars & Trucks.

Some run - some wrecked.

Sat. Dec. 12, 2009, 10 AM Donald McClure TXE 12482 Courtney McClure TXE 15173

All Classified Ads Appear Online at www.usedcarnews.com

TRANSPORTATION

VEHICLES WANTED

LOMEN AUTO TRANSPORT

AUTO WHOLESALERS. We need inventory. Successful Used Car Dealer, 30 years in business, central MA area, seeks successful wholesale buyers. Consign your vehicles here or sell them to us. Call Frank or Jack, 508-853-9254

Serving the upper Midwest 30 yrs,

10 car haulers 800-697-0757 VEHICLES WANTED

Wanted to Buy Volkswagen Poptop Camper Vans 1986 2003 Top Dollar paid. All miles all conditions. Call John

303-287-9797

Holiday Deadlines Monday, December 7 Deadline: Wednesday, November 25 Monday, December 21 Deadline: Friday, December 11 Monday, January 4 Deadline: Monday, December 21 Marie Hingst Classified Advertising Sales Phone: (800) 794-0760 Email: Marie@usedcarnews.com

AUCTION CALENDAR

Advertisers are solely responsible for content of classified advertisements. To place an ad, or for more information, call the Classified Department: 800-794-0760

NOVEMBER 17 Manheim Georgia, Atlanta, GA *S Manheim Arena Illinois, Bolingbrook, IL * S Manheim Colorado, Commerce City, CO* S NOVEMBER 18 Manheim Dallas, Dallas, TX * S ADESA Phoenix, Chandler, AZ * S Southern Auto Auction, E. Windsor, CT *S NOVEMBER 19 Manheim Houston Hobby, Houston, TX * S NOVEMBER 20 Manheim Gr. Nevada, Las Vegas, NV *S Manheim Pennsylvania, Manheim, PA+S NOVEMBER 24 Manheim Orlando, Winter Garden, FL *S DECEMBER 1 Manheim Georgia, Atlanta, GA *S Manheim Arena, Bolingbrook, IL *S

DECEMBER 2 Manheim Dallas, Dallas, TX * S Southern Auto Auction, E. Windsor, CT *S DECEMBER 3 Manheim Gr. Nevada, Las Vegas, NV +S DECEMBER 4 Manheim Gr. Nevada, Las Vegas, NV *S Manheim Pennsylvania, Manheim, PA+S DECEMBER 8 Manheim Orlando, Winter Garden, FL *S ADESA Kansas City, Belton, MO *S DECEMBER 9 Greensboro Auto Auction, Greensboro, NC *S Columbus Fair Auto Auction, Columbus, OH *S Manheim South Seattle, Kent, WA *S * - Open S - Simulcast + - Closed

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USED CAR NEWS

November 16, 2009

Disconnected Jottings From Tony Moorby...

I recently had occasion to travel to Atlanta for a brief meeting, one that allowed me to travel back to Nashville that same evening. I went to book the flight through Delta’s Web site, as they are the only airline to affect direct, non-stop flights from Nashville. The flying time is only 35 or 40 minutes; say an hour from gate to gate. The price was a staggering $930

here). It wouldn’t be so bad if Delta’s service was anything even approaching servile and I can hear you saying “Here he goes again,” but really. If you can get one of their agents to look up from their computer for one second and get the slightest glimpse of eye contact, then consider yourself lucky. All I get is the drumming of painted nails on the counter.

either trip, these days, fills me with a dreaded sinking feeling and to be avoided in all but the most extenuating circumstances.

It occurs to me that the same logic, if that’s the right word, pervades in gas pricing. Without going into all the gory details, I remember the ultimate in questionable practices when the price of a barrel of oil went down a

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

for the round trip. Now, I would be the first to admit that I know nothing about the mysteries and logic involved in “load management” but this ridiculous price seems to me to be nothing short of a thorough drubbing (trust me, I could think of more appropriate words

The other crazy part is that I can travel to England for less than $500, a seven-anda-half hour, 3,000-mile flight. On Delta. Round trip!

If anyone out there can explain this conundrum to me, in words of one syllable, then I’d be pleased to listen.

Anyway, the thought of

couple of clicks, the price at the pump went up for a considerable while. But I guess we’re still fortunate in how little, overall, we have to pay, compared to the rest of the world.

Thankfully, in our business sane heads and all the natural market forces ensure that

vehicle pricing remains sensible. And while new-car sales have been awfully slow and not likely to reach a total industry volume of 10 million units for the year, used-car prices have been creeping up as availability has decreased.

Apart from the availability of credit, a major driver of our business, the other consideration is ‘the cost to trade’. As new-car prices have come down and used car prices have gone up, that gap has closed. With sentiment in the market that the recession is easing, I don’t believe it will be long or take much to trigger a sales climb – thank the Big Guy. The used car business is going to need that volume in three or four years’ time to maintain its momentum – it’s those market forces again. Let’s hope we never have to price like those other guys.

It would be remiss of me to omit an observation of the passing of one of the auction industry’s greats, Jim Wheatley. I used to call him ‘Gentleman Jim’. He used to own, along with his wife, Barbara, the Harrisonburg Auto Auction. He’d worked for Ford Motor Company prior to that and served in

the forces, too. They sold the auction to GE but stayed in the business and maintained a deep and abiding interest in the well-being of the National Auto Auction Association, for which they were inducted into the association’s Hall of Fame. I can think of few more deserving of that prestigious place in our industry. Gentleman Jim was a quiet man, not given to flamboyancy or boisterousness although he had a wonderful sense of humor and it was a rare moment indeed not to see him sporting a gracious smile. His giving to his community is too much to mention here but I can tell you that our business is better placed for his contributions. He gave to more committees that you can count on two hands and when he spoke, you did well to listen.

His diplomacy was legendary and his tact saved many faces any embarrassment. I played golf with him a few times at various conventions – I laughed a lot and learned about patience and warmed to his encouragement. What a truly lovely man. It was my privilege to have known him and my condolences go to Barbara and her family.

C R O S S WO R D

by Myles Mellor

Across 1. They make a peppery sounding sports car 5. This model comes in LE, XLE, S & XRS 10. Trim material 11. ____ GV 13. ____ SM (French car) 14. British thanks 15. Car model 1991 “Legend” 18. Ford that flopped 20. Saab make this kind of engine 21. Remarked 23. It can be white 24. They have C, E and S classes 27. Electric vehicle, for short 28. Yearly payment percent, abbr.

30. Pump stop 31. The end of a sales offer?

33. Easy to park car 36. Place for gloss 37. Chainwheel 39. Always one of the top selling certified car brands 42. Move quickly 43. State that was the auto HQ 44. Jim Waldron, a Michigan dealer, offered to buy this auto brand 46. Cadillac __ Ville

Answers from the 11/2/09 puzzle

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Answers to this puzzle in the 12/7/09 issue. Call 1.800.794.0760 for a FREE subscription.

27.

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Miscalculate ____ Esperante Small Honda Demonstration event Circus swing 2003 Toyota It makes a coat Type of wave Car until 1957 Up or under on the internet Ford Explorer, e.g.

Executive order, for short

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