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J.D. BYRIDER MILESTONE Buy-Here, Pay-Here Group Marks 20 Years

By Ted Craig

One of the most successful firms in the used-car business started in economic times as bad as today’s.

DeVoe Chevrolet-Cadillac, a family-owned store in Marion, Ind., was struggling to sell cars in 1979 because of double-digit interest rates and gas prices at all-time highs.

Jim DeVoe, son of the store’s owner, convinced his dad to try in-house financing. He set up a separate operation in a trailer called Auto Credit.

Out of that trailer grew J.D. Byrider, the buy-here, pay-here group with 13 company-owned stores and 114 franchisees.

“Jim DeVoe was one of the pioneers of this business,” said Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers.

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“He saw the merits of buyhere, pay-here before most other people.”

The J.D. Byrider franchise system started in 1989. DeVoe had been conducting seminars in buy-here, pay-here since 1986 and decided he had a concept worth franchising.

The only snag is Auto Credit proved too generic for a trademark. So DeVoe combined his initials with the name of a defunct electric car maker.

Early franchisees only needed a trailer to add a Byrider franchise. The chain grew quickly through Indiana and Ohio, but J.D. Byrider struggled in bringing the needed talent to Marion.

DeVoe made the decision to move operations to Indianapolis. Steve Wedding, J.D. Byrider’s chief financial officer, considers that the most important moment in the company’s history.

“We can point to a number of people who have joined since that have had tremendous impacts,” Wedding said.

One key hire was a new chief information officer who updated the company’s computer system. That centralized processing and data, allowing headquarters to analyze data and feed it back to franchises so they can make better decisions.

The current computer system, called Discover, is the backbone of the company, Wedding said.

It was at this time that Russ Larson became a J.D. Byrider franchisee. His store in Burlingon, Iowa, was one of the first to operate in a full-fledged store rather than a trailer.

Photo by Kevin Schmidt TOP PERFORMER: Russ Larson, a former banker, stands in front of his J.D. Byrider store in Davenport, Iowa, one of several he owns. Larson had been named the buy-here, pay-here chain’s top franchisee four times.

Larson said he did it to give himself a place he wanted to go to every day.

Today, all J.D. Byrider stores operate out of stand-alone buildings and offer full service.

This drove away some franchisees who wanted to make a smaller capital investment, Wedding said. But it’s been good for the company as a whole.

All that new data analysis in the mid-’90s showed a bulk of charge-offs occurred in the first two years of a contract.

Adding warranties and $5 oil changes vastly improved the

performance of these contracts, Wedding said.

The average vehicle sold at a J.D. Byrider store has $1,400 worth of reconditioning into it before it gets on the lot.

These vehicles average $4,000 wholesale and these days are 2002 models with 90,000 miles.

J.D. Byrider’s goal is having few repeat customers despite the high level of service. Wedding said the company aims to get its customers moving through life.

One way the company does that is by reporting payment in-

formation to the credit bureaus.

That’s one way J.D. Byrider is different from the traditional car dealerships. Another is the company’s franchisees often aren’t car dealers, or at least they didn’t start out that way.

Many are like Larson, whose background was in banking.

Larson and his partner tried the new-car business for a while and found they preferred the J.D. Byrider model.

Other franchisees come from more traditional automotive backgrounds, like J.T. Gandolfo.

Continued on page 3

IN THIS ISSUE • Buy-here, pay-here chains report strong results. – Page 3

• Auction chains look beyond U.S. border for opportunities. – Page 8

• Manheim teams with UPS to improve logistics. – Page 5

• A family feud leads to arrest of fatherson dealers. – Page 16

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J.D. Byrider – Continued from page one Gandalfo owns several dealerships in South Carolina, including a new-car store and two J.D. Byrider franchises.

He was in the car business for years, but had no interest or comfort doing buy-here, pay-here on his own. Then the J.D. Byrider stores became available and Gandalfo saw a tremendous cash flow opportunity.

That proved true within three years.

Gandalfo said the support offered by both the corporate headquarters and other franchisees is exceptional.

He compared it with belonging to a giant 20 group. Gandalfo said he can visit another J.D. Byrider store in the country and the owner will open his doors and share information about any topic.

That rarely happens among new-car franchisees, he said.

There’s little difference between the franchisees and the company-owned stores, Wedding said. The corporate stores serve to offer proof of concept.

“We want to prove that we can do what we’re teaching people to do and

be successful at it,” Wedding said.

DeVoe could have launched a chain of stores himself, like competitors Drivetime and America’s Car-Mart Inc. But that would have slowed growth, Wedding said.

“If we had to grow 127 stores on our own, we’d probably be many, many years out,” Wedding said.

Many of the stores may have been forced to close in recent years when capital grew tight.

That’s been the main challenge this past year, especially for new stores.

Wedding said the company is putting all its excess capital, which had been going to the company stores, into helping these stores.

“Byrider franchising is going to have some skin in the game with new franchisees,” Wedding said.

That’s an example of how the company cares for those who buy into its system.

“It’s more of a family than it is a business,” Larson said. “They truly care about their franchisees.”

That family suffered a major loss in March 2006 when Jim DeVoe and his son-in-law, Steele Gudal,

Photo by Kevin Schmidt NICE DIGS: Russ Larson stands in front of his $1-million facility in Davenport, Iowa. Early J.D. Byrider franchisees operated out of trailers, which was actually part of the chain’s appeal.

died in a plane crash.

“That was a crushing blow,” Larson said. “I called them once a week to bounce ideas off them.”

DeVoe put together a very strong management team, Wedding said, but the company still missed his presence.

“Jim was key to the vision of our company to see beyond the current year and look at what issues we needed to be working on and what opportunities lie ahead,” Wedding said.

“If Jim had been here, we might have had a better 2007 and 2008 than

we did.”

That’s when the company’s portfolio started to get rough. It was having to compete with subprime finance companies and that meant looser underwriting.

It was a challenge, Wedding said, but J.D. Byrider

seems to have turned the corner earlier this year and is now thriving. Profits have nearly tripled.

Capital is still a struggle and growth is slower, but Wedding said J.D. Byrider continues to prove the vision Jim DeVoe had in a small trailer 30 years ago.

STRONG QUARTER

America’s Car-Mart Sees Profit Grow By More Than $2 Million

By Ted Craig

America’s Car-Mart executives believe the buyhere, pay-here chain will continue its strong performance for the foreseeable future.

The company recently reported a profit of $6.3 million for its latest quarter, up from $3.9 million in the same period the year before.

“We truly expect these levels of results to continue into the future,” said “Skip” Falgout, the company’s chairman of the board.

Car-Mart’s revenue grew 14.7 percent, with same store revenue growth of 11.4 percent.

Growth can sometimes create problems in the buy-here, pay-here business by putting too much money on the street. But delinquencies, charge-offs and provision for credit losses were remarkably low by historical standards in the last quarter, according to Jeffrey

“We truly expect these levels of results to continue...”

– “Skip” Falgout

Williams, the company’s chief financial officer.

The active customer base increased 3.3 percent to more than 45,500 during the quarter. But the quality matters more than the quantity.

CEO Hank Henderson said brand marketing helps the company bring in customers who previously financed sales through subprime creditors.

“It allows us to be more selective and raise our standards,” Henderson said.

The only area hurt by improved contract performance is wholesale sales, which experienced a $30,000 decrease in the

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last quarter. That’s due to taking fewer repos to market, Williams said.

The wealthier customer base means contract terms are growing shorter based on higher sales price, which ensures customers have more equity in vehicles.

Falgout said a main focus remains controlling the wholesale purchase price so retail prices stay in line.

Car-Mart added a third regional purchasing director for Kentucky and Alabama. That’s the region where executives see growth.

The company will add lots in those states as trained and qualified as-

sociates become ready, Henderson.

Car-Mart has emphasized training to accomplish that task. It’s brought in trainers in several areas, including collections.

The company enjoys lower turnover among general managers lately, which helps. When it does need to hire, Falgout said there’s a good pool of experienced candidates coming from other industries such as retail and food service.

America’s Car-Mart added several top corporate managers from Walmart Inc. in the last year.

They have improved operations in many ways, Falgout said.

Lower fuel prices benefited the company in a couple of ways this past quarter.

One is lower operating expenses because it costs less to gas up hundreds of vehicles. The other is increased demand for trucks.

Chain with Trio of Stores Reports Improved Margins NowAuto Group Inc., the owner of three buyhere, pay-here stores in Arizona, announced results for its quarter ended Sept. 30.

NowAuto reported revenue of $1.4 million versus revenue of approximately $1.1 million in the prior year. During the quarter gross margin improved to 51.5 percent due to higher sales volume of higher margin vehicles.

Charge-offs and defaults improved significantly over the prior quarter and prior year as a result of increased credit criteria, improved contract management and system upgrades. Net investment increased 11 percent year-over-year in spite of a 13 percent increase in allowance for doubtful accounts.

"The present condition of the subprime and below subprime auto market has continued to impact our industry and our company," said CEO Scott Miller. "While we have managed to increase year-over-year sales revenue our challenge has been, and will continue to be on, collections.

Miller said tighter underwriting criteria yielded positive results in the September quarter.

“Nevertheless, we expect a difficult environment for the foreseeable future,” he said. “Our commitment to customers and shareholders alike remains; NowAuto will do whatever it can to maintain productive contracts without placing imprudent demands on our customers.”

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Bumper Stickers Prove Easier to Remove Than Ever

Thieves Pose as Transporters

The National Auto Auction Association is warning its members not to release any vehicles to anyone claiming to be a transporter from Atlas Towing and Recovery of Illinois.

If anyone does attempt to pick up releases using this company, auctions have been told to notify local law enforcement immediately.

It is believed that on Oct. 12, thieves stole the identity of a one-man tow operation out of Chicago, then set up as a legitimate company on Central Dispatch and contracted with a number of dealers to pick up and transport vehicles, which never make it to their destination.

Two vehicles have already been picked up from a Manheim facility.

Twelve others have been picked up from victim dealerships.

Creditor Buys Portfolio

Consumer Portfolio Services Inc. entered into agreements to assume servicing responsibilities on a $146.1 million portfolio of automobile receivables owned by a subsidiary of CompuCredit Corp.

Though many screen printed bumper stickers have utilized a “removable” adhesive since the 1960’s, persistent myths about bumper stickers damaging cars continue. Bumper stickers have come a long way since the 1940’s when people tied cardboard signs to bumpers with wire. Today’s adhesive choices for custom printed stickers ranges from “super tac” to “static” and everything in between.

Websticker.com, a company specializing in custom bumper stickers and promotional stickers for almost 20 years, still battles misconceptions about sticker adhesives daily. According to owner Jeff Nicholson, “we sell a large number of custom car magnets and static decals even though they cost more and are displayed for shorter periods of time than a vinyl sticker.

The reason is often that many customers or end users are still worried about the risk to vehicle paint jobs.”

Removable adhesives on stickers have been offered for almost 50 years but still people are willing to pay more, in some cases double, for the piece of mind that the material will definitely come off a car without damage.

Adding to the general misconception of damaging adhesives are cheap paper stickers that can be difficult to remove and do leave glue residue. Says Nicholson, “when buying custom

bumper stickers, stickers, labels or decals, it is important to verify that the material, adhesive and print quality are suitable for your purposes. Make it clear how long you want stickers to hold up outside and how difficult, or easy, they should be to remove. Then get a guarantee that the proper product is delivered.”

“We’ve all seen people with stickers Scotch taped to the inside of their car windows,” says Nicholson. “And just yesterday a woman buying magnets proclaimed, ‘I would NEVER put a sticker on my car.’ While it’s fine to be aesthetically or philosophically opposed to stickers on your car, it is important for sticker buyers to know the facts.

Custom printed stickers can be profitable products or strong, economical promotional tools for companies. Misconceptions about adhesives should not get in the way of maximizing the power and profitability of this medium.”

And, if you are having trouble getting an old vinyl sticker off a car?

According to Nicholson, “before you get out the paint thinner, sandpaper, razor blade, or other specialized removal product, I’d suggest using a blow dryer and heating up the sticker.

The heat will soften the adhesive and will be the best bet for peeling the sticker off in one piece.”

percent over September, construction of homes and apartments fell a larger-than-expected 10.6 percent, and building permits, a key indicator of future construction, slid 4 percent.

“I’m not inclined to take on any more exposure until I see that the building-housing market is thoroughly back out of recession,” Haner said after the Commerce Department released the latest reading on new home sales.

“Right now, construction companies are going out of business,” said Erich Merkle, president of the auto industry consulting firm autoconomy.com in Grand Rapids, Mich. “And those companies that are surviving are making do with the existing fleet.”

The housing slump has pushed U.S. pickup sales downward for the past three years.

Sales routinely topped 200,000 per month as recently as 2007, but in February they fell to less than 89,000, the low point for the year. They’re off 32 percent from the first 10 months of 2008, according to Ward’s AutoInfoBank. Ford, Chrysler and GM combined to sell 843,000 pickups through October.

In Las Vegas, once among the hottest housing markets in the nation, building declined rapidly in the recession and is just starting to show signs of recov-

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

Truck Sales Won’t Pick Up Soon DETROIT (AP) – At Kevin Haner’s construction company in Las Vegas, three of the four Dodge Ram pickup trucks are starting to get a little old. He may replace one if he gets a great deal, but he’ll keep running the others until he’s convinced that the housing slump has ended.

Haner’s reluctance to spend is typical of contractors nationwide. This presents a huge problem for the Detroit automakers because truck sales are directly tied to new home construction. Pickup sales are on pace for their worst performance in 17 years, and GM, Chrysler and Ford still sell 91 percent of all full-size pickups in the U.S. Even as Detroit tries to gain traction with new small cars and electric vehicles in a government-mandated shift toward greater fuel economy, it needs to sell more Rams, Chevrolet Silverados and Ford F-150s. Pickups often sell for $30,000 or more and typically command higher prices and generate more profits than small and midsize cars. They account for 22 percent of sales for the Detroit Three. Until pickup sales rebound, steady profits and solid financial footing will likely prove hard to come by.

Haner and others have reason to be cautious. While October new home sales were up 6.2

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

ery, Haner said.

His work force surged to 25 during the boom years earlier this decade, but now its down to six. He paid off three of his trucks in 2007 while business was still good, and he’s maintained them so they’ll last.

With the casual truck buyer all but out of the market, automakers have been offering big incentives such as zero percent financing to entice contractors out of their bunkers. But like Haner, most are not budging because of uncertainty about a housing recovery.

The big drop in October home construction numbers brought fears of a double-dip recession in the industry and warnings that 2010 may still be sluggish for the sector. Yet inventory in October dropped to the lowest level in nearly four decades, leading at least one housing industry analyst to predict that builders will be swinging their hammers soon.

Mike DiGiovanni, General Motors’ top sales analyst, said the automaker still projects an upward trend in new housing late next year.

PAGE 26

by Myles Mellor

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. 17 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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GOING BROWN

Manheim Partners with UPS to Improve Automotive Transportation

By Jeffrey Bellant

UPS Inc. teamed with Manheim recently as part of the company’s effort to grow its automotive transportation business.

UPS’s Automotive Solutions Group will work on behalf of Manheim’s commercial customers to arrange pickup and drop off for vehicles bound for Manheim’s 77 operating locations in the United States.

The two companies, which are both headquartered in Atlanta, signed a contract last May. Brett Franklin, Manheim senior director, said the partnership launched in July with one auction, but it continues to expand.

“We’ve been converting locations since then. It’s a slow and deliberate process,” he said. “It’s been a very positive relationship so far.”

The agreement involved developing an interface between Manheim’s operation system and UPS’s logistic transport system, Franklin said.

UPS will also provide

consistent transport paperwork, payment terms and processes.

“What UPS will be able to do for us is to track all of these movements through one central transportation brain so they can be dispatched efficiently and (reduce) cost and time,” Franklin said.

Manheim officials felt that UPS will not only provide a great logistical system, but can even improve on this system.

“We look to have this rolled out at approximately half of our Manheim locations by the end of next year,” Franklin said.

Wayne Cabeza, director of UPS’s Automotive Industry Solutions group, said the company has been shipping automobiles for about a decade.

“We’ve got between 70 and 80 customers,” Cabeza said. “Some of them are very small and some of them are larger.”

Ford Motor Co. is one of the company’s oldest and largest customers.

The company also ships for dealers and individu-

als, Cabeza said. In 2008, Superior Chevrolet, a Decatur, Ga., dealership specializing in commercial and fleet vehicles, partnered with UPS to expand its ability to ship vehicles outside its normal Southeast region.

Cabeza said the company also offers driveaways and other modes of transportation.

Prior to this new partnership, UPS has worked for an individual client who needed to move units from auction to auction.

Cabeza said UPS began developing a relationship locally with Manheim last year and later discussed a bigger partnership in February.

“Right now, our arrangement is only for our commercial vehicles inbound to Manheim auctions,” Franklin said. “Certainly, there are opportunities for future (expansion).”

Franklin said UPS was a natural choice.

“There’s little question that UPS is the leading logistic expert worldwide,” he said, “and with the experience they’ve had mov-

DELIVER MORE: UPS drivers will now be able to move cars from Manheim’s auctions across the country to dealers’ lots.

ing vehicles for the past 10 years, they really stood out beyond anyone else.”

Cabeza said UPS and Manheim’s parent company Cox Enterprises share a similar corporate culture, which made the

partnership a good fit.

He added that Manheim’s leadership and its position as the largest auction chain also made the venture attractive.

“They’re at the top in their industry, “Cabeza

said, “and we consider ourselves at the top of our industry.”

Franklin said Manheim customers can continue to select and hire other transporters to move vehicles if they choose.

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PROOF

Study Shows Value of Technology

Devices Have Proven Benefits

Source: Subprime Analytics

By Ted Craig

Payment assurance devices, both starterinterrupts and GPS, improve the performance of buy-here, payhere sales contracts.

That’s the conclusion of a major study conducted

by Ken Shilson, founder of the National Alliance of Buy-Here, Pay-Here Dealers. “I feel this study has been long overdue,�

Shilson said.

He shared the results of his study at a recent

NABD conference.

While the results for both types of payment assurance devices proved positive, the way dealers used them varied.

Starter-interrupt devices that use code-based systems pre-programmed to coincide with a customer’s payment schedule are more proactive tools, Shilson said.

They require customers to keep in contact with the dealerships to receive new codes.

This makes both parties more efficient, Shilson said.

Customers prioritize their car payment knowing they need a code to make their vehicles run.

Dealership staff is more diligent in collections, using data rather than personal judgment in when to step up collection efforts.

GPS devices are reactive, but also effective.

They create a psychological deterrent because customers know they’ll lose their car if they fail to pay.

Continued on next page

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Devices – Continued from prior page “Dual technology is something you should definitely evaluate.”

– Ken Shilson

This makes disclosing the fact the vehicles come with the devices critical to making them work, Shilson said. Most legal experts recommend disclosing their usage anyway.

Many in the buy-here,

pay-here business advocate dual devices that provide both GPS and starterinterrupt.

“Dual technology is something you should definitely evaluate because it seems to combine

the benefits of both,” Shilson said.

One dealer Shilson knows uses the less expensive starter-interrupt devices for lower-end vehicles and the more expensive dual devices for higher-end vehicles.

Dealers should create their own strategies for using the devices, Shilson said.

Using technology means dealers can assign more contracts to individual collectors. The devices don’t replace good underwriting and collections processes, however.

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PAGE 8 – FOCUS ON INTERNATIONAL MARKETS

INTERNATIONAL

Auctions Say ‘Oui’ and ‘Si’ to Opportunities Outside the U.S.

By Jeffrey Bellant

American auction chains continue to expand across borders both north and south, with newer sales in Canada and Mexico.

Manheim Montreal, the auction chain’s newest venture into the Great White North, opened less than two years ago, but already shows promise.

Patrick Brennan, Manheim Canada vice president, said the auction opened in January 2008 in what is now the mechanic shop. But the completed auction is an eight-lane facility and has two lanes for a detail department and the standalone mechanic shop.

The sale runs an average of 600 to 800 units a week, with sales as high as 1,200 units.

Manheim Montreal, like its American sister auctions, runs dealer trades, consignment, off-lease, rental and factory units.

At this point, 65 percent of the units are commercial, with the remaining units coming from dealer consignment.

The biggest challenge for starting a new sale in Montreal was understanding that the culture is different than in the United States, Brennan said.

Brennan said the Montreal metropolitan area has about 4.5 million people, which was the largest population area without a Manheim auction.

“So it made a lot of sense,” he said.

Since French is the official language of the city and there are different employment regulations, it is truly a foreign environment, Brennan said.

“You cannot try to have them adapt to you – whether it be the employee or the customer – you have to adapt to them,” he said.

Brennan said the company worked with the

local community and its officials to build a strong relationship.

Manheim also met its goal to bring in local people to run the auction, hiring Yvan St-Jean as general manager and Michel Perras as assistant general manager.

“The team in Montreal has grown to be one of our strongest in Canada, quite honestly,” Brennan said.

“We’re proud of what they’ve done.

“We’re certainly positioned for some great success.”

Outside of the language, a dealer walking into Manheim Montreal wouldn’t know any difference from a U.S. auction, Brennan said.

“Obviously, there are some cultural differences, but those aren’t as pronounced as you’d think they might be,” he said.

On the currency side, the exchange rate is almost even now, so Brennan’s not seeing as many

CANADIAN SALE: Dealers clamor for cars at Manheim Montreal, a recently opened auto auction in Quebec.

cars being shipped to the U.S. One big difference between Canada and U.S. is that Canada has a bigger leasing market than the

U.S. so the majority of commercial units are offlease units, not repossessions or others.

Manheim also continues to work very hard on the

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virtual side with OVE, which is popular with Canadian customers.

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transporting vehicles. Because of the geography of the country and the spread-out population, rail is used more often in moving vehicles, Brennan said.

customers needed an additional location from which to sell their vehicles. As one of the three largest cities in Mexico, Guadalajara was the natural

“The time has come for us to further expand ... in Mexico.”

– Benjamin Skuy

The biggest challenge for Manheim is the presence of competitor ADESA’s largest auction, which has been in Montreal since 1993.

ADESA, however, is making a stir south of the U.S. border with the grand opening of ADESA Guadalajara. The auction actually had its first sale in September, but looks forward to a formal grand opening this month.

The company first entered the Mexican market with ADESA Mexico City in 2002.

“The time has come for us to further expand our operations in Mexico,” said Benjamin Skuy, executive vice president of international markets for KAR Holdings.

“Our business in this area has shown steady growth during the past few years, and our

next step for our expansion.”

Estanislao “Stan” Suarez will serve as general manager of ADESA Guadalajara and report directly to Michel Gillies, managing director of ADESA Mexico.

ADESA Guadalajara will have reconditioning, detailing and transportation capabilities. It will also provide 24-hour vehicle reception, storage, a dealer business center as well as auction-day catering.

“We are extremely pleased with our success in Mexico thus far,” said Gillies. “We are fortunate to have as customers almost every large factory, manufacturer finance, rental and leasing companies operating in Mexico, which enables us to offer our dealers a wide selection of inventory.”

UCN_11

11/30/09

4:18 PM

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12/1/09

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

Law Reduces Fraudulent Liens

By Jeffrey Bellant

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Tightening loopholes in Texas’ mechanic’s lien law has reduced fraud drastically, according to one local tax assessor.

The Texas Independent Automobile Dealers Association worked with the state’s Department of Transportation and other local officials to change a law which allowed some dishonest mechanics and title service providers to obtain vehicles fraudulently.

Danny Langfield, Texas IADA’s deputy executive director, said one problem under the old law was that a mechanic’s lien supersedes the first lien-holder on a vehicle.

That allowed a person to place a fraudulent mechanic’s lien on the car, forcing a dealer to either pay a bill or pay thousands of dollars to take the issue to court.

The dishonest party would do the very minimum to contact a lienholder under the law, knowing that the lienholder would lack either information, money or time to address the issue before losing the vehicle.

Tarrant County Tax Assessor Betsy Price said new law gives the vehicle owner/dealer more time to address the issue while requiring the person holding a mechanic’s lien to do a better job of notifying the dealer about the issue.

A mechanic must now notify the lienholder within 30 days of taking in the car and doing the work. Then 10 days later, the mechanic must mail his notice, and must also surrender – to the county tax assessor – copies of the work order and letter to lienholder and owner of record.

The tax assessor then has 10 days to send notice to the lienholder, and whomever signed the work order, to let them know that the mechanic should have notified them by now. The mechanic must provide them with a right to review the car and a signed work order must be attached. They must also provide the location where the dealer can view the vehicle and how to get in touch with the mechanic.

It has hindered crooked mechanics and title service providers who previ-

ously took advantage of the law.

In the past, the law didn’t require a signed work order be included in the notice.All the mechanic had to do was notify the dealer and even then the abuses were rampant.

Price had seen notices that included little to no information – except to let the lienholder know that the mechanic had his car, for example.

“I had one dealer who received an envelope full of grocery store coupons,” she said. “It was just turning into a legal license to steal.”

Price joined other officials and the Texas IADA, to “put some teeth” in the law.

“It seems to be working,” Price said. “Everybody’s mechanics’ liens are significantly down.

“We were averaging 35 to 40 a month in Tarrant County and we’ve only done two since Sept. 1 (through mid-November).”

Price said Harris County was averaging 100 or more of these liens a month and they’ve done 10 in the same time frame since the new law took effect.

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

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Prepare Now for Upcoming Year NEW YORK (AP) – With the end of the year approaching, small business owners should be scheduling meetings to help them plan for a hopefully stronger 2010.

December is often a slow time for many companies, and owners should take advantage of the down time to do some planning. So meetings with financial advisers, bank officials and consultants should be on your schedule.

Equally important is for employers to meet with their staff.

Employees want to know what’s ahead, especially with so much continuing uncertainty about the economy.

Employees wants to know what's ahead, especially with so much continuing uncertainty about the economy.

No matter what shape the economy is in, the end of the year is an important time to meet with a financial adviser such as an accountant. The conversation should be about all the facets of your busi-

ness, and not just a talk about whether you’ll end the year with a profit or loss.

Most companies have already been cutting costs throughout the recession.

Those that are still having cash flow problems probably need an accountant’s help to determine what their next steps are, whether that means cutting back further, being more aggressive about customers who don’t pay or finding cheaper ways to get the work done.

But many companies will have more upbeat discussions with their financial advisers.

Jeffrey Berdahl, a certified public accountant with Berdahl & Co. in Center Valley, Pa., said his clients, while they’re expecting to see revenue flat or down this year, are cautiously optimistic about 2010.

So they’ll be coming to his office to discuss how they’ll be changing the way they do business in the coming year.

“They know things will turn around. It’s a matter

of when, and what the new business model will be going forward,” he said.

Berdahl said it’s critical for small business owners to be speaking with their bankers, not just at year’s end, but periodically throughout the year. If you haven’t been in touch with the bank, you need to do that soon. Your line of credit could be at stake.

Berdahl said owners need to be up-front with lenders about their companies’ cash flow and receivables. “Keep your banker on notice on what’s going on, good, bad or indifferent,” to avoid any surprises that could make the bank more cautious about lending to you, he said.

And, Berdahl suggested, “treat them as your ally, not your enemy.”

If you have other advisers, now’s a good time to check in with them, too.

Berdahl said owners need to be thinking about marketing _ “let people know you’re still out there” _ so a call to a marketing consultant is in order.

Continued on next page

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

Planning – Continued from prior page If you feel you can’t fit marketing into your budget, then get some help from a counselor at SCORE, the organization that offers free advice to small businesses. You can find a counselor at www.score.org.

Owners who have focused on trying to keep customers happy and maintain a steady cash flow may not have devoted enough time to their employees.

The year’s end gives you a chance to talk to workers about how the business is doing, what you’re

expecting 2010 to look like, and what you’re expecting from them.

“It’s important to communicate what the course of the future is in the organization: Here’s our plan for success, here’s how we’re going to survive and compete,” said Leigh Branham, owner of Keeping The People Inc., an Overland Park, Kan., human resources consulting firm.

Branham said owners still need to acknowledge the ongoing anxiety that employees feel about their jobs.

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There could be issues an owner doesn’t know about.

They could affect the quality of an employee’s work.

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12/1/09

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

Arrest Follows Family Feud

By Valbona Kociaj

The co-owners of a used-car store were arrested for allegedly not paying a woman more than $30,000 after they sold her Mercedes-Benz.

The father and son owners of G&B Auto Sales in Norwalk, Conn., were charged with firstdegree larceny and conspiracy to commit first-degree larceny.

Giacomo Brancato, 76, and Mario Brancato, 42, were released after posting $20,000 bond each.

The duo were arrested after Christina Liff claimed they agreed to sell a 2004 MercedesBenz for her, but then kept the money from the sale.

Liff bought the car and planned on selling it for a profit after doing some repairs.

Her son, Scott, worked at G&B

at the time. He is Mario Brancato’s brother-in-law.

The Brancatos said Scott Liff owed them money from deposits, as well as the sale of a vehicle to another dealership.

“We took what was ours,” Mario Brancato said.

“How am I going to give her money back when her son stole all the money from me?”

Brancato said Christina Liff did pay for the Mercedes.

Police confirm she is the legal owner.

Joe Brancato, another son who works at the store, said the family plans on suing the Liffs in civil court.

Calls made to Scott and Christina Liff were not returned.

Both Giacomo and Mario Brancato are due back in court Dec. 11.

Police Bust Auto Theft Ring LANCASTER, Ohio (AP) – An Ohio sheriff says detectives have seized more than 50 cars from a used car dealership that ran a wide-reaching fraud ring.

Fairfield County Sheriff Dave Phalen says Sommer Auto, Inc., in Pastaskala, pocketed payments from customers but failed to pay lenders. Phalen says the dealer would hide vehicles from banks when a repossession order was issued.

Phalen says the investigation

began recently when a deputy stopped a vehicle with a fictitious dealer plate.

The driver could not prove ownership of the vehicle, and deputies discovered more than 50 other cars parked on his property.

Phalen says no arrests have been made yet. The State Highway Patrol is investigating.

The vehicles will be turned over to banks or impounded until the owners are located.

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12/1/09

2:50 PM

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UCN_18

12/1/09

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

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Antique Auto Appraiser Seeks Apprentices NEW CASTLE, Del. (AP) – In a nationwide industry where customers spend half a billion dollars each year, Chip Romano is an elite name among the restorers of antique cars.

In November alone, he worked on MBNA President and CEO John Cochran’s 1965 Corvette, Jamie Wyeth’s 1950 Mercedes-Benz 170 Cabriolet and former middleweight boxer Dave Tiberi’s 1980 Corvette.

But his passion is more and more reaching out to youth to bring them into the industry and help them find careers at a time when they’re lacking direction. And that’s saying a lot, because his passion started behind the wheel of his older sister’s 1973 Volkswagen Beetle when he was 14.

“I hot-wired her car and drove it around for a week,” he said, smiling.

Not that he’s wanting youth to act recklessly. Quite the opposite, he wants them to find a path in life so they can succeed and have a life they enjoy.

If he’s able to start an apprenticeship program for students in the Colonial School District, he’s already got an idea of what he’ll expect. He, District Superintendent George Meney and Delcastle Technical High School automotive technology teacher Paul Davis have been

working on the idea.

“We’d like to give somebody like that some trainees” Davis said.

They’ve probably found their somebody. “I’m looking for the kids who don’t have a direction and have no idea that this is out here,” Romano said.

He’s probably their best option because, as Davis explains, it’s not easy to find the resources or willing and able people to teach restoration.

“The problem is, those cars aren’t available for training,” he said. “You’re not going to take a car that costs thousands and thousands of dollars and use it as a training tool. That’s a very different kind of job, as opposed to going out and repairing people’s daily transportation.”

JEMS Classics is Romano’s business since 2005; he named it from some of the letters in his daughters’ names, Jessica and Emily. He has a 10,000-squarefoot shop and works with Bruce Hofmann, who does much of the bodywork.

He believes today’s students can become elite restorers of incredible antique cars, helping to keep the industry and the hobby alive for years to come.

“I’m looking for the kids who don’t have a direction and have no idea that this is out here,” said Romano.

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

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BIG LETTERS Car Dealer Courts Controversy

Photo Courtesy of the Associated Press ULTRA UN-P.C.: Maintenance man David Lee of Arvada, Colo., puts the finishing touches on a sign featuring drawings of President Barack Obama for a sales lot of pre-owned vehicles along I-70 in the northwest Denver suburb of Wheat Ridge, Colo.

WHEAT RIDGE, Colo.

(AP) – A billboard showing President Barack Obama wearing a turban has sparked a lot of attention at the suburban Denver used car dealership that put it up.

The sign, completed by artist David Lee, shows a grinning, cartoonish

Obama and bears the words “PRESIDENT or JIHAD?” Underneath the President’s image is a big yellow square with the phrase, “BIRTH CERTIFICATE, PROVE IT!” The words “WAKE UP AMERICA! REMEMBER FT. HOOD” appear at the

bottom of the billboard at Wolf Interstate Leasing and Sales, about seven miles west of Denver.

The sign is visible from I-70.

An Army psychiatrist, Maj. Nidal Malik Hasan, a U.S. citizen born to Palestinian parents, has been Continued on next page

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UCN_19

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UCN_20

12/1/09

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

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Billboard – Continued from prior page charged in the Nov. 5 mass shooting at the Army post in Fort Hood, Texas, that left 13 dead and more than 30 wounded.

Lee said there were plenty of honks from car horns as he painted the billboard.

“One lady came by and gave me the ‘shame, shame’ look,” said Lee, of Arvada, another suburb of Denver.

Dealership owner Phil Wolf was unavailable for comment, but General Manager Wayne Means said the business has seen strong opinions about its sign.

“We’ve had people come

by and say, ‘Keep it up.’

We’ve had people come by and say, ‘Take it down,”’ Means said. “We can have differences of opinion.

This is America.”

The left-leaning advocacy group MoveOn.org called the billboard “racist” and was asking customers to boycott the dealership.

Lee said the billboard has previously held other slogans questioning the president’s citizenship, along with routine ads for cars.

The fringe so-called birther movement claims that Obama was born outside the United States and

is ineligible to be president. The Constitution states that a person must be a “natural-born citizen” to be eligible for the presidency.

Birthers contend that Obama’s birth certificate is a fake, and many say he was actually born in Kenya, his father’s homeland.

Obama’s Hawaii birth certificate along with birth notices from the two Honolulu newspapers were brought forward even before he took office.

State officials in Hawaii have repeatedly confirmed that Obama was born in Honolulu.

State Targets Fake Check Promos

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TRENTON, N.J. (AP) _ One New Jersey lawmaker wants to stop a marketing technique that he believes is deceptive.

Assemblyman Paul Moriarty recently introduced legislation that would bar businesses from mailing consumers unsolicited checks that, once cashed or deposited, enroll them in costly programs. The measure will likely first be considered by the Consumer Affairs committee, although a hearing date

has not been scheduled.

Moriarty says he was spurred to push the legislation after a constituent showed him an unsolicited $8.25 check they received from a business.

Cashing the check would have enrolled the constituent in an automotive roadside assistance program that costs $15.99 per month.

If the proposed legislation becomes law, no person or business would be allowed to send con-

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Violators would be cited under the state's Consumer Fraud Act and face up to $10,000 in fines for a first offense, and $20,000 for subsequent offenses, among other penalties.

A similar measure was introduced in the state Senate.

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UCN_21 REVISED

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5:17 PM

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

RETAIL MARKETS ARKANSAS

Sylvia Curry, coowner, Jacsil Motors, Pine Bluff, Ark.: â&#x20AC;&#x153;This is our 20th year in business. â&#x20AC;&#x153;We carry about 75 cars on our lot. Thatâ&#x20AC;&#x2122;s about the same as this time last year. â&#x20AC;&#x153;Our business this year is down about 56 percent.

We havenâ&#x20AC;&#x2122;t done anything different from previous years. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s the economy. Every manufacturer in town has either had layoffs or theyâ&#x20AC;&#x2122;ve cut workersâ&#x20AC;&#x2122; hours. â&#x20AC;&#x153;I do all of my financing through Credit Acceptance. Two years ago, we stopped doing any inhouse financing. â&#x20AC;&#x153;Other finance companies expect you to endorse paper - guaranteeing it and weâ&#x20AC;&#x2122;re just not going to do it. â&#x20AC;&#x153;About 30 percent of our business is cash sales. â&#x20AC;&#x153;We carry a higher percentage of cars than trucks and SUVs. Itâ&#x20AC;&#x2122;s about 75 to 25 (ratio). We carry about 60 percent domestic to 40 percent im-

port. â&#x20AC;&#x153;We get our inventory from a lot of different places, from auctions, new-car dealer trade-ins, individual buys and weâ&#x20AC;&#x2122;ll sell trade-ins we get here. â&#x20AC;&#x153;Dealer trades are harder to come by and market prices are up at auction because of the scarcity of used cars. I think itâ&#x20AC;&#x2122;s because of a lack of new-car sales. â&#x20AC;&#x153;We also do reconditioning on our vehicles before they go out on the lot.

Itâ&#x20AC;&#x2122;s about the same amount that we did last year. We do not have our own service shop. We farm out the recon work. â&#x20AC;&#x153;Our advertising is through television and newspapers. â&#x20AC;&#x153;We have a Web site and we do some Internet sales.

But they are sporadic. Internet sales are better in the metropolitan areas. â&#x20AC;&#x153;Our average price overall is about $7,000. Itâ&#x20AC;&#x2122;s about the same as last year. â&#x20AC;&#x153;We sold a 2004 Hyundai Santa Fe yesterday for $8,995. It had 95,000 miles on it. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re just hanging in

here. We donâ&#x20AC;&#x2122;t floorplan, so we donâ&#x20AC;&#x2122;t have the banks breathing down our necks. We also have paid for a property over the years, so we donâ&#x20AC;&#x2122;t have high overhead monthly bills. â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t know how these dealers who have these $10,000, $20,000 to $30,000-a-month floor plans are doing it.â&#x20AC;?

MICHIGAN

Jeff Braatz, owner, Paradise Motors, Lansing, Mich.: â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve been in business for 25 years. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re carrying about 85 units right now. â&#x20AC;&#x153;Last year, I had three locations and carried 220 cars. The (closing of those two lots) was due to the lender pullout. â&#x20AC;&#x153;As an independent, I had Capital One, Citibank and Wells Fargo â&#x20AC;&#x201C; all the big boys, so to speak. So when they left, I had to change my business model. â&#x20AC;&#x153;Now weâ&#x20AC;&#x2122;re doing buyhere, pay-here and Credit Acceptance Corp. We still have a couple of credit unions, a little bit of Chase

21

Compiled By Jeffrey Bellant business and a little bit from AmeriCredit. â&#x20AC;&#x153;If youâ&#x20AC;&#x2122;re an independent who doesnâ&#x20AC;&#x2122;t have some kind of in-house program, I donâ&#x20AC;&#x2122;t know how youâ&#x20AC;&#x2122;re going to make it. Itâ&#x20AC;&#x2122;s going to be tough. â&#x20AC;&#x153;I obtain my vehicles through private capital. â&#x20AC;&#x153;I think a big part of the problem in Michigan is that weâ&#x20AC;&#x2122;re becoming like the rest of the country regarding employment. Just in Lansing, we used to have 22,000 GM employees making 22 bucks an hour. We had guys sweeping floors - who couldnâ&#x20AC;&#x2122;t read and write - making $80,000 a year. â&#x20AC;&#x153;In some peopleâ&#x20AC;&#x2122;s minds, it became a birthright. With the (changes in the auto industry) thatâ&#x20AC;&#x2122;s all changed. â&#x20AC;&#x153;What I tell dealers is that you have to figure out how to sell a car for $300 to $350 a month to stay in business and make a profit. â&#x20AC;&#x153;Because now, you have to figure out how sell something to people who now make 16 bucks an hour and still make a profit.

â&#x20AC;&#x153;So now Iâ&#x20AC;&#x2122;m at one location and Iâ&#x20AC;&#x2122;m selling about 40-plus cars per month â&#x20AC;&#x201C; about 42 to 43 a month since March. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s really my model going forward, because Iâ&#x20AC;&#x2122;ve only got so much capital. â&#x20AC;&#x153;For example, my model before was carrying 25 to 26 cars per store. So actually, Iâ&#x20AC;&#x2122;m more profitable having one store selling 40 cars than I was when I had three stores selling 70 to 80 cars. â&#x20AC;&#x153;I was able to split some of the overhead up when I had three locations, but if you think about the inventory and the depreciation we suffered last fall, that was unprecedented. â&#x20AC;&#x153;Back then, there were vehicles like Dodge Durangos, Chevrolet Trailblazers â&#x20AC;&#x201C; vehicles that I had $12,000 invested in and they were worth $8,000. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;d go home everyday and my wife would ask â&#x20AC;&#x2DC;How did it go today?â&#x20AC;&#x2122; Iâ&#x20AC;&#x2122;d say, â&#x20AC;&#x2DC;Well honey, I only sold three cars and lost $12,000 today.â&#x20AC;&#x2122; â&#x20AC;&#x153;Currently, Iâ&#x20AC;&#x2122;m doing about 50 percent in-house

financing. I cut my staff from 26 people at three stores to 11 now. â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t carry many imports. We just donâ&#x20AC;&#x2122;t do well with them. â&#x20AC;&#x153;Trucks have really disappeared. Itâ&#x20AC;&#x2122;s all about cars now. â&#x20AC;&#x153;I obtain my vehicles from a large vehicle network. I get more online than I used to. I also go to ADESA Lansing and Iâ&#x20AC;&#x2122;ve got a buyer who buys cars for me. The beauty of only having one lot is that I can be more selective in my buying. â&#x20AC;&#x153;The (effect of the downturn in new-car sales) is a lack of trade-ins.

Itâ&#x20AC;&#x2122;s a rougher car out there. Every car is like Humpty Dumpty. Every car needs more work and every car out there is a repo.â&#x20AC;? â&#x20AC;&#x153;Our average retail price is about $10,900. Thatâ&#x20AC;&#x2122;s down about $3,000, because Iâ&#x20AC;&#x2122;m not doing those Wells Fargo deals and thatâ&#x20AC;&#x2122;s the price point people want to be at. â&#x20AC;&#x153;I recently sold a 2006 Pontiac Grand Prix with 70,000 miles and sold it for $10,900.â&#x20AC;?

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UCN_22

12/1/09

22

•

3:48 PM

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

WHOLESALE MARKETS CALIFORNIA

Russ Norrish, general manager, Manheim San Diego, Oceanside, Calif.: “Our sales have been very strong, selling 70 percent of vehicles offered each week. While we’ve seen some drop off recently, in general we’re holding steady.

“We were averaging around 1,100 plus units per week with eight lanes.

“Attendance has been steady with new buyers coming in every week.

“Manheim Simulcast attendance is up 50 percent over the previous year, which tells me that dealers are searching a variety of channels for vehicles.

“We draw buyers from within California in addition to dealers from Arizona, Nevada, Utah, and Washington.

“Dealers feel prices are high and that they are having challenges selling cars as there is little traffic at the dealerships. They also say that the Cash for Clunkers program may have attracted most of the buyers they would have seen during this time of

year.

“Consignment volume is down from the spring market. Dealers tell us they are keeping their trade-ins which affects auction volume, as the cars are not coming to auction. If dealers are not selling cars, there are no trades, repos or lease returns in the pipeline which means 2010 could be a challenge. Our team is taking this opportunity to establish new relationships with dealers and fleet business.

“Cars under $10,000 and those that are priced on the market. SUVs and trucks were hot for a while, but have cooled down recently. Toyota, Hyundai and Honda sales remain strong.”

GEORGIA

Bill Holtzclaw, assistant general manager, ABC-Atlanta Redtop Auto Auction, Atlanta, Ga.: “Our fleet sales are pretty much holding their own versus last year. It is the dealer consigned sales that are off.

“I attribute that to the

fact that new car dealers are not selling as many cars and not creating trade-ins which trickle down to used car dealers.

“We have four lanes and we run about 100 vehicles per lane. This time last year, we were probably running 130 vehicles per lane. Two years ago we were running about 150 vehicles per lane.

“Our sales percentages have come up. We are doing about 50 percent to 51 percent sales. Last year it was about 40 percent and two years ago it was about the same.

“We have about 350 dealers attending every auction, so it is about 700 dealers a week.

“The dealers are mostly coming from the local metro Atlanta area, although I do have some dealers from Tennessee and some from Alabama and South Carolina.

“The dealers coming to the sales are the eternal optimists.

“I have two major repossession runners here with me every week, and some minor ones. That is part of my fleet-lease business.

Compiled By Valbona Kociaj Their percentages are running a little higher than the rest, more like 70 percent.

“We start each auction off with what we call specialty items. They will be motor homes, campers, motorcycles and boats.

They probably sell more around the 30 percent mark. We run about 10 or those a week.

“We also run retired government vehicles.

“We do salvage sales. We do two of those a month and those sales run at about 80 percent. We usually have about 250 units per month.

“The average overall price coming through the lanes last week was $4,968. This is about $300 higher than last year.

“I still have dealers commenting on the Cash for Clunkers program. Especially the smaller dealers that handle the buy-here, pay-here.

“They are a little bitter about it “ They are still feeling the effects.

“We just had our sixth year anniversary sale.

“We gave away a gen-

uine NASCAR race truck.”

NORTH CAROLINA

Jerry Barker, general manager, Greensboro Auto Auction Inc., Greensboro, N.C.: “Sales are going pretty well. For this time of year we have been pretty pleased with our sales. I think the Cash-for-Clunkers Program resulted in a shortage of lower priced vehicles. And I think the shortage in the manufacturers’ buyback programs from the rental car companies creates a higher demand for a shorter supply.

“Sales of this time last year were not nearly as good as they are this year. .

“We have 16 lanes and we run about 3,200 to 3,300 vehicles per week.

We ran about the same number of vehicles last year as well, but the conversion rate is about 12 percent to 15 percent better this year than they were last year.

“We have about 1,200 dealers that show up every week. We get representation from about 10 different states.

“I think that if in the past a dealer would buy eight vehicles, they are only buying about four now. Instead of buying eight vehicles every other week, the dealers are coming in every week and buying half the amount.

“I think there are some credit issues with some dealers and they do not want to be caught buying too many vehicles and having the price drop too quickly on them.

“We get a lot of repossessions, off lease cars, rental car companies, we get a pretty good mix of units. But we do not do any power sports units or government vehicles.

“We have a salvage sale every week and the sales percentage is about 80 percent.

“The average price of vehicles running through here is about $13,000.

“I would say that trucks are holding their own this year. They are doing considerably better than they did last year. The smaller, more gas-efficient vehicles should probably be doing a little stronger than what they are.”

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UCN_23

12/1/09

11:16 AM

Page 1

USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

•

23

COMPILED BY JEFFREY BELLANT

CAROLINA AUTO AUCTION CELEBRATES ‘AUTOBERFEST’

Rent To Own Program

Cars 2 Cash

Rent To Own Facts DID YOU KNOW?THAT….

Bankruptcy and Judgments DO NOT Affect Rent To Own Vehicles!

Dealer Retains Title and Ownership until All Payments are Received!

Photo Courtesy of Carolina Auto Auction

Recovery Hassles “ELIMINATED”

PRIZE WINNER: Tommy Rogers, Carolina Auto Auction general manager, (left) congratulates dealer David Blackshear, who won the top $20,000 prize during a recent promotion.

Carolina Auto Auction played host to buyers, sellers and enthusiastic golfers during its two-day Golftoberfest/Autoberfest 2009 this fall.

This was the fourth annual golf event hosted by Carolina Auto Auction.

More than 100 golfers arrived at the Walker Golf Course at Clemson University for a day on the links and over $80,000 in possible winnings. The Walker course at Clemson is rated as one of the best courses in the state and one of the top 25 best college golf courses.

“We all look forward to our annual Golftoberfest, and this year’s tournament exceeded even our expectations,” said Michael Webb, auction director of marketing and sales.

More than $10,000 in prizes were given away: a $1,000 award to the winner of the putting contest, four $2,500 prizes for closest to the pin, and coupon books containing auction discounts valued at over $800. Potential prizes included hole-in-one opportunities to win a new car and $50,000. Trophies were awarded to the top three teams.

Autoberfest was held the following day in the auction arena. The event was attended by more than 900 dealers, who packed Carolina Auto Auction’s eight auction lanes to bid on more than 1,600 units. Following the sale, dealers gathered around the block for more than $30,000 in cash and prize giveaways, including hunting gear, an ATV and trailer, a Bostick Plantation hunting trip and “Carolina’s Cashpot” worth $20,000. Winners included David Blackshear of Blackshear Place Motors and six other dealers.

BRASHER’S HOSTS SCOUTS Brasher’s Cascade Auto Auction’s recent Fall Harvest sale featured 1,100 vehicles from Honda and Acura Financial Services, Wachovia Financial, Remarketing Services and the Pacific Northwest’s leading car dealers.

“We marked the fall harvest season with a great day of buying and selling at Brasher’s Cascade Auto Auction,” said auction sales manager Rob Wassom.

“Hot chili and cornbread seemed to take the chill right out of the air, and gave everyone the extra energy to stay in the lanes until the very end of the sale.”

Wassom reports that sales were brisk all day, with the institutional accounts posting a 75 percent conversion rate.

Also attending the sale were a number of Eagle Scouts representing the Cascade Pacific Council of the Boy Scouts of America. They were on hand to create awareness for the Boy Scouts and to participate in a fund-raising auction at the end of the day. After the sale, dealers

remained to offer bids on a number of items collected by both Brasher’s and the local council office.

By day’s end, more than $4,500 was generated for the Scouts.

“We take our responsibility as a member of our community seriously, and it was gratifying to see how much support the Boy Scouts received from our customers at the fall harvest sale,” said Wassom. “It was great to pull together to raise funds for the Boy Scouts, who do so much to encourage our youth, to help them build character and develop the leadership skills that will serve them as the community leaders of the future.”

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

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UCN_24

12/1/09

24

•

3:21 PM

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

TRUE COST OF INCENTIVES (TCI) ----*TMV values do not include options

OCTOBER, 2008

TCI $881 Avg Equipped New TMV $20,160 Years Old Avg Base Trade-in TMV 1 $11,098 2 $9,581 3 $8,098 TCI $1,681 Avg Equipped New TMV $24,525 Years Old Avg Base Trade-in TMV 1 $13,895 2 $12,078 3 $10,880 TCI $3,064 Avg Equipped New TMV $27,700 Years Old Avg Base Trade-in TMV 1 $14,702 2 $12,247 3 $10,325 TCI $1,459 Avg Equipped New TMV $34,925 Years Old Avg Base Trade-in TMV 1 $16,107 2 $13,937 3 $11,649 TCI $2,803 Avg Equipped New TMV $40,304 Years Old Avg Base Trade-in TMV 1 $24,323 2 $18,897 3 $14,558 TCI $2,192 Avg Equipped New TMV $22,786 Years Old Avg Base Trade-in TMV 1 $14,221 2 $11,613 3 $10,311 TCI $5,906 Avg Equipped New TMV $32,516 Years Old Avg Base Trade-in TMV 1 $17,201 2 $14,817 3 $12,388

DON’T MISS THE GREAT DEALS THIS SEASON at MANHEIM GEORGIA TUESDAY, DECEMBER 8 9:30AM Start Time - FMC, Mazda, Primus, 5/3 Bank, Enterprise Holdings, Hertz, RES Enterprise, Car & Truck Rental, Citi Financial, HSBC, RS, SST, Universal Motor, Capital One, Wachovia Dealer Services, Lease Plan, Suzuki, Hyundai Capital America, Nissan/Infiniti, Avis Budget Group, Toyota Open & much more!

MONDAY, DECEMBER 14 10AM - FORD MOTOR COMPANY SPONSORED AUCTION Ford Factory Sale - 350+ Units - closed

TUESDAY, DECEMBER 15

All Sales Live On Simulcast

8:30AM/IN-OP/100+ UNITS • 9:30AM Start Time - FMC, Mazda, Primus, 5/3 Bank, Citi Financial, Americredit, SST, Capital One, US Bank, Wachovia Dealer Services, RS, Condor Capital, Lenders Fleet, Lease Plan, Hyundai Capital America, Nissan/Infiniti, HYUNDAI OPEN FACTORY , Avis Budget Group, & much more!

TUESDAY, DECEMBER 22 9:30AM Start Time - FMC, Mazda, Primus, Ford Rentals/ARS, 5/3 Bank, Hertz, Enterprise Holdings, Citi Financial, HSBC, SST, Capital One, Lease Plan, RS, Wachovia Dealer Services, US Bank, Lenders Fleet, Condor Capital, Hyundai Capital America, Suzuki, Nissan/Infiniti, Avis Budget Group, Toyota Open & more plus 1 PM FORD FACTORY SALE closed - 200+ Lane 10 at 1PM OPEN SALE ON DECEMBER 29 AT 9:30 AM - HEAVY TRUCK & EQUIPMENT SALE AT 1:30 PM 7205 Campbellton Rd Atlanta, GA 30331-8144 404 - 349-5555 888 - 766-7144

TCI $2,364 Avg Equipped New TMV $24,173 Years Old Avg Base Trade-in TMV 1 $14,513 2 $12,507 3 $10,847 TCI $2,541 Avg Equipped New TMV $27,328 Years Old Avg Base Trade-in TMV 1 $16,030 2 $13,223 3 $11,419 TCI $4,573 Avg Equipped New TMV $38,458 Years Old Avg Base Trade-in TMV 1 $19,768 2 $14,397 3 $14,016 TCI $4,011 Avg Equipped New TMV $50,298 Years Old Avg Base Trade-in TMV 1 $29,689 2 $23,407 3 $19,029 TCI $3,092 Avg Equipped New TMV $27,331 Years Old Avg Base Trade-in TMV 1 $13,716 2 $12,068 3 $9,592 TCI $1,955 Avg Equipped New TMV $26,898 Years Old Avg Base Trade-in TMV 1 $14,128 2 $11,493 3 $9,020

OCTOBER, 2009

COMPACT CAR

$1,275 $19,658 Avg Base Trade-in TMV $11,010 $9,735 $8,123

MIDSIZE CAR

$2,223 $24,745 Avg Base Trade-in TMV $13,909 $12,538 $10,858

LARGE CAR

$3,531 $29,582 Avg Base Trade-in TMV $13,568 $12,588 $11,383

SPORT CAR

$1,801 $34,049 Avg Base Trade-in TMV $18,172 $14,602 $12,789

LUXURY CAR

$3,757 $41,211 Avg Base Trade-in TMV $26,249 $22,847 $17,784

COMPACT PICKUP

$1,519 $23,838 Avg Base Trade-in TMV $14,908 $14,493 $11,554

FULLSIZE PICKUP

$4,858 $32,844 Avg Base Trade-in TMV $22,332 $18,986 $16,667

COMPACT SUV

$1,804 $26,127 Avg Base Trade-in TMV $16,041 $14,760 $12,088

MIDSIZE SUV

$2,069 $28,384 Avg Base Trade-in TMV $18,556 $16,881 $15,202

LARGE SUV

$5,055 $39,818 Avg Base Trade-in TMV $25,786 $23,433 $15,798

LUXURY SUV

$3,314 $48,647 Avg Base Trade-in TMV $33,789 $29,004 $22,482

MINIVAN

$1,660 $28,454 Avg Base Trade-in TMV $15,559 $14,212 $12,894

VAN

$3,150 $27,153 Avg Base Trade-in TMV $14,477 $11,984 $9,521

% CHANGE'08-'09 44.72% -2.49% -0.79% 1.61% 0.31% 32.24% 0.90% 0.10% 3.81% -0.19% 15.24% 6.79% -7.71% 2.78% 10.25% 23.44% -2.51% 12.82% 4.77% 9.79% 34.03% 2.25% 7.92% 20.90% 22.16% -30.70% 4.62% 4.83% 24.80% 12.06% -17.74% 1.01% 29.83% 28.14% 34.54% -23.69% 8.08% 10.53% 18.01% 11.44% -18.58% 3.86% 15.76% 27.66% 33.13% 10.54% 3.54% 30.44% 62.76% 12.71% -17.38% -3.28% 13.81% 23.91% 18.15% -46.31% 4.11% 13.44% 17.77% 34.42% 61.13% 0.95% 2.47% 4.27% 5.55%

Edmunds.com's monthly True Cost of Incentives (TCI) report takes into account all of the manufacturers' various United States incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used. TCI data (and other Edmunds.com data products) can be viewed industrywide, import vs. domestic, by country of origin, by make, by model and by segment. True Market Value (TMV) is the transaction price for vehicles.

UCN_25 REVISED

12/2/09

9:01 AM

Page 1

USED CAR NEWS

December 7, 2009

â&#x20AC;˘

25

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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

Located on CONE Rd. Sale Every MONDAY 9:30 am Over 180+ units weekly 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

Call Marie Hingst today at 800-794-0760 or FAX 586-772-9400 to place your Classified Ad TODAY!

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USED CAR NEWS

D e c e m b e r 7, 2 0 0 9

Disconnected Jottings From Tony Moorby...

Winston Churchill said that England and America were two great counties divided only by a common language. There were other ways, too.

In the mid to late ‘70s, British Car Auctions Ltd. c o m prised sixteen auctions and a home office. In a country the size of Tennessee and half of Kentucky that was quite sufficient for national coverage. The new car market, at its best, generated about 1.5 to 1.9 million units and a total vehicle park of about 40 or so million.

A couple of events took place around 1978 – the company was taking a look at possible expansion into Europe and we were anxious to see what the American manufacturers were up to in their (limited) use of auto auctions. We were trying to get the British manufacturers to sell their cars through our facilities.

These efforts proved to be very fruitful as all the mak-

ers used us for their company and program cars.

Attempts to buy or build auctions in Europe were somewhat futile endeavors in those days. Firstly they all spoke different languages – no surprise here – but Europe was, by no means, an economic community. Business borders were jealously guarded and tax rates differed to the extent that moving cars around was an onerous and unrewarding business.

So there was no basis for auctions as free agents.

Mike Richardson, then the managing director of BCA, came over to the US for some initial research in 1979 and again, more seriously, in 1981, when deals were actually brokered to buy some auctions. The original idea was to buy a couple of auctions and send the profits back to England to bolster BCA’s bottom line. BCA was then a public company listed on the London Stock Exchange. Mike’s research showed that the industries were strikingly similar and had, in fact, blossomed around the same time; right after the war. They

had also suffered somewhat from a tarnished (and sometimes well-deserved) reputation as a nefarious pipeline for redistributing cars that had been tampered with in various ways.

We had cleaned that act up in England ten years prior and found that all kinds of other enterprises were willing to do business that previously wouldn’t have touched us with a ten-foot disinfected barge pole! We repeated that exercise over here but that’s a long story and worth retelling in another column.

If there was a major difference, it was that the British auctions used to deal with fleet and leasing companies, banks, daily rental operators as well as new and used car dealers.

Under government-regulated wage restraint, the company car became common-place and the used ones needed to be resold at replacement time. BCA had systems and personnel in place to deal with every facet of marketing and reselling cars, vans, trucks, plant and machinery, vintage and antique vehicles.

All this in tiny facilities used every day of the week except for Sundays (one of the auctions even had a Sunday flea market). In this country it wasn’t unusual to see fleets dumping cars in one market, to the detriment of prices for that model. Auctions typically served their local market of retail and wholesale used car dealers.

There was an almost incestuous protectionism of local business.

BCA’s sixteen auctions were used to acting as a harmonious group, giving the same level of service, whether a customer was in Surrey or Scotland, Winchester or Wales. That was one of my responsibilities over there.

Mike Richardson wanted that situation to be replicated over here and formed Anglo American Auto Auctions to acquire the necessary facilities nationwide. He invited me to join him as chief door knocker or vice president of sales. The job was supposed to last for a year or two, developing a sales force, representing as many auctions as we had

acquired at the time.

I know it sounds ungracious but it was like shooting fish in a barrel and success came quickly, generating new business from facets of the industry who hadn’t ventured near a new and organized resale system. I obviously stayed. Manheim had a few auctions but they acted in competition with each other rather than complimenting one another. The strategy wasn’t wrong, just different, but it gave us the opportunity to establish ourselves as a cohesive, customercentric remarketing group.

When I look at the groups now, including the independent auto auctions, they act in much a more unified way than they used to, I believe to everyone’s benefit.

I have to look back and say that, apart from meeting and marrying Terry and growing a wonderful family, the relationships I’ve established have provided more joy than I can possibly relate here. The language is still sometimes a problem but I’m working on it.

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

DECEMBER 8 Manheim Orlando, Orlando, 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 DECEMBER 15 Manheim Georgia, Atlanta, GA *S Manheim Arena Illinois, Bolingbrook, IL * S ADESA Minneapolis, Dayton, MN * S DECEMBER 16 Manheim Dallas, Dallas, TX * S Southern Auto Auction, E. Windsor, CT *S DECEMBER 18 Manheim Pennsylvania, Manheim, PA+ S DECEMBER 22 Manheim Colorado, Commerce City, CO *S Manheim Orlando, Orlando, FL *S DECEMBER 23 Manheim Phoenix, Chandler, AZ *S * - Open S - Simulcast + - Closed

C R O S S WO R D

by Myles Mellor

Across 1. Reach a business agreement (3 words) 6. Saturn coupe or sedan, no longer being made 10. Hot and cold controller 11. Toyota SUV name 12. Selling information item 13. Tracker, for one 14. Sportage or Spectra 15. Wind direction, for short 17. None 18. Chrysler SUV 20. Car named after the granddaughter of Romano Artioli, the Chairman of Lotus 22. Dusty 24. xA or tC 26. Sweltering 27. Auctioneer’s word 29. Film director’s cry 30. City transport 32. Cover expenses 33. Challenges 36. Travel 37. 12th Greek letter 38. Nissan model 40. Grassy area 42. Elton John, e.g.

43. Ford bought its car division in 1999

Answers from the 11/16/09 puzzle 3 $ < ' $ < / 2 $ 1 6

2 5 6 & + , 2 & 8 * 2 . & 8 5 $ 6 $ , ' , ( 0 ( ' 6 5 & 2 2 $ 6 3 5 2 & . $ , 0 , 3 2 1 1 ( 2 1 7 2 3 $

( & 2 ; + , 7 5 2 * < ( ' 6 ( / 5 & ( ' ( 5 ) ) / , 3 ( 7 7 & 1 7 , $ & 2 6 5 & +

5 2 : ( 1 6 / ( ( 6 $ 6 0 + 2 < : 6 8 4 9

/ / $ 2 2 ' 7 $ 3 - ( 7 5 ( 9 3 5 $ 5 7 1 5 2 7 $ = , 3 ' ( $ = $ / (

44. Tire feature 46. Infrared, for short 47. 2010 Kia ____ 48. Scull 49. Brink 53. Between 1992 and 1996 the best selling cars in the U.S. Down 1. German luxury car 2. Expert 3. Breadwinner 4. Vision or Talon 5. Checking out cars on the lot

6. Plead for 7. Ford ____ 8. Royal Academy (abbr.)

9. Toyota sedan 16. Paradox 19. Nissan SUV 21. Ford for a getaway?

23. Carry out 25. Box-shaped Nissan 28. Well-liked 30. Centimeter, abbreviation 31. Chrysler engine 32. Chrysler brand introduced in 1929

Answers to this puzzle in the 12/21/09 issue. Call 1.800.794.0760 for a FREE subscription.

33. Black is a favorite for car buyers 34. European car 35. Extra inventory 39. Let it ____!

41. Map abbreviation 42. Reduces speed 43. Contest 45. Mainstay of Dodge’s truck division 50. Executive, for short 51. Tea party state 52. Brad Pitt played __ Smith

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©2009 Manheim. All rights reserved.

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HARD SELLING?

A:

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Here, your vehicles will be seen by more than 900,000 dealer visits each week.

Learn more at 1.800.377.4343 or visit Manheim.com/sell.