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www.usedcarnews.com

Subaru Leads In Residual Value Awards Experts deemed Subaru “This has allowed Subaru to the brand most likely to achieve strong sales growth retain residual values over without relying on heavy disthe next few years. counting or fleet sales, which

“Subaru’s products ... continue to inspire a remarkable loyalty among its customer base” – Raj Sundaram

The brand topped the lists for both Kelley Blue Book and ALG in their recent resale awards.

“The sustained high quality of Subaru’s products, as well as its consistent message about the benefits of allwheel drive, continue to inspire a remarkable loyalty among its customer base,” said Raj Sundaram, senior vice president, ALG‘s solutions group.

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is another key to its ranking atop the mainstream brands again this year.”

Japanese manufacturers dominated both lists with some progress made by American brands.

Kelley named the Subaru Impreza WRX the top sports car for resale and the Outback best wagon. ALG has the Outback in the midsize SUV category, which it won, while the Forester led the way among compact SUVs and the Legacy among midsize cars.

Kelley also named the Outback one of the top 10 vehicles overall for resale value.

Honda finished second in the ALG awards and made a strong showing on both lists.

Both Kelley and ALG named the Fit the best subcompact.

ALG named the Odyssey the best minivan.

Toyota’s Sienna led that category for Kelley, but the Accord won mid-size car and the CR-V was named best

WHOOP-DE-DOO: Subaru’s Outback made the list of best resale values for both Kelley Blue Book and ALG, although each put the vehicle in a different category.

compact utility and one of the top 10 overall.

Toyota performed much better in the Kelley analysis than it did with ALG. The only Toyota leading a category for ALG was the Tacoma for mid-size pickup.

Kelley also picked the Tacoma for that category and also named the FJ Cruiser best mid-sized SUV and a top 10 overall.

Both firms named Ford’s Fseries the best full-size pickup. Kelley also liked the Taurus best among full-size cars and the Mustang among high-performance cars.

ALG chose no other American vehicles, but Kelley named the GMC

Acadia both the best full-size SUV and one of the top 10 overall. The Jeep Wrangler also made the top 10 despite not being named the leader in any individual category.

ALG named a Korean winner, the Hyundai Elantra, as best compact car.

Kelley and ALG split the most in the luxury categories. Kelley named BMW the best brand, while ALG said it was Infiniti.

ALG did name the BMW X3 the best luxury compact SUV. Kelley placed the X5 and the X6 on its best overall list.

No Infiniti model made the Kelley list.

ALG picked the QX56 best

full-size SUV. Nissan, Infiniti’s sister marque, lead the ALG awards in the full-size car and sport car categories with the Maxima and the GT-R respectively.

Kelley shut out that brand as well.

Three luxury vehicles rounded out Kelley’s top 10 the Audi A5 and Lexus GX and RX. Both firms agreed the Volkswagen Golf TDI was the best alternative energy vehicle.

Mini arguably fared the best of any brands after Subaru. Most of the company’s lineup made at least one of the lists.

IN THIS ISSUE • Numbers show dealers way to face challenges. – Page 3

• City provides incentives for consumers to buy green. – Page 10

• State association creates new award, names director – Page 6

• Dealers told money is available on Wall Street. – Page 14

11/29/10

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Toyota Financial Services & Lexus Financial Services present

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USED CAR NEWS

December 6, 2010

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3

Note Dealers Face Challenges in 2011

By Jeffrey Bellant

DALLAS – Buy-here, pay-here dealers face economic challenges in 2011, but they can improve their businesses by managing risk from inventory to deal structure.

Ken Shilson, founder of the National Alliance of Buy-Here, PayHere Dealers, unveiled some analytics at a recent conference that could help dealers face the challenges of the coming year.

Shilson has tracked the economics of the business over the past decade and found some key figures for buyhere, pay-here dealers to examine.

For example, the average retail sale price has gone from $6,556 in 1998 to $9,683 in 2009, a 48 percent increase.

But the average gross profit on that vehicle has only risen 21 percent, from $3,427 to $4,149.

Meanwhile, average reconditioning costs have skyrocketed 184 percent over that same period, from $196 to $556.

“The reason for this change is emissions standards,” Shilson said.

“A lot of states have adopted tighter emissions rules, so you just can’t buy any vehicle and put it up for sale.

Now you have to spend a lot more on it to get it ready.

“So we’ve seen a huge increase from a cost perspective. That doesn’t

even include operations or other costs.”

Dealers have more cash in the deal, about $4,865 on average, compared to $2,520 in 1998, a 93 percent increase.

But the average down payment and average weekly payment amounts only increased 64 percent and 42 percent, respectively.

The other factor is that contract terms have gone up 30 weeks, or 29 percent, to 132 weeks in 2009 from 102 weeks in 1998.

The result of all this is that dealers have ended up taking on more risk over that time frame, Shilson said.

Taking on risk is OK, if you know how to manage it and control it, he said.

Even if dealers charge more for a vehicle to make up for the increasing costs, it only matters if they can collect it.

Shilson said dealers are also settling for less money in the down payment, which also hurts.

He said dealers could charge as little as $5 per week on a payment and not adversely impact their default rates.

But it will make a “huge difference in your cash flow,” Shilson said.

There are some good signs in the first six months of 2010.

Sales have generally increased and collections have generally improved, Shilson said.

Photo by Jeffrey Bellant NUMBERS GAME: Ken Shilson, founderof the National Alliance of Buy-Here, Pay-Here Dealers , said dealers continue to face a host of economic hurdles in the coming year, from supply issues to an increasing amount of cash in deals.

But consumers remain apprehensive about large amounts of new debt this year.

Shilson also said unit sales are down slightly.

Inventory remains limited in 2010, and Cash for Clunkers is the major reason, Shilson said.

“Certainly, the availability of inventory has been (down),” he said.

Shilson said the other looming

factor is the reduction in franchise sales in recent years will have an effect on buy-here, pay-here inventory three to four years from now.

“You’re going to be looking for that five- or six-year-old car and where are you going to find it?” Shilson said.

“We’re not going to go back and manufacture any more 2008 or 2009 vehicles.”

Continued on page 7

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USED CAR NEWS

December 6, 2010

NEWS BRIEFS Creditor Reports Lower Revenues

Consumer Portfolio Services Inc. recently announced operating results for the third quarter.

Operating results for the third quarter of 2010 included revenues of $36.8 million, a decrease of approximately $16 million from the same period a year ago.

Total operating expenses for the third quarter of 2010 were $40.3 million, a decrease of $16.8 million.

Net loss for the third quarter of 2010 was $4.5 million, compared to a net loss of $4.3 million for the year-ago quarter.

During the third quarter of 2010, CPS purchased $35.3 million of contracts from dealers as compared to $26.7 million during the second quarter of 2010 and $506,000 during the third quarter of 2009.

The company’s managed receivables totaled $843 million as of Sept. 30, 2010, a decrease of $354.3 million from the same period a year ago.

CPS still faces NASDAQ delisting.

Association Warns Dealers of Scam

stores have been Infiniti belongs.

This is the first time a stores located in Omaha, Neb., Extended auto warranty certified inspection, light The Michigan Independent Denver and Knoxville, Tenn. companies are therefore mechanical check, and oil Automobile Dealers Associlikely to be given lower and fluid analysis have been ation is warning members of Service Contract grades because the BBB has packaged together and a scam involving dealers’ In- Broker Questions BBB received a large number of offered at RV auctions in the ternet departments.

AA Auto Protection, a bro- complaints about such com- United States.

The scam involves individ- ker of vehicle service con- panies.

Certified inspections will uals using stolen identities to tracts, has sent a letter to two be available for RV units sold apply for credit directly to a states’ attorneys general, re- Manheim Offers at select Manheim Specialty dealer online. All the individ- questing their aid in seeking Specialty Certification locations and online and will uals claim they’re interested redress against practices by Manheim Specialty Auc- expand to boats, motorcycles, in buying a new Infiniti QX56 the Better Business Bureau tions and Titan Certified powersports, heavy trucks advertised on eBay, Cars.com considered unfair by the have joined forces to offer and equipment in the future. or AutoTrader.com. company. certified inspections to Man- The new certified inspection All the buyers claim to be AA Auto Protection is ask- heim Specialty customers, program was piloted at Manself-employed and have cel- ing state officials to consider starting with RVs. heim Lakeland. lular home and work num- the conduct of the BBB as it is bers. They usually submit ap- described by AA Auto ProtecPublished By General Media LLC plications with very deep, tion and other sources.

U S E D C A R NEWS (ISSN 1555-7413) is published at high scoring credit profiles.

For example, in the wake of 24114 Harper, St. Clair Shores, MI 48080 Most of the communication the US Fidelis scandal, the with the dealer is done by e- BBB added an option for Phone: 586-772-5200 or 800-794-0760 Fax: 586-772-9400 mail. Phone conversations “auto warranty companies” www.usedcarnews.com are kept to a minimum. to their main phone menu.

Charles M. Thomas The perpetrator will re- The BBB ratings criteria proquest that all the paperwork vide that the final grade is inFounder (1947-2002) be forwarded via overnight fluenced partly by the indusLynda R. Thomas, Publisher express mail and may agree try to which a given company Colleen Fitzgerald, General Manager to pay for the shipping of the Editorial: vehicle up front.

PAGE 22 Ted Craig, Managing Editor All of the fraudulent applications uncovered to this Jeffrey Bellant, Staff Writer point were for individuals livContributing Writers: ing in Detroit that responded Emily Caswell, Sheila McGrath, Dave Piestrzynski to an ad. So far, the targeted

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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.

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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

December 6, 2010

NABD – Continued from page 3 “In my opinion, that’s going to cause some consolidation.”

Buy-here, pay-here remains the most rapidly growing part of the automotive industry, however, and the most profitable if done right, Shilson said.

He said even though collections have increased, there has also been a bump in defaults due to voluntary repossessions.

Shilson said dealers must study their numbers in detail to improve business in 2011.

“You have to learn from your losses, not repeat them,” he said.

There are four factors that affect performance in a buy-here, pay-here deal: the customer, the vehicle, the deal structure and how you collect, Shilson said.

For example, the type of vehicle sold by a buy-here, pay-here dealer can have an effect on the bottom line for dealers.

Shilson there are several cars that perform worse than others in a buyhere, pay-here deal. Those makes include Daewoos, Eagles, Mazdas, Land Rovers and Isuzus.

“If you can keep these vehicles working, you’re not only a car dealer, you’re a magician,” he said.

A Land Rover, for example, is a bad buy-here, pay-here because it’s so expensive to fix.

However, Shilson says it’s difficult

to create a general list of the best cars for a buy-here, pay-here model because it often depends on the market and the dealership.

“We have people that swear by Tauruses,” he said, “and we have people who swear at Tauruses.”

Mileage is another factor in determining a successful buy-here, pay-here deal.

Vehicles that had less than 90,000 miles had a lower than average default rate, Shilson said.

Loan terms also affect default rates, with loans of 24 months being the most successful.

However, vehicle contract lengths in the 37 to 43 month range also performed well, but Shilson attributes this to their associated service contracts.

“Warranties and service contracts are really the only add-on that reduce the default rate,” Shilson said.

“It keeps that vehicle running.”

Default rates are also reduced when vehicles have a code-based payment system, such as a starterinterrupt device, Shilson said Another factor is how much a dealer marks up a vehicle for sale, “The most favorable sweet spot is when you’re marking up your vehicle 110 percent or less of vehicle cost,” Shilson said, As the mark-up increases, so does the default rate, he said.

•

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USED CAR NEWS

December 6, 2010

Association Creates New Award

By Jeffrey Bellant

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Greg Gage, owner of Gage Auto Sales, won the 2011 Oregon Quality Dealer of the Year award.

Gage, who opened his dealership in Milwaukie, Ore., in 1998, followed in the footsteps of his father, starting in sales at a franchise dealership after high school.

After selling two cars in his first month, Gageโ s future was settled.

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Gage spent 10 years working in different positions at several dealerships before setting out on his own. He owned and operated a newcar lot, but fell in love with used-car sales.

Gage said he learned some hard lessons through the years and decided to move into the used-car business with Gage Auto Sales. โ Dad taught me to sell the best way,โ Gage said. โ Take care of the customer. That is what leads to referral and repeat sales.โ Gage is married to Amy and the couple has four children.

Continued on next page

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USED CAR NEWS

December 6, 2010

•

Association – Continued from prior page He coaches youth baseball and basketball, along with other community activities.

He was thrilled to receive the Oregon IADA award.

“I feel that this is the very highest honor I could receive,” Gage said.

He said his goal is to change the negative image of car salesmen.

The Oregon IADA also created a new award, the Don Lulay Lifetime Achievement Award, and gave it to its namesake.

Don Lulay, owner of Lulay’s Car Connection in Salem, Ore., received the award which is being given to exceptional individuals who over the For Cars, Trucks and Vans

years have played an intricate role in the association’s development and progress.

Lulay, a 24-year member, has served as president of the group and on countless committees and boards over the years.

He was also the state’s Quality Dealer of the Year in 1999.

The Oregon IADA also named Marco Huchette as its new executive director.

Huchette, a U.S. Air Force veteran, recently served as senior executive of the Civil Air Patrol National Headquarters, where he managed a staff of 25.

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USED CAR NEWS

December 6, 2010

PAGE 8 – FOCUS ON AFTERMARKET

Products Add Appeal at Low Cost

By Sarah Lee Marks

LAS VEGAS – As used car costs have climbed steadily this past year, the most common question among independent and chain auto retailers was “How do I maximize profit per unit?”

Judging from the variety of products focused on detailing, repair and reconditioning at SEMA and AAPEX, the answer was clear; “Do the best job you can on presentation and differentiation.”

The shows featured more than 2,200 exhibitors and drew 120,000 attendees from across the globe.

Among dealership personnel the most popular subject was the huge increase in used car sales of older, higher mile vehicles.

These vehicles require more reconditioning and that takes away from the bottom line. Many of the products presented at the shows, however, allow staff to make repairs inhouse and on the cheap.

Sue Endle, product engineer from 3M’s automotive

aftermarket division, demonstrated a complete kit for restoring a car’s finish.

The color-coded, Velcrobacked sponges are used with an orbital buffer and minimal liquid, gently stripping the dirt and environmental damage away without burn-ing the paint or waiting for hazing.

The second phase finish restorer and water-repelling sealer took about an hour to apply for an average car.

The kit includes a scratch fixer and retails for $59.99 per kit, which should cover four average sized vehicles.

PDR was well represented at this year’s show as exhibitors showcased a variety of tools and suction kits, light bars and protection devices ranging in price and complexity from a simple suction product from SAS Group, to a 100-piece tool program with video instruction, manuals or franchise opportunities costing several thousand dollars.

More than 20 different manufacturers and distributors displayed their best

Photo courtesy of SEMA SHINY: Attendees at this year’s SEMA expo saw a whole range of products and vehicles that fit every budget and need. Environmental products were among the most popular.

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USED CAR NEWS

December 6, 2010

City Offers Green Incentives

By Sheila McGrath

Dealers in the Southern California city of Corona have a new incentive to stock alternative-fuel vehicles on their lots.

Early in November, the city approved a program treating buyers of low-emission vehicles to a cash rebate of $2,000 for new cars and $1,000 for used ones. Corona’s action followed that of nearby Riverside, Calif., which began offering the rebates last year.

The program covers compressed natural gas, electric, or non-diesel hybrid vehicles, and takes effect on Jan. 1, 2011.

Robert Morin, Corona’s principal civil engineer, said the Southern California city is governed by an Air Quality Management District, which takes funding from vehicle registrations and gives a portion of those funds to cities to initiate clean air programs.

Corona had already instituted a car pool plan for city employees to help in the clean-air effort.

But when they heard the city of Riverside was offering rebates to people who bought alternative-fuel vehicles, they decided to give it a try, too.

They’ve set aside $60,000 for the program.

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“Not only does it help clean the air because they’re alternative-fuel vehicles, but it also helps spur the local economy by getting residents to purchase vehicles from local dealers. So it’s a win-win,” Morin said.

Morin said his office has already been getting positive responses about the program, and the city’s Economic Development office has been getting calls in favor of the plan, too.

“People are saying ‘I was thinking of getting a hybrid, and now I’m going to,’” Morin said.

In Riverside, 28 residents have taken advantage of the program since it started in August 2009.

Kevin Street, Riverside’s regulatory programs and compliance manager, said they originally started the program just for city employees, but expanded it to include all of the city’s residents a little more than a year ago.

Their main motivation for the rebates is improving air quality, but the fact that it helps the local economy is a bonus, he said.

“Everyone’s responses have been extremely positive and it’s been very well received,” he said.

“Dealers are obviously pleased because we’re doing something that can help them sell vehicles.”

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USED CAR NEWS

December 6, 2010

Chains Report Financial Results A pair of buy-here, pay-here chains recently reported mixed improvements.

America’s CarMart Inc. reported a revenue increase to $91.8 million in the latest quarter from $82.6 million in the same period a year ago with same store revenue growth of 8.1 perHank Henderson cent.

Retail unit sales increased to 8,431 from 7,965 for the prior year quarter.

The company’s active customer base is now more than 49,000.

Allowance for credit losses remains unchanged at 22 percent of finance receivables as the amount of losses increased.

That was good, but Car-Mart executives expected better.

“Our financial results for the quarter were solid, but short of our own internal expectations,” said William H. (“Hank”) Henderson, CEO of America’s Car-Mart.

“The uptick in our credit losses means we’ve got to do a better job taking care of our customers.”

Continued on page 18

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USED CAR NEWS

December 6, 2010

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DALLAS – Buy-here, payhere dealers still have options for financing, and alternatives range from portfolio dilution to private equity.

John Marcus, managing director of New York investment banking firm Laidlaw & Co., offered his advice on accessing capital during the recent National Underwriting and Collections Conference here.

Marcus said lenders spend a lot of time examining underwriting and collections practices.

“That is probably the guts of the due diligence that they do, in addition to the strength of the management team and the financial history of the company,” he said.

Marcus said the financial markets are still a challenge, especially for small to middle-market companies.

The thin IPO market is only available to the largest companies, he said, and the improving securitization still favors larger issuers.

One ray of hope is the small business law that President

Obama recently signed. It provides $30 million to smaller community banks that they can lend to small and mid-market businesses.

Asset-based financing remains the most common financing available to dealers. Banks are finally starting to loosen their criteria in that area.

“When times are good, everybody’s in the market and the terms get looser and looser,” Marcus said. “But when the credit crunch comes, they all go under a rock.”

Another financing approach for buy-here, payhere dealers is selling portfolios.

“It does provide liquidity and it does reduce your overhead expenses,” Marcus said.

“But this is an expensive form of financing.”

One alternative form of this financing is dilution, in which a dealer sells a part of his portfolio.

“Dilution is not a dirty word,” he said. “(It) is something that allows for companies to raise growth capital and ultimately grow the value of their business.”

Continued on page 17

11/30/10

4:35 PM

Page 1

USED CAR NEWS

December 6, 2010

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USED CAR NEWS

December 6, 2010

NHSTA Issues Truck Recall DETROIT (AP) – More than 192,000 General Motors and Isuzu midsize pickup trucks are being recalled because of a problem with the system that anchors child safety seats, the National Highway Traffic Safety Administration said.

The recall affects Chevrolet Colorado and GMC Canyon models from the 2004 to 2011 model years.

Also affected are Isuzu I-

280 and I-350 pick-up trucks from 2006 and I-290 and I370 models from 2007 and 2008.

The Isuzus were built by GM at its factory in Shreveport, La. NHTSA said on its website that the trucks all have bench front seats and no rear seats.

Owners can’t get to the top child seat anchor for the center of the front seat, and the owner’s manual has no in-

structions on how to use the top anchor, NHTSA said.

No accidents or injuries have been reported, General Motors spokesman Alan Adler said.

Both NHTSA and GM discourage people from using child seats in the front seats of vehicles.

“We don’t want anybody to put it there anyway because it’s not safe,” Adler said.

The repairs are being made

because there could be circumstances that require putting a child in a safety seat in the front-center seating position, since the trucks have no rear seats, governemnt officials said.

The affected models could be regular cab or extended cab vehicles.

The lack of access to the top tether anchor and lack of instructions could result in the seat being improperly in-

stalled, increasing the risk of injury or death in a crash, NHTSA said.

The automakers do not yet have a schedule for notifying owners of the problem, NHTSA said.

Dealers will cut a hole in the back panel to open access to the anchor.

The manufacturers will give owners information on how to properly secure the seats.

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WASHINGTON (AP) – The Transportation Department has outlined changes to the government’s 5-Star Safety Rating System that will make it more difficult for new cars and trucks to earn top scores.

Only two of the first 34 vehicles tested under the new program – the 2011 BMW 5 Series and a version of the 2011 Hyundai Sonata – received the top grade of five stars. The Toyota Camry, the best-selling passenger car in the United States, received three stars.

The ratings range from one to five stars, with five stars being the highest and one star being the lowest.

The so-called “Stars on Cars” system, which evaluates vehicles on front-end and side-impact crashes and rollovers, is being revamped for the 2011 model year because so many vehicles were receiving top marks under the old system, making it difficult to distinguish the best performers.

Typically, more than 90 percent of the vehicles tested under the old system earned four or five stars. In 1979, less than 30 percent received four or five stars.

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In the latest testing, most of the 33 vehicles reviewed received an overall score of four out of five stars.

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USED CAR NEWS

December 6, 2010

Funds – Continued from page 14 However, it is one of the hardest decisions a business owner will have to make.

“Which do you want to choose?”

Marcus said. “(Complete) control, or do you want to choose growing the value of your business?”

Dealers have several alternative forms of financing, such as mezzanine financing, private equity financing and mergers and acquisitions.

Mezzanine financing typically comes in the form of subordinated debt or preferred stock.

“It is very plentiful in today’s

market,” Marcus said. “There’s more than $50 billion of mezzanine financing that has been raised by the providers over the past three years.”

Private equity financing is plentiful in today’s market, with roughly $400 billion available and a growth rate of about $35 billion a quarter.

The returns are typically in the mid twenties to upper 30s, compared to a lower return from mezzanine funds, Marcus said.

Mergers and acquisitions are another option, though this usually requires several companies that have like-minded values and complementary geographic diversity.

•

17

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USED CAR NEWS

December 6, 2010

Chains – Continued from page 12

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America’s Car-Mart launched its biggest promotion of the year, a zero down campaign for tax season.

Henderson said that is off to a great start.

NowAuto Group, another in-house finance chain, continues to struggle but reported an improved performance.

The company reported revenue of $1.1 million and a net loss of 5 cents per diluted share versus revenue of

approximately $1.4 million and a net loss of 50 cents per diluted share in the prior year.

During the quarter, gross margin improved to 63 percent due to improved capture of vehicle costs.

The cost of charge-offs and defaults improved by 13 percent over the same quarter of the prior year as a result of increased credit criteria, improved contract management and system upgrades.

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UCN_19

11/30/10

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USED CAR NEWS

December 6, 2010

RETAIL MARKETS MICHIGAN

Al Tiano, owner, A&B Motors, Roseville, Mich.: “I’ve been in the car business, on my own, since 1993.

Before that I worked with my dad and my brother. I have two locations now.

“I keep about 120 vehicles on my lots.

“I think that’s about the same as this time last year.

“We get our vehicles from the auctions and from wholesalers.

“We also get them from trade-ins. But I get a lot from auctions.

“I’ll also get some aged inventory from ‘A’ lots.

“Last year and this year, we’re averaging between 50 and 60 units per month.

“We’re evenly stocked between cars and trucks. I have a pretty big lot, 300 feet wide.

“I split it so that half of it is filled with cars and the other half is filled with sport utility vehicles and pickups.

“I don’t carry any imports, unless I take them in trade.

“I’m on the east side of Michigan, so I don’t know if it has to do with the cus-

tomer and the blue-collar (Detroit) view of imports. I don’t know.

“I just cannot sell an import. I could have the nicest late-model import and I cannot move it.

“The highlines are different. If it’s a Jaguar or a (Mercedes) Benz, I can sell it.

“We do a lot of subprime deals. About 80 percent of my business is subprime.

“With the economy last year, we lost a lot of the major banks.

“The only major bank that worked with us was Chase.

Its subprime program is pretty good, so I can offer a great rate.

“We also partnered up with Credit Acceptance Corp., which helped us.

“We have credit unions, too.

“But I think the banks are starting to loosen up a little.

Now, we’ve picked back up everybody.

“I’ve got Credit Acceptance, AmeriCredit, credit unions – I’ve got about 10 to 12 lending institutions.

“The biggest thing is having a very good financ-

ing manager and I’ve got one of the best.

“My step-brother, Jimmy, does all the financing. He’s got a great relationship with the lending institutions.

“We’ve earned a lot of trust with banks.

“They know we’re not selling junk and we’re not adding things to the deal that don’t need to be added “We just run a straight dealership. We’re honest with our customers and get a lot of repeat business.

“One thing I don’t understand is the prices in (the value guides). You can’t buy cars for as cheap as they book them for. Some of them are just so inconsistent, it’s crazy.

“We service our own cars and recondition them. We have a two-bay service center.

“We also do a little service for outside vehicles, but not too much.

“On average, we’re probably putting in $800 to $1,000 in recon. The way prices went up, it’s definitely over $1,000.

“I used to carry all late models with 20,000 to 30,000 miles.

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“Now I’m finding myself buying cars with more miles.

“But I have a variety of cars. I’ve got cars from $2,995 to $30,000.

“Our average price overall, though, is about $13,000.

We try to keep in the $12,000 to $14,000 range.”

UTAH

Clint Martin, general manager, 4K Cars, Orem, Utah: “I’ve been in business for 13 years.

“I started out working in the car business after answering a help-wanted ad when I was in high school for a job at a car lot.

“We have four lots. We try to carry 30 units on each lot.

That’s about the same amount as this time last year.

“I sell an average of 20 units per lot. That’s also about the same as 2009.

“Supply has definitely been an issue. We’re still able to get the cars we need, but it’s getting to be (difficult).

“I get most of my vehicles from auction. I use Brashers in Salt Lake City.

“Our inventory is split about 50/50 between cars and trucks.

“As far as domestics versus imports, I carry more domestic vehicles.

“It’s about 70 percent domestic and 30 percent import.

“Our average unit here is about five to seven years old, with about 70,000 to 100,000 miles.

“That’s similar to this time last year.

“We’ll recondition units before they go out.

“We have a service shop, but it’s to service our own vehicles.

“We don’t do outside work.

“We spend a lot on reconditioning.

“On average, we’ll spend about $800 per car.

“We do mostly retail sales, not subprime or buy-here, pay-here.

“The average price of vehicles on our lot is about $10,000.

“One recent vehicle we sold was a 2003 Land Rover Freelander sport utility vehicle.

“It had about 66,000 miles on it. We sold it for $7,700.”

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UCN_20

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USED CAR NEWS

December 6, 2010

WHOLESALE MARKETS IOWA

Todd Givant, general manager, Des Moines Auto Auction LLC., Des Moines, Iowa: “We opened in January 2008.

“We have three lanes and we’re running two.

“On average for the year, we’re running about 250 units per week.

“Last year at this time, we were averaging 140 units per week.

“Our sales percentages are about 70 percent. That’s up about 10 percent from this time last year.

“About 95 percent of our volume is dealer consignment. The rest are bank repos and credit union repos.

“Attendance at our auction could be anywhere between 150 and 200 dealers.

“We get them from Iowa, Nebraska, South Dakota, Minnesota, Illinois and Missouri.

“Right now, I’d say the retail market is a tough environment.

“Although we’re not big enough to have a separate powersports sale, we do run things like campers, motor-

cycles and boats through our regular sales.

“Overall, I’d say our average sales price is about $4,000, though it might even be a little higher now.

“The 2000 to 2004 unit, with 80,000 to 100,000 miles has been pretty strong.

“I think the lower mile, late model stuff is a little harder to sell. Not as many independent dealers are going to put a $20,000 unit on their lots.

“My family has been in the car business for about 100 years, with new-car stores, salvage yards and used-car lots. The last 15 years, the family has moved into the auction business.”

WISCONSIN

Kristie Griffin, president, Greater Milwaukee Auto Auction, Milwaukee, Wis.: “We’ve been here ( just over) six years.

“We have four lanes and we’re running anywhere between 800 and 1,000 a week through our open sale.

“Our sales rate is averaging 60 percent right now.

“But we just signed a General Motors contract.

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Our first GMAC sale was Oct. 7.

“We have an open sale on Thursdays and we have a closed General Motors factory sale every other Tuesday.

“So on Tuesdays, we’re selling 250 cars each sale and you wouldn’t believe what that has done for our dealer consignment.

“Dealer registration used to involve just signing up one person, now it’s an entire department.

“We have so many new buyers and so many new sellers. It’s crazy.

“We run our GMAC units at 9 a.m. and the rest of our lanes kick off at 10 a.m.

“I like to sell more than 100 cars before the main (10 a.m.) sale even starts.

“Our numbers have been up throughout the entire fall.

“A lot of it is also due to our Simulcast presence. We were not really up and running with Simulcast until the General Motors sale came. I think selling to the entire country via online has increased the retention (values) for our cars and we’re able to bring more buyers for the cars. That

brings more money.

“We’re bringing in more than 500 dealers in our open sales every week, consistently. Last year at this time, we were getting, maybe, 375.

“We do a good job drawing dealers here from the Milwaukee area, northern Illinois and the Chicago area.

We’re drawing remote bidders online from the entire state of Wisconsin, like northern Wisconsin and areas like Madison, Wis. “We have always pulled dealers from a 150-mile radius, but with the Internet we’ve been able to get people from far away to bid on our cars.

“We have a Manheim sale about 20 minutes away, so we have some buyers fly in and go to the Manheim sale on Wednesday and then our sale on Thursday. Also, some dealers come in Tuesday for our closed sale and then go to the Manheim sale on Wednesday.

“Our auction is big into giveaways. We give away $1,000 early-bird drawings and we’ll give away things like flat-screen televisions.

We’re heavy into that stuff. It really works for us.

“We’ll offer a free float sale through AFC, for example.

We’ll also offer dealer appreciation sales.

“In addition to GMAC, we also have ARI as one of our fleet-lease accounts.

“However, our main focus is still dealer consignment. It makes up about 70 percent of our volume.

“We also have what we call a ‘rock and roll’ sale. The ‘rocks’ are vehicles that don’t run or drive (similar to an inop). The ‘rolls’ are vehicles that don’t run real well. We sell those before our main sale. We’ll run about 30 of these from dealer consignment.

“Before GMAC came, we averaged about under $4,000 per car. With GMAC, we’re probably up to around $8,000 per car. Retail is up, from what I’m hearing from dealers.

“In the past, we’ve had a decent market for two-wheel drive trucks, but right now we’re struggling with those.

But we’re up in snow country, so we’re not doing great with two-wheel-drive units.

“The crossovers are real hot.”

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UCN_21

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USED CAR NEWS

December 6, 2010

21

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###:5$!94/'*!#$:4)Monday August 23, 2010 In This Issue: • Wholesale Prices Decline Again • Auction Chain Promotes Sales Director • Mercedes Names Remarketing Chief

Owners, Executives Lack Confidence

Used Car News: Consumer confidence needs better employment numbers to improve.

And the nation’s executives and business owners need more confidence before they start hiring.

The Dealers’ Source for Industry News!

The National Federation of Independent Business Index of Small Business Optimism lost 0.9 points in Point Upward Indicators July and reached 88.1 following a sharp decline in June. The Index has been below 93 every month since January 2008, and below 90 for 24 of those months, all readings typical of a weakThe or Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.1 percent in July to 109.8, recession-mired economy. Ninety percent of the decline this month resulted from deterioration in the following a 0.3 percent decline in June, and a 0.5 percent increase in May. outlook for business conditions in the next six months.

“The indicators point to a slow expansion through the end of the year,” said Ken Goldstein, economist at The “The recovery in optimism that we are currently experiencing is very weak compared to recoveries Conference Board. “With inventory rebuilding moderating, the industrial core of the economy has moved to a after the 1982 and 1975 recessions,” said Bill Dunkelberg, NFIB’s chief economist. “Theslower small pace. There appears to be no change in the pace of the service sector. Combined, the result is a weak business sector is not on a sustained positive trajectory, and with this half of the private sector economy with little forward momentum. However, the good news is that the data do not point to a recession.” missing in action, the economy’s poor growth performance is not surprising.”

THE FULL STORY > Only a small percentage of these gloomy business owners say they plan on hiring in the next three months.

Auction Chain Promotes Sales Director ADESA announced that Chad Ruffin has been promoted to executive director of sales for the national sales team, effective immediately. Ruffin will report directly to Jeff Bescher, senior vice president of sales.

THE FULL STORY >

COME TO CENTRAL FLORIDA. Used car lot for sale. Buy Here Pay Here. 1/2 mile Super Walmart. 6 lane hwy. Strong book. $20,000 a month income. Owner finance half.

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Email:marie@usedcarnews.com or Fax: 586-772-9400

C L A S S I F I E D S

Big business isn’t feeling any better. Chief Executive magazine’s CEO Confidence Index fell to 79.8 in July.

All five components of the index fell significantly, with the Current Confidence Index showing the largest percentage dropping to 52.0. The lack of hiring hasn’t hurt companies that much, yet.

Although productivity declined in the second quarter, it grew for five quarters in a row. That means Mercedes employers are getting more out of the employees they do have.

Names Remarketing Chief

Financial (MBF) announced that Horacio Trujillo is promoted to the head of remarketing, effecLabor productivity, or output per hour, is calculated by dividing an index of real output by Mercedes-Benz an index of tive Sept. 1. hours worked of all persons, including employees, proprietors, and unpaid family workers.

The decline occurred because output rose 2.6 percent and hours rose 3.6 percent.

In this position, Trujillo will be responsible for managing the company’s remarketing processes, including the Customer and Asset strategies in conjunction with Mercedes-Benz USA. He will report to Janet Marzett, vice president of collections, customer service and remarketing.

THE FULL STORY >

Remarketer Adds Recovery Solution This newsletter was sent to you by Used Car News 24114 Harper Ave., St. Clair Shores, MI 48080 800-794-0760

Openlane Inc. has acquired Recovery Database Network Inc. (RDN), a specialized provider of software and data solutions related to the recovery of assets for the automotive finance industry.

RDN provides a software platform that links auto lending institutions with recovery companies to expedite the recovery of vehicles. RDN will be managed as an independent subsidiary of Openlane, with the existing RDN team continuing in place.

THE FULL STORY >

C L A S S I F I E D S

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USED CAR NEWS

December 6, 2010

Disconnected Jottings From Tony Moorby...

It seems like a decade ago that I was writing about the potential demise of GM and, although a Republican, I supported the bail-out. Not because I inherently believe that government has a place in industry or its direction,

that we did the right thing.

One lesson of recent events for any manufacturer is to thaw the frozen cores of management that kept these companies from fundamental change. That ’s the mid-level managers who

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

but, in this case, the downstream effects of letting GM go under would have devastated the economy at a time when wholesale unemployment would have sent our beloved country into a tailspin worse than that to which we’ve recently born witness.

Add to that the knock-on effects to other manufacturers, the reflection of the American car manufacturing business around the world.

The car is an American icon, right? I won’t go on. I believe

protected their fiefdoms and domains so effectively as to keep the rest of the world out and fed their bosses the pap they wanted to hear rather than the realities of the marketing Main Street. We ended up with models that wouldn’t offend the committees that built them, but didn’t excite the public to buy them.

It’s not for me to go into the high finances that bring these complicated affairs to fruition - I couldn’t do it anyway, but the new IPO for

GM has fueled a faith in the company, the car business and potentially the economy, too. And that’s the whole point of this grand political maneuver in the first place.

A by-product is that the government gets a hefty chunk of its original investment back for you and me. I’d like to think that we’ll see some of those benefits, but that’s another story. Another is that, hopefully, they will learn that all the best ideas don’t come from the corner offices and freedom of expression has its place in business as well as in political observations.

At first glimpse, I thought that history was repeating itself. I was in the retail car business in England when all the troubles of British Leyland came about in the ‘70s. That was different, the climax of a fight that had been brewing between the unions and government (any government) for many years.

The conflagration finally came to a head while Maggie Thatcher, the “Iron Maiden,” was prime minister and the bosses of all the unions were going head to head for almost

any reason. One of the problems compounding issues in those days was that there were about 20 different unions representing the interests of their varied memberships. As an example of how ridiculous things became, if there was a quality issue on the production line one had to find an electrician to push the button, an electrical switch, to stop the line.

I tried to deliver a brand new Austin 1800 with Coca-Cola cans rolling around under the rear seats and marbles in the front doors. The PDI guy obviously picked them up, but the manufacturers were digging their own grave, allowing products to get to a public who were becoming more and more alienated

from home-based product and allowed the Japanese and German manufacturers to gain a foothold which they never let go.

Sir Michael Edwards, a Thatcher management placement, never put together a company that could enjoy the individuality of the products that made up British Leyland - Austin, Morris, MG, Triumph, Jaguar, Rover and Daimler, plus the commercial divisions. One survives under the aegis of Indian-owned Tata Motors.

Let’s hope that the designers and engineers are given an opportunity to make our American manufacturing business as great as it should be. The alternatives are not pretty.

To see past columns from Tony Moorby, log on to

usedcarnews.com/ columnists/tony-moorby

Answers to the 11/15/10 puzzle

C R O S S WO R D

by Myles Mellor

Across 1. Cadillac model 3. Nissan 5 passenger wagon 5. HX, for one 9. Auto route, for short 10. Took a seat 11. Avalon maker 13. Mini ____man 14. Auto’s grill protector 15. Make a U-turn (2 words) 18. Floral necklace 19. Sprinkle 21. Old British Austin 23. Look at 24. Price ___ 26. Type of welder 29. Classic car, often 30. Carry on

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Hyundai sedan Financing charge Tiny amount Auction action Thrilla in Manila boxer ___ on the side of caution Honda Accord _____ Saturn model Rep Optima is one Sirius and Sync provide it Sauce source

Down 1. ____ Fireflite 2. Former General Motors division 3. VW sedan 4. Car starter 6. Higher 7. Ford’s turnaround hero 8. VW family car 12. Toyota pickup 13. Credit, for short 16. Have a loan

17. Entry and exit point 20. Auto insurer with roadside service 22. Dieter’s measurement 24. Subaru SUV 25. Bad jam 27. Detroit’s founder 28. Guarantee

Answers to this puzzle in the 12/20/10 issue. Call 1.800.794.0760 for a FREE subscription.

30.

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35.

It signs the dotted line Space in a car Ford’s new wagon Ford 4-door sedan Another Ford 4-door sedan 36. Light metal symbol 42. Yoko ____

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