Used Car News 2/4/13 by Used Car News

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February 4, 2013

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ON THE WEB: Fewer Consumers File For Bankruptcy

Chain Grows Through Innovation

U.S. consumers are likely to continue being prudent paying down their debts, with personal bankruptcy filings likely to drop again in 2013.

CRM Fails to Match Behavior

An analysis of over 4,700 car buyers from 42 dealerships nationwide showed material inconsistencies between the sourcing information dealers entered into their customer relationship management.

NIADA Adds Partner

The National Independent Automobile Dealers Association announced the endorsement of Dealertrack Technologies as a National Corporate Partner of the association. SIX AND COUNTING: The owners and staff of Car Credit City cut the ribbon for the chain’s newest store in Wentzville, Mo. The buy-here, pay-here group has purchased former new-car stores, former used-car stores and other retail locations to house its operations.

Firm See More Lease Pull-Aheads

Many car lessees may be eligible to upgrade to a newer car and reduce their monthly payments through “lease pull-ahead” offers, reports Edmunds.com.

By Ted Craig

The owners of a fast growing Missouri-based buyhere, pay-here chain see innovation as the key to success. Richard Wolkowitz started Car Credit City with his father, Herbert, eight years ago. Both came into the car

business from a far different background – working as practicing attorneys. The Wolkowitzes saw an element missing from the auto market in St. Louis. That was a buy-here, payhere store that offered a better level of both product and experience. The pair was right in their

belief and Car Credit City has quickly expanded into six locations in Missouri and Illinois. The stores offer five- to six-year-old vehicles with about 90,000 miles on them. The average retail price of a vehicle at Car Credit City is around $11,000. “We don’t promote that

we sell the cheapest car, because we don’t,” Richard Wolkowitz said. “We sell the best car humanly possible, because we understand that if the car isn’t working right and there are repairs after the sale, the customer can’t afford to pay the car note, Continue on page 3

Manheim Merges MAFS, DSC into NextGear Rush - Dated Material

By Ted Craig

Manheim is taking its floor planning operations to a new level. The auction company recently announced it will merge its two floor plan components – Manheim Automotive Financial Services and Dealer Services Corp. – into one entity

called NextGear Capital. Brian Geitner, formerly DSC’s president, will lead the company as president. Geitner said the new name reflects the careful process used in bringing the two firms together and also the goal of using the latest technology to help dealers. “Our motivation and

“Our motivation and our passion is to help our customers reach their goals.” Brian Geitner our passion is to help our customers reach their goals,” he said. Manheim purchased DSC

last year. NextGear will be headquartered in Indianapolis. Continued on page 3

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USED CAR NEWS

Car Credit City – Continued from page 1 insurance and repairs. They’re going to have to make decisions.” The company invests a lot in reconditioning. A standard reconditioning includes new brakes, tires, rotors and windshield wipers. If the vehicle needs a tune up, all the spark plugs get changed, Wolkowitz said. The firm partnered with Firestone for a 25,000-square-foot reconditioning center in Bridgeton, Mo. The facility opened last year. Car Credit City’s relationship with Firestone allows its customers to get their vehicles serviced at Firestone locations throughout the country. This allows a uniform process for repairs, Wolkowitz said. Providing the same service anywhere is another important aspect of the strategy. All six stores are decorated the same, using a color scheme of red, white and black. Staff wear shirts that match the décor. Like the Wolkowitzes,

most of the staff comes from outside of auto sales. The most important quality Wolkowitz looks for in a potential employee is the ability to adapt to change. A new program is always in the offering. One example is a promotion that allows customers to pay ahead on their contracts, reducing their payments by $10 for every $500 they pay at one time. So a customer might bring in a $2,000 tax refund and see his remaining payments lowered by $40. Wolkowitz feels his chain enters into a long-term relationship with its customers and they try to help the customers in anyway they can. Car Credit City staff helps customers find jobs, like many stores. But they also help find legal help when needed and even connect them with doctors. “We try to provide full life services to our customers,” Wolkowitz said. Wolkowitz is considering how to expand further now that the group has opened its

“We try to provide full life services to our customers.” Richard Wolkowitz sixth store. markets in the Midwest. An- ing with some investment One possibility is mov- other is franchising. bankers about financing ing into other metropolitan Wolkowitz said he is talk- these moves.

NextGear – Continued from page 1 Geitner explained DSC already had a large infrastructure built in the city. What is more important, however, is the floor planner will now have 300 field representatives across the country addressing dealers’ needs in their stores or at the auctions. Another aspect of NextGear’s customer service strategy is a major investment in technology. Dealers using NextGear

to finance their wholesale purchases will find quicker access online, Geitner said. They can also receive information about their accounts any way they want, including emails and texts. The company is also creating apps for customers to handle their floor planning from their smartphones. Geitner said NextGear’s staff is also looking at ways to serve its customers

beyond traditional floor planning. Ultimately what is most important to dealers from a floor plan company is funding and Geitner said dealers will find robust terms from the newly merged firm. All of these initiatives, from the technology to the field representatives are built to meet one goal, he said: making the complex simple for both dealers and auctions.

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USED CAR NEWS

NEWS BRIEFS Finance Firm Strikes PE Deal

NAC announced the successful completion of its recapitalization with Trivest Partners, a private equity firm. With the addition of Trivest as the companyâ€™s primary investor and partner, the newly capitalized company is focused on aggressive growth and further enhancement of the administration, vehicle service agreement products and technology tools NAC provides. NACâ€™s management team, led by Christina Schrank, president, and Paul Leary, executive vice president, will continue to lead NACâ€™s daily operations. Former owners Bill Speaks and Pete Biscardi will continue to be active members of the companyâ€™s board of directors.

Consultant Adds Dealer Service

ers to dominate the market by identifying points of competitive differentiation in the digital space and converting leads, especially Internet leads, into sales. Based in Las Vegas, Opportunity Max is a digital consulting and services firm that provides auto dealers with opportunity/lead management, event handling, competitive intelligence, website optimization, staff development, fixed operations management, social media strategies & implementation, and reputation monitoring. Now, as a part of the Maritz suite of dealer solutions, Opportunity Maxâ€™s team and services are going to be integrated with Maritzâ€™ automotive experts and sales and marketing solutions.

Manual Helps with Financing Servicemember Sales

Maritz, known for its performance improvement programs and work with most automotive brands such as BMW, Chrysler, Ford, GM, Honda, Nissan, Toyota and Volkswagen, is taking its expertise directly to the dealer market. The company announced the acquisition of Opportunity Max and the subsequent formation of Maritz Dealer Solutions. This dealer-focused solutions group will enable automotive deal-

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PAGE 33

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Published By General Media LLC USED CAR NEWS (ISSN 1555-7413) is published at 24114 Harper, St. Clair Shores, MI 48080 ")(ĹźÉ&#x;ĹľĹ¸ĹśĆ?ĹˇĹˇĹ˛Ć?ĹľĹ˛Ĺ°Ĺ°É&#x;),É&#x;Ĺ¸Ĺ°Ĺ°Ć?ĹˇĹšĹ´Ć?Ĺ°ĹˇĹśĹ°É&#x;É&#x;É&#x;2ĹźÉ&#x;ĹľĹ¸ĹśĆ?ĹˇĹˇĹ˛Ć?ĹšĹ´Ĺ°Ĺ° www.usedcarnews.com Charles M. Thomas )/(,É&#x;Ć˜ĹąĹšĹ´ĹˇĆ?Ĺ˛Ĺ°Ĺ°Ĺ˛Ć™ Lynda R. Thomas, Publisher Colleen Fitzgerald, General Manager Editorial: Ted Craig, Managing Editor Jeffrey Bellant, Staff Writer Contributing Writers: Emily Caswell, Sheila McGrath, Jenny KIng Columnist: Tony Moorby Advertising: Shannon Colby, Account Manager Megan Frump, Account Manager Marie Hingst, Account Manager Circulation: Helen Thomas Production: Josie Godlewski, Media Manager Tim Montie, Graphic Designer â€”â€”â€”

)&ĹşÉ&#x;ĹąĹ¸É&#x;É&#x;É&#x;Ć€É&#x;É&#x;É&#x;)ĹşÉ&#x;Ĺ˛Ĺą

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.

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The federal Servicemembers Civil Relief Act provides important financial protections for servicemembers and their families. Although the SCRA has been on the books for years, the subject of financial protections has become a focus of federal and state regulation. The Dodd-Frank Wall Street Reform and Consumer Protection Act created a powerful new federal agency, the Consumer Financial Protection Bureau. One of the CFPBâ€™s principal missions is the protection of the financial interests of servicemembers and their families. Many states have enacted laws that provide protection as well. Compliance Guide - Servicemem-

É&#x; É&#x; É&#x; 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

Scion, Subaru Partner to Win Cars.com Award By Jeffrey Bellant

DETROIT – Cars.com, for the first time, named two cars for its highest honor: the Toyota Scion FR-S and Subaru BRZ. The two vehicles, part of a joint venture between the two automakers, were named “Best of 2013” during an event here at the Fillmore coinciding with the North American International Auto Show. “Nearly identical, inside and out, the Scion FR-S and Subaru BRZ sports cars provide a driving experience that is second to none,” said Patrick Olsen, Cars.com’s editorin-chief. “The FR-S and BRZ’s impressive driving ability at a remarkably affordable price made these two sports cars stand out above the other nominees.” Other nominees for the Best Of 2013 award included the BMW 3 Series sedan, Honda Accord, Honda CRV, Ram 1500 and the Toyota Prius c. Julie Hamp, chief com-

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munications officer, Toyota North America, said the new Scion is “fun to drive and fun in spirit.” She announced, as she accepted the award, that the company is making a special purple version of the Scion FR-S in honor of the Cars.com award, since purple is the brand’s signature color. Michael McHale, Subaru’s director of communications, accepted Subaru’s award and thanked Cars. com. The Dodge Challenger won Cars.com’s Shoppers’ Choice Award for the second year in a row. “The Challenger was one of 10 award finalists which were each selected based on new car shoppers’ actions taken on the site including searching through car listings, filling out consumer reviews and contacting dealers for more information about specific cars,” Olsen said. “The winner was determined through fan voting on the Cars.com Facebook page. “As the most popular

Photo by Jeffrey Bellant AWARD NIGHT: Julie Hamp, chief communications officer for Toyota North America, stands in front of the Scion FR-S with the “Best of 2013” award from Cars.com during an event in Detroit.

vehicle on Cars.com two years in a row, there is no doubt that car shoppers love the Challenger.” Reid Bigland, president and CEO, Dodge Brand, later released a statement about the award and the sales success of the Challenger. “We’re very proud to win the Cars.com ‘Shoppers

Choice Award’ for a second consecutive year, recognizing the passionate following and strength of the iconic Challenger,” Bigland said. “It’s this enthusiasm and one-of-a-kind muscle car styling and performance that led the Challenger to an all-time annual sales record in 2012.”

Cars.com also announced its Lifestyle Award winners. Winners include the 2013 Ford F-150 for “Work Truck of the Year,” 2013 Ford Mustang for “Play Car of the Year,” 2013 Honda Odyssey for “Family Car of the Year,” and 2013 Toyota Prius for “Eco-Friendly Car of the Year.”

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Photo by Andy Cripe MAN OF THE CENTURY: Car dealer Chuck Wilson recently marked his 100th birthday. He entered the car business in 1940 by opening a Nash dealership.

CORVALLIS, Ore. – Chuck Wilson had to give up golf a couple of years ago and stopped driving his own car a few months back. “I’ve got a few miles on me,” he confesses. But, most weeks, the founder of Wilson Motors in Corvallis still shows up at the dealership in the morning and puts in six or seven hours of work, rain or shine, Monday through Saturday. Wilson’s been working six days a week most of his life, rarely taking a day off, even on his birthday. In fact, he was planning on coming to work Jan. 8, the day he turned 100. The only reason he didn’t is because he was recovering from a brief hospital stay. The following week, however, he was back on the job at his Ford dealership at 1105 N.W. Fifth St. Wilson said he wouldn’t have it any other way. “I’ve got to have something to do,” he said, dressed for business in gray slacks, a blue sweater and a houndstooth sport coat. “I don’t want to stay at home all day. I like it here.” That’s a good thing, because Wilson has spent a lifetime in the automobile business. After working his way through Harvard Business School, he took a job with Pacific Finance, a Portland company that handled car loans. In 1940, at the age of 27, he opened a Nash dealership in downtown Corvallis. “It was a good automobile,” Wilson recalled, but he eventually

made the switch to Ford. Wilson doesn’t handle the dealership’s daily operations anymore. His son Dick, 72, is the general manager, while grandson Tom, 49, runs the used car department. Like the family patriarch, they tend to put in a six-day workweek. But even if he’s not the boss anymore, Chuck Wilson still is involved in the business, said Todd Powell, the dealership’s sales manager. “He comes to me five times a day and asks me how many we’ve got sold,” Powell said. “And he’s always saying, ‘Make sure you take care of the customer.’” “Well, it helps, I’ll tell you that,” Wilson said, as though it was the most obvious thing in the world. “If you didn’t take care of your customers, you wouldn’t have any business. It’s pretty simple.” Powell had planned a big celebration to mark Wilson’s 100th birthday, running an ad in the newspaper, inviting other area car dealers and stockpiling 250 boxes of Cracker Jack — which started giving away prizes about 1913, the year of Wilson’s birth — to hand out as party favors. Unfortunately, Wilson got sick and couldn’t come to work that day, so the big birthday bash was canceled. Still, it may be just as well. Wilson doesn’t have a lot of patience for parties — or birthdays, either, for that matter. “I’ve had too many of ‘em,” he harrumphed.

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USED CAR NEWS

Industry Applauds Title Law Change By Jeffrey Bellant

A new law means Michigan dealers and floor planners can more efficiently manage the title transfer process when the lender holds the title. Ed Ophoff, owner of Ophoff Motor Sales in Muskegon, Mich., said the legislation eliminates a loophole that had been a problem for dealers and lenders. Dealers were in a bind before because they were required by law to have title to a vehicle on their lot, said Ophoff, who is chairman of the Michigan Independent Automobile Dealers Association. This proved a problem with floorplanned vehicles, since a vehicle title serves as the lender’s collateral. Under the new law, which goes into effect March 28, dealers can hold copies of the title of floorplanned vehicles instead. “This legislation updates the law to reflect the current state of the used car sales industry,” said the bill’s sponsor, Rep. Brad Jacobsen (R-Oxford). “This change will help dealers secure additional inventory, increase competition, and ultimately lower prices for consumers.” The law states a dealer can enter into an agreement with an inventory lender allowing the lender to

retain the certificate of title for a vehicle subject to a floor plan under certain conditions. A dealer will have to post a notice on the vehicle window disclosing the existence of the floor plan loan: the dealer would have to maintain a color copy of the certificate of title in either paper or electronic form at the dealer’s place of business; and the dealer must maintain a paper or electronic copy of the inventory loan agreement between the dealer and lender, along with the inventory list, which cannot be more than five days old. The law will require a floor planner to release the title within two banking business days after receiving full payment, proof of full payment or a request from the Secretary of State. Failing to meet the deadline would result in a $500 fine. Floor planners holding a title to a vehicle are also required to register – at no charge – with the Secretary of State. The bill also established a $100 late transfer fee for independent dealers, as opposed to the previous $15 late fee that applied to all dealers. “The change to the law is positive one for inventory lenders, independent dealers and consumers,” said John C. Wick, general counsel for Dealer Services Corporation (DSC).

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PAGE 8 - NADA CONVENTION ISSUE

New NADA Chair Uses CRM to Select Inventory (David W. Westcott, president of Westcott Automotive in Burlington, N.C., is the incoming chairman of the National Automobile Dealers Association. Westcott purchased his store in 1981. Prior to that he worked for General Motors and legendary dealer Jim Moran. Westcott found his dealership in a somewhat unusual way. He sent out a direct mail piece to dealerships throughout the Southeast, looking for an operation to buy. He received more than 50 offers and chose the Burlington store even though he had no personal connection to the area. Wesctott Automotive includes GMC, Buick, and Suzuki franchises as well as an extensive used-car operation. The stores participate in the GM Certified program and do some in-house financing.) UCN: What is your usedcar retail strategy? Westcott: Our strategy is twofold. Stock the right vehicles which are competitively priced. Then properly getting these vehicles in front of low-funnel buyers. Low-funnel buyers have done their homework and are actively in the marketplace. We use our CRM and other market data to keep in front of those customers who are close to a buying decision. We find that when we stock for these customers our turn rate is much higher. However, we still have a good portion of customers that come to us as repeat or referral looking simply to us to help them fulfill their needs. Either they are upgrading due to personal or family needs or they are looking to downsize we provide guidance as to what fits their budget and matches their needs. UCN: What is your usedcar wholesale strategy and sourcing? Westcott: We use several inventory management programs to see what our market is selling and where there are gaps in supply and demand. Being a Buick and GMC dealer we find it difficult to focus on just these brands due to their relative low wholesale supply. sFebruary 4, 2013

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Therefore, we focus a lot of our sourcing for our existing customer base and supplement with traditional and online auctions. Twice a week we review our current inventory and determine what type of activity there has been on each unit. After 40 days we start marking our vehicles for wholesale online. If after 60 days they have not retailed or have not wholesaled the units will be moved to a physical live auction. UCN: Massachusetts recently dealt franchise dealers a setback by supporting Right to Repair. Do you see national implications? Westcott: There have been no national implications because the Massachusetts ballot initiative passed in November is unworkable in practice. It should be repealed, not replicated. The so-called Right-to-Repair concept is fundamentally flawed to the core. Consumers already have a right-torepair their vehicle at any business of their choice. Franchised dealers work very hard to retain service customers after manufacturer warranties expire. Consumers want and deserve well-trained professionals working on their vehicles, and that is exactly what they can find at franchised dealerships. UC N: C a l i f o r n i a h a s new regulations for the buy-here, pay-here business. Franchise dealers sat that fight out. Why? Westcott: NADA historically has not taken positions on legislation pending at the state level. We advocate for franchised dealers before the U.S. Congress and Executive Branch. The California New Car Dealers Association (CNCDA) â€“ the largest state franchised dealer trade group in the country â€“ was actively engaged in the buyhere, pay-here issue in 2012. The California legislature passed three bills on this issue, of which two were signed into law by Gov. Brown. As drafted, the measures focused solely on the buyhere, pay-here dealers causing the concerns, which

resulted in major media coverage in the Los Angeles Times and other publications. The CNCDA worked with all the lawmakers in the state legislature to ensure that the bills did not cover new-car dealers and therefore the CNCDA was neutral on the bills. In part, the CNCDA modeled its approach after the provisions that NADA fought for in the DoddFrank bill, in which dealers engaged in indirect lending remain subject to the juris-

diction of the Federal Reserve Board and the Federal Trade Commission and dealers engaged in direct, buyhere, pay-here lending are regulated by the Consumer Financial Protection Bureau. Similarly, the new California bills cover only buy-here, pay-here dealers. UCN: Tell us about the new NADA president. Westcott: Before NADA, Peter Welch had been president and chief executive of-

ficer of the California New Car Dealers Association since 2003. He managed its government affairs office, including legal, legislative and regulatory affairs, since 1990. Iâ€™m looking forward to working with him. Peter is a great selection. He is the right person to help lead our organization as we confront the challenges ahead. Phil Brady was with us for 12 years and Frank McCarthy for 33. Itâ€™s not a position we turn over very often.

NADA Economist Predicts Strong Sales The sales momentum of new cars and light trucks established last year is likely to continue in 2013, predicts Paul Taylor, chief economist of the National Automobile Dealers Association. Taylor expects more than 15.4 million new vehicles will be purchased or leased in the United States this year, an increase of 1 million vehicles over 2012. Last year, 14.4 million new vehi-

cles were sold. â€œPent up demand, affordable auto loans and enticing new-vehicle designs add up to a solid sales year that will outperform the overall U.S. economy,â€? Taylor said. Taylor highlighted several factors that will support stronger auto sales in 2013: Ć€É&#x; (.Ć?*É&#x; '(É&#x; Ć‘É&#x; "É&#x; continued replacement of cars and trucks that aged to a record level during the re-

cession will propel sales this year. Ć€É&#x; 0#&&É&#x; ,#.É&#x; Ć‘É&#x; )1É&#x; interest rates for auto loans, which are expected to increase in future years, will help motivate consumers to finance a new vehicle purchase in 2013. Ć€É&#x; ),É&#x; 1Ć?"#&É&#x; Choices â€“ New-vehicle models offer greater consumer appeal in design and fuel efficiency.

NEXT ISSUE: TECHNOLOGY SPOTLIGHT www.usedcarnews.com

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USED CAR NEWS

Marketplace Marks Milestone AutoTrader.comâ€™s Trade-In Marketplace reached a major milestone in January: the five millionth consumer offer was generated on Jan. 14. For shoppers, the Trade-In Marketplace offers a no-haggle way to get an instant offer, backed by AutoTrader.com, on their car, sight unseen, which they can take to a participating dealership to turn the offer into cash or use it toward the down payment on another car. For dealers, it provides third-party credibility on trade-in valuations, while also providing them with a

way to source pre-owned inventory. Last year alone, more than 429,000 consumers redeemed their Trade-In Marketplace offers at participating dealerships, according to independently fielded consumer follow-up surveys. And, approximately 50 percent of consumers who redeemed their offer indicated that they traded in the vehicle for a replacement, instead of selling the car to the dealership. An AutoTrader.com study found that just 37 percent of consumers are satisfied with the traditional trade-in process.

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~Ă›Ă›Ă?Ă›Ă›Ă›February 4, 2013

USED CAR NEWS

Small Business Owners Feel More Stress

A pair of recent surveys shows small business owners are worried about the cost of healthcare. More than half of U.S. small-business owners say healthcare costs and taxes on small businesses are hurting their operating environment â€œa lot,â€? making these the top two concerns among eight issues tested in a January Wells Fargo/ Gallup Small Business survey. They are followed by the price of energy, government regulations, and the federal debt ceiling. At the bottom of the list of owner concerns are the availability of credit for business, federal spending cuts, and immigration policies. These results are from the quarterly Wells Fargo/Gallup Small Business survey, conducted Jan. 7-11, with a random sample of 601 small-business owners. In a separate question, owners who say they are not hiring were asked to rate eight reasons why they are not doing so. Sixty-one percent of these owners point to worries about the potential cost of healthcare as the reason they are not hiring, making it fourth on the list. The top three reasons they gave are that they do not need additional help; they are worried about IAG_UCN-feb4.pdf 1 1/23/13 revenues and sales; and they are

worried about the U.S. economy. Overall, U.S. small-business owners were optimistic about the small business operating environment in January, with the Wells Fargo/Gallup Small Business Index increasing to 9 after plunging to minus-11 in November, after the election. Despite this improvement in sentiment, owner optimism remains below the recent high of 23 in April. It is also lower than the 15 in January of last year. Another survey found many small business owners are feeling overworked starting out 2013. Sixty-one percent wish they could shed the backroom administrative tasks, according to the 7th Annual National Small Business Survey conducted by Staples Inc. Organization will play a key role in small business ownersâ€™ goals of growing and being productive: Ć€É&#x;ĹśĹšÉ&#x;*,(.É&#x;1#-"É&#x;."3É&#x;)/&É&#x; )Ć? cus all of their attention on their actual business and leave the daily tasks to someone else É&#x; Ć€É&#x; Ĺ¸ĹłÉ&#x; *,(.É&#x; ) É&#x; -'&&É&#x; /-#(--É&#x; owners are solely responsible for organizing their companies É&#x; Ć€É&#x; "#&É&#x; ĹˇĹ°É&#x; *,(.É&#x; /-É&#x; ."Ć? nology to keep them organized, 62 percent admit they donâ€™t necessarily use technology to de10:21 AM crease clutter.

Ć€É&#x;&')-.É&#x;Ĺ˛Ĺ°É&#x;*,(.É&#x;)(Ć‰.É&#x;-",É&#x; confidential material- the leading reason being itâ€™s just easier to throw materials away Keeping up with the latest technology will be an important factor in how small businesses plan to get ahead in 2013: Ć€É&#x;,&3É&#x;"& É&#x;) É&#x;,-*)((.-É&#x;1#&&É&#x; upgrade their operating systems

this year to help their businesses grow for the future Ć€É&#x; ĹśĹśÉ&#x; *,(.É&#x; ) É&#x; )1(,-É&#x; '#.É&#x; #.É&#x; is challenging to keep up with the constant technology changes É&#x; É&#x; Ć€É&#x; 1)É&#x; ."#,-É&#x; ) É&#x; ,-*)((.-É&#x; also note that these technological advances have caused them to change how they operate their business on a daily basis.

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USED CAR NEWS

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BAT-MONEY: The original Batmobile from the 1960s TV show brought plenty of bidders at the Barrett-Jackson sale in Arizona (top). Auto customizer George Barris (bottom) designed the iconic car.

LOS ANGELES (AP) – “Holy windfall, Batman!” The Batmobile just sold for $4.2 million. The original 19-foot-long black, bubble-topped car used in the 1960s “Batman” TV show sold at auction Jan. 19. The Barrett-Jackson Auction Co. in Scottsdale, Ariz., revealed the selling price but says the winning bidder has not been disclosed. Auto customizer George Barris, of Los Angeles, transformed a one-of-

a-kind 1955 Lincoln Futura concept car into the sleek crime-fighting machine. It boasted lasers and a “Batphone” and could lay down smoke screens and oil slicks. The iconic car was used by Adam West who starred as the Caped Crusader and by Burt Ward, his sidekick Robin known for exclamations beginning with – “Holy.” Barris’ publicist says his client is pleased with the auction result.

ADESA Adds Transport Tool ADESA announced that CarsArrive has successfully been integrated at all ADESA U.S. auction locations. The CarsArrive Internet-based platform consolidates shipments and optimizes both full and partial loads in real time - offering the most efficient option for the buyer, the seller and the carrier. Its custom-

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USED CAR NEWS

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BOSTON (AP) – When Mirko Chardin was 14, one of his best friends was shot and killed while being robbed of a pair of sneakers. Chardin, afraid for his own safety, began carrying a gun. He was arrested after the gun fell out of his pocket in front of a plainclothes police officer. But Chardin, who now works part-time as a buyer for a used-car dealership, applied for a gun license 15 years later, and was rejected. The reason: A Massachusetts law bars him for life from being able to get a gun license based on his juvenile arrest on a firearms charge. George said Chardin went to college and graduate school, earning a Ph.D. in teaching. Now 33, he is married and works as an administrator at a charter school. along with the used-car position. He wants a gun for self-defense because he carries large amounts of cash to car auctions, George said. Chardin, who has not been in any trouble since then, is challenging the law before the state’s highest court, arguing that it violates the Second Amendment. The Supreme Judicial Court will hear arguments on Feb. 4. “We are seeking a determination that, as applied to Mirko Chardin – a person with a completely clean adult record, a person with a nonviolent juvenile record – that this is unconstitutional under the Second Amendment, his right to keep and bear arms,’’ said Edward George Jr., one of Chardin’s attorneys. The law automatically disqualifies certain people from getting a gun license, including anyone adju-

dicated as a juvenile delinquent for committing a felony, a violent crime or violating any weapons, ammunition or drug law. Chardin’s lawyers say many states have similar laws, but they do not contain lifetime bans like the Massachusetts law. In most states, people previously adjudicated of nonviolent offenses as juveniles may obtain a gun license after a certain number of years if they are able to show they have had an otherwise clean record. “For the most part, for every aspect of life, if you make a mistake as a juvenile, and you are an adult and you keep your nose clean, you are basically treated as though you have a clean slate,’’ said Susan Chu, Chardin’s other attorney. State Attorney General Martha Coakley’s office is defending the law, arguing that it disqualifies only people who have committed serious crimes. “This is especially true as to Chardin, whose disqualification is based on a serious, weapons-related offense,’’ Coakley’s office argues in a legal brief filed with the court. Commonwealth Second Amendment, a group that advocates for the protection of Second Amendment rights in Massachusetts, argues that there in a contradiction in state law. On the one hand, state laws on juvenile crime are aimed at rehabilitating youth rather than punishing them. On the other hand, when someone who has been charged with a crime as a juvenile later applies for a gun license, their juvenile record disqualifies them, said attorney Keith Langer.

Odometer Charge Draws Indictment A federal grand jury in Philadelphia unsealed an indictment charging Kyle Novitsky, 45, and Judith Aloe, 52, both of North Miami Beach, Fla., with making false odometer statements, securities fraud and conspiracy to commit these offenses. According to the indictment, as early as 2004, and through at least 2010, the defendants devised a scheme to defraud buyers of used motor vehicles by misrepresenting the mileage of approximately 247 vehicles they sold. As part of the scheme, the indictment charges that Novitsky and Aloe purchased high-mileage, used motor vehicles in Florida, California and elsewhere from a national vehicle leasing company. The defendants are charged with conspiring to alter the odometers in these vehicles to reflect false, lower mileage. The indictment alleges that

Novitsky and Aloe then fraudulently altered the motor vehicle titles and sales documentation associated with these vehicles to reflect the false, lower mileage. As a result, the commonwealth of Pennsylvania issued motor vehicle titles reflecting this false, low er mileage, which the defendants knew to be untrue. Novitsky and Aloe subsequently sold the motor vehicles at wholesale automobile auctions in Manheim, Pa., and elsewhere, and provided to the buyers Pennsylvania titles bearing the lower false mileage. The indictment alleges that in some instances, the true mileage of the vehicle was greater than 100,000 miles more than what the title indicated, and as a result of selling the vehicles with false, lower mileages, the defendants received higher sales prices for the vehicles they sold.

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CARMEL, Ind. â€“ On Feb. 1, NextGear Capital was announced as the new name for an inventory finance powerhouse created through the merger of industry leaders Manheim Automotive Financial Services (MAFS) and Dealer Services Corporation (DSC). Former DSC President Brian Geitner will lead the newly-minted NextGear Capital as president, bringing his passion for serving the industry and his proven track record in building successful floor plan /FYU(FBS$BQJUBM1SFTJEFOU companies. Brian Geitner NextGear Capital: Whatâ€™s Next for Floor Planning â€œCreating NextGear Capital is a visionary endeavor,â€? said Geitner, â€œbecause we are building a industry-serving floor plan company on the solid foundations of two great industry leaders with strong cultures of customer focus and service.â€? The name NextGear Capital was chosen from dozens of researched options, said Geitner, to reflect the leadership role the new independent company will play in moving the remarketing finance industry forward. He added that NextGear Capital will be able to offer customers more value by making the process of buying and selling inventory faster, simpler and ultimately more profitable. â€œI am extremely excited about whatâ€™s next for our customers,â€? Geitner emphasized. â€œWith a broader offering of products

and services, our industry-leading customer experience will serve the needs of dealers and auctions, alike.â€? Great People Make Great Companies â€œOur excellent staff and their high level of customer service are what make us different from any other finance company in the industry,â€? Geitner said. â€œWe will continue to invest in leading technology to help our people and our customers shift ahead, one gear at a time, to the next level.â€? NextGear Capital customers will have access to their accounts in four convenient ways: dedicated Account Executives for in-person visits at their businesses, an advanced Customer Service Center available 8 a.m. to 6 p.m. in all markets, and convenient access through online account management and mobile floor plan applications.

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â€œWhen you do business with NextGear Capital,â€? said Patrick Brennan, Group Vice President of Manheim Automotive Financial Services, â€œyou get a lot more than just financing options. You receive a robust array of services and support to help you acquire and move your inventory.â€? The combined customer base of more than 17,000 dealers and hundreds

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USED CAR NEWS

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Finance Firms Issue Notes A pair of auto finance firms recently issued notes. General Motors Financial Company Inc. announced the pricing of a $1 billion offering of automobile receivables-backed securities. The 2013-1 transaction will have initial credit enhancement of 7.25 percent, consisting of a 2 percent cash deposit and 5.25 percent overcollateralization. Total required enhancement will build to 14.25 percent of the then-outstanding receivable pool balance, which includes the initial 2 percent cash deposit.

First Investors Financial Services, Inc. announced that it has completed the issuance of $187 million in term asset-backed notes in a private placement transaction. The notes consist of five sequential pay classes that carry a weighted average coupon rate at issuance of 1.03 percent. Initial credit enhancement consists of a cash reserve account equal to 1.5 percent of the outstanding principal balance of the initial receivables pool and an initial overcollateralization of 0 percent, which will increase to 2.5 percent through cash collections.

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USED CAR NEWS

Shopping Online Becomes More Common By Jenny King

DETROIT - Mobile devices have changed the way cars are bought and sold. And fine-tuning these transactions is critical to both customer and dealer satisfaction, marketing executives told attendees at a recent conference. Scott Painter, whose TrueCar Internet operation promises guaranteed savings “and a hassle-free buying experience” through a network of some 5,500 certified dealers, said computer commerce is still in its first inning. “Price distribution will continue to narrow,” Painter told his audience. Shopping online and buying offline will become more seamless, he added. Painter was joined by Google executive Kim Stonehouse and Hyundai sales vice president Dave Zuchowski. While Stonehouse focused on identifying the best potential leads by means of their online searches, Zuchowski emphasized the growing importance of the customer experience at the dealership level. The lines between brand attributes like quality and styling are becoming gray areas, Zuchowski said. “The consumer experience is one of the few ways we can be creative,” he said. “When does that begin? It might be on a social

media site.” So it’s not just about having a contemporary facility, though updates are important, he said. “Training all employees in customer contact and an improved digital world both are important,” he said, adding that 92 percent of Hyundai’s dealers use the automaker’s standard URL. Hyundai also has a lead program and 90 percent of its dealers are in it,

Zuchowski said. The focus, he said, is on lead quality, not quantity. A source should be clearly identified. Stonehouse said 930,000 people are in the car market at any given time. “Shoppers spend three months or less ‘in market.’ “In an analog world, dealers are looking for shoppers,” Stonehouse said. “In a digital world they are looking for you.” Gathering data, under-

standing it and using it creatively are important, she said. “We are getting to a point of balance,” Stonehouse said, referring to growing consumer access to information formerly shared by factory and dealers. Painter sees this as good: “Instead of a fearful customer, you will have an informed customer, and this builds trust.” Mobile information for

customers at the point of purchase will affect deals. Transparency has not hurt dealer profitability, Painter asserted. “Get used to it; embrace the change,” said Hyundai’s Zuchowski. Zuchowski said customer satisfaction information could be gathered electronically at the time of sales and service instead of the typical 45 days it now takes a dealership to query a customer.

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FTC Warns of Email Scam The Federal Trade Commission is warning small businesses that an email with a subject line “NOTIFICATION OF CONSUMER COMPLAINT” is not from the FTC. It is similar to the “Consumer Complaint” emails purporting to be from the Better Business Bureau. In both instances, the email falsely states that a complaint has been filed with the agency against their company. The FTC advises recipients not to click on any of the links or attachments with the email. Clicking on the links may install a virus or other spyware on the computer.

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February 4, 2013 t21

USED CAR NEWS

Shopping Online Becomes More Common By Jenny King

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ÛÛÝÛÛÛFebruary 4, 2013

USED CAR NEWS

Toyota’s Legal Battle Over ‘Sudden Acceleration’ Continues LOS ANGELES (AP) – As Toyota Motor Corp. chips away at settling lawsuits claiming its vehicles suddenly accelerate, the question remains whether attorneys who sued could prove to a jury there was a design flaw. The company maintains stuck accelerator pedals, faulty floor mats and driver error are the reasons for vehicles unexpectedly surging, while plaintiffs’ attorneys contend Toyota’s electronic throttle control system is to blame. Recent settlements totaling more than $1 billion by Toyota to resolve numerous lawsuits involving economic loss and a few involving wrongful death claims may signal that the automaker doesn’t want to risk coming out on the losing end of a potentially costly court decision. “A bad loss in a jury trial would inflict lasting damage to Toyota in loss of public confidence,” said Los Angeles-based attorney Christine Spagnoli, who has won several multimillion-dollar verdicts against automakers over safety defects. “I believe Toyota will continue to look for better opportunities to get a win.” The company said Thursday it settled a lawsuit with the family of two people killed in a Utah crash DAA-Memphis_CHRYSLER UCN AD.pdf that was set to go to trial next month

and serve as a test case for hundreds of others that are pending. Terms of the agreement weren’t released, but it comes just weeks after Toyota agreed to pay more than $1 billion to settle lawsuits where vehicle owners said the value of their cars and SUVs plummeted after the company recalled millions of vehicles because of sudden-acceleration issues. In the Utah case, Paul Van Alfen and his son’s fiancee, Charlene Jones Lloyd, were killed when their Camry slammed into a wall near Wendover, Utah. in 2010. The Utah Highway Patrol concluded based on statements from witnesses and the crash survivors that the gas pedal was stuck. It was the first so-called “bellwether” case, before a federal judge in Orange County, Calif., chosen to help predict the potential outcome of other lawsuits making similar allegations. Wayne Mason, a product liability attorney in Dallas, doesn’t believe Thursday’s settlement portends poorly for either side going forward. “This is like taking an aspirin when you have a migraine,” Mason said. “Each of these cases has to be weighed on their own merit. I will be surprised if some don’t get tried.” 2 1/23/13 12:10 PM Toyota continues to be dogged

BY DESIGN?: Attorneys involved in lawsuits against the Toyota Motor Company argue that incidents of “sudden acceleration” were caused by a design flaw. Toyota has already paid more than $1 billion in settlements over the isssue.

by sudden-acceleration issues that arose four years ago. Last month the U.S. government hit the company with a record $17.4 million fine for failing again to quickly report problems to federal regulators and for delaying a safety recall. More than 150,000 2010 Lexus Rx 350s and RX 450h models were recalled because the driver’s-side floor mats can trap

the gas pedal and cause the vehicles to speed up without warning. Toyota has recalled more than 14 million vehicles globally to fix sticky gas pedals and floor mats. The company also paid a total of $48.8 million in fines for three violations in 2010. While the recalls have soiled the Continued on page 23

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February 4, 2013 t23

USED CAR NEWS

FTC Issues Buyer’s Guide Warnings to Dealers The Federal Trade Commission’s Southwest Region Office has warned 11 used car dealerships in Jonesboro, Ark., that their sales practices violate the FTC’s Used Car Rule, which requires used car dealers to display a “Buyers Guide” detailing warranty and other important information on the cars they sell. FTC staff inspections in Jonesboro found that eight dealers failed to display Buyers Guides on almost all used cars offered for sale, and three dealers failed to display the guides on a significant number of used cars. Ten dealers properly displayed the guides on all or nearly all of the used cars offered for sale. The FTC sent warning letters urging the 11 dealers to come into compliance by properly displaying the guides in a clear and conspicuous location on all used cars. The inspections were part of the FTC’s ongoing efforts to enforce the rule, in conjunction with state and local officials. On Dec. 4, the FTC announced that it is seeking public comment on proposed changes to the Buyers Guide. The FTC is also issuing a final rule that makes technical corrections and revises the Spanish translation of the guide.

Toyota Lawsuit the company’s sterling reputation for reliability, Toyota has regained its position as the world’s largest automaker and saw sales increase 27 percent last year. The automaker also has received some vindication. Both the National Highway Traffic Safety Administration and NASA were unable to find

– Continued from page 22

any defects in Toyota’s source code that could cause acceleration problems. In 2011, a federal judge found that Toyota wasn’t liable for a 2005 crash involving a Scion that the driver blamed on the electronic throttle or a floor mat. A second bellwether trial is slated

for later this year, but it’s unclear if a resolution will be made before then. 0 Plaintiffs’ attorneys have reviewed thousands of internal Toyota documents, reviewed data and deposed employees, but most of that material has been kept under seal in court records.

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1/28/13 3:30 PM

ÛÛÝÛÛÛFebruary 4, 2013

USED CAR NEWS

Airbag Issues Cause Recalls for Manufacturers Honda recently issued a major recall, affecting nearly three quarters of a million vehicles. Honda is recalling 748,481 model year 2009-13 Pilot and 2011-13 Odyssey passenger vehicles manufactured from March 13, 2008 through Dec. 21, 2012. One or more rivets that attach the airbag module to the airbag cover may be missing. The absence of more than one rivet could alter the performance of the driver’s airbag during deployment. This could potentially increase the risk of injury during a crash. Honda will notify owners and instruct them to take their vehicle to a Honda dealer. The dealer will inspect the driver’s airbag module and replace it if necessary, free of charge. The recall is expected to begin on or about Feb. 16. Honda’s recall campaign number is S75. In other recall news, Southeast Toyota Distributors is recalling certain models interspersed through model years 2009 through 2013 as follows: model year 2009-2012 Tacoma, 4Runner, Camry, Camry Hybrid, Prius, and RAV4; model year 2009-2010 Avalon, FJ Cruiser, and Highlander Hybrid; model year 2010-2013 model year Corolla, Si-

enna and Tundra; model year 20092013 Highlander and Venza; model year 2012 Prius V; and model year 2010-2012 Sequoia. During modification by Southeast Toyota to include accessories such as leather seat covers, seat heaters or headrest DVD systems, these vehicles may not have had the passenger seat occupant sensing system calibration tested. Without passing the calibration test, the occupant sensing system may not operate as designed.

If the front passenger seat occupant sensing system is out of calibration, the front passenger airbags may not deploy or they may deploy inappropriately for the passenger’s size and position. This could increase the risk of personal injury during the event of a vehicle crash necessitating airbag deployment. Although there have been some high profile recalls lately, the NHTSA recently announced that the agency received 41,912 complaints

concerning potential safety defects in 2012, down from 49,417 in 2011, and 65,765 in 2010. Manufacturers filed more than 650 safety recalls, affecting over 17.8 million vehicles, child seats and vehicle equipment, during calendar year 2012. Over the last three years, NHTSA’s defect and compliance investigations and compliance testing have resulted in over 430 recalls involving 22 million vehicles and products.

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1/28/13 3:22 PM

February 4, 2013 t25

USED CAR NEWS

City Dwellers Like EVs

While sales of plug-in electric vehicles (PEVs) have fallen short of projections to date, interest in these vehicles is growing, particularly in large metropolitan areas. Cities like New York City, Los Angeles, San Francisco, and Seattle combine large population areas with early rollout schedules from vehicle manufacturers, and positive attitudes toward electric vehicles among residents, making them fertile ground for electric vehicle manufacturers in the coming years. According to a recent report from Pike Research, a part of Navigant’s Energy Practice, sales of electric

vehicles in the largest 102 cities in the United States will total slightly more than 1.8 million from 2012 through 2020. The report’s analysis indicates that PEV acceptance is strongly linked to not only the availability of PEV models, but also the accessibility of charging infrastructure. Texas, for example, has seen a dramatic increase in the number of EV charging stations available in 2012. Pike Research’s index of positive opinions toward electric vehicles moved the state’s ranking from 42nd in 2010 to fourth in 2012, the largest change of any state in the index.

Feds Want Noisier Hybrids As required by the bipartisan Pedestrian Safety Enhancement Act of 2010 (PSEA), the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) is proposing that hybrid and electric vehicles meet minimum sound standards in order to help make all pedestrians more aware of the approaching vehicles. Electric and hybrid vehicles do not rely on traditional gas or dieselpowered engines at low speeds. This makes them much quieter and their approach difficult to detect. The proposed standard, Federal Motor Vehicle Safety Standard No. 141, would fulfill Congress’ mandate in the Pedestrian Safety Enhancement Act that hybrid and electric vehicles meet minimum sound requirements so that pedestrians are able to detect the presence, direction and location of these vehicles when they are operating at low speeds. The sounds would need to be detectable under a wide range of street noises and other ambient back-

UCN_25.indd 1

ground sounds when the vehicle is traveling under 18 miles per hour. At 18 miles per hour and above, vehicles make sufficient noise to allow pedestrians and bicyclists to detect them without added sound. Each auto manufacturer would have a significant range of choices about the sounds it chooses for its vehicles. However, the characteristics of those sounds would need to meet certain minimum requirements. In addition, each vehicle of the same make and model would need to emit the same sound or set of sounds. NHTSA estimates that if this proposal were implemented there would be 2,800 fewer pedestrian and pedal cyclist injuries over the life of each model year of hybrid cars, trucks and vans and low speed vehicles, as compared to vehicles without sound. NHTSA has sent the proposal to the Federal Register. Upon publication, the public will have 60 days to submit comments on this NHTSA action.

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ÂƒĂ›Ă›Ă?Ă›Ă›Ă›February 4, 2013

USED CAR NEWS

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A recent online survey on auto repair conducted by AutoMD.com showed that while consumers are generally satisfied with their dealership experience, they trust independent repair shops over dealerships for auto repairs by two to one. Sixty-seven percent of respondents said that they trust an independent repair shop more than a dealership to repair their vehicle. When asked why they preferred the independent repair shop, the top two reasons were: 1) a relationship with their local mechanic (40 percent) and 2) better pricing (at nearly 30 percent). Furthermore, the survey revealed that over 80 percent of respondents reported they had felt overcharged at the dealership, with 59 percent claiming that the overcharge was at least $200 and nearly 20 percent claiming over $500. Plus 47 percent said paying a premium or paying for unnecessary repairs / service is the worst part of the dealership experience. But it is not all bad news for dealerships: 47 percent of those who utilize dealership service centers said they were either satisfied or very satisfied with their experience, with 23 percent feeling neutral. However, of those who were dissatisfied with their dealership experience (30 percent), the belief

that they had been overcharged was the number one driver of dissatisfaction. And of the 33 percent who say they trust the dealership more than the independent shop for repairs, 60 percent cited the dealership mechanicâ€™s knowledge of and familiarity with their particular model as the reason for their preference. But it would appear that of those who go to the dealership for repairs, the vast majority are only doing so because their vehicle is under warranty or recall: 83 percent report that they would not have chosen the dealership if their vehicle hadnâ€™t been under warranty/recall. The top reason? Repairs at the dealership are more expensive than at the independent repair shop (51 percent). Nearly two-thirds of respondents believe they can save over 20 percent on repairs by choosing an independent repair shop over a dealership, and 72 percent say a savings of just 10 percent would make them opt for the repair shop over the dealership. This is not just perception or speculation, itâ€™s an educated opinion. Consumers are looking for comparison quotes: 78 percent say they have compared repair job quotes between the dealership and independent repair shop.

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Jaguar, the Jaguar logo, and Jaguar Financial Group are trademarks of Jaguar and any use by JPMorgan Chase Bank, N.A. (â€œChaseâ€?) is under license. Land Rover, the Land Rover logo, and Land Rover Financial Group are trademarks of Land Rover and any use by Chase is under license. Retail / Loan and lease accounts are owned by Chase.

The tradename â€œMazda Capital Servicesâ€? as well as the Mazda and Mazda Capital Services logos are owned by Mazda Motor Corporation or its affiliates and are licensed to JPMorgan Chase Bank, N.A. (â€œChaseâ€?). Retail / Loan and lease accounts are owned by Chase.

12-380 CAF Remarketing Used Car News Ad.indd 1

UCN_26.indd 1

6/5/12 1:46 PM

1/25/13 4:20 PM

February 4, 2013 t27

USED CAR NEWS

7603 Payteck_Target UCN_2013_Layout 1 1/11/13 9:24 AM Page 1

State Bans Auto Advertiser A Louisiana company that misled North Carolina consumers with its advertisements for used car sales events has been permanently banned from automobile advertising and marketing in North Carolina. Under a consent judgment, Level 10 Marketing and its owner David M. Bottner are permanently banned from engaging in any advertising or promotional business with new or used automobile dealerships in North Carolina. If they fail to live up to the judgment, they will have to pay a penalty of $40,000. North Carolina joined Arizona, Iowa, Kentucky, Maryland, Oregon and Pennsylvania in bringing the case. As alleged in the complaint, Level 10 Marketing sold advertising and sales packages to North Carolina auto dealers designed to increase

sales of the dealers’ used vehicle inventories. The advertisements falsely claimed that the sales events involved vehicles brought in from elsewhere by using terms such as “lender’s inventory sale” or “repossessed vehicle event” and used other misleading terms to create a false sense of urgency, such as “emergency disposal,” and “liquidation.” Company advertisements also claimed that used vehicles would be sold at “90 percent off original price,” which was actually a comparison with the Manufacturer’s Retail Price (MSRP) of the vehicle when new, according to the complaint, and falsely claimed that “some vehicles will be available for $1 down, $114 per month.” These ads routinely misrepresented the cost of the vehicles and the ability of consumers to obtain financing.

Dealer Fails to Deliver Vehicles PASCAGOULA, Miss. (AP) — A former Pascagoula car dealer has been sentenced to serve 10 years in prison for accepting payments for cars that he never delivered to customers. Rusty Keenum, the former owner of TK Motors, pleaded guilty to 12

UCN_27.indd 1

counts of felony false pretense and one count of embezzlement. Prosecutors say Keenum had bilked customers out of $32,000 for cars at the dealership. Keenum was also ordered to pay $6,000 in fines and spend time under post-release supervision.

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1/25/13 4:21 PM

ÛÛÝÛÛÛFebruary 4, 2013

USED CAR NEWS

RETAIL MARKETS ALABAMA

Marty Thomas, owner, Hometown Auto Sales, Meridianville, Ala.: “This is our 11th year in business. “I have just one location. “Usually I keep about 20 units in inventory. “Lately, we’ve been selling about 14 units per month on average. “This month we’re actually down, but (the overall average) has been steady over the last few years. “We buy about 90 percent of our inventory from the auctions. “I buy the rest off the street. “People will come by and we buy from them. “It’s still primarily auctions, but I do buy a few more off the street. “We’re straight retail. “The average retail price is about $10,000. “We recondition our vehicles before they go on the lot. “I actually have a detail shop at the lot. “We do some outside detailing, too. “On average, for repairs,

By Jeffrey Bellant

cleaning and everything, we’re probably throwing about $400 a car into recon. “The average model year is 2007, roughly. “Average mileage ranges from 80,000 to 110,000. Miles are definitely getting higher. “I carry about 60 percent domestic and 40 percent imports. “Normally, I carry about 50 percent cars and 50 percent trucks. “But now is not a good indicator of our normal inventory. “Right now, I’m carrying about 20 percent trucks. “It’s tough to find trucks in the price range we sell in today’s market. “For advertising, I use Autotrader.com, Cars.com and we have a website. “We also do local print (ads) in newspapers. “We recently sold a 2006 Dodge Charger R/T for $13,600. “It had 98,000 miles. “Although the year hasn’t started out great, I’m hoping for a good year.”

MINNESOTA

Jim Heiland, owner, Liberty Station, Arlington, Minn.: “We’re starting our 11th year in business. I have one lot. “My inventory right now is very low, maybe at an all-time low. It was at 15 cars near the end of January when I picked up another five or six cars. “Normally, I like to keep 25 or 30-plus cars in inventory. But I just haven’t been able to find the cars I wanted to buy at the price I wanted to pay. “It’s just seemed like, whatever I want is the same as what everyone else wants. So the price is about $1,000 more than I think I should pay. “I sold about 17 to 18 cars a month on average in 2012. “The total was about 10 cars ahead of 2011. “I’ve heard that there’s going to be 500,000 lease returns heading into the market. I’m sure the newcar stores will start gobbling them up. But when they sell those, they take

in trades and that works out good for me. “I think that some of the new-car stores that I buy from are short of used cars, too. So they’ve been keeping cars that have over 100,000 miles, when before this, they would never keep anything that had over 60,000 to 80,000 miles. “My market is in the $3,000 to $9,000 (retailpriced) car. “I use the Manheim Market Report as my bible. “I am just seeing a ton of cars in that 180,000-mile to 220,000-mile range. My customers don’t often want to buy a 200,000mile car. “But I guess I shouldn’t say that. I just sold a 1999 Chrysler Sebring convertible with 190,000 miles. I got $2,100. Everybody was telling me, ‘You’ll have that thing until the spring.’ But we’ve sold more convertibles in January than we did in June. “About 60 percent of my cars come from new-car dealers. Ten to 15 percent are trade-ins and a few

come from off the street. I advertise that I buy cars. I get another 10 to 15 percent of my cars from the auctions. “We primarily sell retail. We’ve been working with a couple of sources for subprime financing but we just haven’t put a deal together yet. “We sell more cars and vans (65 percent) than SUVs and trucks. “We sell a lot of Dodge Caravans and Chrysler Town & Country minivans. “We sell 90 percent domestic vehicles. “My average model year would be 2003. The average mileage would be in the 90,000 to 135,000 range, which is up from previous years. “I think that hurricane out east took a lot of cars out of the market. “I have a 5,000-squarefoot building with a showroom. “We have a shop for service and detailing, but we have that primarily for servicing our own vehicles.”

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1/28/13 10:38 AM

February 4, 2013 t29

USED CAR NEWS

WHOLESALE MARKETS ARIZONA

Tom McDermott, general manager/owner, Metro Auto Auction of Phoenix, Phoenix: “We’ve been here six years. “We have eight lanes and we’re running eight. We really need 10. “Right now, I’m running between 1,300 and 1,600 vehicles, depending on the week. We are scheduled to run 2,000 in our anniversary sale. “We’re up about 10 percent in volume from last year. We are enjoying an organic growth. Most auctions should be growing and if they’re not, they’re losing market share. The retail climate is expanding, which contributes to the wholesale climate. “In the last few months, I’ve read some very positive news stories about finance companies lending deeper into credit scores, which is a very big deal. “Our sales percentages average about 60 percent throughout the year. At this time of the year, we’ll push toward 70 percent.

UCN_29.indd 1

“In terms of attendance, it depends on the sale, of course. On average, we’ll draw 850. Then on a big sale we’ll draw about 1,100. “We draw a lot of dealers from Arizona and Mexico. We’ll also regularly draw from the surrounding states, California, Colorado, Idaho and some from Washington. Then we’ll get a few guys, especially snowbirds, who have discovered Phoenix from outside the area. “Business has been good for our dealers. The market shifted. I’ve been in the car business for 33 years. I’ve watched this cycle where it usually starts to improve at the beginning of the year. But we started to improve before the end of 2012. “The way I see it is that dealers are looking for that early spring market. “The new-car stores are starting to sell more cars, have more demand. “On average, I’m about 90 percent dealer consignment, which is by design. “Our overall average price is about $7,000. That’s about the same as this time last year.

By Jeffrey Bellant “We also do online sales through Live Global Bid. For our GSA sales, 30 percent of the cars receive online bids. “In the consignment sale, I don’t do wholesale online. For that I concentrate on brick and mortar services. “The GSA sales are once a month. “Those can be anything from low-mileage 2006 and 2007 Pontiacs and Chevrolets all the way to school buses, ambulances – a mix.” OKLAHOMA

Mike Clopton, general manager/partner, Oklahoma Auto Exchange, Oklahoma City: “We’re starting our ninth year. “We have four lanes and we’re running all four. “We run about 800 to 900 per week. “The volumes are up a little bit, maybe 10 percent. “I kept thinking every year that we’ve (maxed out), because we’re limited in space and there’s only so many cars we can fit on the lot. “Then what happens is we’ll just sell a higher

percentage. “For example, we were selling at 65 percent in December. “That’s really unusual for us in December. “So we’ve been in the 60s for about a year. “The thing we want to do well with is the new-car trades and the smaller (fleet companies). “Our average sale price is only $4,600 a car. “Those cars usually sell at a lower percentage than the factory-type, fleet-lease cars. “Dealer consignment makes up about 70 percent of our volume. “We have a national account, LeasePlan USA, and a few other (fleet-lease, repo) accounts. “I’d say we draw between 325 and 400 dealers in the lanes. “They mostly come from Oklahoma, but also from Texas, Arkansas, Kansas and Missouri. “But our focus is to be a really good auction for Oklahoma. “Dealers’ moods have been good. We really have a

positive group of people in this state. “In the past, we’ve done GSA sales, but we don’t do those anymore. “There’s not a specific type of car that’s doing well. “If we just get a nice, clean anything – truck, car – anything that has 100,000 miles or less, that’s good. “You know, for what we sell, it doesn’t matter if it’s four-wheel drive or twowheel drive. It will sell. In some places, it matters whether it’s a four-wheel drive. “The only thing that we’re having a more difficult time selling is the (rough stuff ) – the $500 to $800 cars. “(As of Jan. 24), the weather has been good. It hasn’t been too cold. “So we haven’t been affected like the folks in the Midwest and Northeast (with the cold). “What’s difficult for auctions when it’s cold, is having those cars sit in the freezing weather. “With an older car, it puts a lot of strain on the auctions just to get them running.”

1/28/13 9:23 AM

ÛÛÝÛÛÛFebruary 4, 2013

USED CAR NEWS

MONTHLY DEALER CONSIGNMENT AVERAGES

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Compact Car Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: Fullsize Car Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: Luxury Car Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: Midsize Car Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: Pickup Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: Sports Car Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: SUV Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG: Van Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 YTD AVG:

Avg Sale Price

Avg. Mileage

$6,186 $6,277 $5,896 $5,970 $5,878 $6,046 $6,349

188,865 178,925 181,060 186,376 185,586 183,401 172,703

$4,948 $4,942 $4,785 $4,917 $4,923 $5,225 $5,300

246,642 224,139 221,121 224,871 208,673 214,822 207,238

$13,546 $13,385 $12,955 $12,691 $12,924 $13,583 $13,489

225,222 213,123 216,526 226,783 215,256 206,754 203,135

$6,521 $6,396 $6,080 $6,104 $6,094 $6,405 $6,564

213,950 201,365 204,643 207,998 205,505 203,390 194,354

$11,981 $12,096 $11,797 $11,960 $12,135 $12,515 $12,012

229,262 213,987 219,919 235,514 234,732 233,676 224,824

$13,849 $13,236 $13,161 $12,960 $12,830 $13,403 $13,691

181,838 181,983 183,019 189,864 182,916 176,743 163,721

$11,482 $11,497 $11,276 $11,152 $11,254 $11,949 $11,783

237,181 219,569 220,364 228,974 222,425 214,591 213,381

$5,885 $6,009 $5,688 $5,742 $5,816 $6,017 $6,185

263,057 248,843 252,939 264,128 254,086 249,387 242,332

CURRENT YTD, THROUGH DECEMBER 2012

UCN_30.indd 1

SOURCE: MANHEIM CONSULTING

1/25/13 1:09 PM

February 4, 2013 t31

USED CAR NEWS

HPV UCN AD DUE 2013.01.25 OUTLINED.ai 1 1/25/2013 10:11:05 AM

Compiled By Jeffrey Bellant

AUCTION OPENS RECON CENTER

Photo Courtesy of DAA of the Rockies PICTURE PERFECT: Michele Noblitt, vice president of Dealers Auto Auction of the Rockies, along with Joe Genereaux of GE Remarketing, stand in the photo booth of the state-of-the art recon facility.

Dealers Auto Auction of the Rockies (DAA Rockies) opened its new 12,000-square-foot reconditioning building in December. The new building is home to DAA Rockies’ detail department, mechanic shop, arbitration department and the new state of the art photo booth. The recon building is located on the auction property. “Our new photo booth will help grow our online presence through sharper images of our inventory,” said Michele Noblitt, executive vice president. “The high quality of work from our detail shop combined with our state of the art photos will help our customers sell and buy online.”

Manheim Sales Celebrate Awards Fourteen Manheim locations were recently honored by BMW Financial Services, GE and Ford for offering customers the highest and most consistent performance and service levels during 2012. The awards were announced during the fourth quarter of 2012. Manheim Orlando was recognized by BMW Financial Services as Auction of the Year, along with nine other top selling Manheim locations. During the GE Imagination Awards Ceremony, Manheim swept the Silver Awards for the Top Performing Auctions in each region of the country. Manheim Atlanta and Manheim Southern California both won the National Technology award for East and West, respectively. To round out the distinctions from GE, Manheim also took

UCN_31.indd 1

home the prestigious “Above and Beyond Award” and the “Outstanding Promotions Award” for the West. Six Manheim locations received the Ford Auction Service Award, which measures the performance of standards critical to the success of closed and open sales. “The highest compliment we can ever receive is having our customers recognize us for top performance, service excellence and dedication,” said Nick Peluso, Manheim senior vice president, customer management. We invite news items and top-quality photos from our readers to be considered for “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

1/25/13 5:24 PM

ÛÛÝÛÛÛFebruary 4, 2013

USED CAR NEWS

TRUE COST OF INCENTIVES (TCI)

TMV does not include options

Dec. 2011

Dec. 2012

Compact Car

% Change ‘11-’12

TMV does not include options

TCI

$1,099

$1,483

34.94%

TCI

1 2

$11,569 $11,022

$12,242 $11,307

5.82% 2.59%

1 2

TCI

$389

$792

103.60%

TCI

1 2

$10,011 $9,894

$10,314 $9,374

3.03% -5.26%

TCI

$2,011

$1,918

1 2

$13,906 $13,418

TCI 1 2 TCI 1 2 TCI 1 2 TCI 1 2

Subcompact Car

Dec. 2011

Dec. 2012

Large Crossover SUV

% Change ‘11-’12

$3,467

$3,183

-8.19%

TCI

$21,873 $18,035

$22,595 $19,044

3.30% 5.59%

Large Traditional SUV

Dec. 2011

Dec. 2012

Midrange Sport Car

% Change ‘11-’12

$2,690

$2,556

-4.98%

1 2

$33,920 $31,860

$39,731 $29,152

17.13% -8.50%

Premium Sport Car

$3,858

$3,876

0.47%

TCI

$5,930

$4,203

-29.12%

1 2

$29,393 $23,131

$28,707 $26,780

-2.33% 15.78%

1 2

$69,664 $57,443

$81,063 $54,191

16.36% -5.66%

-4.62%

TCI

$2,308

$1,206

-47.75%

TCI

$3,024

$3,256

7.67%

$14,687 $13,615

5.62% 1.47%

1 2

$16,972 $14,910

$17,667 $15,404

4.09% 3.31%

1 2

$24,623 $21,257

$24,642 $21,974

0.08% 3.37%

$3,921

$3,715

-5.25%

TCI

$3,896

$4,369

12.14%

TCI

$2,107

$2,220

5.36%

$15,582 $12,569

$13,287 $13,951

-14.73% 11.00%

1 2

$21,585 $18,344

$24,438 $20,660

13.22% 12.63%

1 2

$28,695 $24,928

$28,264 $25,271

-1.50% 1.38%

Midsize Car

Large Car

Compact Crossover SUV

Compact Truck

Large Truck

Minivan

$2,167

$1,480

-31.70%

TCI

$1,950

$2,332

19.59%

TCI

$15,457 $13,891

$16,614 $15,123

7.49% 8.87%

1 2

$16,326 $14,524

$19,379 $15,800

18.70% 8.79%

1 2

$2,350

46.78%

TCI

$15,681 $13,201

0.50% 10.89%

1 2

Midsize Crossover SUV $1,650

$2,171

31.58%

TCI

$1,601

$18,356 $16,784

$20,223 $17,820

10.17% 6.17%

1 2

$15,603 $11,905

Midsize Traditional SUV

Van

Entry Sport Car

$1,837

$1,834

-0.16%

TCI

$1,846

$1,637

-11.32%

TCI

$19,934 $17,103

$22,730 $19,240

14.03% 12.49%

1 2

$22,107 $17,159

$20,656 $19,921

-6.56% 16.10%

1 2

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_32.indd 1

TMV does not include options

TCI 1 2

Entry Luxury Car

Entry Luxury SUV

Midrange Luxury Car $3,624

$4,257

17.47%

$33,173 $27,262

$37,050 $28,924

11.69% 6.10%

Midrange Luxury SUV $2,411

$1,935

-19.74%

$40,681 $35,719

$40,690 $35,207

0.02% -1.43%

Premium Luxury Car $6,583

$4,705

-28.53%

$61,265 $48,500

$60,540 $49,863

-1.18% 2.81%

Premium Luxury SUV $3,881

$3,179

-18.09%

$45,538 $44,366

$48,143 $39,456

5.72% -11.07%

1/28/13 4:46 PM

February 4, 2013 t33

USED CAR NEWS

Disconnected Jottings From Tony Moorby... Iâ€™ll miss the NADA convention this year. Moreâ€™s the pity â€“ I always get a sense of how the industry feels about itself whenever Iâ€™ve been before. Itâ€™s like a barometer for the rest of the year. Pundits are pointing to a

Itâ€™ll be interesting to see how the bankers find ways and mechanisms to fund this potential growth before the regulators breathe fire and brimstone over the lenders shoulders and snuff out this consumer flame. The regula-

Tony Moorby

Ć€É&#x; Ĺ´Ĺ°Ć?3,É&#x;0.,(É&#x;) É&#x;."É&#x;#(/-.,3 Ć€É&#x; ,-#(.É&#x; ,)'É&#x;ĹąĹšĹšĹˇĆ‘Ĺ˛Ĺ°Ĺ°Ĺ°É&#x;) É&#x;É&#x;É&#x; É&#x; /.)').#0 Ć€É&#x; ,0É&#x;-É&#x;Ć‰-É&#x;2/.#0É&#x;0#É&#x;É&#x; É&#x; *,-#(.É&#x;) É&#x;-&-É&#x;(É&#x;',%.#(! Ć€É&#x; )),3É&#x;Ć É&#x;--)#.-É&#x;Ĺ˛Ĺ°Ĺ°ĹśĆ‘*,-(. Ć€É&#x; 1,É&#x;."É&#x;#(!É&#x;) É&#x;)(),É&#x;3É&#x;É&#x; É&#x; Ć€É&#x; É&#x;&&É&#x;) É&#x;',

15.8 million vehicle market this year and that would be a healthy climb on the way back to normalcy. Leasing insiders are anticipating their share within that growth, maybe even spurring some of it. Old portfolios will be sloughing off another half a million used vehicles into the wholesale marketplace. And the construction industry is showing signs of feeding a pent-up demand in spite of the political environment in which it finds itself, boding well for truck sales to get back on track.

tors canâ€™t even get their own house in order. Weâ€™ve been left teetering on the edge of the â€˜fiscal cliffâ€™ while debt and unfettered borrowing by the government continue to erode the rock face underneath and President Obama wants no oversight or restriction on our debt ceiling. Iâ€™m no expert on the legal side of the Constitution, but Iâ€™m sure that he canâ€™t spend any further and cast the requirements of congressional oversight, willy-nilly to the wind. We should say â€˜Noâ€™ to the growing socialist depen-

dencies on public services and the public purse. A swift look at Europe, France and Great Britain in particular, to see the effects of handouts to a growing population who are more aware of welfare loopholes than the people who wrote the rules in the first place. Letâ€™s get back to cars. Looking at NADAâ€™s convention website will confirm how large and complex the business has become and continues to be. Suppliers have changed from the likes of window sticker holder makers to designers of apps for contacting customers on special deals as they drive by the dealership on their cell phones. Itâ€™s not just a case of demographic knowledge of your customer any more â€“ we know where you are as well as who you are. Itâ€™s cool and exciting stuff and the very nature of retailing is changing before our eyes. The question is, â€˜Is everyone comfortable with Google being the omnipresent eye in the sky?â€™ They might even know Iâ€™m writing this about them! Seriously, customer contact

C R O S S WO R D

has taken on the semblance of an art form and some serious money is being thrown at these enabling technologies. Thatâ€™s not to say that some fun stuff is off the table but the appetite to look like youâ€™re throwing money around like a drunken sailor to entertain your customers isnâ€™t quite what it used to be. Such largesse is to be frowned upon these days. Shame about that! Celebrating success is something Iâ€™d like to see us get back to sooner rather than later. As the NADA convention is one of the earliest in the year, the Consumer Electronics Show being the first major one, we hope an air of optimism is established right away. They have a new president in Peter Welch who. universally seems to be well accepted as a seasoned veteran of the California New Car Dealersâ€™ Association and can exert his influ-

ences on a now-broadened basis. His history includes a long stint overseeing regulatory affairs in the toughest state in the nation for such matters as related to the car business. Heâ€™s coming into this job on a rising tide, with new opportunities abounding, including giving NADA an even greater stentorian voice in Washington. Orlandoâ€™s not the worst place to be at this time of year if you can fight your way through the traffic. And once youâ€™re on the convention floor there are plenty of new models and products to indulge any imagination. The half-clad girly ones are a rarity nowadays â€“ another testament to our changing sensibilities. So itâ€™s a shame I wonâ€™t be getting my exercises this year â€“ walking around the miles of Expo floor during the day or lifting my elbow in the evenings.

To see past columns from Tony Moorby, log on to www.usedcarnews.com/ columnists/tony-moorby