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ON THE WEB: Credit Unions See Growth in Auto
Bill Blocks Sales with Open Recalls By Jeffrey Bellant
Approximately two in three credit union executives see loan growth as the critical business issue facing their industry in 2013, according to a survey from TransUnion. The survey found that more than half of credit union respondents believe auto loans are their biggest opportunity.e.
Buy-Here, Pay-Here Chain Adds Stores
America’s Car-Mart, Inc. announced the opening of its 122nd and 123rd dealerships. The dealerships are located in Florence, Ala., and Kirksville, Mo. Florence is the 12th dealership in Alabama and Kirksville is the 17th dealership in Missouri.
Consumers Shrug Off Payroll Tax Hike
A survey found more than half of consumers said they either hadn’t noticed or had been unaffected by the payroll tax cut expiration in January. The lowest-income households were least likely to cut back.
Another media expose has prompted a California lawmaker to target used-car dealers over the issue of vehicles with open recalls on their lots. State Sen. Hannah-Beth Jackson (D-Santa Barbara) authored Senate Bill 686, which would prohibit dealers from displaying, renting, advertising, selling or leasing any vehicle subject to a manufacturer’s recall until repaired. The legislation followed a local television news crew’s hidden camera report allegedly revealing that vehicles at several used car lots had open recalls and were sold to unsuspecting customers. The story later ended up on a national morning news show. But Larry Laskowski, executive director of the Independent Automobile Dealers Association of California, said the bill unfairly targets dealers. “Jackson’s bill doesn’t address any consumer-owned vehicles, only those on dealers lots (estimated to be less than 30 percent of recalls),” he said. “It ignores the fact that a car sitting on a deal-
Photo by The Associated Press BIRDS OF A FEATHER: California state Sen. Ted Lieu, center, and Sen. Hannah-Beth Jackson disucss policy issues. Both legilstaors have introduced bills dealers in the state feel would unfairly burden them.
er’s lot with an open recall is that way because the consumer who previously owned the vehicle ignored manufacturer’s recall notices.” Laskowski added that one problem is the lack of a national database that would allow a dealer to enter a VIN and check to see if there are any open recalls.
Some efforts have been made to discover used vehicles with open recalls, he said. California’s Department of Motor Vehicles already blocks transfers with emission recalls until the repairs are made, Laskowski said. The used-car industry is already making efforts to help dealers with this prob-
lem. The National Independent Automobile Dealers Association has a link on its website that allows dealers to run a free Carfax open recall check on most vehicle brands. The Jackson bill would also require a dealer to perform a recall even if the manufacturer was no longer obliged to make that repair.
Certified Sales Top 190,000 for First Time Ever
Rush - Dated Material
March certified preowned sales hit an all-time high, exceeding 190,000 monthly sales for the first time, with sales of 190,065, 9 percent up from March (174,337, the previous high), and 21.1 percent higher than February. There were 27 selling days in March compared to 28 in March 2012 and 24 in Feb-
their all time highs. New highs: Ford/ Lincoln/ Mercury; Toyota; Mazda; Mercedes-Benz; Volkswagen; Hyundai; Kia; Mini; Nissan and Subaru The following brands achieved their highest-ever quarter: Ford/ Lincoln/ Mercury; General Motors; Mazda; Volkswagen; Kia; Mini and Subaru.
Overall, used-car sales did well in March. TrueCar estimates usedcar sales at 2,891,896 for March. The ratio of new to used is estimated to be 1:2. Edmunds.com estimates that 3.44 million used cars were sold in March, for a SAAR of 36.6 million. That compares to 3.36 million sales in February.
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ruary. March also had the highest daily selling rate, at 7,039. AutoData Corp. reports that first quarter sales were 497,647, 9.4 percent above the first quarter a year ago and the highest quarter ever. Many brands achieved new highs, while many of the other brands neared
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Younger Buyers Eye Wider Array of Manufacturers Japanese brands like Honda remain among the most popular among consumers, but brands from other countries and even domestics are gaining ground with younger buyers. Automakers learn how inmarket new-car shoppers view their brands as the 2013 Brand Image Award winners are announced by Kelley Blue Book. These awards, based on an entire year’s worth of consumer perception data from the company’s Brand Watch study, honor the automotive brands that have most successfully captured positive consumer attention. The 2013 Brand Image Awards, presented to the top brands in 13 categories, are based on consumer automotive perception data from Kelley Blue Book Market Intelligence’s Brand Watch study. Brand Watch is an online brand and model perception tracking study tapping into more than 12,000 in-market new-vehicle shoppers annually on Kelley Blue Book’s KBB.com. The highly comprehensive Brand Watch study offers insight into inmarket new-vehicle shoppers’ perceptions of brands and models, including important factors driving their purchase decisions while they are in the midst of the shopping process. The Kelley Blue Book Brand Image Awards recog-
nize automakers’ outstanding achievements in creating and maintaining brand attributes that capture the attention and enthusiasm of the new-vehicle buying public. Award categories are calculated among luxury shoppers, non-luxury shoppers and truck shoppers. This marks the sixth consecutive year that Kelley Blue Book has presented auto manufacturers with the Brand Image Awards. This year, Honda takes home the most trophies. Honda is named Best Overall Brand by non-luxury shoppers, which speaks to Honda’s stellar reputation and brand leadership in the minds of consumers. Furthermore, Honda is awarded Most Trusted Brand for the second year in a row, and Best Value Brand for the third year running. Receiving consecutive awards in key categories like Trust and Value underscores that the positive attributes of the Honda brand continue to resonate with the new-car buying public. Meanwhile, among nonluxury shoppers, MINI is a standout for Performance, while Ford leads for Car Styling, and Chrysler wins for Most Refined Brand. According to truck shoppers, Toyota is the Best Overall Truck Brand. Among luxury shoppers, BMW takes the top spot as Best Overall Luxury Brand, and Porsche brings
STILL THE ONE: Consumers continue to hold Japanese manufacturers like Honda in high regard, but younger buyers are taking a look at vehicles from around the world.
home two trophies for Performance and Car Styling. Domestic manufacturer Buick excels among luxury shoppers for Value, while Lexus leads for Trust, and Mercedes-Benz is viewed as Most Refined Luxury Brand. Most of these results are typical of these surveys. But other data shows a change in popular tastes could be coming. American auto brands are gaining strength with younger buyers in the U.S., while their Japanese rivals have taken a big step back, reports Edmunds.com. According to an analysis of new car retail registrations from R. L. Polk & Co., American brands accounted for 36.8 percent of cars bought
by Americans age 25 to 34 in 2012, up from a share of 35.4 percent in 2008. Meanwhile the share of Japanese brands for the same age group plummeted from 50.6 percent to 42.9 percent during that period. But even with the incremental success of American brands, Edmunds.com found that the exodus from Japanese cars by young buyers is turning mostly toward South Korean brands. About 10 percent of new cars purchased by 25-to-34 year olds in 2012 carried South Korean nameplates, more than doubling the rate for this age group since 2008. The South Koreans’ progress with young buyers re-
flects their overall growth in the U.S. market. Korean brands represented 9.5 percent of all new retail registrations in the U.S. in 2012, almost twice as much as their share of 5.0 percent in 2008. European car labels are flexing their own muscles in the U.S. market as well, accounting for 9.9 percent of new car registrations in the U.S. last year, up from 8.5 percent in 2008. Like the South Koreans, European carmakers have delivered consistent growth among all age groups since 2008, with the biggest successes among older car buyers, thanks to Baby Boomers choosing European luxury cars postretirement.
Toyota Settles County’s Unintended Acceleration Lawsuit LOS ANGELES (AP) – A $16 million settlement over the safety recall of Toyota vehicles that were at risk for unintended acceleration and braking issues was announced by Orange County prosecutors and Toyota Motor Corp. The suit was one of a flood of cases brought against the automaker after more than 14 million vehicles were recalled in 2009 and 2010 — many of them still waiting to be heard or settled. In the lawsuit, Orange County District Attorney Tony Rackauckas claimed deceptive business practices, alleging Toyota had concealed safety issues related to its floor mats and ``sticky’’ gas pedal issues. The suit sought $2,500 per
violation under California’s consumer protection laws Under the settlement, Toyota continues to deny all the claims made in the suit. ``Having addressed floor mat and `sticky pedal’ issues with effective and durable solutions, we are gratified that Toyota vehicles are once again widely recognized as among the safest and most reliable on the road,’’ Christopher P Reynolds, an attorney and vice president for Toyota, said in a statement. In the past, the carmaker blamed driver error, faulty floor mats and stuck accelerator pedals for the problems. A highway tragedy in suburban San Diego sparked the recalls and numerous
lawsuits against the Japanese carmaker. An off-duty California Highway Patrol officer and three family members were killed after he lost control of the car, a Toyota-built Lexus, in a grisly accident. The car reached speeds of more than 120 miles per hour before it hit an SUV, launched off an embankment, rolled several times and burst into flames. That case was settled for $10 million before similar cases were consolidated in federal court. At the end of 2012, Toyota agreed to pay a $1 billion payout to settle claims from owners who said the value of their vehicles dropped after the recall. In the Orange County
case, half the $16 million will go to a gang reduction program and the other half will be used to pay the costs of the case and the pursuit of future economic crime
cases. According to press reports, Bob Barker Lexus, the dealership that lent the Lexus, is seeking protection for itself in court.
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USED CAR NEWS
NEWS BRIEFS Consumers Prefer to Sell Cars Than Donate Them to Charity
A new Kars4Kids survey revealed that despite high awareness and knowledge (88 percent) of tax credit eligibility for making non-cash charitable donations, most U.S. adults opt to sell their used cars instead of donate them. The survey also indicated that only 10.5 percent of U.S. adults have donated a car. The study was conducted in March among 1,000 U.S. adults ages 18 and older. Only 5.4 percent of adults reported donating their used cars when they purchased a new one. Additionally, 4.6 percent of adults will keep their old cars and not use it.
was a record-setting year for its Automotive Loan Origination System, with more than 10.8 million loan applications and 3.7 million contracts processed through the companyâ€™s auto lending platform. This marks a 31 and 33 percent year-over-year increase for applications and contracts, respectively.
Volvo CPO Uses Carfax
Carfax has been chosen by Volvo Cars of North America to provide vehicle history information for the Volvo Certified Pre-Owned program. Since 1999, certified Volvo dealers have run a Carfax vehicle history report on all Volvo cars submitted for certification. Under the renewed agreement, Volvo and its certified Loan System Sets Record Fiserv Inc. announced that 2012 dealers are providing consumers
MILESTONES Former auto dealer and auction partner Robert Brest, 87, died on March 30. Brest spent over 50 years in the auto business, most recently as partner with Jim Lamb of Lynnway Auto Auction, where he had worked since 1997. He previously owned several dealerships in the larger Lynn, Mass., area. A graduate of the University of Washington, Brest was a former
president of the Lynn Chamber of Commerce and a WW II veteran. Services were held at the Temple Emanu-El, in Marblehead, Mass. C R O S S WO R D by Myles Mellor
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with free Carfax reports for every certified Volvo vehicle. Thirty-seven manufacturer brands use Carfax for their certified preowned programs.
GM Financial Closes Ally Deal
General Motors Financial Company Inc. has acquired the equity interests in the top-level holding companies that comprise substantially all of Ally Financial Inc.â€™s auto finance and financial services business in Europe and Latin America. The purchase includes operations in Germany, United Kingdom, Italy, Sweden, Switzerland, Austria, Belgium, the Netherlands, Chile,
Colombia and Mexico. The international operations will continue to offer a full range of retail and lease financing, dealer loans and related services. The international leadership team and employees will transition to GM Financial with no disruption to the service provided to GM customers and stakeholders. The purchase agreements between GM Financial and Ally, announced in November, also include international operations in France, Brazil and China, which are pending certain regulatory and other approvals and are expected to close later in the year.
Published By General Media LLC USED CAR NEWS (ISSN 1555-7413) is published at 24114 Harper, St. Clair Shores, MI 48080 Phone: 586-772-5200 or 800-794-0760 Fax: 586-772-9400 www.usedcarnews.com Charles M. Thomas Founder (1947-2002) Lynda R. Thomas, Publisher Colleen Fitzgerald, General Manager Editorial: Ted Craig, Managing Editor Jeffrey Bellant, Staff Writer Contributing Writers: 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€”
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. 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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WE BUY BHPH NOTES Hyundai and Kia are recalling almost 2 million cars and SUVs. Hyundai is recalling 1,059,824 model year 2007-2009 Accent and Tucson, model year 2007-2010 Elantra, model year 2007-2011 Santa Fe, model year 2008-2009 Veracruz, model year 2010-2011 Genesis Coupe, and model year 2011 Sonata vehicles. The stop lamp switch in the affected vehicles may malfunction. A malfunctioning stop lamp switch may cause the brake lights to not illuminate when the brake pedal is depressed or may cause an inability to deactivate the cruise control by depressing the brake pedal. Additionally, a malfunctioning stop lamp switch may also result in intermittent operation of the push-button start feature, affect the operation of the brake-transmission shift interlock feature, preventing the shifter from being moved out of the park position and cause the electronic stability control malfunction light to illuminate. Failure to illuminate the stop lamps during braking or inability to disengage the cruise control could increase the risk of a crash. Hyundai will notify owners, and dealers will replace the stop lamp switch, free of charge. The safety recall will begin by June. Hyundaiâ€™s recall campaign number is 110. Kia is recalling 623,658 model year 2007-2010 Rondo and Sportage, model year 2007-2011 Sorento, model year 2007 Sedona, model year 2010-2011 Soul, and model year 2011 Optima vehicles for the same problem. Kiaâ€™s recall campaign number is SC098. Hyundai also is recalling 186,254 model year 2011-2013 Elantra vehicles manufactured from Nov. 12, 2010, through March 5, 2013. A support bracket attached to the headliner may become displaced during a side curtain airbag deployment. If the headliner support bracket makes contact with an occupant
during a crash, it may cause a laceration injury. Hyundai will notify owners, and dealers will apply adhesive strips to the headliner, free of charge. A remedy is expected to be available in May. Hyundaiâ€™s recall campaign number is 109. In related news, the National Highway Traffic Safety Administration announced a new iOS app for iPhones and iPod touches that will provide real-time vehicle safety information to consumers from NHTSAâ€™s SaferCar.gov site. NHTSAâ€™s SaferCar app allows users to search its 5-Star Safety Ratings for vehicles by make and model, locate car seat installation help, file a vehicle safety complaint, find recall information and subscribe to automatic notices about vehicle recalls. NHTSA will also give developers real-time access to the data that powers this app through an Application Programming Interface (API), enabling them to integrate these data into new and existing apps and empowering consumers with important safety information. The announcement is just the first phase for the SaferCar app for iPhone and iPod Touch devices, which can be downloaded from Appleâ€™s iTunes Store. Development is also underway for a version compatible with Android devices. The launch of the NHTSA app is part of ongoing efforts by the nationâ€™s chief automotive safety agency to make it easier for consumers to access and submit information about important vehicle safety concerns. Earlier this year, the agency also updated resources on its www. SaferCar.gov website to enable consumers to quickly locate information on specific safety defect investigations, complaints and vehicle recalls. The app launch coincides with the release of the NHTSA Application Programming Interface (API) â€” a new way to provide safety data.
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Lien Fraud Leads to Prison Time A former Oklahoma used-car dealer has been sentenced to serve 16 months in prison for making a false statement to a federally insured credit union. In addition, he was ordered to pay $276,216.57 in restitution to his victims. In 2008 and 2009, John B. Langley owned and operated J&K Langley Corp., which sold used cars in Oklahoma City under the name Bargain Network Auto Sales. In June 2012, Langley was indicted for borrowing money from Municipal Employees
Credit Union and pledged vehicles on his lot as collateral, when he knew that those vehicles had been pledged to Floorplan Xpress. The indictment also alleged that Langley defrauded the credit union by selling collateralized vehicles and failing to give the proceeds to the credit union to satisfy his loans. On Nov. 7, Langley pled guilty to giving a fictitious lien release letter on Floorplan Xpress letterhead to Municipal Employees CU dated March 23, 2009, in connection with a loan for a 2009 Nissan Maxima.
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USED CAR NEWS
High Satisfaction Draws Consumers to Car Sites Third-party automotive websites have an opportunity to create loyal and outspoken advocates by providing a satisfying website experience, whether consumers are shopping for a new or used vehicle, according to the J.D. Power and Associates 2013 Third-Party Automotive Website Evaluation Study. The inaugural study measures the usefulness of third-party automotive websites during the new- and used-vehicle shopping process by examining four key measures (in order of importance): information/ content; navigation; appearance; and speed. Overall satisfaction with thirdparty automotive websites averages 725 (on a 1,000-point scale). The study finds a high correlation between overall satisfaction with a third-party automotive website and the likelihood to recommend and return to the site. “The websites with the highest overall satisfaction also have the highest advocacy and loyalty rates in the study,” said Arianne Walker, J.D. Power’s senior director of media and marketing solutions. “A more satisfying experience will keep shoppers coming back, positively impacting site analytics and increasing exposure to the revenuegenerating advertising on the sites.”
Providing a satisfying experience on third-party automotive websites comes with certain challenges that manufacturer sites do not have. For instance, third-party sites need to strike a balance between the content provided and the revenue-generating advertising content. In addition, shoppers expect thirdparty sites to have information and images on all makes and model years. “The large amount of information required for third-party automotive sites to be useful presents a unique challenge, as the information must be organized in a user-friendly way, weighing heavily on strong navigation and good user experience principles,” Walker said. Additionally, the study finds that satisfaction is higher among newvehicle shoppers than among usedvehicle shoppers (735 vs. 715, respectively). One of the contributing factors to this difference in satisfaction is the disparate experience shoppers often have when trying to locate vehicle information for new vs. used vehicles. A key contributing factor to a less satisfying experience when shopping for used vehicles, compared with new vehicles on a third-party site, is that shoppers have to make
very specific decisions regarding a vehicle model -such as model year or trim level-in order to explore available content. In contrast, when shopping for new vehicles, shoppers are able to obtain vehicle content more quickly and without requiring decisions regarding vehicle details before exploring the model, creating a more seamless experience as they view multiple vehicles. “With most third-party automo-
tive sites, the shopping experience is different among new- and usedvehicle shoppers,” Walker said. “Websites that perform particularly well in the study provide a consistent shopping experience, including much of the same content, for both groups of shoppers.” Cars.com ranks highest in the inaugural study with a score of 782. Following Cars.com in the rankings is Kelley Blue Book (777) and AOL Autos (753).
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PAGE 8 - Dealer Software Management
Right DMS Boosts Productivity, Aids with Compliance By Jeffrey Bellant
Dealer management systems remain a key tool for independent used-car dealers. Finding the right system is key for sales and legal protection. Chris Martin, president of the National Independent Automobile Dealers Association, said DMS programs have come a long way. “There have definitely been dramatic improvements over the years,” Martin said, “as well as an increase in providers.” The evolution of these systems is evident in his own business, he said. “We have gone from a simple in-house DMS a decade ago,” Martin said, “to a much more robust system that easily walks your through all the steps for any type of transaction.” Martin, president of Team E-Z Auto Inc. in Fayetteville, N.C., uses a DMS system from Carolina Dealer Solutions/KGI Solutions. He expects his DMS to handle the issues involved in a business model different from most.
“We have used a leasehere, pay-here model for almost 21 years,” he said. “And it does require that a DMS that can originate and service true leases.” Martin said outside of the issues involved in running a lease-here, pay-here business, he wants a DMS system that has specific features and benefits. He wants a system that is user-friendly up front. He also needs it to offer great customer service, integrate with other vendors and prints out all documents “without have to jump back and forth between systems.” But the issue that hangs over every dealer’s head, especially in this business environment, is compliance. It’s one of the biggest changes that Martin has seen over the years with DMS programs. “Most of the DMS providers take compliance seriously and offer regular updates as things change,” Martin said. Attorney Tom Hudson, a partner with Hudson Cook LLP in Hanover, Md., has experience working with
DMS companies and on compliance. “We represent a number of DMS companies,” he said. “I know that our companies stay up-to-date on compliance issues and I suspect that others do as well.” He said in modern business, a solid DMS is a must. “I don’t see how a dealer can operate without a DMS,” Hudson said. “I’m sure that somewhere out there, some dealer’s doing just fine without one, but I can’t see how.” Hudson said DMS providers couldn’t afford to slack off on compliance issues. But he said a solid and reputable DMS provider is that it can help dealers stay out of trouble. So business owners should do their due diligence. “Dealers ought to ask pointed questions about how the company they are considering keeps up with legal compliance developments,” Hudson said, “and how often they update their legal knowledge.” Martin recommends that dealers take their time and “test-drive” each DMS they are considering.
Illustration by Joe Schlaud
Online Tools Help Dealers Move Metal More Efficiently By Jeffrey Bellant
LAS VEGAS - Multi-platform selling can be a boon for consignors, but others still have questions about the emerging strategy. Bob Graham, ARI’s vice president of vehicle remarketing, and Karen TannerSmith, director of OneMain Remarketing, discussed the ins and outs of selling across multiple platforms during a discussion at the recent Conference of Automotive Remarketing. Dozens of remarketing professionals attended the roundtable, which touched on several issues involving the strategy. Multi-platform selling may be defined differently from consignor to consignor, Graham said. “But really, the technical (meaning) of multi-platform selling is taking your vehicles and putting them online, on multiple platforms, all simultaneously,” Graham said. t"QSJM, 2013
So a vehicle might be on OpenLane, SmartAuction, an international platform, etc., at the same time. Graham said ARI has been doing multi-platform selling for eight to 10 years. “We built the hub (of our multi-platform system) ourselves,” Graham said. So every vehicle that ARI has comes through the single hub, where digital pictures are taken and condition reports are written. Then it sends the vehicle out to the multi sales channels. “Right now, our vehicles will be on a minimum of four or five platforms, and as many as 14 or 15 platforms, concurrently,” Graham said. Those are virtual live sales, or within five minutes of “live.” ARI will have a floor for every vehicle, so that once a bid is made, ARI knows that it has at least achieved its floor on the vehicle. “For us, it’s a way to do the one thing all remarketers
want to do,” Graham said, “(which is) to get maximum exposure for the vehicle.” In the past, getting a vehicle to a physical auction where you could get the most bodies in the lane was critical. Today, it’s the same, but online venues allow a consignor to get much more exposure. For those looking at the idea of multi-platform selling, there are a couple of ways to go about it. One is to do what ARI did and build it from scratch. There are also other providers, including Liquid Motors and AIM. Greg Lubrani, chief operating officer for Liquid Mo- ASSETS: Greg Lurani of Liquid Motors explains how companies like his expand the wholesale options for consignors. tors, said multi-platform remarketing technology to remarketing is simply fol- simultaneously. lowing what retail deal“Now it’s being adopted on push inventory to Openlane, ers have been doing for the wholesale side,” he said. OVE and SmartAuction, Luyears, placing cars on eBay, So Liquid Motors was ap- brani said. AutoTrader and Craigslist, proached about developing Continued on page 10
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