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www.usedcarnews.com
Social Media Means Old Skills in New Settings
There’s An App For That By Emily Caswell
By Ted Craig
TROY, Mich. – Social media seems like a whole new way to do business, but it really takes dealers back to the basics. ADR Consulting is hosting a series of social media seminars for independent dealers that shows how traditional values of trust and relationships are going online. One of the latest stops was in Michigan. Trainer Mike Morgan spent the first part of his seminar describing how dealers need a good grasp on who they are before presenting themselves to a virtual community. “Once you’re confidant in your brand and everybody buys into it, then you’re ready for social media,” Morgan said. A whole new type of buyer has evolved in the past few years, Morgan said. These people use the Internet for research before stepping on a lot. This includes research into the dealers as well as the cars. Information comes from a variety of sources, from guide books and automotive reviews
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to the opinions of friends and neighbors. “You are now the last step in their car buying,” Morgan said. “You used to be the first.” Buying styles know no age limits, Morgan said. He’s 26 and buys in the traditional, impulsive fashion. Social media includes people ages eight to 80. But the composition of the seminar attendees showed a bias toward the young. Many of the last names were recognizable for people in the state’s used-car business, but they were the children of the dealers. Maria Grimaldi was there for her family store, Grimaldi Auto Sales. She’s active on social media personally, but is trying to convince her family of its use as a marketing tool. She appreciated Morgan’s focus on the big picture. “You’re not selling a product,” Grimaldi said. “You’re selling yourself.” There were several veteran dealers at the seminar as well, learning some new tricks. One was Phil Trupiano of Birmingham Motors. He scored some points by being the only owner of Apple Inc.’s new iPad. This new tool is the latest way to integrate people’s digital lives. “We’re surrounded by this all the time,” Morgan said. “It’s taking over our lives.” Social media allows people to communicate better. Dealers need to learn the best ways to reach their customers.
Photo by Kristin Craig GETTING SOCIAL: Trainer Mike Morgan, right, and Maria Grimaldi
of Grimaldi Auto Sales demonstrate what Facebook interactions would look like in real life, complete with status updates and pokes. The way people communicate today is changing, but basic principles, like word of mouth, stay the same.
You can use them to find restaurants, a movie time and now a used car. That’s right, thanks to Lake City Motors, one more commodity is now at the finger tips of iPhone app users – used cars. The Seattle-based used-car dealership was the first in the area to create an iPhone app for used car shoppers when they launched it two months ago. Sales manager Peter Liu, an avid iPhone user, saw no reason his dealership shouldn’t have its own app. “I search the apps everyday,” he said. By searching other dealership apps he found a company that could build Lake City Motors an app at a reasonable price. So, he hired the company, MobileAppLoader LLC., based in Cupertino, Calif. They built the app for “a few hundred dollars” according to Liu and maintain it for a monthly fee of $15. “(It’s another way to) get our name out there,” said Liu. Potential customers can use the application to search Lake City Motors’ inventory. They can view photos, check out prices, schedule a test drive or even use the built-in loan calculator. “For $15 a month I think it’s worth a try,” Liu said.
IN THIS ISSUE • Auctions set new records for prices and sales, both in the lanes and online. – Page 3
• Dealers adjust to a new way of doing business after the economic slowdown. – Page 8
• CarMax is ready to start adding stores again as sales improve. – Page 5
• A Georgia museum displays automobiles as art forms. – Page 20
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April 19, 2010
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Wholesale Prices, Sales Surge Both Online and in the Lanes By Ted Craig
March was a strong month for used cars on both the wholesale and retail side. Wholesale used vehicle prices rose sharply in March, according to Manheim Consulting. The Manheim Used Vehicle Value Index stood at a record level of 119.9 in March, which represented a 13 percent increase over the past year. The Index adjusts auction prices for mix, mileage and seasonality. Pricing strength in the wholesale used vehicle market became more broad-based in the first quarter of 2010 as record tax refunds and improved retail credit availability reinvigorated the market for lower-priced vehicles, said Manheim chief economist Tom Webb. Meanwhile, prices for late-model, higher-priced units stayed strong despite the increase in new vehicle incentive activity in March. March brought forth a significant increase in incentives (mostly in the form of no-down, low-rate, financing or lease deals) from a variety of manufacturers, some of whom – such as Honda – have generally stayed away from such promotions in the past. The incentives helped push the seasonally adjusted annual selling rate for new vehicles to 11.8 million in March, the best non cashfor-clunkers month since July 2008.
This latest incentive war was sparked by Toyota’s push to save market share following the furor over its massive recalls. Toyotas are faring better than expected in the used market, but are off still from where they were. Webb and CarMax CEO Tom Folliard both commented recently that Toyota wholesale prices were rising in recent weeks. They were climbing at a slower rate than the rest of the market, however. Certified sales in March were “phenomenal,” according to Toyota executives. Toyota was the top-selling certified brand by far, outselling not only rival Chevrolet, but the entire GM Certified Used Car line-up. Dealers sold 26,288 certified Toyotas in March, up from 22,197 a year ago and 18,382 in February. But Toyota was helped along on the certified side with incentives, just like on the new side. A record tax season supports retail demand. As of March 13, $175.4 billion in federal individual income tax refunds had been disbursed. That was up $6.3 billion (or 3.7 percent) from the year-ago period, which, in turn, was up $19.5 billion (or 13 percent) from the same period in 2008. The number of refunds in 2010 is falling
Manheim Used Vehicle Value Index March 2009 – March 2010
121 119 117 115 113 111 109 107 105 103 101 99 97
Mar 09
Apr 09
May 09
Jun 09
Jul 09
Aug 09
Sep 09
Oct 09
Nov 09
Dec 09
Jan 10
Feb 10
Mar 10
Manheim Used Vehicle Value Index categories based on 2001 J.D. Power and Associates Vehicle Segmentation
behind 2009’s pace, but the average dollar amount is up nearly 10 percent. Although Webb would generally consider the number of refunds to be an important (if not the most important) measure, it is noteworthy that this year’s higher average refund was driven by programs especially important to used vehicle buyers - most notably, the Earned Income Tax Credit which was increased and expanded. TRS Tax Max had an increase in total tax returns for the 2010 season. The company provides tax return process-
ing services for buy-here, pay-here customers. TRS Tax Max had a small decrease in dealer sign ups, but the average number of deals per lot increased giving clients a steady stream of income this tax season. The average check increased to $4,541 from $3,900. Online sales surged in March, as well. Openlane Inc. reported its most successful month in its 10-year history. Sales figures for the month of March 2010 were 38,671 vehicles, exceeding the previous record set in June 2009.
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April 19, 2010
AutoTrader.com Exec Gives Tips Web Scam Targets Edmunds.com
Edmunds.com is currently working with authorities, Web hosts and banks to put an end to a scam that victimizes online car-shoppers. The company is telling consumers that if they see a classified ad that references an Edmunds escrow service, please report it immediately to the Web site hosting the ad. Edmunds.com does not have an escrow service, but criminals are fraudulently using the site’s name, logo and likeness to induce car buyers to send them the payment for the car, falsely assuring them that the money will be safely held until the vehicle is delivered. Edmunds.com was successful in shutting down the fraudulent Web sites edmundsautopayment.com and edmundspayment.com, but is concerned that other such sites may emerge. People who believe that they were victimized by a scam should contact their bank as soon as possible. Fraudulent advertisements should be reported directly to the Web sites that hosted them.
To find success in Internet marketing, automobile manufacturers and dealers must transition away from leads and clicks as success measures and learn to understand the Internet as an influencing medium on shoppers. This is the message delivered by AutoTrader.com President and CEO Chip Perry at the 2010 NADA/IHS Global I n s i g h t Automotive Forum in New York City on March 30, which was held in advance of Chip the opening Perry of the 2010 New York International Auto Show. “Click-through rates have plummeted since the advent of online advertising, dropping from 30 percent in 1994 to just .2 percent in 2008,” Perry said. “Considering those numbers, we in the auto industry must rethink how we measure online brand metrics and advertising influence among the 99.8 percent of viewers who do not click on an ad, whether it is in the form of a display or an online classified listing.” Perry notes that for lower-
involvement, lower-cost purchases like books, CDs or consumer electronics, the clickand-buy model has thrived and revolutionized the economy. But for larger items like automobiles or homes, where the transactions are much more complex, high-cost and time consuming, the Internet has not had a strong track record as a transaction service. However, the Internet has thrived as an information source in many industries that have high cost items and complex transactions, including auto, which as a result has created many efficiencies. For automobile marketers working on-line, Perry recommends better targeting of messaging for more granular contextual relevance, something that will drive deeper consumer engagement. By better engaging vehicle shoppers, auto dealers and manufacturers will have a greater influence on consumers’ preference for specific brands and dealers.
“The impact of advertising upon online shoppers goes further than simply clicks and leads, but we tend to measure things that are easy - like clicks and leads,” Perry said. “Shoppers are heavily influenced by online research beyond what clicks and e-mail leads would indicate.” The implications of this dynamic in online advertising, according to Perry, are: • Over exuberant focus on clicks and leads is stifling the ability for marketers to influence consumers and drive
brand preference; • Much of the influencing power of the internet is being under measured and underutilized; • Marketing organizations need new resources, skills and tools to fully leverage the power of the Internet. According to studies, shoppers exposed to online advertisements have raised awareness of a product and have an increased positive opinion of the brand they saw advertised, which leads to a higher likelihood of purchase.
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
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Reporters: Jeffrey Bellant, Julie Dawso, David Piestrzynski
by Myles Mellor
Columnist: Tony Moorby Advertising Account Managers:
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Shannon Colby, Pam McNamara Classifieds: Marie Hingst Marketing: Megan Frump, Marketing Coordinator Circulation: Helen Thomas Production: Cliff Bennett, Production Manager Graphic Designer/Web Coordinator: Josie Godlewski Layout Design: Cassie Fennell, DesignWorks-AMG
Vol. 16 • No. 2 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
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of listed vehicles in auction ads. Most lists are partial and all lists are subject to last minute changes by auto auctions, so before travelling a long distance for a particular auto auction event, contact the auction by telephone for a fax of vehicles in the sale. Used Car News assumes no guarantees or liabilities concerning the accuracy of any advertisements. All Rights Reserved. Reproduction in any form is prohibited without the written consent of the publisher. OUR ADVERTISING APPROVAL POLICY Please submit clear, legible copy. Payments from first time advertisers must accompany the insertion order. Distribution is guaranteed by U.S. Postal Carriers. The advertising reservation deadline is 5:00 p.m. Friday, 10 days prior to the issue date. Camera ready ads must be received by noon on Monday prior to the issue date.
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CarMax Grows Again RICHMOND, Va. (AP) – Used-car dealership chain CarMax Inc. said its fourth-quarter earnings doubled as higher prices and increased customer traffic drove sales. It also plans to resume store growth, a sign of recovery from the worst U.S. auto sales market in decades. Stronger sales and profits as well as increasing stability in the credit markets will allow the Richmond company to open between eight and 15 stores over fiscal 2012 and 2013, said CEO Tom Folliard. It also will open three previously built stores this fiscal year, which it had announced last quarter. Over the past year, CarMax has curtailed its store growth in response to the economic environment, but has said it is committed to resuming its long-term plan of increasing its store base, which had been growing at annual rate of about 15 percent. “While sales are not back to pre-recession levels, the positive trends that we’ve seen in our strong profitability have convinced us that moving forward with a measured plan for store growth over the next few years is the appropriate strategy,” Folliard said in a conference call with investors. CarMax, which operates 100 stores, said it earned $75.4 million, or 33 cents per share, in the three months ended Feb. 28, up from $37.5 million, or 17 cents per share, a year ago. The latest results included a net gain of 7 cents per share related to its financing division.
The company said revenue rose about 25 percent to $1.83 billion from $1.47 billion a year ago, while sales at stores open at least a year rose 12 percent. Thomson Reuters says analysts were expecting a lower adjusted profit of 25 cents per share on lower revenue of $1.76 billion. Used vehicle sales rose 13 percent as the company’s average selling price rose 10 percent. CarMax said its gross profit per used vehicle sold increased 1.3 percent to $2,067 and total gross profit increased 15 percent primarily because it sold more cars. It also lowered its reconditioning costs by $200 per car over the year. The company’s auto financing arm reported income of $58.9 million compared with $28 million a year ago. To weather the weak automotive market and better position it for future growth, CarMax has been focused on lowering expenses, and improving traffic, execution and gross margins. It had lowered its advertising spending and efforts to curb store and corporate overhead costs. Expenses for the fourth quarter increased 3 percent to $202.2 million versus a year ago. For the year, the company earned $281.7 million, compared with $59.2 million in the previous year. Revenue for the year increased 7 percent to $7.47 billion from $6.97 billion. In other news, Fitch Ratings has affirmed CarMax Auto Owner Trust as Outlook Stable.
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Dealer Talks to Remarketers
Photo by Jeffrey Bellant ADVICE: Dealer Robert Mulkey offers remarketers advice about how to better sell
cars during a recent conference in Las Vegas. By Jeffrey Bellant
LAS VEGAS – The best way to remarket cars during lean times is to know what buyers want. Robert Mulkey, owner of Oklahomabased Regal Used Cars and Credit, offered some tips to help remarketers during a conference earlier this year. Mulkey has a family of stores expanding to 13 locations this year. He won the National Independent Automobile Dealers Association’s National Quality Dealer of the Year award in 2007. The company has dealerships in Oklahoma, Missouri and Kansas, in addition to a related finance company. It buys around 3,000 cars a year at auction and remarkets 1,500 to 1,600 repossessions. While it’s important for remarketers to understand value guides, they should be careful to understand the market first.
“Don’t get hung up on these books,” Mulkey said. “Market value is determined simply by supply and demand.” Guide books will tend to overvalue late-model, low-mileage cars, he said. Mulkey said more dealers are turning to the Manheim Market Report for its real-time look at values. Choosing the right auction is critical and Mulkey recommends that a dealer find an auction that treats them as a major customer. “You have to be a big fish in a small pond,” he said. “If you’re not the big fish in a small pond, you have to find a smaller pond. You’ve got to be important to that auction.” Mulkey said he brings his cars to a twolane auction and is treated “like the GMAC” of the sale. Run numbers are key, he said. Continued on next page
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Mulkey – Continued from prior page “The best position is the second Mulkey said remarketers need to dealer in,� he said. “That second know who the dealers are in their marposition is the best.� kets. He told remarketers to call the At the least, sellers need to get place- dealers up, let them know what they ment in the first half of the sale. If they have available. cannot do that, Remarketers also they should find need to spend time in “If they want another sale, the auction lanes, to Mulkey said. get to know the dealto turn it down, “It’s also really ers and auction staff. you let them important that Mulkey said remaryou deal with an keters should be turn it down.� auction that has aware of who has an online prespurchased their vehi— Robert Mulkey ence,� he said. cles in the past. If a “That’s someremarketer finds out thing that’s becoming more popular, that the buyers are primarily wholeespecially with cars that are still under salers, then the remarketer has room manufacturer’s warranty.� to improve. The reason that cars under warranty Sellers should run cars on a green do better online is that the warranty light and not fight a buyer in eases concerns of buyers who are skep- arbitration. tical about the condition of a car sold “You (shouldn’t) care what it’s online. about,� he said. “If they want to turn it Mulkey said consignors must price down, you let them turn it down.� the cars to sell. However, Mulkey said sometimes a Buy-here, pay-here dealers normally dealer will say a car is shifting sluglook for cars below $10,000, with the gishly and wants the seller to knock “sweet spot� being between $3,500 some money off the deal in arbitraand $5,500. tion. If a dealer tries to do that more Mulkey said if a seller is bringing than once, the remarketer should tell these types of cars to auction, they the auctioneer he doesn’t want that should look for a place that brings in buyer to bid on their cars. DriveTime buyers and other large Mulkey said it’s also critical to sell dealer groups. cars with a title. There’s nothing worse “The bigger you are, the more you’re than a dealer who has to send a car going to pay for a car,� he said. back because there’s a problem with Mulkey said big dealership groups the title. and chains need to buy a lot of cars, so Reconditioning costs should be kept they have to win more bidding wars at a $300 to $500 average and a thorthan a small dealer. ough detail is also important, he said.
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PAGE 8 – NEW RULES IN FOCUS
Dealers Adapt to Today’s ‘New Normal’ By Ted Craig and Jeffrey Bellant
Dealers today have been through plenty of changes in the past few years. The credit crunch, the inventory shortage, the recession. All these factors have changed the way they do business. All Economies Are Local Butch Freeman, owner of Idaho Auto Finance in Boise, Idaho, lost 37 percent of his portfolio in 2009. At the other end of the country, Candace Bennett enjoyed a record year at her Wheelmart in Leesville, La. The difference between the two locations – employment. Idaho’s unemployment rate is slightly above the national average. Louisiana’s rate is below 7 percent. It’s even better in Leesville, home to Fort Polk. Soldiers at the base were between deployments all last year. “Everybody’s employed,” Bennett said. “It’s bucked national trends.” About 75 percent of the sales at Wheelmart are special finance. Bennett cultivated strong relationships with her creditors over her eight years in the business.
This helped keep sales rising when creditors cut back on originations. Of course, the steady paychecks helped even more. “People who are employed really make a difference,” Bennett said.
“We don’t want to collect the cars. We want to collect the payments.” — Butch Freeman
Freeman’s customers are much worse off. Many suffered reductions in income and couldn’t afford their payments. “They just didn’t have the money,” Freeman said. Some mornings his buy-here, pay-here store looked like the day after auction with all the repossessions. Freeman said sales have held up fairly well. He’s tightened his process to improve collections.
File photo BETTER THAN AVERAGE: Dealer Candace Bennett is enjoying high numbers of employed shoppers
at her store, Wheelmart, in Leesville, La. Other dealers struggle with persistent joblessness in their local economies.
early on that his company needed to shrink to succeed. “I study a lot of numbers, so I probably started looking at this back in 2007,” Mokry said. More than a year ago, Bill He made his move last year, Mokry, owner of Capitol Car slowly consolidating his busiCredit in Austin, Texas, saw ness.
“We don’t want to collect the cars,” he said. “We want to collect the payments.” Credit’s Hard to Come By
Mokry closed three of his four locations and a recon center. Mokry said a lack of available credit was the main driver for his dramatic downsizing. Continued on page 10
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New Normal? –Continued from page 8 “paradigm shift,” Mokry said. Even with his dealership’s drastic change, Mokry remains optimistic about the future. He said floor planners are taking more applications after pulling back last year, which is a good sign. “The economic structure of Texas is also still really strong,” Mokry said “I think we’re going to weather this better than most other states.” However, he said there is still a problem when the cost of vehicles have increased while the creditworthiness of customers has declined. Mokry said while others feel this is a great time to be aggressive, he’s keeping a cautious approach.
“You can sell yourself out of business if you don’t have a line of credit to go place your loans and put them into your finance company,” Mokry said. Indirect lending could have become a concern for Henry Mullinax, owner of Mullinax Auto Sales in Anniston, Ala., since banks began pulling out of the market, but another source filled the void. “Credit unions pretty much took over the independent market. They became the ally for the independents,” Mullinax said. “They still have a good portfolio that’s performing well. They’ve been aggressive in buying paper.” These changes in the business are a
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Which way are new-car sales headed? There are two views on this. “During the last year, the phrase ‘the new normal’ has come into popular use, especially when it’s applied to future auto demand,” analyst Maryann Keller said. The argument goes that new-car demand was a bubble created by cheap credit, just like the housing market. Consumers bought cars more because the deals were too good to pass up rather than because they really wanted them.
no longer exists thanks to a new labor agreement with the United Auto Workers and restructuring brought on by bankruptcies. The car companies no longer need to produce excess inventory and then sell these vehicles at a discount. Manheim chief economist Tom Webb expects lower sales for new cars in the future, but higher transaction prices. He expects new-car sales will skew even more toward the rich. “The real market in terms of mainstream America is the used market,” Webb said. “The real One of the biggest changes in the used-car market has market in terms been the dozens of new-car dealerships that have of mainstream switched to used only. Most of these moves America is the weren’t done by choice. used market” Dealers lost their franchises and needed to stay in – Tom Webb business somehow. This created more compeKeller doubts this theory. tition for independents and changed the She presented a rosier forecast for the way all dealers do business, said Joe Leautomobile business during a recent re- scota, chairman of the automotive marmarketing conference. She said in the keting program at Northwood Universame way forecasters overestimated car sity. sales going into the end of the last This means making it easier for people decade, they may be underestimating fu- to buy a car,”Lescota said. ture sales now. “You have to be more hands-on,” he One reason new-car sales could im- said. “You have to reach out to people. prove is the increasing number of buyers. “It’s not that people aren’t buying. It’s The so-called “echo boomers,” born in that fewer people are buying.” the late ‘70s and early ‘80s, are a huge Dealers need more accessibility. population that’s just entering its peak That means changing store hours to car-buying years. meet the consumers’ schedules and imBut the incentive to move a lot of metal proving the online experience.
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USED CAR NEWS
April 19, 2010
‘80s Test Drive Robber Still Sits on Death Row CARSON CITY, Nev. (AP) – Jim Monahan has been wondering a lot in recent days why Samuel Howard is still alive after almost 30 years on Nevada’s death row. “My mother has died. Most of my dad’s friends have died, and he continues to live,” Monahan said. “He has outlived almost everyone in my family. It makes no sense financially for the state of Nevada to keep paying for these guys to stay alive.” “Executing Howard will not bring my father back,” Monahan said, “but may bring a small amount of closure to me and my family.” March 27 marked the 30th anniversary of the day Las Vegas police arrived at 12-year-old Jim Monahan’s door and told him, his sister and mother that his father had been found shot to death in a van parked along Boulder Highway. George Monahan, a 39-year-old dentist, had given a test ride to a man who expressed an interest in buying the family van. Monahan was robbed of $2 and shot in the head. Samuel Howard, then 31, was arrested five days later in Downey, Calif. Police said that on at least 20 previous occasions, Howard requested test drives and robbed used-car salesman and others who were selling cars. On May 4, 1983, Howard was sentenced to die for murdering George Monahan. Howard, now 61, remains incarcer-
ated at Ely State Prison. Nevada provides him free room, board and medical care – even flying him by helicopter to University Medical Center in Las Vegas when he slipped into a coma in 1991. Letters he has written have been posted on Web sites for advocates for prisoners. He professes to be a bornagain Christian. “God will help you make the right choices, but he will not help you make the wrong ones,” Howard wrote in a letter in which he warned teenagers against drugs and premarital sex. “The choice is yours. You can follow Him now or suffer later.” Jim Monahan, now a marketing executive in Boise, Idaho, has never received a letter of apology from Howard. Monahan even wrote him last year. He continues to grieve. “I just wrote ‘You killed my dad. I am ready to start a dialogue with you,”’ Monahan said. “You would think if he is a born-again Christian that he would be remorseful.” Howard is one of 80 male prisoners on death row at the Ely prison. Twenty-nine of them were given death sentences before 1990. Seven have been on death row longer than Howard. Last year, state Assemblyman Bernie Anderson, D-Sparks, introduced a bill to require the state to study the costs of keeping prisoners alive as they file legal appeal after legal appeal.
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4/13/10
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USED CAR NEWS
April 19, 2010
Creditor Reports Loss Consumer Portfolio Services Inc. announced that on March 25 it entered into a new $50 million financing facility. The facility is structured similarly to an unrated term securitization transaction with an extended prefunding period. It allows for contribution of receivables over a period of time until $50 million in asset-backed notes have been issued or the end of 2010, whichever occurs first. At that point, no additional notes will be issued and the notes will be repaid over the remaining life of the receivables. Approximately $9.1 million of assetbacked notes were issued at the closing of the facility. The company also announced operating results for its fourth quarter and the full year ended Dec. 31, 2009. Operating results for the fourth quarter of 2009 included revenues of $46.7 million, a decrease of approximately $27.9 million, compared to $74.6 million for the fourth quarter of 2008. Total operating expenses for the fourth quarter of 2009 were $85.3 million, a decrease of $26.6 million as compared to $111.9 million for the 2008 period. Pretax loss for the fourth quarter of 2009 was $38.6 million compared to pretax loss of $37.3 million in the fourth quarter of 2008. Net loss for the fourth quarter of 2009 was $46.4 million, compared to net loss of $23.4 million for the yearago quarter. For the year ended Dec. 31, 2009,
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USED CAR NEWS
April 19, 2010
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Auction Adds GMAC Sale Sanford Auto Dealers Exchange has scored a coup by nabbing a GMAC account for its recently expanded auction. Joe Greco, a consultant for the auction, said GMAC will bring its SmartAuction and SmartLane banners starting with the May 4 sale. It will be a big change from the Sanford, Fla., auction’s regular line-up. Although the auction runs some units from Enterprise Rent-a-Car, its breadand-butter has been new-car trades from dealerships like the Coggin Automotive, which has 28 stores. Founded in 1992, the sale has six lanes in its current facility which is seven years old. It sits on 75 acres and normally runs about 2,000 units a week, with a 60 percent conversion rate.
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The sale is owned by Michael Tumminello and Jeff Brody. “We’re hoping that this GMAC deal will add 300 to 400 cars a week to begin with,” Greco said. The auction has made some improvements to draw its new client. “We’ve been working (to get) this GMAC account for almost a year,” Greco said. “In order to get this account, we developed 30 additional acres. “We also built a brand new 15,000square-foot body shop that we opened a month ago. It has all of the state-of-theart technology.” The auction also expanded its reconditioning department from one bay to three bays and upgraded its operations with a new computer system, Greco said.
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USED CAR NEWS
April 19, 2010
Pair Admits Rollback Scheme Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor announced that a father and son who rolled back the odometers on used cars they sold at their two Vineland auto dealerships in New Jersey were sentenced for obtaining fraudulent vehicle titles to match the false odometer readings. John R. Horstmann, 66, and his son, Brian Horstmann, 38,, were sentenced by Superior Court Judge Robert P. Becker Jr. in Cumberland County. Judge Becker sentenced John Horstmann, who formerly owned BAuto Sales, to four years in state prison. The judge sentenced Brian Horstmann, who formerly owned Cumberland County Car Company, to For Cars, Trucks and Vans
four years of probation, conditioned on him performing 150 hours of community service and paying a $3,000 fine. Both dealers are out of business. John Horstmann pleaded guilty in January to second-degree conspiracy to commit official misconduc Brian Horstmann pleaded guilty to an amended count of third-degree conspiracy to commit official misconduct. The two men admitted they conspired with a former employee at the Vineland Motor Vehicle Agency, Gina Guzzi, 42, to obtain 89 fraudulent vehicle titles reflecting false mileage readings. Guzzi pleaded guilty to conspiracy to commit official misconduct and was sentenced in 2008 to four years in prison.
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USED CAR NEWS
April 19, 2010
RETAIL MARKETS ILLINOIS
Gordon Tormohlen, owner, Tormohlen’s Good People Automotive, Freeport, Ill.: “We are slightly below our forecasts, but we are steady. “We did not get the typical February peak, it was more level throughout the month. Year to date, I think I’m down about four units. “Profitability-wise, we’re up about $20,000 over last year. “We haven’t had a losing month in about six years. “We’re a low overhead operation. I used to be a Chrysler dealer for 20 years, peaking at three locations with 72 employees. I sold that in 2003. “The portion of the dealership that I kept – because no one wanted it – was the buy-here, pay-here dealership. “I also have a service operation that is a very brisk (business) because we picked up a number of my old
Chrysler customers . “My service manager is the same person I had at the Chrysler store. “We keep about 60 units on the lot. A typical (sales) month for us is 15 to 20 units. We don’t push it real hard. “This year, we’re getting what I’m categorizing as a ‘wiser customer.’ The folks who say, ‘hey, I got a tax refund so I’m going to buy a car,’ are not around. But the ones that realize they need an automobile for work, and they don’t want to overextend themselves, are coming out here. “Althoughour rates are somewhat higher than a bank would charge, when they look at the total interest charge of our two-year program, they see that they are saving money. “Our delinquencies last year, at this time, were running 8 or 9 percent. We’ve been running 3 to 5 percent so far this year. “We’re at the auction every single week. I typically start buying deep
sometime in early- to mid-August. Given my volume, I try to fill my lot and then still have an additional 20 to 25 cars behind the building. This year we had about 17. “It’s afforded me the opportunity to just walk away when the prices get too loopy. “I attend Greater Rockford Auto Auction.I’ve gone there since the mid1970s. I know all of the significant players at that auction. I’ve actually had situations where guys have waved me off a car when they know it isn’t the kind of car I want to stock. “We have GPS units that we’ll put on particular vehicles. We have an internal scoring system and (if a customer doesn’t pass the scoring system) we’ll still sell them a car, but we’ll put a GPS unit on it, under the proper circumstances. “Also, if they are more than 20 miles outside our market area, we’ll put a GPS unit on the vehicle. “We ended up restruc-
Compiled By Ted Craig
turing a couple of years ago. We wrote a very extensive business plan and hooked up with a SBA loan, refinancing everything. Since then, we’ve been just working on getting debt-free. “We’re trying to get out from under our floor plan. We have a significant number of buy-here, pay-here accounts and those cash flows sustain the business. We’re currently retiring debt at about $6,000 a month. “SUVs are very popular right now. Trucks have slowed down for us and economy cars aren’t doing much at all. My mix is probably 85 to 90 percent domestic, because they’re easier to fix and less expensive to repair. “We sell quite a few Chryslers and we do a lot with Tauruses. Durangos are extremely popular. “The last sales on my sheet were a 2003 Jeep Liberty Limited, a 141,000-mile unit which sold for $9,850; and a 1995 Caprice, with a leather and chain-link steering wheel, which
“Buy-here, pay-here sold for $7,040. It had collections have been 140,000 miles.” pretty good. We’re getSOUTH CAROLINA ting paid. Norman Stuckey, “Most of the tax reowner, Central Motors funds are going toward Inc., Columbia, S.C.: down payments on pur“Right now, we’re chasing cars. pretty busy. We’re nor“We have one location mally busy this time of and our average inventhe year. It’s tax season. tory is about 50 cars. “We have seen a lot of “Replacing inventory people coming in with has been a challenge. tax returns. The returns We’ve gotten a little go out quick with these more aggressive in findrapid refunds. A lot of ing new ways to buy cars. the cars that we’ve sold “Sometimes, I network recently are a reflection myself with attorneys to of that. buy vehicles through es“The tax returns seem tate sales. We also adverthe same as they have tising that we buy cars. been in previous years. “For advertising, we “The average down use television and local payment here is about trade magazines. We sign $2,000. The average pay- long-term contracts ment is $375 (monthly). (with our television com“Before tax season, mercials to save money). business was slower than We get a lot of repeat it had been in years be- business. fore. “I have seen a little bit “Our economy is pretty of a rise in the number of good. We have the higher-income cusbiggest university in the tomers than usual. state and one of the “The last car we sold biggest (military) forts in was a 2004 Ford Expethe country, Fort Jack- dition. It had 93,000 son, in the town that I’m miles and sold for in. $14,000.”
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UCN_19
4/13/10
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USED CAR NEWS
April 19, 2010
WHOLESALE MARKETS CONNECTICUT
John Barberino, owner, Hartford Springfield Auction Co-Op, LLC, East Granby, Conn.: “Business is fabulous. We’ve been in business since 1996. But we’ve expanded this month to six lanes. The expansion has been in the works for about two years. “We’ve moved a mile away, from seven acres to 107 acres. Our old facility will be used for reconditioning. “We’ve been running about 400 units through three lanes (prior to expansion). We’re running more than last year this time. “Our sales percentages have jumped from 48 percent last year to about 55 percent. “Just about everything is selling right now. There’s just a huge shortage of product. “The only type of vehicle that’s a little off is the Pontiac. “That’s because of the termination of the brand. “Our dealers come
f ro m C o n n e c t i c u t , Massachusetts and New York. “We’ll draw about 500 dealers in the lanes. That’s gone up from 350 last year. “Our business is all dealer consignment. “We don’t have any salvage or other type of sales. “One of the (online services) we have is giving the ability to allow the dealer to stay in his office at his dealership and still represent the car in real time. “It’s not like Simulcast. The dealer can communicate with the auctioneer in real time to give (information) about the car. “He can say, ‘I need another $300,’ or ‘ the car has frame damage.’ “That’s our proprietary technology. “We’ve been doing that for a few sales. “We also run ADESA LiveBlock, Manheim OVE and GMAC SmartAuction. “We’re tied in with all the big boys.”
TENNESSEE
Todd Ward, fleet/lease manager, Airport Auto Auction Inc., Alcoa, Tenn.: “Everything’s going real well. “We run an average of 250 to 300 cars per week. We have four lanes. “We’re up in volume from this time last year. “I’ll be honest with you. I don’t know what changed (to increase our volumes). But we have noticed that it has increased over the last two years. “Our sales percentages have been right at 78 percent. It was about 73 to 74 percent this time last year. We had a couple of weeks in the last quarter where we hit 81 to 82 percent sales “Our problem isn’t selling them, it’s getting enough of them. “We’re getting about 255 dealers in the lanes for sales. That’s been about the same as this time last year. “Many dealers are coming from the local
•
19
Compiled By Jeffrey Bellant
area and from the Southeastern United States. They’ll come from Tennessee, Kentucky, Georgia and some from North Carolina. “We also run some fleet-lease. The main one is ARI. But fleet-lease is a small percentage of our volume, maybe 5 percent. “We don’t have a GSA sale anymore. “Prior to our regular sale, we’ll run an in-op sale on video screens. Right after that, we’ll run powersports units, like boats and motorcycles. Then we’ll run our regular cars. “Our powersports units have increased. We’ll probably run 15 to 20 of those every week. “Four-wheel drive diesel trucks are really doing well right now. “But everything is selling above book. “We’ve been on OVE since last September. It’s really taking off this year. We’ll have 150 to 200 online at any one point. “Our average price overall is $5,500.”
WISCONSIN
Daniel Pieroni, general manager, Greater Milwaukee Auto Auction, Milwaukee, Wis.: “We have four lanes. “We’re running between 500 and 600 units. We’re down compared to this time last year. “Even though our consignment is down, our sales percentages are up. “Our sales percentages in the first couple of months of the year were hovering between 60 and 70 percent. Last year, we averaged about 55 to 60 percent, so it’s definitely been a strong increase. “We’re getting between 350 and 400 dealers in the lanes. That’s also increased from this time last year. “Our dealers are coming from pretty much all over the Midwest. We’re pulling dealers from southern Illinois, Iowa, Mississippi, and the Upper Peninsula of Michigan. “Dealers are saying there’s a shortage of cars and prices are high.
“For most of the dealers in our area, retail business was very strong in February and March. “We have several small banks and finance companies that bring repossessions. “Typically, we were consigning five to 10 repos a week. “Now it’s up to probably upwards of 15 per week. We’re seeing more repos because of the economy. “Before our general consignment sale, we’ll run a video sale for all of our non-running vehicles. “We also have a full reconditioning facility. “Our average price of a car sold overall is probably $3,500. “With the shortage of cars, dealers are really thinking outside of the box. Guys are buying cars that they normally wouldn’t have bought. “Dealers have needed to make adjustments in their normal way of thinking in order to supply their lots with vehicles.”
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USED CAR NEWS
April 19, 2010
OTHER VOICES
Exhibit Captures Auto Elegance Even before “The Allure of the Automobile” opened on March 20, more than 20,000 people from around the country had reserved tickets to the newest exhibition at the High Museum of Art in Atlanta (running through 6/10/10; w w w. h i g h . o r g ) . This speaks volumes about America’s love affair with cars. The Museum’s message is simple; cars are much more than transportation – they are works of art that are inextricably woven into our nation’s cultural and economic fabric. Despite the unprecedented business challenges the industry has recently confronted, this exhibition is a statement about our industry that’s worth celebrating. “The Allure of the Automobile” reflects the celebration of design and technology as well as the stories behind some of the most beautiful
tion across the country or the first car we owned. It’s our “car stories” that highlight the automobile’s crucial role in American culture. They reveal each successive generation’s quest for the freedom to travel and explore. The automobile has truly been one of society’s most influential innovations. Over time the auto industry has responded effectively to new challenges, changes and generations. In the century since the Ford Model T first rolled off the assembly line, our industry has produced innovative designs, ground-breaking technologies, revolutionary production processes and creative retail concepts. America’s ability to grow economically has long been linked with the automotive industry. Today, the industry accounts for roughly one in ten U.S. jobs and four percent of our gross domestic product. The industry also continues to shape our cars to meet our needs. We now boast
cars ever made. The grace and artistry of the 18 rare cars on display at the High include masterpieces by Bugatti, Duesenberg, Jaguar, Mercedes-Benz, Porsche and Ferrari. These cars embody the passion and excitement we experience when we encounter automotive design at its best. These one-of-a-kind works of art define the pinnacle of innovation and craftsmanship. They tell the colorful stories of special people who designed and owned them - and even made history in them. Of note, and an interesting parallel to today’s depressed economy, nearly half of the cars featured in the exhibit were manufactured during the dire economic conditions of the Great Depression, and in contrast to today, had very few restrictions on design. For most of us, owning one of these great machines is out of reach. Even so, we all have personal stories about the cars we’ve known and loved - whether it’s a station wagon that took us on a childhood vaca-
more eco-friendly engines, powerful new electronic systems and innovative safety features. And just when we think we’ve seen it all, a new model -- or even a redesigned but familiar favorite - is unveiled and is so striking that it that turns our heads as it passes by. Affordable transportation also continues to be an important part of the industry, as car ownership for most Americans is a basic necessity. But cars are also part of our dreams, aspirations and culture. This is the essence of “The Allure of the Automobile” exhibition. These 18 cars have the power to move us physically and emotionally. I hope you will make time to visit these rare examples of automotive excellence before they return to their permanent owners. Thanks to the efforts of the High Museum of Art and its Guest Curator Ken Gross, we have been given a unique opportunity to reflect and celebrate our great industry – one which we are fortunate to be a part of every day.
The Allure of the Automobile Society Supporting Companies Company
Nalley Automotive Group Auction Insurance Agency AutoTrader.com Barclays Capital Barrett-Jackson Auction Company Black Book BSC America, Inc. Deer Run Investments, LLC The Coca-Cola Company Columbus Fair Auto Auction Copart CVC Capital Partners DealerTrack Holdings Deloitte & Touche LLP Dow Lohnes, PLLC DuPont Automotive North Highland Holder Construction JM Family Kelley Blue Book Manheim Mota Motors Porsche Cars North America R. L. Polk & Co. Southern Auto Auction TPC Management Company UPS Global Freight Forwarding
Location
Atlanta, GA Birmingham, AL Atlanta, GA New York, NY Scottsdale, AZ Gainesville, GA Bel Air, MD Atlanta, GA Atlanta, GA Columbus, OH Fairfield, CA New York, NY Lake Success, NY Atlanta, GA Atlanta, GA Plymouth, MI Atlanta, GA Atlanta, GA Ft. Lauderdale, FL Irvine, CA Atlanta, GA Los Angeles, CA Atlanta, GA Southfield, MI East Windsor, CT Franklin, TN Alpharetta, GA
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USED CAR NEWS
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USED CAR NEWS
April 5, 2010
Disconnected Jottings From Tony Moorby... “Create your own visual style…let it be unique for yourself and yet identifiable for others.” Orson Welles was referring to the visual arts, but could have equally been talking about branding and product imaging.
Thinking back, it wasn’t such a gift. If you had the vaguest interest in cars you could identify a car by the sound its starter motor made. And a Vauxhall Viva could not have been more different than an Austin Mini in looks, style or
personally, putting everything they own behind the idea selling something that came from the mind of someone else. I know of no other business that demands so much talent from start to finish and to do it every day. Think of the dealer – architect, lawyer, accountant, adverTony Moorby tising m ave n , • 40-year veteran of the industry marketing guru, • President from 1997–2000 of ADT Automotive engineer, inventory • Served as ADESA’s executive vice president of sales manager, human and marketing resources specialist, deluxe salesman, • Moorby & Associates 2006-present charity donor, • Awarded the Ring of Honor by NIADA community leader, • NAAA Hall of Famer copywriter and fashionister and We all work in a business that utility. Here, Mustangs stirred fortune-teller! And that just epitomizes the importance of the senses in the same way as gets him to Monday lunchtime. style and memorable features; Corvettes, but the differences This is not just a talent – it’s after all, if two cars did exactly were endless. One man’s meat, pure genius and these people the same thing, in exactly the another man’s poison… are in every Main Street in same way, at exactly the same I rejoice every day at being America. cost, you’d buy the better-look- involved in a business which We have the pleasure in dealing of the two. To your eyes, results from so much genius. ing with products that range that is. Thank goodness we all From an initial vehicle con- from the utilitarian to the see things differently. cept, designing the machines downright sexy. Although I I remember, as a kid in the and spaces to build the vehi- have to say that some of the fifties, being stultified by my cles, planning their interiors to designs we see today are pap father’s ability to name the accommodate so many consid- for the masses, hardly promotmake and model of every car erations, using new, fabulous ing the classics of the future. that passed. He even knew the technologies, finally to the ge- Everyone has their own idea sound they made. Eventually, nius of marketing and distrib- of what constitutes a classic when I got into the car busi- uting the product by business- but the High Museum in Atness I could echo his talent. men and women who take it lanta, Georgia is exhibiting The
Allure of the Automobile, hinged around eighteen of the world’s absolutely finest cars from the Golden Age of automobile design. Art Modernespawned cars from the thirties are on display like a 1937 Hispano-Suiza and a Bugatti Type 57S which, to me, is as sensual as a reclining nude! Also showcased are cars from the fifties and sixties like the understated elegance of a 1961 Aston Martin DB4GT Zagato in contrast to the classic clarion call to luxury provided by the 1957 Cadillac Eldorado Brougham. This is a must-see exhibition if one bone in your body has any predilection for cars. I was fortunate to have been invited to a preview of what the show was to be and how it was to be laid out in the museum and was witness to the stunning amount of work that goes into mounting such an ex-
quisite undertaking. And we have one of our own to thank for sponsoring and underwriting the endeavor – Manheim Auctions, under the tutelage of Dean and Christine Eisner, is the main promoter. Dean’s an interesting character. In a well-earned, privileged place as Manheim’s CEO, he wears his position with understated (a Cox trait) sensitivity. He lets others take the spotlight, but they move at his persuasion. He’s a dexterous and talented leader. On top of that, he’s a decent chap and nice to be around. While I was there, an exhibition of works by Leonardo Davinci was on display but it had closed – a situation that I bemoaned to one of the museum’s curators. He quietly showed me to a private door and said, “It’s all yours!!” There I was to see art and engineering at its zenith. Pure genius.
The Allure of the Automobile Exhibit runs at the High Museum of Art, Atlanta, through June 20. The High Museum is located at 1280 Peachtree Street Northeast, Atlanta, GA 30309 (404) 733-4444 www.high.org
C R O S S WO R D
by Myles Mellor
Across 1. Dodge ____ SRT10 4. Chevy _____ 2LT 9. The car’s 10. Give the car a new coat 11. Strikingly unusual, like the Bugatti Veyron for example 12. Massachusetts peninsula 14. ___ inclusive 15. Enjoyment 16. Kia ___ EX 19. Showy flower 20. Old English, for short 21. Kia ____ Koup 23. SRX Turbo makers 24. ____ on the brakes 26. Skill 27. Famous truck 29. Goes with behold 30. Hyundai Elantra ____ 32. ____ Sedona 34. Smooth 36. Brings in an old car for another one (2 words)
Answers from the 4/5/10 puzzle
38. RX-8 is one of its models 39. Winter coat 41. VW’s diesel car line (2 words) 44. Pre-owned 45. Seattle locale 47. Saturn model 48. It’s what creates a car Down 1. Nissan hatchback 2. Much bought 3. Profit amount, abbr.
4. Light and strong metal 5. Toyota built in the UK 6. Wear away 7. Changed, of gears 8. Common market, abbr. 13. Dark blue color 15. Filled up the tank 17. Extra lines on a letter 18. Paint layer 21. They have an Edge! 22. Dot the i’s and cross the ___ 23. Light yellow color
Answers to this puzzle in the 5/3/10 issue. Call 1.800.794.0760 for a FREE subscription.
25. Excellent (2 words) 26. Gold symbol 28. Tracer is one 31. _____ MKT EcoBoost 32. Sedan from Suzuki 33. Acknowledgement of achievement 35. Richmond’s state 37. Sundial number 40. Prefix meaning inside 41. Commuting option 42. It’s better than lease 43. Price ___ 46. __ Mans car race
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