June 2, 2014
ON THE WEB: Few Consumers Drive A Hard Bargain
www.usedcarnews.com
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Demand Remains Ahead of Used Supply
Only about 20 percent of car shoppers consider themselves “extreme price grinders” who will take as much time as they can to get the lowest possible price on a new or used car, according to a new report released by Edmunds.com.
FTC Supports Direct Sales to Consumers
Federal Trade Commission staff submitted written comments on legislative proposals that would alter the ability of automobile manufacturers to sell their cars directly to consumers. The comments note the staff’s strong opposition to state laws that mandate a single method of distributing automobiles to consumers.
Index Shows New Cars Out of Reach for Many
The latest U.S. Auto Buyer’s Affordability Index from Requisite Press indicates that a U.S. median-income buyer can only afford 52.1 percent of the April new-car average transaction price.
Rush - Dated Material
File photo BRING IT ON: Much has been made of a flood of vehicles overwhelming the wholesale market and driving down prices, but industry insiders say dealers can absorb much of the increase in supply. By Ted Craig
Someday, a large increase of used-car supply will drive down wholesale prices. But that day might prove later than sooner. ADESA Analytical Services reports that wholesale prices remained at high levels in April. Tom Kontos,
ADESA’s executive vice president of industry analysis, said this reflects scarcity in supply and abundance of demand particularly for certification-eligible vehicles, and more specifically for off-rental units. Kontos said an increase in off-lease vehicles will moderate prices.
Tom Webb, Manheim’s chief economist agrees prices will fall, but that might not happen this year. “There isn’t going to be a major decline because as long as dealers are making a healthy profit, they’ll keep buying,” Webb said. If anything, demand should increase in the next
few months as the used-car superstores from Sonic Automotive and Asbury Automotive come online. Matt Read, general manager of Loveland Auto Auction, is ready for a flood of cars. “I would like to see it,” Read said. “Right now would be fine.”
Auction Chains Enhance Offerings for Franchise Dealer Groups The two largest auction chains are offering more ways for dealership groups to wholesale cars. Manheim has partnered with Hendrick Automotive Group to create the dealership group’s first onsite auction lane in Charleston, S.C. The one-lane, newly retrofitted operation is located at Hendrick Automotive Group’s dealership facility in Charleston and sells wholesale trade-in vehicles from its 11 Charleston-area dealerships. Similar to Manheim’s auction lane offering, the sale uses technology such as Simulcast, an auctioneer and auction block and Manheim employees.
Since its opening on March 11, four sales have been held with 95 percent of the vehicles sold and an average of 140 dealers in attendance. The sale, open to all registered dealers, is staffed by employees from Manheim Darlington. Meanwhile, ADESA announced the launch of a new online vehicle remarketing website for franchised dealers within the Prestige family of dealerships. This custom site, prestigedealerdirect.com, allows Prestige dealers to view and purchase vehicles exclusively in an online “closed” auction venue before the vehicles are ever offered through an open sale.
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