September 2, 2013
ON THE WEB: Auto ABS Losses Ready to Rise Following Lows
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Auction Association Gathers in Indy
Losses on both prime and subprime U.S. auto ABS rose in July following lows seen earlier in the spring, according to Fitch Ratings. Auto ABS losses are likely to increase as the seasonally weak fall progresses. Dealers will begin discounting existing 2013 models to make way for new 2014 models, which typically impacts loss severity and drives loss rates higher.
AutoTrader.com Marks Mobile Milestone
Over 2.1 million unique visitors interacted with AutoTrader. com from a smart phone during July, which represents a 60 percent increase year-overyear. AutoTrader.com’s mobile properties include a mobile site and a car shopping app for iPhone and Android phones.
Odd Designs Need Time To Catch on with Public
Consumers’ preferences for products with odd designs depend on how many times they viewed the product.
Photo by Jeff Kowalsky TEAM OF RIVALS: Outgoing NAAA President Paul Lips, left, and incoming President Jack Neshe show off their hometown colors. The Indianapolis Colts and New England Patriots might be fierce rivals, but the two ADESA execs are old friends. See more on page 8.
The National Auto Auction Association has hosted its convention at some of the top destinations in the United States, such as New York, Chicago and Orlando, Fla. So what’s the deal with Indianapolis? “There’s going to be a lot of people who are going to
be pleasantly surprised,” said NAAA president Paul Lips about his hometown. Indianapolis has long had much to offer visitors. It is second only to Washington, D.C., in the number of war memorials, was named one of the best downtowns by Forbes and is home to one the top
sports venues in the nation – the Indianapolis Motor Speedway. According to a recent USA Today article, Indianapolis ranks 27th on the list of Top 50 convention sites in the nation. The JW Marriott hosting the NAAA is the largest hotel in the chain. It was built
for the 2012 Super Bowl. Lips recommends taking a stroll down to Massachusetts Avenue for attendees with free time. Of course, there may be little of that. The association has more educational sessions scheduled this year than ever before.
Regulators Look for Discrimination in Auto Finance Rush - Dated Material
By Ted Craig
Several federal agencies are on the look out for discrimination in indirect auto lending. Representatives of the Consumer Finance Protection Bureau, the Federal Reserve and the Justice Department spoke on a recent teleconference about the topic. The CFPB’s Patrice Ficklin said while the many dealers are exempted from the regulator’s oversight, the finance companies are covered. “(We) will use that authority wherever appropriate to ad-
dress discrimination,” Ficklin said. All credit applications other than those for mortgages are barred from collecting demographic data. But the feds said they will use proxies to look for patterns of discrimination. The proxies include geo-coding, which looks for discrimination based on the number of minorities who live in a specific area. This is sometimes called “redlining.” Regulators will also check databases for Hispanic last names and female first names for signs of discrimination. Continued on page 16
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September 2, 2013ÛÛÝÛÛ
USED CAR NEWS
Young People Like Cars, But Don’t Drive, Buy Them By Ed Fitzgerald
Isabelle Helms of AutoTrader.com knew her recent survey would tell plenty about the car buying habits of young people. And the most important question of all might be whether these “millennials” even care about cars. The study, “Next Generation Car Buyer,” quizzed millennials ages 16-24 and 25-32, and compared their car shopping attitudes with Gen Xers (ages 33-47) and Baby Boomers (ages 44-66). The study confirmed other data showing a car might not be a top priority with these young people. Helms said in addition to delaying car purchases, 36 percent of young millennials are putting off getting a driver’s license. “We learned quite a bit about these people, who are projected to be the wealthiest generation of all time,” said Helms, who is AutoTrader.com’s senior research and marketing director. “And cars are indeed important to a millennial
and central to their life. “Many of them (23 percent) say they are simply too busy to drive,” Helms said. “They are busy with school or overloaded with extracurricular activities. They are also referred to as the over-scheduled generation.” The AutoTrader.com study showed that 19 percent of the millennials say they are afraid of driving and 15 percent say it’s too expensive. Helms pointed out that the millennials who live at home might have parents who both work, which would mean at least two vehicles are already in the household. The study also shows millennials have a somewhat conflicting attitude when it comes to salespeople and dealerships. The study showed that millennials are more likely than Gen Xers or boomers to visit dealer lots multiple times before making a purchase. Also, 49 percent of millennials say they rely heavily on a salesperson for information, compared to 38 percent of boomers. But 56 percent of millenni-
Photo by Ed Fitzgerald LOOKING FORWARD: Isabelle Helms of AutoTrader.com speaks to reporters at the Automotive Press Association lunch in Detroit. Helms shared recent studies on young buyers.
als say they are more likely to go out of their way to avoid interacting with salespeople for fear of high-pressure sales tactics. Only 37 percent of boomers said the same. “They (millennials) said they thought a dealer might try to sell them a service they didn’t want, like an extended warranty,” Helms said. When it comes to particular brands of cars, the mil-
lennials show their eyes are often bigger than their stomachs. Both groups of millennials list Audi as their favorite brand. But when it comes time to buy a car, the millennials are much more practical, with Honda, Ford, Toyota and Chevrolet topping the list of cars purchased. Helms said brand was also important to the millennials
who said they were likely to be shopping for a used car. The study did not ask specifically about used cars. It also did not ask where the respondents lived, which would increase their likelihood of using mass transit. The millennials surveyed also say they are more reliant on word-of-mouth information on cars, which includes social networking.
8/26/13 3:33 PM
Â Ă›Ă›Ă?Ă›Ă›Ă›September 2, 2013
USED CAR NEWS
NEWS BRIEFS CPS Sees Earnings Jump
liens with an electronic exchange of these policies have been updated the ADR management group and since Jan. 1, 2011, additional time plan to begin integration of the two Consumer Portfolio Services Inc. data with the NC DMV. is needed for new arbitration and companies shortly. announced earnings of $4.8 million Website Offers Subscription Service structural damage posters and mafor its second quarter. EBay Motors announced the terials to reach all member auctions. Auction Edge Adds Liquid Motors This compares to net income of launch of a national subscription Auction Edge has integrated Liq$1.3 million in the second quarter program for dealers, which enables PAR Acquires Remarketer uid Motors capabilities into the Aucof 2012. ADESA announced that its sub- tion Edge platform. Revenues for the second quarter of small and mid-size dealerships to reach millions of car shoppers sidiary, PAR North America, has acAuction Edge will now offer 2013 were $70.5 million, an increase across the nation for a fi xed rate. quired Auto Depot Remarketing. â€œEDGE Multi-List,â€? a custom verof $26.3 million, to $44.2 million for With the subscription program, Located in Fontana, Calif., Auto sion of Liquid Motors â€œOne Click the second quarter of 2012. Total operating expenses for the dealers can leverage a consistent Depot Remarketing works with sev- Remarketing,â€? to its customers. Edge Multi-List pushes invensecond quarter were $61.9 million, monthly online sales channel, com- eral credit unions, regional banks plete with dedicated account supand fi nance companies. tory to all of the major online marcompared to $42.8 million for the port and in-depth reporting. The acquisition will allow PAR to ketplaces. If a bid meets reserve or 2012 period. Services include advanced seller offer repossession, skip and title ser- the vehicle sells with a buy now or During the second quarter of tools, detailed reporting and dedi- vices to ADRâ€™s client base. accepted offer, the system will auto2013, CPS purchased $203.8 milcated one-on-one account onboardPAR will retain key members of matically remove the listing. lion of new contracts compared to $180.1 million during the first ing and support quarter of 2013 and $137.9 million Published By General Media LLC during the second quarter of 2012..
NAAA Sets Date for Policy
Another States Switches to Electronic Titles and Liens
The National Auto Auction Association has set a date for its new arbitration policies. NAAA Chief Executive Officer Frank Hackett announced changes to the arbitration and structural damage policies will now take effect Oct. 13. Since this is the first time
VINtek reports that it assisted with the passage of electronic lien and title legislation in North Carolina. Senate Bill 407, signed by Governor Pat McCrory on July 23, requires the North Carolina Division of Motor Vehicles to implement an ELT program by July 1, 2014. Within a year of implementation, banks, credit unions and other au8/9/13 tomotiveCarolina15K-UCNaug19.pdf lenders in the state 1will begin to replace their paper-based
C R O S S WO R D by Myles Mellor
PAGE 29 12:09 PM
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: Ed Fitzgerald, Jenny King, Sheila McGrath 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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September 2, 2013 ÝÛÛ
USED CAR NEWS Pittsburgh UCNsep2_V.pdf
NICB Expands ‘Hot’ List
GONE IN 60 SECONDS: The Nissan Altima is starting to pass Honda in a competition it would rather avoid – most stolen car. According to the National Insurance Crime Bureau, thieves are starting to avoid Hondas due to improved anti-theft technology.
The National Insurance Crime Bureau released an expanded, data-rich version of its popular Hot Wheels report - its list of the 10 most stolen vehicles in the United States. The report examines vehicle theft data submitted by law enforcement to the National Crime Information Center and determines the vehicle make, model and model year most reported stolen in 2012. A first-edition feature is also contained in the report: a look at the Top 25 2012 vehicle makes and models that were reported stolen in calendar year 2012. In previous Hot Wheels reports, rankings were determined based on the most stolen model year vehicle within each vehicle make and model. Only one make/model/year would appear on the Top 10 list, even though other model years of the same vehicle would have earned a position on the list. This was done to offer a more varied list with significant theft numbers than to focus on just one or two makes year after year. Beginning with this report, the Top 10 most stolen will appear by make and model only with its corresponding theft total. Beneath the make and model will appear its various model years with their corresponding theft totals for 2012. For 2012, the most stolen vehicles
in the nation were (total thefts in parentheses): Honda Accord - (58,596) Honda Civic - (47,037) Ford Pickup - (Full Size) - (26,770) Chevrolet Pickup (Full Size)(23,745) Toyota Camry - (16,251) Dodge Caravan - (11,799) Dodge Pickup (Full Size) - (11,755) Acura Integra (9,555) Nissan Altima (9,169) Nissan Maxima - (6,947) Older Honda Accords and Civics were by far the most stolen models in 2012. The 1996 Accord led the list with 8,637 thefts. In fact, Accords and Civics account for the first 16 spots on the most stolen list and all are 19902000 models. By comparison, newer Hondas are rarely stolen, thanks to improved anti-theft technology. The new feature in Hot Wheels this year is the addition of a list of the top 25 model year 2012 vehicles that were most stolen in calendar year 2012. The Top 10 on this list are: Nissan Altima - (921) Chevrolet Impala - (778) Chevrolet Malibu - (727) Toyota Camry - (665) Ford Fusion - (655) Ford Pickup Full Size - (595) Ford Focus - (523) Chrysler 200 - (449) Dodge Charger - (416) Dodge Avenger - (412) C
New Car Dealers Team with Carfax An agreement to give used car shoppers on DriveChicago.com access to Carfax Vehicle History Reports has been reached by the Chicago Automobile Trade Association (CATA) and Carfax. In addition, the CATA is working with Carfax to provide Carfax Vehicle History Reports to its dealer members through a unique CATA subscription. Kicking off this partnership
is a 90-day campaign providing no-charge Carfax Vehicle History Reports to DriveChicago.com site visitors on nearly every used vehicle listed. This campaign will run through November. A part of the agreement, the companies also will promote the availability of Carfax Reports on DriveChicago.com.
8/26/13 3:32 PM
ÛÝÛÛSeptember 2, 2013
USED CAR NEWS
State Passes Odometer Law
By Jeffrey Bellant
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The Oregon state legislature approved changes in the requirements on odometer readings and dealer education. Monty King, president of the Oregon Vehicle Dealers Association, said the legislation had support form various groups, including the OVDA. The legislation was also supported by the Oregon Independent Automobile Dealers Association, the Oregon State Sheriff ’s Association and the Oregon Association Chiefs of Police, said King. The law that will allow voluntary disclosure of mileage on cars older than 10 years. The bill was signed into law this summer and goes into effect on Jan. 1, 2014. Federal law requires state DMVs to record and preserve odometer readings on cars when they’re sold, but only if the vehicle is less than 10 years old. The new state law requires the Department of Motor Vehicles to update its electronic file with the most current odometer reading, even if it’s more than 10 years old. Supporters said it will help with vehicle history reports and a more accurate determination of car value, but it can help law enforcement agencies detect odometer discrepancies and fraud. King said this helps the reputable dealers and weeds out the bad ones who try to roll back odometers to mislead customers. It also helps prevent odometer fraud, a multi-million dollar problem in the industry. The legislation passed through the House unanimously and only received one ‘No’ vote in the Senate. The signing of the law follows an earlier legislative hearing where King told officials he
would keep coming back “session after session after session” to get the bill passed. Another law passed requires that dealers renewing their licenses after Jan. 31, 2014 must take four hours of continuing education per year, according to King. The state also passed a law that allows local governments to set maximum towing rates and create a complaint process to draw public input and get feedback. “Predator towing companies pay their employees on commission, which gives them a perverse incentive to tow as many cars as possible – sometimes illegally,” said Senator Mark Hass (D-Beaverton). This might have an effect on customers of buy-here, pay-here dealers, who might get their cars towed but don’t have the money to recover them. If they walk away, the dealer is stuck with the bill if he wants the car back. House Bill 3159C allows cities with a population of over 15,000 to regulate towing companies by requiring these companies to obtain an annual license and to establish caps on the amounts that towing companies can charge car owners to recover their vehicle. The bill also allows cities to set up a process to receive and respond to complaints from car owners regarding towing companies. Under HB 3159C, areas outside of these larger cities may also regulate towing companies, either through the jurisdiction of the county or the city. “Towing companies charge obscene fees to people just trying to get their car back. A hook up fee, a gate fee, a storage fee, a parking brake fee – it’s outrageous and just plain wrong,” said Senator Jackie Dingfelder (D-Portland).
8/26/13 4:08 PM
September 2, 2013ÛÛÝÛÛ
USED CAR NEWS
Bus Bench Ad Angers Officials DES MOINES, Iowa (AP) – The general manager of Des Moines’ transit system wants the city to ban advertisements on bus stop benches that encourage people to buy a vehicle rather than ride the bus. Elizabeth Presutti of the Des Moines Area Regional Transit Authority asked officials in a letter last month to update city code to ensure future advertisements don’t send a conflicting message about riding the bus, The Des Moines Register reported. She requested the city prohibit anti-transit advertising similar to how it doesn’t allow the marketing of alcohol and night clubs.
be sending,” Presutti said in the letter. “Not only does it discourage transit use, it also reinforces a false stereotype that transit riders are made up entirely of those who can’t afford a car.”’ A spokeswoman for J.D. Byrider, which has nearly 150 dealerships in 30 states, told The Associated Press that the company has used transit advertisements in other markets without any issue. However, the company could not specify whether those advertisements also included the marketing question of why someone would use the bus. The newspaper reported that
“This is not a message we should be sending.” Elizabeth Presutti “We unintentionally cloud such important messages by simultaneously allowing these anti-transit ads in the public right-of-way,” she wrote to City Manager Rick Clark. Presutti’s letter was in response to several bus stop bench advertisements by J.D. Byrider, a usedcar dealership franchise based in Indiana. The advertisements read: “Why ride the bus? You can drive with us!” “This is not a message we should
some of the advertisements have been taken down since Presutti’s letter was sent in July. The issue was discussed at a City County meeting, and City Councilwoman Christine Hensley said she would look into it. “Our tax dollars are paying for public transit and we have an ad on our bus benches encouraging people to buy a car instead of ride the bus. To me, that’s not right,” she said.
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PAGE 8 - NAAA CONVENTION
Incoming President Wants to Hear from Industry (Jack Neshe is the incomI started working at Coning president of the National cord Auto Auction in JanuAuto Auction Association. ary 1990 and I’ve been in the Neshe is the general manager business every since. of ADESA Boston.) UCN: So was seeing Tom UCN: What’s your back- become NAAA president ground? what inspired you to get Neshe: I worked at a fran- on the same path? chise dealer from 1980 to Neshe: Tom said being 1990. One day, the used-car NAAA president was a great manager asked me to go to experience and that I should the auction to bring a ve- get involved with the assohicle back to the store. I saw ciation. the excitement there and deI had been on the board cided that’s where I wanted of the Massachusetts Indeto be. pendent Automobile DealA mutual friend of Tom ers Association. I joined Caruso and mine put us the NAAA’s membership together. Tom was look- committee and the legislaing for a manager of the tive committee. mechanical shop. They were great groups
of people and I had the opportunity to make a lot of new friends. Then I became president of the Eastern Zone. Following that the opportunity arose to become president of the national association. It’s been such a rewarding experience and the support has been tremendous.
UCN: What has been the biggest eye-opener for you as you visit the auctions? Neshe: It really gave me a chance to see how other auctions work and talk over industry issues with the other general managers. We’re all competitors, but we all go through the same
things. It allows us to bring some ideas back and improve on the processes. That’s one of my goals as president – to open up the lines of communication and see what we can do to help the industry.
next session. The revised arbitration policy is going to give dealers more confidence in the lanes. I hope to continue to grow on what the past presidents have put in place and leave something that others can UCN: What are your oth- use after me. er goals as president? Neshe: The auction stanUCN: Every president dards are going to be really seems to say it takes more important as online sales than a year to get anything grow every day. I’d like to done. offer more opportunities Neshe: That’s true. You to provide training for the think about things you’d independent auctions in like to do and then the year those standards. just flies by. But I hope to The Institute has been fan- get a few things done in the tastic. We’re working with next year. the Ritz-Carlton for the Continued on page 10
Photos by Jeff Kowalsky ON THE ROAD AGAIN: Paul Lips, left, and Jack Neshe joke around during a stop in Detroit. The pair have visited 65 auctions in the past year to celebrate the National Auto Auction Association’s 65th anniversary. Neshe, who started in the car business at a new-car store, wants to keep open the lines of communication with NAAA member auctions.
Outgoing President Reflects on Well-Traveled Tenure (Paul Lips is the outgoing president of the National Auto Auction Association. Lips is ADESA’s executive vice president of operations and finance.) UCN: How was your year as president? Lips: It was a great year. It was a very rewarding experience. I set a goal to visit 50 auctions in the year and then we upped that to 65 in honor of the NAAA’s anniversary. The year flew by because it was so busy. It was really nice to walk
ÛÛÝSeptember 2, 2013
into some of the auctions. The employees would get really excited and say, “Nobody from NAAA has ever visited us before.” They rolled out the red carpet. It was also a year of accomplishments. We have the new arbitration policy that’s coming out, a new structural damage policy that will be in place soon, and we’re making progress on standard grading. We continue the good work Charlotte (Pyle, the NAAA chairman of the board) started with the po-
litical action committee and for almost 17 years now. the Day on the Hill, as well Boston was always a loas the leadership initiative. cation where we hosted analyst meetings. UCN: It’s unusual to have two presidents from the UCN: What will you take same company back-to- away from your time as back. How well did you NAAA president? know each other before Lips: Having been in this this? position, you get feedback Lips: We knew each other from other auctions, feedpretty well. back from customers. You One of my first trips for really learn how complex ADESA was to Boston. our industry is and how we We’ve known each other can work together.
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USED CAR NEWS
NAAA President UCN: Is there anything in Washington, D.C., that youâ€™re keeping an eye on? Neshe: A few things have come up, but nothing thatâ€™s affected the industry yet. Itâ€™s going to be very important to watch out for bills that will affect the industry. I had the chance to attend the Day on the Hill for the first time this year. Itâ€™s very eye opening.
UCN: Is there a way for the NAAA to work more with the dealers? Neshe: A lot of dealers attend our auctions and see the logo, but they donâ€™t really know what the NAAA is. Iâ€™d really like to promote the benefits of doing business with an NAAA member.
- Continue from page 8
UCN: How do you get more auction executives involved with the NAAA? Neshe: One way is through the site visits weâ€™ve been making. People have told us they want to get more involved, so we set them up on some of the committees. Frank and the NAAA staff have been putting more information on the website than ever. Weâ€™re seeing a lot of interest. UCN: Is there a theme for this year? Neshe: With the NAAA anniversary coming up, our theme is â€œThe Symbol of a Quality Auction.â€? Weâ€™re going to have a new logo that reflects that theme.
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~ÛÝÛÛSeptember 2, 2013
USED CAR NEWS
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Dealer Claims Phantom Classics A classic car dealer in Texas has been sentenced to prison for bank fraud and money laundering. Ricky Prince pleaded guilty in 2012 to bank fraud and money laundering and was sentenced to 36 months in federal prison on Aug. 13. Prince was also ordered to pay restitution in the amount of nearly $1.5 million. According to information presented in court, from March 2007 to August 2010, Prince owned and operated North Texas Muscle Cars Inc., specializing in antique automobile sales, in McKinney, Texas. During this time, Prince submitted materially false personal finance
statements and income tax returns to financial institutions to secure credit for himself and his dealership. To further the scheme, Prince included antique automobiles such as a 1963 Chevrolet Corvette, a 1974 Pantera Detomasoy, a 1967 Chevrolet Chevelle and a 1938 Ford Custom Street Rod, that were never purchased. As a result of the fraudulent activity, the financial institutions incurred actual losses totaling approximately $1.4 million. Prince was ordered to report to prison on Sept. 27 to begin serving his sentence.
Sirius XM Launches New Program Sirius XM Radio announced the launch of Service Lane, its new program that provides a complimentary 2-month SiriusXM subscription to qualifying customers who have their satellite radio-equipped vehicles serviced at participating auto dealerships. Service Lane builds on the success of the SiriusXM Pre-Owned Vehicle program, which has surpassed 10,000 participating dealers across the country and includes
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Feds Take Funds in Forfeiture By Sheila McGrath
An Albuquerque, N.M., used-car dealer lost nearly $842,000 from his bank accounts after federal prosecutors filed a forfeiture action against him early this year. Prosecutors say he broke the law by structuring his bank deposits to avoid triggering Currency Transaction Reports, which banks are required to file whenever a transaction exceeds $10,000. But the dealer, Reza Ella, a naturalized U.S. citizen from Iran, says he has done nothing wrong and is being targeted because he is Iranian. CTRs are a tool designed to combat money laundering, drug dealing and terrorist activities. If an individual intentionally structures large transactions to avoid triggering the reports â€“ by breaking deposits into smaller amounts or depositing them in different banks on the same day â€“ federal rules provide for the seizure of the funds connected to the violation. Ella told the Albuquerque Journal that he started getting visits from federal agents around the time of the 9/11 attacks. Shortly thereafter, the Internal Revenue Service began questioning him about his business practices.
2851 St. Johns Parkway Sanford, FL 32772 407-328-7300 | Fax: 407-321-4466 www.sanfordautodealers.com General Manager Office Manager SmartAuction
Joe Killory, ext.112 Tara Napier, ext.135 Ed Murphy, ext.113
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In 2007, the FBI seized nearly $490,000 from his bank accounts, alleging he structured his withdrawals to evade reporting requirements. But nearly all of that money was returned to him in a settlement of the claim. Ella told the Journal that the only reason he settled in 2007 instead of going to trial was so he could get back to running Discount Auto Sales, the used-car dealership he has been operating for 23 years. And, he said, he thought settling would mean an end to his troubles. The U.S. Attorneyâ€™s Office in Albuquerque filed the most recent action in January, claiming that from Sept. 19, 2011 to July 3, 2012, Ella and his employees made 223 structured cash deposits totaling more than $1.7 million into three different Albuquerque banks. â€œOf the approximately 223 cash deposits, 37 were same day deposits at two banks totaling over $10,000 per day,â€? the complaint states. â€œBased on the Homeland Security Investigatorsâ€™ investigation, it does not appear that Discount Auto Sales, a small car dealership, generates sufficient vehicle sales to account for the cash deposits,â€? the complaint says. The complaint goes on to state Continued on page 16
1205 Northwest 27th Avenue Ocala, FL 34475 352-368-5900 | Fax: 352-368-2051 www.ocalaautodealers.com General Manager Office Manager
Richard Galway Dawn Hensley
Sale Day Information: Every Wednesday at 5pm. 500+ weekly consignments specializing in new car dealer trades.
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~ÛÝÛÛSeptember 2, 2013
USED CAR NEWS
Regulators – Continued from page 1
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Some creditors claim they cannot control actions by the dealers they work with. The regulators said they would not accept that defense. “Lenders should not assume they are only liable when they have
a way of getting compensated by the finance companies. Ficklin said creditors could avoid these problems by compensating dealers in other ways, such as a flat fee structure.
“Dealer compensation is not the problem.” Patrice Ficklin actual knowledge of discrimination by a particular dealer,” Ficklin said. They should also not assume that discrimination is limited to favoring whites over other groups. Coty Montag of the Justice Department used the example of Nara Bank, a lender that was sued for giving better rates to Asian borrowers. Ficklin said the problem arises from dealerships setting rates as
“Dealer compensation is not the problem,” she said. “Only one particular method of compensation out of several creates fair lending risk.” While many dealers are outside the CFPB’s direct scope, buy-here, pay-here dealers fall entirely in the Bureau’s oversight. As a result, Ficklin said the CFPB is also looking for possible discrimination by dealers who do their own financing.
Forfeiture – Continued from page 14 that “Ella had previously engaged in illegal structuring of cash transactions” in 2007. But the complaint does not mention that in the 2007 case, all but $12,000 of the seized money was returned to him. The U.S. Attorney’s office declined to comment on the case, but in a
statement, said that Ella’s national origin, ethnicity and religion played no role in the decisions to file the two actions. “Instead, the United States filed these actions based on bank records of Mr. Ella’s financial transactions and other information set forth in the civil complaints.”
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Â‡Ă›Ă?Ă›Ă›September 2, 2013
USED CAR NEWS
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Social Media Influences Buying Consumers are driving the changes in the car buying experience and automakers are adjusting their marketing strategies to influence the decision-making process. According to PwCâ€™s Autofacts Analyst Note for August, automakers are investing in new social media and digital campaigns to launch vehicles and engage the next generation of consumers. While automotive manufacturers may still need some convincing about the benefits of using readily available information from social media, engagement in these channels is driving change in the automotive industry. Three underlying consumer trends that are creating opportunities for innovation and driving change in automotive retail include: Millennials, defined as 18 to 30 year olds, make up 40 percent of the total available car buying population, contributing $200 billion to the US economy annually. The acceleration of social media usage, with 70 percent of consumers using social media to learn about other customer experiences when making car-buying decisions. Proliferation of connected mobile devices, such as smart phones, provides integration and connectivity for OEMs to develop cross-platform
apps to enhance the driving experience. Each factor is connected to the car buying experience, ultimately molding the strategies of OEMsâ€™ marketing programs. Automotive companies can leverage available data through social media channels in varying stages of the â€œsocial engagement journey,â€? by one-way communication, and also by utilizing the feedback from consumers to customize their marketing strategies. According to a recent PwC survey, consumers are more likely to recommend a product after following the brand on Twitter. Specifically, 69 percent of consumers share their negative experience with others through social media, and 40 percent of consumers value the option to shop across multiple channels, such as web, mobile and in-store. Automotive selling has transitioned from one-way sales to a twoway digital platform. Buyer expectations continue to drive toward flexibility and accessible purchasing options. OEMs should embrace the benefits of a strong social media presence and utilize the on-going dialogue of their brand and products to better understand consumer sentiment to adjust their marketing strategies and help drive revenue growth.
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September 2, 2013ÛÛÝÛÛ~
USED CAR NEWS
Car-Mart Revenues, Income Up America’s Car-Mart Inc. recently announced net income of $7.5 million on revenues of $123 million. Same store revenue increased 5.6 percent. “Even though our revenues were up, we feel like we could have done even better as we believe that increased funding to the subprime auto industry continues to have a negative effect on our business especially on the provision for credit losses line,” said America’s CarMart CEO William H. (“Hank”) Henderson. “We believe that many companies that are competing for our customers on the funding side are not focused on earning repeat business tied to customer success. We believe that by helping our customers successfully complete the terms of their contracts, which has always been and will always be our primary focus, we will continue to fulfill our vision of being the most respected buy-here-pay-here organization in the country.” Retail unit sales increased 9 percent to 10,643 from 9,753 for the prior year quarter with productivity increasing to 28.4 retail units sold per store per month from 28.3 for prior year quarter. Average retail sales price increased $252 to $9,836, or 2.6 per-
cent, from the prior year quarter and decreased $127, or 1.3 percent, from the prior quarter. Net charge-offs as a percent of average finance receivables were 6.2 percent, up from 5.9 percent for prior year quarter. Provision for credit losses was 24.3 percent of sales vs. 22 percent for prior year quarter. Selling, general and administrative expenses were 18 percent of sales vs. 18.2 percent for prior year quarter. The chain opened two new dealerships during the quarter. The dealership count now stands at 126. The active accounts base is now over 59,000. Debt to equity is 47.3 percent and debt to finance receivables is 26.2 percent. Allowance for credit losses stood at 21.5 percent of finance receivables at July 31. “Our provision for credit losses is certainly higher than we would like but our expected cash on cash returns continue to be very attractive even with the higher credit loss amounts,” said Jeff Williams, chief financial officer of America’s CarMart. Contract lengths extended to an average of 29.5 months up from 28.1 at this time last year.
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8/26/13 4:53 PM
Ă›Ă?Ă›September 2, 2013
USED CAR NEWS
Licensing Ranks Worse Than Taxes
Chase is Your Source for Quality, Value and Selection
Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, has released the results from the second annual Thumbtack.com Small Business Survey. The study, drawing upon data from over 7,000 small business owners, provides new insights into state and local business environments across the nation. Professional licensing requirements were 30 percent more important than taxes in determining a stateâ€™s overall business-friendliness, confirming the findings from last yearâ€™s study. Furthermore, this yearâ€™s research revealed that 40 percent of U.S. small businesses are subject to licensing regulations by
When youâ€™re searching for a broad selection of clean, pre-owned vehicles your customers want, when and where you want them, look to an industry leader. Look to Chase. t A wide variety of vehicles â€” from economy to luxury t Convenient online and in-lane vehicle availability with on-site Chase remarketers Choose Chase on: "%&4"DPNÂ…07&DPN
The tradename â€œSubaru Motors Financeâ€? and the Subaru logo are owned/licensed by Subaru of America, Inc. and are licensed to Chase Bank USA, N.A. (â€?Chase USAâ€?) and JPMorgan Chase Bank, N.A. (â€œChaseâ€?). Retail/Loan accounts are owned by either Chase or Chase USA and lease accounts are owned by Chase.
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.
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multiple jurisdictions or levels of government. Utah was the top rated state, and Austin, Texas, was the top rated city. At the other end of the spectrum, Rhode Island and Newark, N.J., were the lowest rated state and city. The ease of obtaining health insurance was an important factor for many businesses. One-third of small business owners rated obtaining and keeping health insurance as â€œVery Difficult,â€? versus only 6 percent who rated it â€œVery Easy.â€? Small businesses were relatively unconcerned with tax rates. More than half of small business owners felt they pay about the right share of taxes.
More Consumers Approved for Credit Swapalease.com reports increases this year for customer credit approval on lease transactions through the end of July. According to website data, total year-to-date credit approvals were 75.6 percent through July, up from 73.9 percent through the end of June and the highest cumulative average recorded so far this year. Historical data show that 70 percent approval is considered healthy for the online car lease marketplace,
which matches a person looking to exit a vehicle with a car shopper looking to take over a short-term lease. Approvals have continually increased since 2011, and the current 75.6 percent approval rate compares to 61.6 percent year-todate approvals through July 2012. In July approvals, 80.6 percent of Swapalease transactions were approved by the incoming bank. Thatâ€™s the second best month this year, behind only Mayâ€™s 88 percent.
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8/26/13 3:54 PM
September 2, 2013ÛÛÝÛÛ
USED CAR NEWS
Feds Unveil Recall Database
“ We Don’t Just Build Solutions, We Build Relationships.” — Paul Rosenthal, Vice President of Sales – Automotive Solutions Group
DETROIT (AP) – Starting next summer, U.S. consumers will be able to search a giant database to find out if their cars or motorcycles have been recalled and if the vehicles have been fixed. Only about 70 percent of recalled vehicles are taken to dealers for repairs, leaving thousands of cars on the road with potentially critical safety flaws. The database will let car owners search for free to see if they missed a recall notice, and used car shoppers will be able to see if all recall work has been done on cars they want to buy. The National Highway Traffic Safety Administration, the agency that regulates auto safety, said that it would require major auto and motorcycle makers to give customers online access to data so it can be searched by vehicle identification number. The searches will give people “peace of mind knowing that the vehicle they own, or that they are thinking of buying, is safe,’’ NHTSA Administrator David Strickland said in a statement. Currently, automakers search state registration data to find owners of vehicles that are being recalled and notify them by mail. Some automakers, such as Ford Motor Co., already offer the database searches. Those that don’t will have to make the data available by Aug. 14 of next year, NHTSA said in a statement. People also will be able to access the data through NHTSA’s website, www.safercar.gov, which will have secure connections to the manufacturers’ systems. Customers will be able to go to NHTSA’s website and key in a vehicle identification number. NHTSA plans to develop an app to allow for searches on mobile devices, the agency said. Currently, people can search
NHTSA’s database by company, model and model year to find out if cars have been recalled. But they can’t find out if the repairs have been done on a particular vehicle. Manufacturers will be required to update their recall data at least once per week, NHTSA said. NHTSA said its rule on the databases also requires manufacturers to tell the agency about each car’s propulsion system and safety technologies. The agency says this will help it spot problems with the systems. Also under the rule, auto and motorcycle makers will have to notify owners about a recall within 60 days of telling NHTSA of the recall, the agency said. In other recall news, Hyundai is recalling 239,000 model year 200610 Sonata vehicles manufactured March 1, 2005 through Jan. 21, 2010; and model year 2006-11 Azera vehicles manufactured Sept. 27, 2005 through Nov. 22, 2010 originally sold in, or currently registered in, Connecticut, Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin and the District of Columbia. Road salt and water can enter portions of the rear cross member, leading to corrosion of the cross member steel. This may lead to detachment of one of the rear control arms. Control arm separation may suddenly change the rear wheel alignment, affecting the handling of the vehicle, increasing the risk of a crash. Hyundai will notify owners, and dealers will repair or replace the cross member assembly. The recall is expected to begin by the end of September. Hyundai’s recall number is 113.
Solutions Built on Relationships. At Spireon, our customers come first. Which might explain why Paul Rosenthal, Vice President of Sales for Spireon’s Automotive Solutions Group, took a personal interest in helping Jim and Renee at Preferred Funding. “GoldStar GPS has been helping us win for over 5 years. In my business, people make the difference and Paul and the GoldStar team are always there when I need them.” – Jim Willis, President of Preferred Funding. With over 25 years industry experience, Paul has continued to build long-standing relationships with automotive dealers and lenders nationwide by setting the Gold Standard in service and quality. More automotive lenders and dealers have chosen GoldStar GPS over any other tracking system. We keep working hard to earn your trust and your business, with innovative technology that meets your evolving needs and through giving you the support and service you deserve.
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8/26/13 4:10 PM
ÛÝÛSeptember 2, 2013
USED CAR NEWS
Auto Manufacturers Fail to Satisfy Car Shoppers Automakers are not pleasing customers as much as they did a year ago, although pent-up demand is pushing strong sales, according to a report released by the American Customer Satisfaction Index (ACSI). Customer satisfaction with automobiles and light vehicles declines to an ACSI benchmark of 83 on a 0 to 100 scale, following back-to-back years of improvement. The slide in customer satisfaction for autos comes at a time when sales of both domestic and import brands are surging. The industry’s sales growth is most likely due to pent-up demand, along with inexpensive financing and the return of dealer incentives. The ACSI’s 2013 Auto Industry report covers customer satisfaction with 20 nameplates—both foreign and domestic—which comprise some of the most popular brands bought by U.S. consumers. The erosion in customer satisfaction for autos impacts domestics as well as imports. Overall, only 26 percent of the individual nameplates improve, while 53 percent decline and 21 percent remain unchanged. Among Asian vehicles, three of nine show decreases. Likewise, two
of three European brands drop. On the domestic side, five of eight nameplates are down compared to a year ago. Although the drop in customer satisfaction affects most automakers, Detroit is losing ground to imports. The customer satisfaction gap relative to imports is now the widest in five years. As recently as 2010, Asian and domestic carmakers were tied for customer satisfaction, but the Asian group has reestablished a significant advantage. Of the eight nameplates above the industry average, only two are domestic (Cadillac and GMC), while the three bottom entries are all domestic (Jeep, Dodge, and Chevrolet). While domestic automakers reported strong sales for July, the aggregate of the Big Three’s market share has shrunk slightly since 2011 and remains below pre-recession levels. As in previous years, luxury brands have the upper hand when it comes to pleasing customers in 2013. Mercedes-Benz captures the industry lead, jumping to an ACSI benchmark of 88. Toyota’s Lexus brand slips but retains second place at 87, followed closely by three cars at 86—Subaru,
Toyota, and an improved Honda. GMC rises to 85, tying luxury plate Cadillac. Volkswagen dips slightly, but still exceeds the industry average at 84. Honda’s upscale brand Acura enters the ACSI at 83, equaling the industry average, but a far cry from Toyota’s upscale Lexus nameplate. The Ford nameplate ties Acura with an unchanged score of 83. Several vehicles cluster a point lower at 82. Kia and Mazda are flat compared with the prior year,
while Buick, BMW, and Hyundai show declines. Both GM and Chrysler show mixed results in 2013, with two of three brands suffering downturns in customer satisfaction. For GM, both Buick and Chevrolet drop compared to the prior year. The loss for Chevrolet places it in a tie for last with Chrysler’s Dodge, down to 79. Chrysler’s Jeep retreats as well, down to 80, but the Chrysler nameplate rebounds to 83.
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8/26/13 4:12 PM
September 2, 2013ÛÛÝÛÛ
USED CAR NEWS
Auto Expenses Vary by State Where a consumer lives can greatly affect their auto expenses, a pair of new studies show. Georgia is the most expensive state to operate a motor vehicle and Oregon is the cheapest, according to a new Bankrate.com report. Bankrate factored in the costs of gasoline, insurance, repairs, taxes and fees. In Georgia, a typical driver spends $4,233 per year to operate his or her vehicle. That is almost double the cost in Oregon ($2,204). The national average for the cost of operating a vehicle was $3,201. Georgians’ long commutes lead to above-average gasoline costs and insurance rates. And Georgia has the highest state automobile taxes and fees in the nation. Oregonians benefit from the absence of a state sales tax as well as relatively low car insurance costs. Plus, the typical Beaver State resident drives 16 percent fewer miles than the national average. California ($3,966), Wyoming ($3,938), Rhode Island ($3,913) and Nevada ($3,886) round out the five most expensive states. Alaska ($2,227), South Dakota ($2,343), Montana ($2,660) and Indiana ($2,698) join Oregon among
the five cheapest states. Meanwhile, a new GoBankingRates.com study finds the West Coast boasting lower auto loan rates overall, while the North East ended up with the majority of states with rates of 4.01 percent and higher. Although the average interest rate for a new vehicle is 3.65 percent APR nationwide, state averages varied from a low of 3.03 percent in Michigan to a high of 5.11 percent in Rhode Island. The states with the lowest average auto loan rates ranked as follows: Michigan, 3.03 percent; Oregon,3.04 percent; Alaska, 3.04 percent; New Hampshire, 3.08 percent; South Carolina, 3.15 percent; Vermont, 3.17 percent; Oklahoma, 3.23 percent; Utah, 3.28 percent; Washington, 3.29 percent; and North Carolina, 3.31 percent. The states with the worst average auto loan rates were: Rhode Island, Connecticut, New Jersey, Massachusetts, Louisiana, West Virginia, Delaware, Mississippi, Pennsylvania and Virginia. The best auto loan rates in the country come from Californiabased Burbank City Federal Credit Union and Oregon-based First Community Credit Union, which offer a 0.99 percent APR base rate for 36-month terms.
8/26/13 12:51 PM
USED CAR NEWS
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GE Capital Fleet Services announced a major milestone with the sale of its 100,000th customer vehicle through its Remarketing by GE program. Launched in 2007, Remarketing by GE has enabled more than 300 customers nationwide – including credit unions, independent finance companies, banks, and corporations with owned fleets – to outsource the disposition of automotive assets to GE Capital Fleet Services’ team of professional automotive remarketers. The milestone vehicle was sold at Manheim Chicago and the seller was the Chicago-based Turner Acceptance Corporation, a longtime Remarketing by GE customer.
“GE’s expertise in vehicle asset disposition has allowed us to remain focused on our core business: lending to and serving our customers,” said Jonathon Levin, president of Turner Acceptance Corp. “We truly appreciate the relationship we have with GE Capital Fleet Services, both locally and across the country.” GE Capital Fleet Services also announced the launch of an expanded Remarketing by GE website for customers. The website content includes auction sale calendars, information on promotional events, customer testimonials, and a direct link to GE Capital Fleet Services’ YouTube channel.
RouteOne Enhances ID Verification RouteOne LLC and National Credit Center announced that they will integrate to offer identity verification and authentication services to help auto dealers streamline and improve their compliance efforts. These services enhance RouteOne’s current compliance offering, and are delivered through its IDOne product. Dealers using the service will be able to verify applicant information across multiple data sources simul-
taneously with one mouse-click, including an Office of Foreign Assets Control check. If an alert is identified, dealers can then quickly administer an “out-ofwallet” risk-based quiz conveniently from the same system as another method to confirm identity. In addition to verification, IDOne provides an audit trail to ensure compliance, and works seamlessly with RouteOne’s credit application system to eliminate duplicate data entry and the potential for error.
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A U T O
BANK IT. Mailed to 70,000 New & Used Car Dealers
September 15, 2008
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October 1, 2012
Dealers Work Hard To Keep Customers in Cars By David Piestrzynski
Falling wholesale prices make charge-offs more significant for some vehicles. SUVs sold at premium values, before fuel prices began to impact their values, haunt many dealers’ portfolios. Meanwhile, more customers fall behind as the cost of everything from fuel to food rises. “In a case like this, dealers may be sometimes more inclined to work harder with the customer,” said Rick Potter, president, CAR Financial Services. “If you bought a vehicle for $10,000 six months ago, and it’s depreciated, the loss is definitely greater when you take back that vehicle.” While many dealers agree the higher charges should be avoided, some feel wholesale values should never factor into a charge-off. “The decision to repossess a car at CarBiz is simply because we
September 18, 2006
National Chain DriveTime Sells Out to PE Firm
Photo by Jeffrey Kowalsky
A LITTLE BIT COUNTRY, A LITTLE BIT ROCK & ROLL: Outgoing NAAA President John Rea enjoys a harmonious relationship with incoming President Bob McConkey Jr. See page 5 for their full interview.
Association Calls Auto Auction Week a Success
The National Auto Auction Association’s Auction Week promotion was a success. The event took place the week of Aug. 25, commemorating the NAAA’s founding on Aug. 28, 1948. A couple of auctions managed to get their governors to make statewide proclamations. Both Oklahoma Gov. Brad Henry and Mississippi Gov. Haley Barbour declared auto auction week in their respective states. NAAA President John Rea, owner of Rea Brothers Mid-South Auto Auction in Pearl, Miss., said he was pleased when he received Barbour’s proclamation. He was also excited by the industry’s efforts around National Auto Auction Week. “It’s just great that we’re all doing that,” Rea said. NAAA President-elect Bob McConkey Jr.., owner of DAA Northwest in Spokane, Wash., was impressed by the local government response and by the response from customers. “It’s been received very well,” McConkey said. “I’ve been happy to see the industry get behind this as well as they did.”
One of the nation’s largest buy-here, pay-here chains is selling itself to a private equity group. DriveTime Automotive Group, Inc., and DriveTime Acceptance Corp and DriveTime Credit Co., entered an agreement on Sept. 14 to sell DriveTime in separate transactions. According to a filing with the Security and Exchange Commission, a new entity owned by third-party investors will purchase all of the outstanding stock of DT Acceptance Corp. and DriveTime Automotive Group. This entity will acquire the companies’ used-vehicle dealership operations, including 91 owned and leased stores and 16 reconditioning and other facilities. Phoenix-based DriveTime will sell its finance receivable portfolio, consisting of vehicle-related installment sales contracts, certificates
IN THIS ISSUE • Couple weds at used car store during classic car event. – Page 3
• America’s Car-Mart reports higher revenue. – Page 16
• Find out all the details behind the new look of Used Car News. – Page 4
• A Georgia dealer is in trouble with the state and its floor planner. – Page 38
representing its residual interests in securitizations of finance receivables, and certain other assets to Santander Consumer USA Inc. Santander has purchased a number of other subprime auto portfolios in the past few years, including CitiFinancial Auto. Shareholders of DriveTime Automotive Group and DriveTime Acceptance Corp., will receive “aggregate proceeds of approximately $700 million, while the purchasers will assume, refinance or repay certain items of existing indebtedness of DriveTime,” according to the filing. The transactions are subjected to closing conditions “including the receipt of required regulatory approvals and, with respect to the obligations of the purchasers to consummate (the deal), the successful completion of an offer to repurchase DriveTime’s $200 million publicly traded senior notes.” For several years, DriveTime was a publicly traded company. The chain was called Ugly Duckling for part of that time. The company’s founders took the chain private in 2002. DriveTime is one of the large participants in the buy-here, pay-here business being looked at by the Consumer Financial Protection Bureau as the regulator evaluates the industry.
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Mailed This Issue: 75,000 New And Used Car Dealers
these days face three kinds of government audits. The first is a federal income tax audit by the IRS. “I don’t see a significant amount of activity on retail or buy-here, pay-here dealers so far,” Shilson said. “There is some, but it’s not
intense. “Certainly no more so than any other industry. A certain percentage of people in any industry are going to get audited.” The IRS has recently changed the way it conducts audits, Shilson said. The
Automotive Web sites use sports programs to promote themselves.
By Jeffrey Bellant Used Car News Staff Writer
A Georgia used-car dealer is still going strong after nearly six decades. PAGE 45
City officials are blocking a dealer’s plans to expand his property. PAGE 58
Photo by Jeff Kowalsky
GOING TO DISNEY WORLD: Gregg Kobel, left, will take the reins of the National Auto Auction Association from Tom Caruso. Interviews with auction executives begin on page 5.
Auction Leaders Gather in Orlando
BLOOMING: Outgoing NAAA President Charlotte Pyle, right, prepares to hand off the reins of the association to incoming president Paul Lips.
By Jeffrey Bellant Used Car News Staff Writer
Auction Staff Attend Disney Institute
The National Auto Auction Association meets for its annual convention this month in Orlando. For outgoing president Charlotte Pyle, there will always be an extra connection with this city. Pyle worked with The Disney Institute to create a training program for auction staff. “We were able to reach people at auctions who don’t get a chance to come to the conventions,” she said. “They’re the ones who help us with the day-to-day work. “They’re extremely critical to our business. This gave them leadership skills. On the first day, they were really nervous spending time with auction general managers and owners. They grew so much in that two-day span.” Interviews with the incoming and outgoing presidents on page 8
A 2006 Pontiac G6 with 19,888 miles wholesales for $12,455.
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service now scans returns and does a comparative analysis between current and previous returns going back two or three years. They are looking for big changes in numbers, Shilson said. Continued on page 60
Copart Pulls Plug on Wholesale Experiment
The 58th annual National Auto Auction Association Convention will feature appearances by eight Heisman Trophy winners, with a special reception broadcast live on NIADA.TV. The convention, scheduled Sept. 26 through Oct. 1 at the Grande Lakes Orlando Resort and Spa in Florida, will draw industry leaders, vendors, vehicle manufacturers, remarketers and auction owners along with their employees. On Wednesday, the grand opening of the exhibit hall will feature a special reception with eight winners of college football’s most prestigious prize. Heisman Trophy winners Pete Dawkins, Joe Bellino, Gary Beban, Johnny Rodgers, Gino Toretta, Richard Kazmaier, Tony
Dorsett and Billy Sims will have a meet-and-greet reception with the sponsors and exhibitors. Tom Caruso will present each exhibitor and sponsor with autographed items from the former football stars. The National Independent Automobile Dealers Association will broadcast live on its Internet channel NIADA.TV from 6 p.m. to 7 p.m. Wednesday night. About 1,100 people are expected to attend the auction industry’s biggest event, and more than 60 select exhibitors will display their products and technology in the convention’s exhibit hall. Heisman winner Dawkins, a graduate of West Point and former commander of the 3rd Brigade of the 101st Airborne Division, will also speak at the convention during a special luncheon Friday, sponsored by DaimlerChrysler.
NAAA members will have various meetings throughout the event, while there will also be time for several leisure activities. A golf tournament is scheduled at the Ritz-Carlton Golf Club, a Greg Norman-designed course at the Grande Lakes Orlando. A pool-side tennis tournament will also be held at the resort, along with several receptions and a free breakfast buffet. A fund-raiser for the NAAA Scholastic Foundation will feature a drawing for a 2007 Pontiac Solstice. Ford Motor Co. will also host an awards reception and banquet. The event will culminate with the president’s reception, ushering in the NAAA’s new leadership for the 20062007 year. The reception will include a special fireworks display.
Copart is dropping its wholesale auto auctions to concentrate on its salvage business. Spokeswoman Marla Pugh said the company has decided to focus its efforts on the salvage side of the auto auction business. “We have been very strong on the salvage side of the business,” she said. “We’ve been strong on the wholesale side, too. But the salvage side is much stronger.” In an e-mail statement Sept. 7, Pugh said the launch of the company’s VB2 technology has been a “tremendous success,” which led to the expansion into the wholesale vehicle market. But the wholesale business has not kept up with the salvage business. “While both sides of VB2 have been growing,” she said, “VB2’s phenomenal success in the salvage industry has overshadowed our growth in the wholesale dealer auction industry. “As a result, we have decided to focus all our efforts on the Copart side of VB2 and no longer support VB2’s non-salvage efforts.” Pugh said this change will not affect the use of its VB2 technology on the salvage side of the business. Copart has 122 salvage auctions in the United States and Canada, with nine added in the past calendar year, Pugh said. “We will continue to add more,” she said. Pugh said the company has been in communication with its wholesale clients and promises a slow pullout of the wholesale business.
“We are working with our business partners on the wholesale side of VB2 to make a smooth transition for everyone concerned,” she said, “and we look forward to further success in the salvage industry.” Copart had expanded in the wholesale business after experiencing substantial growth in its existing business following the launching of its VB2 technology, Pugh said. Auction industry veterans interviewed said Copart’s decision makes sense. “It doesn’t surprise me,” said Tony Long, general manager of Airport Auto Auction Inc. in Alcoa, Tenn. Long said Copart approached his auction early on to be a part of the wholesale program, but he passed. He didn’t think Copart’s foray into the general wholesale arena would be long lived. “They are excellent business people and very shrewd,” Long said. For that reason, Copart wouldn’t continue in a segment where it knew it would have limited success, he said. Long said Copart’s strengths were always in salvage, and technology with VB2 – an assessment echoed by Jim Elzholz, general manager of North Bay Auto Auction in Fairfield, Calif. “I think it’s a good move by them,” Elzholz said. “Their business is the salvage business.” Jim Hallett, president of Columbia Fair Auto Auction, said he didn’t know the details of the move, but said the effect is clear. “It just tells me they don’t want to be in the wholesale car business,” he said.
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States Seeking More Money Audit Dealers By Jim Stickford agents are closely examining Used Car News Staff Writer the books and records of dealers and dealerships to Many state governments find money there. are seeking additional revKen Shilson is an accountenue and they are looking at ant and the founder of the car dealers as a good place to National Alliance of Buystart. Here, Pay-Here Dealers As a result, government (NABD). He said dealers
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cannot find a way for our customer to be successful,” said Carl Ritter, CEO of CarBiz Inc., one of the nation’s largest buyhere, pay-here chains. “Market value of vehicles do not enter into our decision process. It’s either a good loan or not.” CarBiz offers several tiers of financing at its stores, including buy-here, pay-here deals involving vehicles in excess of $20,000. Ritter said many of these deals involve trucks and SUVs. “We have seen the value of product, especially trucks, drop and increase our losses on certain loans, but we continue to follow our rigorous policies with regard to portfolio management,” he said. Robert Mulkey, president of Regal Car Sales and Credit in Tulsa, Okla., also said repossession is the last resort. “Keeping people in the car should always be a dealer’s policy,” he said. Mulkey said large pick-up trucks have remained a consistent seller for his stores despite higher gas prices. He continues business as usual despite the changing environment. “You can’t say ‘this guy’s in a two-year old Expedition, so we’ll lower the payment’,” Mulkey said. “Eventually, you’ll be giving cars away. Going into a deal thinking that way is not a good thing.” Fast-changing wholesale prices could also affect a dealer’s decision to resell a repossession. Potter said sometimes his company will allow dealers to remarket vehicles if they have maintained value after a repossession. For example, if a dealer sells a car for $10,000, and the customer defaults after only $3,000 is paid off, Potter said a dealer may be better off creating another $8,000 deal, if the value is still there.
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nomic headwinds remain strong. Incentives would help, of course, but those remain low for most models. Automakers spent an average of $2,316 on vehicle incentives in August, said Edmunds.com, down less than three percent from July. A potential incentive war between luxury automakers does seem brewing. Lexus upped its average incentive spending 41 percent to $2,667 per vehicle in August, the biggest month-tomonth increase by any major automotive brand, according to Edmunds.com. BMW’s incentive spending ticked up four percent to $3,664 per vehicle from July. Mercedes-Benz’s incentive spending, meanwhile, fell nine percent to $3,808 per vehicle. But the company is offering $4,000 cash incentives to conquest other luxury car owners for its M-Class and E-Class vehicles, which also happen to be in the same segments as Lexus’ two strongest products: the RX and ES. Worries about new-car sales seem unnecessary as they defied economic concerns in August coming in basically flat with July. But that was below earlier expectations. Several analysts have slashed their sales forecasts for the year. “The auto industry is a mixed bag this year, due to economic uncertainty; sales have improved compared to last year, but nowhere near the potential we had ex p e c t e d ,” said TrueCar.com’s Jesse Toprak.
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ADESA Announces Return to Wall Street By Jeffrey Bellant
Photo by Jeffrey Alan Kowalsky A COUPLE OF CLASSICS: Incoming NAAA president Charlotte Pyle, left, and outgoing president JayCadigan check out the inventory at Birmingham Motors Ltd, a highline used-car store in Birmingham, Mich., during their recent visit to the Detroit area.
Auction Execs Gather for Annual Confab
When Charlotte Pyle takes the gavel in Chicago, she’ll become only the third woman to serve as president of the National Auto Auction Association and the first in more than a decade. The other two served back-to-back – Ruth Hart-Stephens in 1993-94 and Alexis Jacobs in 1994-95. “It’s very humbling,” Pyle said. She admits to feeling nervous, but not because she’s a woman. Pyle is more concerned about her ability to carry on the NAAA’s tradition of strong leadership for the industry. Outgoing president Jay Cadigan said Pyle has no reason for concern. “She does a fabulous job in everything she does,” Cadigan said. “She’s going to do just fine.” While Pyle’s inauguration is the convention’s conclusion, this is Cadigan’s show. It should be a good one with very high attendance, he said. “The convention really is the place where our industry meets every year,” Cadigan said. “And I look forward to it every year.” Read their interviews on pages 8 and 9.
IN THIS ISSUE • A dealer overcomes challenges, including cancer. – Page 3
• Small cars drive big price increases in the used market. – Page 10
• A new director takes charge at the Florida IADA – Page 5
• Alleged immaturity could bring action against store. – Page 26
ADESA is going public for the third time. KAR Holdings Inc., the auction chain’s parent company, filed a registration statement with the Securities and Exchange Commission for a p r o posed initial public offering of its Jim c o m Hallett m o n stock. KAR intends to apply to list its common stock on the New York Stock Exchange. The IPO’s timing depends upon several factors, including market conditions, a company release reported. Goldman, Sachs & Co. will act as an underwriter of the proposed offering. KAR owns ADESA, Automotive Finance Corp., Insurance Auto Auctions Inc. and other related ventures.
The company realigned its management recently. Jim Hallett has been appointed chief executive officer, replacing Brian Clingen who will remain as chairman of the board of KAR Holdings. Tom Caruso, ADESA’s current chief operating officer, will assume Hallett’s previous role as chief executive officer and president of ADESA. Jim Hallett said Caruso is a great choice to replace him as CEO. “Tom has been an integral part of the success ADESA has achieved both internally with employees and externally with customers,” Hallett said. “Tom Caruso’s character, reputation and tremendous work ethic will enable him to very effectively transition to this new leadership role.” Caruso returned the compliment. “I am very excited about my new position at ADESA,” he said. “I am blessed to be able to work with the great team that Jim Hallett has assembled at the corporate office and in the field. In my new role, I will focus on providing leadership to all of the employees of ADESA while ensuring we provide exceptional service to all of our customers.” Caruso said his immediate attention is on preparing his move to Indiana from Boston, which will be a big change. “That has been the number one question everyone is asking me, because I am such a Boston guy,”
he said. Caruso said his time spent in his previous position – and his involvement with the National Auto Auction Association – will help him better perform his new job. “I have been fortunate that over the last nine years as a regional vice president, then COO of ADESA, I have been responsible for managing the day-to-day operations at our auctions and also have worked with all of the ADESA and KAR Holding business units. In addition I had the honor of representing our industry as NAAA president in 2006,” he said. Clingen said Hallett’s appointment as CEO is also well-deserved. “These moves reflect the tremendous accomplishments that Jim and the KAR Holdings leadership team have achieved in what has been an extremely challenging environment,” Clingen said. “The board of directors and I look forward to working with Jim in his new role as he leads the continued growth and success of KAR Holdings.” Hallett said under his leadership the company will build on the foundation the leadership has established. “I’m honored to follow Brian as the next CEO of KAR Holdings and am excited to assume this new role,” Hallett said. “Over the last two-and-half years since the formation of KAR Holdings and its family of companies, I believe we have grown into a cohesive company with a reputation for outstanding service to all of its customers.”
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Lithia Launches Superstore Chain
By Ted Craig Used Car News Staff Writer
Dealers turn to public auction as a place to buy and sell cars. PAGE 32
State associations in the Northwest name their top operators. PAGE 50
Legislation supported by the Georgia IADA cracks down on curbstoning. PAGE 58
Photo by Robyn Martin-Farej
TAKING THE WHEEL: John Rea, right, takes over as National Auto Auction Association president from Gregg Kobel, left, at the group’s annual convention. The convention takes place Sept. 19-22 in Kobel’s hometown of Chicago. Auction executive interviews begin on page 5.
Lithia Motors Inc. is in the early stages of launching this decade’s first new national used-car superstore chain. The concept seemed dead when AutoNation Inc. announced it was closing all 23 of its superstores in 1999. CarMax Inc’s tremendous success since then, however, shows the strategy can work with proper execution. Lithia made its first move toward following CarMax’s game plan when it opened the first L2 Auto store in Loveland, Colo. The store, a prototype for future facilities, offers 225 units for sale in a non-traditional retail environment. Kiosks for searching the inventory fill the wide-open showroom. “It has more of an Internet cafe feel,” said Chris Holzshu, L2’s chief financial officer. A consumer works with one person through the whole process rather than being passed off to a finance manager at the end. All sales are no-haggle, just like CarMax.
Holzshu said much of the sales process, such as finding inventory and obtaining financing, can be done before a consumer ever sets foot on the lot. The l2.com Web site is a major component of the strategy. It resembles a general retail site more than a traditional dealership site. An attractive young woman welcomes visitors to the site in a short video. The entire purchase can take less than 30 minutes if the consumer’s done enough prep work online, Holzshu said. Having a strong online presence expands L2’s presence, he said. Having a wide reach is important in a state like Colorado. L2 resembles CarMax in another way by offering to buy vehicles off the street without a sale. The next two L2 stores are going up in Amarillo and Lubbock, Texas. L2 is growing in the parts of the United States CarMax where has left a void, said George Hoffer, a professor of economics at Virginia Continued on page 60
America’s Car-Mart Unveils Map for Future A 2004 Chrysler Crossfire with 30,457 miles wholesales for $14,165.
Key to Success: Improving Collections By David Piestrzynski Used Car News Staff Writer
IN THIS ISSUE • Economic recovery depends on improved employment outlook. – Page 3
• Interviews with the incoming and outgoing NAAA presidents. – Page 8
• Auction chain expands by adding sale in Tennessee. – Page 5
• Check out the Top Auction Guide. – Insert
America’s Car-Mart executives are trying to convince Wall Street that declining revenue is a good thing. The buy-here, pay-here chain recently announced revenues for the quarter were down 5.6 percent from a year ago. Car-Mart earned $58.7 million for the quarter ended July 31, down from $62.6 million in 2006. During a recent conference call, the company’s executives said the decline was a result of its emphasis on improved underwriting and collections. The company implemented this strat-
egy during the previous fiscal year to avoid being crushed by bad debt. “It’s important to understand our portfolio,” said Skip Falgout, Car-Mart’s CEO. “It’s not a direct correlation with traditional credit markets.” The more cautious strategy produces lower revenues and fewer sales. In the last quarter, Car-Mart retailed 5,847 units, down from 6,867 a year ago. “Our goal is to increase quality sales, and not just overall sales numbers,” said Hank Henderson, Car-Mart’s president. Henderson said sales will rise eventually. There are signs the new tack is working. For the quarter, Car-Mart reduced its accounts 30 days past to 4.1 percent, down from 5.6 percent a year ago.
Veteran Exec Takes Top Post By David Piestrzynski Used Car News Staff Writer
America’s Car-Mart President William “Hank” Henderson is moving up to CEO of the publicly-traded buyhere, payh e r e chain. H e n derson is a 21-year veteran of t h e Arkansasb a s e d Hank company. Henderson He takes over from T.J. “Skip” Falgout. Henderson has been CarMart’s president since 2002. Continued on page 60 He was chief operating offi-
on 65 Years
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New-car sales should rise this fall thanks to increased fleet sales, even as manufacturers hold the line on incentives. Declining consumer confidence, a struggling housing market and a stagnant unemployment recovery should hold back retail sales for the re s t o f t h e ye a r, s a i d Edmunds.com chief economist Lacey Plache. Meanwhile, many companies are sitting on piles of cash while interest rates remain at historic lows. They can refresh their fleets now at a low cost and get good prices for the vehicles they rotate out. Full-size pickups coming out of commercial fleet use continued to command record high prices in August, according to data from Manheim. Prices for off-fleet midsize cars were lower, but they’re coming off historic highs in June. E d m u n d s .c o m s e n i o r analyst Jessica Caldwell said retail sales could perk up due to lower gas prices, but eco-
Manufacturers Turn to Fleets, Incentives
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cer prior to that and has served in numerous roles within the organization. His tenure as CEO will begin at the company’s annual investors meeting in Bentonville, Ark., on Oct. 16. Henderson will also retain his title as Car-Mart president. “Hank’s been with CarMart all his professional life and there’s no one that understands the nuances of our business any better,” Falgout said. Henderson takes over the company’s plan to increase the quality of its existing business, rather than focus on expansion. One of the reason’s many feel Henderson is the right man to continue the internal strategy is the relationship he has with every level of Car-Mart’s management. A solid knowledge of the
company’s infrastructure will be necessary, as the company plans to improve its IT department, sales training, associate development and purchasing department. “On behalf of the board of directors, I want to thank Skip for his efforts and contributions to the growth and success of Car-Mart, helping to guide the company to become America’s largest publicly traded buy-here, pay-here company,” Henderson said in a release. “I look forward to his future contributions, support and counsel as we continue to move forward.” But the company says it will continue with its plan of tightening its underwriting standards before moving forward with any new locations. Continued on page 60
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TrueCar has hired Alison Sternberg as vice president of investor relations and administration. Sternberg will manage investor relations and serve as the conduit for all investor communication with TrueCar in the newly created position. She will also develop the company’s administrative functions, working closely with TrueCar’s administrative support team, as well as handle special projects. Sternberg joins TrueCar from Modular Wind Energy (a venturebacked clean technology company), where she was chief of staff to the CEO. Prior to that, she was the business unit manager for the Los Angeles private wealth business at Goldman Sachs after working two years for an executive search firm Sternberg also worked at Ares Management across a range of human capital, investor relations and administrative functions. “TrueCar is revolutionizing automotive retail to improve the carbuying experience for buyers and sellers,” Sternberg said. “Investors have already taken notice of the company, and I’m looking forward to the opportunity to work with TrueCar’s current and future investors to continue to keep the compa-
ny moving forward.” She spent nine years at Goldman Sachs in New York fulfilling a variety of management and strategy roles in investment banking and sales trading. Sternberg has a B.A. in English from Barnard College/Columbia University in New York.
company’s technology infrastructure, designing new Web and mobile applications to support clients, and leading innovation in the auto transport industry. With more than 11 years of IT management experience, Clayton’s background in information security, Web design, database design and networking provides him with the skills needed in his new position. Clayton most recently served as the director for information services in a Nashville area school district. Before that, he served as the chief technology officer at AmeriFlex, a financial services/health benefits administrator. Clayton is a native of western Kentucky, and graduated from Murray State University with a bachelor’s degree in telecommunications systems management.
Global Lending Services LLC has appointed Michael T. Miller as chief information officer. Miller has spent more than 20 years serving in C-level positions for both public and private organizations. He has worked with some of the industry’s leading companies, including serving as chief credit officer and chief operating officer for AmeriCredit Corp., where he led the development of analytics, technology, marketing and operations. Most recently, Miller served as the :=G9Û8hhgaflkÛJ]fagjÛJlY^^ Û The Consumer Financial Prochief strategy and technology officer for Sixth Gear Inc., leading the tech- tection Bureau recently announced nology platform that launched the the addition of several members to senior positions within the Bureau, business including Laurie Maggiano as the program manager for servicing and KjYfkhgjl]jÛEYe]kÛK][`Û;aj][lgj securitization markets in the DiviMetroGistics announced the hir- sion of Research, Markets, and Reging of Craig Clayton as director of ulations. Prior to joining the Bureau, Magtechnology. Clayton will be responsible for continuing to expand the giano worked at the U.S. Department
of the Treasury, where she served as the Director of Policy in the Office of Homeownership Preservation. During her time at Treasury, Maggiano was one of the principal architects of the Making Home Affordable program, a nationwide foreclosure prevention program that helped form the basis for CFPB servicing rules. Prior to joining the Treasury, Maggiano managed servicing policy at the U.S. Department of Housing and Urban Development. Additionally, she spent 20 years in the private sector as a director at Freddie Mac and as a senior vice president for two major mortgage banks on the West Coast. In 2011, Maggiano was honored with a lifetime achievement award for Leadership in Mortgage Servicing, and in 2012 was named a Woman of Influence in the mortgage industry by Housing Wire Magazine. Other additions include Sartaj Alag, who is returning to the CFPB and will serve as chief operating officer. “In his previous role at the Bureau, Alag was in charge of starting up and managing the Office of Consumer Response. Prior to his time at the Bureau, Alag worked at Capital One for nearly 10 years. TM
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RETAIL MARKETS ARIZONA
Frank Sarwark, owner, Consolidated Auto Sales, Phoenix, Ariz.: “Our dealership has been in business for 71 years. My father started it. “We have one location. “We keep about 100 cars on the lot. We’re selling about 35 to 40 per month, somewhere around that. “(To acquire vehicles), we go to auction. We’ve got several wholesalers we work with. We also go to new-car dealer bid sales. “About 80 percent of our business is buy-here, pay-here. “The average retail price is around $8,000. “It’s gone up a little bit from this time last year. “The scary part is the cars out there are older than they’ve ever been. “It’s hard to find a nice car with reasonable miles on it. “We carry about 70 percent cars and 30 percent trucks and sport utility vehicles. “We have a pretty good selection of imports.
“One of the bid sales we go to has a selection of BMWs, Jaguars, Mercedes and Volkswagens. We also have a pretty good market for them. “For mileage, I try stay under 120,000 if I possibly can. But we do get some with 140,000 and 150,000 miles. “The average model year is a 2003 to 2004. “We’ve got some 2008s out here, but also 1999 to 2000 models with a lot of mileage left in them. “This is just off the top of my head, but we’re probably averaging $300 to $350 for reconditioning per car. “We do service in house. We just service our customers. “We have a website. We use Craigslist. “We use several of the (local) auto publications to advertise. “We use social media, like Facebook. “One car we sold recently a 2001 Mercedes CLK 320. It had 102,000 miles. “It was a very nice car. We got $9,000 for it.”
Compiled by Jeffrey Bellant MICHIGAN
Ray Campise, vice president, Certified Motors, St. Clair Shores, Mich.: “My wife, Lori, and I have been in business 11 years. “I have one location. “I carry about 30 cars on my lot. We’re turning more than 20 cars a month. “My business is up 10 percent from this time last year. The reason is financing has loosened up. Creditors have loosened up. “Secondary financing is much more aggressive than it was at this time last year, so is conventional financing. Credit unions are also lending. “I don’t do any buy-here, pay-here. “I do subprime and conventional financing. It’s probably 65 percent conventional, 35 percent subprime. That’s actually the correct balance that I want so the cash flow stays (consistent). “I get vehicles from the western part of the country. I go all the way out to Washington, Colorado and Montana. I go
through auctions. “Also, since I’ve been in the business 40 years, I have dealers I buy from. “I’m on the hunt for cars 24/7. “Right now, our (inventory) is at an average price that is probably $6,950. That’s what our average vehicle is, if not a little lower. “It’s a good price point, because that’s my market. That’s my price point. “Last year, the average price was a little bit lower, since it was a little tougher year (economically). Ever since the recession, though, the average price has gone a little higher each year. During (the recession) I was hunting for cars that were $4,000 to $5,500 or $6,000 and it was hard finding that market. “All of my cars are under 100,000 miles. So I’m not selling cars with 125,000 or 150,000 miles, everything is under 100,000. “My inventory is over 90 percent cars and 10 percent trucks and SUVs. I’ve just got a strong car market
in my area. “It’s all domestic. I’m red, white and blue. On this side of town, we have Chrysler, Ford and General Motors workers, but it’s mostly a Chrysler town. “My average model year is about a 2004 or 2005. The mileage runs from 85,000 and below. “I had a 2001 Dodge Stratus go out recently. It had 85,000 miles. With taxes, transfer of plate, the car (sold) for $4,987. It also had a six-month, 6,500mile warranty. “Most of my cars, though, go out with a one-year warranty. I don’t want to send out a bad car. It covers air, gaskets, transmission, etc. “I’m still spending $500 to $700 per car for reconditioning. I’m going through that car from end to end. We put brakes and tires on them. That work is farmed out. I have a small company – basically just my wife and me. “I live off of referrals. I’ve got families that have bought nine or 10 cars from me over 11 years.
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WHOLESALE MARKETS NEBRASKA
Mark Cooley, general manager, Nebraska Auto Auction, Lincoln, Neb.: “We just had our five-year anniversary on Aug. 20. “For that sale, we had 600 cars and sold 60 percent and had a great sale. “We have three lanes and we’re running three lanes. “Last year, we were running 300 to low 300s. This year we’re running in the 350 to 400 (range). “We acquired SAC Federal Credit Union as a consignor and that helped us grow. They run exclusively here. “I (also attribute it) to hard work. “For the year, our average sales percentage is about 50 to 55 percent. It’s about the same as this time last year. We’re just getting more cars. “The majority of our cars are dealer consignment, about 95 percent. “The average number of buyers in the lanes is between 180 and 200. That’s pretty much the same as this time last year. “Mostly, dealers are coming here from a 200-mile ra-
dius. But others come (from farther away). “We have a guy from Eastern Motors who flies in from Wisconsin for sales. He’s pretty consistent. We have guys that drive here weekly from Sioux Falls, S.D. We also have dealers coming from Kansas City consistently. “Dealers’ moods are mixed. Some are having a good year and some are struggling. “It’s an agricultural area and the farmers around here have had bumper crops the last three or four years. They’ve really rocked. It’s kept the economy strong here. But the automobile industry seems to be off a little. “What I see is that people seem to be keeping their cars and repairing them, rather than trading them (for newer cars). I’m seeing more higher mileage cars than normal. “The other change is that, last year, our average car sold was probably $3,500 to $4,000. This year, it spiked up to $5,000. “The growth of the pieces
Compiled by Jeffrey Bellant and the quality has really gone up. “We’re averaging, every week, 20 to 25 franchise stores that run cars. “As far as online sales, we use Auction Pipeline and sell cars every week via simulcast sales. We’ve sold cars to (buyers) in every state, across the entire continental United States. “We store (units) and facilitate sales for VSE Corp., a Flynn Jensen company, that provides governmentseized vehicles from the Internal Revenue Service, Homeland Security, etc. We’ve been doing that for about 2 ½ years. “Some of these units might sit seven or eight months waiting on trials to finish or until the issue with the government settles. “In a year, we might sell 100 to 150. When they go up for bid, though, high bidder wins. Those (units) have been everything from motorcycles and jet skis to – actually – logging equipment out of South Dakota. “Trucks are selling strong in this area. With other vehicles, anything
80,000 miles and under is selling well. “We’ll finish strong. This will be our best year ever and we’re looking forward to the first quarter of next year.”
Ray Vickers, owner, Farmington Auto Auction, Farmington, N.M.: “We’ve been in business since 1994. “We have two lanes and we’re running about 125 units a week. That’s about the same as this time last year. “Sales percentages have risen a little bit from this time last year. We’re close to 60 percent. I’d like to say it’s from our hard work. “We’ll get up to 75 bidders in the lanes. They’re coming from New Mexico, southern Colorado and Arizona. “Dealers are saying that business is a little off. They’re not setting any records. “About 60 percent of my volume is dealer consignment. The rest is repossessions and lease returns. “The nice repos are bring-
ing a lot of money. The repo volumes are (similar) to last year. “The lease returns do seem to be picking up. “We haven’t had very much salvage. We only get one or two pieces a week. “We also have a GSA sale that we run once a month. We’ve had the sale since June 2012. “Over the past two months we’ve run 200 units per month in just the GSA sale. In total, we’ll have about 1,200 to 1,300 units in GSA volume for the year. It’s a lot of work, but they’ve sold very well. They’ve brought a lot of money and the (sellers) have been happy. “With (non-GSA) units, anything nice is still bringing rain. “I think the trucks are off a little bit here even though we’re in truck country. “The GSA volume has driven up (the average price on the block). The average price now is about $6,500 a piece. Before GSA, we averaged about $3,200 per unit. “I feel that the rest of the year is going to get better.”
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TRUE COST OF INCENTIVES (TCI) June 2013
% Change ‘12-’13
TMV does not include options
Compact Car $1,107
1 2 3 4
$13,994 $12,354 $11,452 $8,935
$13,486 $12,272 $11,495 $8,887
-3.63% -0.66% 0.38% -0.54%
1 2 3 4
$20,901 $16,737 $14,768 $11,940
TMV does not include options
TCI 1 2 3 4 5
Subcompact Car $480 $1,173 $12,759 $10,749 $10,126 $8,001 $6,311
$12,288 $11,140 $9,342 $7,820 $6,497
% Change ‘12-’13
$19,155 $19,302 $15,967 $11,265 $9,451
-8.35% 15.33% 8.12% -5.65% 2.13%
$18,165 $15,628 $12,823 $10,724
3.75% -2.80% 4.61% 5.97%
Entry Sport Car $1,381 $2,114
-3.69% 3.64% -7.74% -2.26%
1 2 3 4
$17,509 $16,078 $12,258 $10,120
Midsize Car $2,424
1 2 3 4
$16,734 $14,737 $13,772 $10,543
$15,050 $14,342 $13,745 $10,970
1 2 3 4
$23,572 $22,446 $18,151 $14,641
$19,952 $22,085 $20,281 $15,309
-10.06% -2.68% -0.20% 4.05% -4.31%
-15.36% -1.61% 11.73% 4.56% -1.68%
Midrange Sport Car $2,429 $2,110
TCI 1 2 3 4 5
TCI 1 2 3 4 5
TCI 1 2 3 4 5
Large Car $4,244
$18,844 $15,898 $12,685 $11,083
$16,645 $14,513 $13,443 $10,960
-11.67% -8.71% 5.98% -1.11%
1 2 3 4
$44,297 $33,144 $30,343 $25,630
$38,642 $38,358 $29,352 $25,498
-12.77% 15.73% -3.27% -0.52% -7.18%
Premium Sport Car $3,732 $3,160
Compact Crossover SUV $1,857 $1,566 $17,404 $16,070 $14,188 $11,793
$17,418 $15,775 $14,692 $11,663
Midsize Crossover SUV $2,048 $2,373 $21,904 $19,765 $16,860 $14,402
$19,839 $20,105 $17,453 $13,815
Midsize Traditional SUV $1,226 $1,540
1 2 3 4
$25,294 $20,598 $17,386 $15,822
$23,371 $23,672 $19,401 $14,974
Large Crossover SUV $3,719 $3,755
1 2 3 4
$25,621 $20,934 $17,860 $16,364
$25,206 $22,075 $19,095 $15,295
Large Traditional SUV $3,036 $3,346
1 2 3 4
$31,511 $28,859 $23,032 $19,059
$32,197 $29,451 $26,662 $20,950
Compact Truck $1,654
0.08% -1.84% 3.55% -1.10% -3.63%
1 2 3 4
$97,096 $67,341 $52,765 $44,487
$62,190 $74,717 $50,489 $47,542
-35.95% 10.95% -4.31% 6.87% -5.47%
Entry Luxury Car $3,196 $4,029
-9.43% 1.72% 3.52% -4.08% 5.74%
1 2 3 4
$29,091 $23,127 $21,423 $19,042
$25,062 $22,790 $21,679 $17,627
-13.85% -1.46% 1.19% -7.43% -3.27%
Entry Luxury SUV $1,743 $2,026
-7.60% 14.92% 11.59% -5.36% -2.70%
1 2 3 4
$31,819 $27,825 $22,871 $18,961
$29,614 $26,887 $24,044 $19,198
-6.93% -3.37% 5.13% 1.25% -2.09%
Midrange Luxury Car $3,904 $4,937
-1.62% 5.45% 6.91% -6.53% 24.58%
1 2 3 4
$37,154 $32,402 $26,112 $22,213
$36,341 $31,946 $28,246 $21,213
-2.19% -1.41% 8.17% -4.50% 0.65%
Midrange Luxury SUV $2,139 $2,221
2.18% 2.05% 15.76% 9.92% -2.77%
1 2 3 4 5
$44,489 $39,043 $34,923 $28,835
$39,126 $37,237 $32,440 $26,717
-12.05% -4.63% -7.11% -7.35%
Premium Luxury Car $4,511 $5,096
7.51% 6.07% 3.21% 8.73% 0.10%
1 2 3 4
$72,253 $61,331 $45,645 $35,225
$56,982 $51,791 $43,771 $34,710
-21.14% -15.55% -4.11% -1.46% -9.09%
Premium Luxury SUV $2,341 $3,014
1 2 3 4
$18,923 $16,265 $14,470 $12,132
$20,345 $17,253 $14,934 $13,191
Large Truck $3,786
1 2 3 4
$26,025 $22,115 $18,642 $17,501
$26,022 $23,608 $20,549 $17,172
1 2 3 4
$56,581 $44,579 $39,995 $31,531
$46,413 $46,749 $34,990 $32,617
-0.01% 6.75% 10.23% -1.88% 13.03%
-17.97% 4.87% -12.51% 3.44% -6.69%
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.
8/23/13 11:09 AM
ÛÛÝÛÛÛSeptember 2, 2013
USED CAR NEWS
Compiled By Jeffrey Bellant
ABC Kicks Off Baton Rouge
DRAWING A CROWD: The Auction Broadcasting Co. celebrated its new 30-acre auction facility in Baton Rogue with a grand opening sale recently.
ABC Baton Rouge loaded the lanes with vehicles from several consignors during its grand opening sale earlier this summer. “The grand opening sale at ABC Baton Rouge was a huge success,” said Auction Broadcasting Co. President Jason Hockett. “We were really pleased with the dealer turn out as well as the turnout and support of our commercial accounts.” ABC Baton Rouge opened a new 30-acre auction facility located just behind the Baton Rouge Metropolitan Airport. The auction has a gourmet Cajun restaurant operated by Boutin’s. Baton Rouge Mayor Kip Holden was on hand for a ribbon-cutting ceremony for the sale. Representatives from ARI, Capital One Automotive, Lease Plan, PHH, Santander Consumer, and regional financial institutions were represented at the sale. ABC Baton Rouge managing partner Butch Royall said the fleet and lease lane had an 88 percent conversion rate. Dealer consignment sold at a 63 percent rate, which included 60 consignment vehicles from new-car dealerships.
Auction Hosts ‘Buffalo’ Sale
Buyers and sellers got a taste of the Old West and an opportunity to bid on a large consignment of cars and trucks at the annual “Buffalo Sale” at Brasher’s Portland Auto Auction this summer. Dealers crowded into the auction arena to bid on more than 1,000 vehicles, and at day’s end, sold 63 percent of the vehicles. To add incentive to the excellent selection of cars, trucks and SUVs, Brasher’s Portland Auto Auction offered 60- and 90-day floats throughout the sale. There was also free local drive-in transport during promo week and no consignment fees.
In addition, special promotions were held in every lane, with dealers winning a variety of gifts and prizes, including Brasher’s Rewards Points, shirts, hats and gift cards. Auction customers were treated to a Western cookout in the lanes, enjoying buffalo brisket sandwiches and dessert. 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: firstname.lastname@example.org
8/26/13 2:04 PM
September 2, 2013Ă›Ă›Ă?Ă›Ă›Â€Â€
USED CAR NEWS
Disconnected Jottings From Tony Moorby... Many of you know that I commute weekly from just south of Nashville to Chattanooga. For the most part I use I-24 as, going against the traffic, itâ€™s rarely busy and affords an easy ride of two hours from
twists and turns, the full effect is forfeited to good driving sense. Talking of driving sense, road disciplines in the south in the past have been a little, letâ€™s say, relaxed, lax even. But with a little anticipation
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;',
doorstep to doorstep. Iâ€™ve been doing it for over three years and actually enjoy the â€œdown time,â€? catching up on thoughts, dreaming, scheming, making the occasional phone call â€“ yes, thatâ€™s still legal here â€“ while observing the changing seasons in what must be one of the prettiest parts of the country. The back-roads route, when the occasion dictates such a diversion, such as Bonnaroo or a rare traffic tie-up, proffers an even greater reward of spectacular scenery but with
and forgiveness one could overlook a signal to go left when the driver actually wanted to turn right, or no signal at all on the presupposition that the driver knew exactly where he or she wanted to go, without regard to othersâ€™ safety or capabilities. With the influx of newcomers from all over the country or even the world, if you include people like me or the German bulge in population in Chattanooga, at the behest of VW, skills have improved no end.
C R O S S WO R D
Thereâ€™s now an urgency to get from A to B where none was before and a southern laissez faire attitude has now become an anxious, letâ€™s-getthere-now dash as quickly as possible. There are exceptions, of course. Manners on the interstates are nothing short of appalling. American visitors to Europe are horrified at how fast people drive, especially on the motorways, autoroutes or autobahns. But disciplines are observed that would please the harshest topsecurity prison warden. One wouldnâ€™t dream of driving in the outside lane, even at the speed limit, if you were not overtaking â€“ drivers overtake without dawdling and return to the innermost lane available. Big trucks travel at the speed limit in convoy and only overtake in dire necessity so there are no trucks travelling side-byside, with governed engines, holding up the progress of swifter and more agile traffic. The whole thing is business-like and, amazingly, accidents are few and far between. To pass a driving test in Europe is arduous,
Across 1. Luxurious Bentley 5. Pony car first introduced in 1966 9. Steal 10. Large open cars with open tops 11. 70s Austin made in the UK 14. Electric vehicle, for short 15. Daytona and Indianapolis, for example 19. Old Toyota model 22. Stop ___ dime (2 words)
Down 1. Old GM auto shows name 2. SEC football contenders, abbr.
it out of the parking lot and back again, you are awarded that precious document that guarantees so much freedom in this country and is taken as a right more than a privilege. In my three years of using the same stretch of I-24, Iâ€™ve made a study. The highway links Chicago via I-65 to Key West on I-75, I-85 and I-95. Iâ€™ve managed to determine which states, through which these roads meander, and what types of cars, provide drivers to avoid. A green minivan, registered in Indiana with stick figures in the rear window denoting an attachment to a wife, three kids and a dog, whose driver wears a ball cap and possibly smokes a pipe while he polices the outside lane at 67 miles per hour is to be avoided at all costs and an invitation to go the back way.
To see past columns from Tony Moorby, visit www.usedcarnews.com/ columnists/tony-moorby
Sponsored by INSURANCE AUTO AUCTIONS
By Miles Mellor
23. Negative word 25. Fuel usage term 26. Winner at the Pebble Beach Concours 2013 30. Concept performance pickup shown at the Woodward Dream Cruise, 2013 (3 words) 33. Buick sedan 35. Alongside 36. Rolex, for one 38. Porsche model 40. Type of fuel 43. Flat___ truck 44. Start! 45. Part of A.P.R. 46. Have title 47. Buying prospect who doesnâ€™t keep his appointment (2 words)
difficult and long-winded. The written test allows no mistakes over pages and pages of direct questions; no gambling on multiple choice here. The driving part of the test typically would last about 45 minutes to an hour on roads of all descriptions, under the hawk-like and intimidating glare of an examiner akin to a doctor performing an autopsy. The waiting list for a test can be months long. If you pass your test with an automatic car, you are disallowed from driving a manual shift â€“ that takes a different test! Needless to say, the result is a well-qualified and deft new driver. Here, if you can fog a mirror in one breath, take an eye test without thinking itâ€™s a Polish wedding invitation and shift from Park to Drive, then make
3. Lamborghini model 4. They make the Versa Note 5. USMC rank 6. 1917 American car 7. Mercedes-Benz CLA45 ____ 8. Sale abbreviation 9. It may go on a roof 12. Time before 13. Fan noise 16. Piece of an engine 17. Inside prefix 18. Radar user 20. Mustang rivals 21. State where the Ducks play 24. Approve 27. Metal mixtures 28. Power measurement 29. Excess of revenues over outlays in a given period (2 words) 31. Yearly payment percent 32. X5 maker 33. V10 SRT sports car
Answers to the 8/19/13 puzzle 1
34. Aka brand 37. Silverado 1500 ____ cab 39. Boltâ€™s partner 40. Cosy room 41. Bachelorâ€™s last words 42. Swelled head
G O A L L
S A D
F U 33
A L F
O M Y 28
A N S
A A 40
C R E
Answers to this puzzle in the 9/16/13 issue. Call 1.800.794.0760 for a FREE subscription.
8/23/13 1:33 PM
Â€Â Ă›Ă?Ă›Ă›September 2, 2013
USED CAR NEWS
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