January 16, 2017
High Tech Provides Opportunity for Dealers
THE FUTURE: Toyota shows off a concept car at the Consumer Electronics Show. More and more there is a blurring of the lines between tech shows like the CES and car shows like the North American International Auto Show.
By Ted Craig
Rush - Dated Material
In-car technology was on the main stage at both the Consumer Electronics Show and the North American International Auto Show. Tech now ranks high in the car selection process for new-car buyers, according to the 2017 Autotrader Car Tech Impact Study. Having the latest technology is more important than vehicle color for 61 percent of respondents. Brand and styling still count for more, but not by much. This increased interest in technology also presents an opportunity for used-car dealers, said Karl Brauer,
executive publisher at Cox Automotive. Brauer said today’s aftermarket products allow dealers to install upgrades fairly easily and at a reasonable cost. “You can essentially make an older car feel as up-to-date as a newer car,” Brauer said. “You’re basically giving a Botox shot to the car.” Brauer cautions that dealers need the right set-up at their stores, including the right inventory and marketing. But if they have that, they might find consumers willing to pay for better technology.
“Dealers might be surprised,” Brauer said. Just don’t expect them to pay for safety technology. The Autotrader survey found most respondents expect safety technology to come standard. Of course, dealership staff needs to know about the technology they are selling and that can prove a challenge even on the new-car side. Autotrader recommends car shoppers consider two test drives when making a purchase decision – one for the ride and one for the technology. The main catch to spending so much time explaining the tech-
nology is it can lengthen the sales process and other surveys show customer satisfaction takes a steep decline after the first 45 minutes at a dealership. There is a downside to having cars that are rolling smartphones, though and that is hacking. There have been several highprofile reports recently of hackers showing they can hijack vehicles remotely. Brian Moody, Autotrader’s executive editor, said it’s possible manufacturers might someday produce low-tech versions targeted at those concerned about hacking or other issues.
COMING ATTRACTIONS Boost your inventory with fresh off-lease vehicles ready for you and your CPOV Program. Visit ChryslerDirect.com or ADESA.com/dealerblock to view available vehicles. ©2017 Chrysler Capital. Chrysler Capital is a registered trademark of FCA US LLC and licensed to Santander Consumer USA Inc. Chrysler, Dodge, Jeep, Ram, Mopar and SRT are registered trademarks of FCA US LLC. FIAT is a registered trademark of FCA Group Marketing S.p.A., used under license by FCA US LLC. CC-AD_61216-2_010517
Nicole Graham-Ponce » General Manager » Manheim Dallas-Fort Worth
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USED CAR NEWS
January 16, 2017 • 3
University Names Top Innovator in School Contest EFG Companies and Northwood University recently announced the selection of Team Vigilance as the winner of the 2016 Innovator of the Year Award competition, and the recipient of $25,000. Team Vigilance utilized their millennial mindset, ongoing dealership research, and F&I mentor input to create “401Karrs”. The product addresses Millennial and Gen Z concerns around financial security, and delivers on dealership goals around customer retention. In addition to the team’s monetary reward, they will potentially see 401Karrs developed by EFG for market availability. Team Vigilance is made up of three team members: Alec Bond from Linden, Mich.; Houston Huff from Tuscon, Ariz.; and Lucas Myrhe from Austin, Texas. “We want to thank all the teachers and mentors from this competition and across Northwood who’ve been a huge inspiration and motivation throughout this project,” Myrhe said. “With
their guidance, we were able to deliver a product that is beneficial to customers and dealerships, increasing dealership profit, retention, and customer satisfaction.” During the semester-long contest, team members leveraged time spent with their mentor, Craig Drew, the general manager of Central Maine Motors Auto Group in Waterville, Maine. “Team Vigilance hit the ground running from day one, and they weren’t afraid to go back to the drawing board. Their dedication and perseverance to create a useful and beneficial product won them this award,” Drew said. Team Vigilance developed 401Karrs to address a concern among Millennials and Generation Z – financial stability 401Karrs is essentially a down-payment savings product. Dealership customers will have the opportunity to add as little as $20 to their monthly payment, which will be used for a down payment on their next vehicle.
Photo Courtesy of EFG Companies INNOVATORS: Houston Huff of Tucson, Ariz., from left, Alec Bond of Linden, Mich., and Lucas Myrhe of Austin, Texas, receive a $25,000 check as winners of the Innovator of the Year contest from Northwood University.
When they return to the selling dealership to purchase their next vehicle, the dealer will match up to 20 percent of the amount saved, or $1,000. In this way, the product acts as a customer retention tool, since they must return to the dealership to take advantage of the match. The last part of 401Karrs
is a reinsurance opportunity. As with vehicle service contracts, dealers can participate in reinsurance on the 401Karrs product, accruing interest on the money set aside for the down payment. This balances out the dealership match and has the potential to generate greater reinsurance profit. In addition to experienced
team mentors, the contest was judged by F&I industry leaders. The eight-member panel brought more than 100 years of F&I expertise. Several of the judges commented that the student product entries provided a fresh perspective and challenged their thinking about their own dealerships and operations.
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4 • January 16, 2017
USED CAR NEWS
NEWS BRIEFS Credit Acceptance Founder Retires Credit Acceptance Corp. announced that Donald A. Foss, the company’s chairman, retired as an officer and director effective Jan. 3.
lion return-to-market events between September 2015 and August 2016. Consumers going from a CPO vehicle to a CPO vehicle from the same original equipment manufacturer showed the highest loyalty rate at 75 percent.
Foss founded Credit Acceptance in 1972 and served as the company’s chief executive officer from 1972 through 2001. He added the role of chairman of the board at the time of the company’s initial public stock offering in 1992. Since that time, Credit Acceptance’s market capitalization has grown to over $4.5 billion from $90 million.
Consumers going from a new vehicle to another new vehicle came in second, at 60.9 percent. Rounding out the top five: consumers with a CPO going to a new vehicle (54.1 percent), consumers with a new vehicle going to a CPO (49.1 percent) and consumers with a non-CPO used vehicle going to a CPO (47.1 percent).
The board has no present intention to fill the chairman’s role or to Ally Financial Strikes Finance Deal fill the vacancy on the board created with Carvana Ally Financial announced an by Foss’s retirement. The board of directors will be led agreement to provide financing to by lead director and chair of the au- support retail contracts from Cardit committee, Thomas N. Tryforos. vana. Through the agreement, Ally will make up to $600 million available to Carvana over the next 12 months CPO Buyers Prove Loyal In a recent analysis of consumer through financing and bulk purchasrepurchase behaviors, Experian es of contracts. Under the terms of the agreement, found that the owners of a certified Ally will provide financial arrangepre-owned vehicle who returned to market to buy another CPO ve- ments to support Carvana’s retail hicle of the same make were the operations, with an initial commitmost loyal group of buyers surveyed. ment of up to $600 million. The The analysis looked at nearly 12.6 mil- agreement expands Ally’s existing
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relationship with Carvana, which university will match the donations also includes a floorplan credit line dollar for dollar until the endowment and vehicle sourcing through Ally’s is fully funded at $250,000. SmartAuction platform. The endowment fund is managed by the University of Texas InvestTradeRev Debuts U.S. HQ ment Management Co., which overTradeRev is opening its United sees investments for the University of Texas and Texas A&M systems States headquarters office. The new building is located at and has more than $37 billion under 12726 Hamilton Crossing Blvd., Car- management. UTIMCO was created mel, Ind. It will include state-of-the- in 1996 as the first external investart technology infused throughout ment corporation formed by a public the office and large monitors show- university system. The initial scholarships from the casing live streams between the Toendowment are expected to be ronto and U.S. head offices. awarded for the 2017-18 academic year.
NIADA Foundation Creates Endowment
Wholesale Prices Rise Slightly
The NIADA Foundation, the charitable arm of the National Independent Automobile Dealers Association, is taking its investment in higher education to another level. The foundation’s board of trustees has authorized the creation of an endowment to fund scholarships for students at the University of Texas at Arlington’s College of Business who have shown an interest in a career in the automotive industry. The NIADA Foundation Endowment was created with an initial gift of $25,000, which will be followed by four more annual donations. The
Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased by 0.2 percent in December. This brought the Manheim Used Vehicle Value Index to 124.9, a decline of 0.6 percent from a year ago.
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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.
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USED CAR NEWS
January 16, 2017 • 5
Auto Site Ranks Top Searches Edmunds.com named the vehicles that were the most researched on its site in 2016, showing that SUVs and passenger cars have solid spots in the automotive market. The Honda CR-V was the most researched vehicle for the second year in a row, followed by the Honda Accord, Honda Civic, Toyota RAV-4 and Honda Pilot. While the order of popularity shifted a bit, the list of the top 10 most researched vehicles was unchanged from 2015. Edmunds determined its list of “most researched” vehiFor Cars, Trucks and Vans
cles by calculating which vehicles had the most monthly unique visitors to the new car research and inventory pages for that model on its desktop and mobile sites. Edmunds analysts predict the Ford F-150, Chevrolet Silverado, Toyota Camry, Honda Civic and Toyota Corolla will be the best-selling vehicles of 2016, in that order. This represents a slight shift from 2015, when the Ford F-150, Chevrolet Silverado, Toyota Camry, Toyota Corolla and Honda CR-V were the top five best-selling vehicles.
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6 • January 16, 2017
USED CAR NEWS
Sales to Russia Bring Charges A New Jersey auto dealer was charged for allegedly defrauding more than 140 Russian citizens. Sergey Kapustin was charged with one count of wire fraud and conspiring to commit wire fraud. Kapustin was the owner and president of Global Auto Group, Effect Auto Sales and G Auto Sales, located in Elizabeth, N.J. Global bought and sold used cars, typically high-end vehicles that were classified as salvaged. From January 2011 through December 2014, Kapustin allegedly operated a scheme to defraud customers, who usually lived in Russia, Ukraine or parts of the former Soviet Union. Kapustin had one or more Russian language websites that offered for sale luxury vehicles, including cars from Mercedes and Lexus, which were normally priced below market value. The site said the cars could be shipped to Finland for easy delivery to Russian citizens, if they agreed to pay full price upfront for the vehicles. Kapustin was Russian and his websites were geared to buyers who believed they were getting a “good deal” from a fellow countryman who could be trusted to follow through once the purchase price had been paid.
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After the buyers would wire the full price to one or more bank accounts controlled by Kapustin, he would allegedly give them a litany of excuses and reasons for delay in delivery. Unbeknownst to them, more often than not Kapustin had neither possession nor title to the vehicles being sold. At some point, the victim would be offered a different, often inferior car, burdened with added shipping and storage costs. The buyer, desperate to acquire something for money already spent, would oftentimes wire additional money to rescue the car from its storage, but still wind up without a car. Those very few cars that did land in Finland were normally the product of salvage auctions for vehicles that had been immersed in or flooded with salt water and were inoperable. Kapustin allegedly stole approximately $2 million this way. The count with which Kapustin is charged carries a maximum penalty of 20 years and $250,000 fine. Kapustin was arrested by special agents of the FBI. The case is being handled by the U.S. Attorney for New Jersey.
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8 • January 16, 2017
USED CAR NEWS
NADA CHALLENGES ON NEW CAR SIDE CREATE ISSUES FOR USED By Ted Craig
The biggest challenges to used-car pricing can be found at any local new-car dealership. These challenges include the vehicles coming offlease, vehicles late in their life cycle and the incentives offered to sell those vehicles. The off-lease vehicles have received the most attention, in part because there are so many of them. And the projected volumes only increase
for the next few years. Certified pre-owned programs absorbed much of that volume, reaching new sales records in 2016. However, there remain questions about how much those programs can grow before they start stealing sales from the new side. Steve Szakaly, chief economist for the National Automobile Dealers Association, said there is still plenty of room for growth in the CPO market, but it creates a bal-
ancing act for the manufacturers. Off-lease vehicles provide a challenge for a reason other than their sheer size – the limited variety. Many manufacturers have leased vehicles with the same option packages and have only offered a limited range of colors. This proves especially true for luxury models. Leasing has been a preferred method for juicing sales rather than offering
Avg. Days in Inventory, Retail Transactions
45% 7% 7% Market Share
6% 6% 5% 5%
4% 20% 4% 15%
Manufacturers seem intent on cutting production instead. This is especially true of poor selling models, which mostly means cars. Fiat Chrysler already announced plans to discontinue the Chrysler 200 and the Dodge Dart. Fleming said plenty of other models could follow those two out of the market entirely. That might change if a majority of car markets stay stuck in neutral this year. “You only really have two global markets doing well for new-car sales – the U.S. and China,” Szakaly said. And car sales face considerable uncertainty in both countries.
Piling It On: Higher Inventories Drive Even More Incentive Activity 85
Luxury Buyers Demand Luxury Utility: Luxury SUVs Far Outsell Luxury Cars 50%
retail incentives. Now the question becomes: Will manufacturers turn to incentives as the risk of lower residuals makes leasing less attractive? If they do opt for incentives, they’ll need to make more generous discounts than they did in 2016. The incentives offered in 2016 produced little sales growth, said Tim Fleming, manager of residual forecasting for Kelley Blue Book. “It’s fleet sales that are really propping up volumes,” Fleming said. Manufacturers might be hesitant to push increased sales too much, he said. “They’re realizing sales growth has become very expensive,” Fleming said.
65 2014 2015
3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Non-Luxury Cars
A New Lease on Life: Leasing Lingered Over 30%, but Should Come Down in 2017
Nothing in Life is Free: All These Capabilities Come at a Cost
Average New-Car Transaction Price
2014 2013 20%
If They Build It…Some Tough Decisions Regarding Production May Be Called For
Oops…We Did It Again. Sales End the Year Up 0.3% at 17.5 Million Units Overall
New-Vehicle Sales (Daily Selling Rate)
Incentive Spend / ATP
10.5% 9.8% 9.7%
8.9% 8.8% 8.5%
17.5 M 17.4 M 16.5 M
60,000 55,000 50,000 45,000 40,000 35,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Source: Motor Intelligence; Kelley Blue Book
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10 • January 16, 2017
USED CAR NEWS
AG Cracks Down on More Than Two Dozen Dealers Pennsylvania has filed 29 legal actions against individuals and businesses accused of engaging in unlicensed car sales, selling unroadworthy vehicles and publishing deceptive advertisements, according to Attorney General Bruce R. Beemer. The legal actions are the result of investigations conducted in 2016 by the Attorney General’s Bureau of Consumer Protection. In addition to the legal actions, the Bureau of Consumer Protection in 2016 is-
sued 130 warning letters to new and used motor vehicle dealers related to advertising and sales concerns. These legal actions and warning letters are the result of an ongoing statewide initiative designed to detect automobile dealers engaging in deceptive business practices. Agents with the Bureau of Consumer Protection reviewed online, television, radio and other forms of advertisements to ensure organizations are complying with relevant federal and
state laws. Some of those include the Pennsylvania Board of Vehicles Act, the Pennsylvania Automotive Industry Trade Practices Regulations and the Unfair Trade Practices and Consumer Protection Law. This initiative is expected to continue in 2017. The Pennsylvania State Board of Vehicle Manufacturers, Dealers and Salespersons requires any person, corporation, or other entity who is engaged in the business of buying, selling, or exchanging new or used
vehicles to be licensed as a motor vehicle dealer. A person must be licensed by law if that person sells or negotiates the sale of five or more motor vehicles in a calendar year. Licensed salespeople may only sell motor vehicles for the dealership that they are associated with by the State Board. The Bureau in 2016 took legal action against 16 individuals and entities for allegedly conducting unlicensed sales within the Commonwealth. The Auto Regulations
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explain that a motor vehicle offered for sale in the Commonwealth is represented to be roadworthy and the advertiser or seller shall disclose, prior to sale, specific conditions the advertiser or seller knows or should know exist in the vehicle. Issues that should be disclosed include whether the frame is bent, cracked or twisted; whether the engine block or head is cracked; whether the vehicle is unable to pass state inspection; whether the transmission is damaged, defective or deteriorated requiring replacement; whether the vehicle is flood damaged; or whether the differential is damaged, defective or deteriorated requiring replacement. Sellers who fail to disclose these conditions misrepresent to the buyer the quality of the vehicle. In 2016, the Bureau filed four legal actions against individuals and entities for allegedly selling unroadworthy vehicles. The Consumer Protection Law prohibits any unfair methods of competition or unfair or deceptive acts or practices, such as engaging in any fraudulent or deceptive conduct, which creates a likelihood of confusion or of misunderstanding. Anyone whose business practices or advertisements are deemed misleading or deceptive could be subject to legal action. The Bureau in 2016 took legal action against nine individuals and entities for allegedly misleading or deceptive conduct within the Commonwealth.
Insurer Sues GM HARRISBURG, Pa. (AP) – General Motors has been sued over a 2014 car fire that caused more than $450,000 in damage to two central Pennsylvania homes. Erie Insurance Exchange and four of its policyholders claim the blaze resulted from a defect GM officials didn’t adequately address. The fire began in the engine compartment of a 2000 Pontiac Grand Prix.
USED CAR NEWS
January 16, 2017 • 11
State Says Dealer Failed to Pay Off Creditors An Arkansas used-car dealer faces a lawsuit claiming he violated numerous consumer protection laws and misled finance companies. The state’s attorney general filed a consumerprotection lawsuit against Vancurens Auto Sales LLC, Infinity Auto Sales Inc., Infinity Towing and Recovery Inc., John Michael Vancuren, Michelle Nicole Vancuren and their officers and owners. Those named in the lawsuit are accused of multiple violations of the Arkansas Deceptive Trade Practices Act. By acting in concert with one another, the defendants deceived Arkansans into taking out multiple third-party loans to purchase used vehicles, failed to apply the proceeds of returned vehicles to outstanding loan principals, towed and repossessed vehicles by using highpressure tactics and commonly failed to deliver the titles of sold vehicles to
consumers. According to the complaint, customers often returned vehicles due to mechanical issues, but the Vancurens failed to return the finance proceeds to the creditor, which left the customer with a debt to pay and no vehicle. In other situations, the Vancurens convinced the consumer to purchase another vehicle with financing from a different third-party creditor, but again the Vancurens failed to refund the original finance proceeds so
the consumer was left with two loans on two different vehicles, but they only possessed one vehicle. One consumer described a June 2013 purchase of a Ford truck for which his sister co-signed. The consumer returned the truck to the lot six weeks after purchase because of mechanical issues. John Vancuren promised the consumer that his loan with Westlake had been paid off. Three years later however, the consumer’s sister learned through a separate
credit application that her credit report showed 24 months of late payments to Westlake for the truck. In another incident, a Spanish-speaking consumer purchased a Honda Civic from the Vancurens in August 2013. In September 2014, John Vancuren arranged to meet the consumer and her son, who spoke some English, at the dealership. Knowing that the consumer was not fluent in English, Vancuren took the consumer’s son inside and slipped out the back door to
present the Spanish-speaking consumer with a document stating she “returned the car to the dealer instead of paying the balance on the car.” He told her if she would sign it, he would give her a $5,900 check for the equity in the car. The check never arrived, and the consumer was left without a car. The state is asking the court to impose civil penalties, restitution, attorneys’ fees, costs and other relief against these individuals and companies.
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Store Wins Sewer Suit PORTSMOUTH, N.H. (AP) — A judge has ruled that a Portsmouth auto dealership incurred damages caused by a city sewer line running through its property. The Portsmouth Herald reports that Rockingham County Judge William Delker said Toyota dealer James Boyle wasn’t informed when he bought the property in 2003 that a municipal sewer line was installed in a berm across the rear of the property. Delker said the city promised to repair the sewer line but hasn’t done so. He said part of the property has become flooded due to years of failed maintenance. The Portsmouth City Council previously voted to take 4.6 acres of Boyle’s land to maintain the sewer line and allocate $348,000 to compensate him. Boyle and his lawyer have called the amount inadequate.
12 • January 16, 2017
USED CAR NEWS
RETAIL MARKETS ARKANSAS George Williamson, president/owner, Williamson Motor Co., Jonesboro, Ark.: “I’ve been in business 33 years, just one location. “I keep right around 75 in inventory. “Mainly, I get inventory from auctions. I use Memphis Auto Auction, Dealer’s Auto Auction of Memphis and ADESA Little Rock. “We’re selling about 30 a month. “We are probably 75 percent buy-here, pay-here. “Average down payment is $1,250. The average term length is going to be 24 months. “We do not use starterinterrupt devices or GPS. “The average retail price is around $9,950. “Average model year is about 2010 and mileage is about 125,000. That’s gone up over the years. “We’ve just been selective in the ones that we buy. (Underwriting) is where the money is made. It’s where
the success is, for sure. “Right now, we’re carrying about 40 percent cars, 50 percent SUVs and 10 percent trucks. We had more trucks a year ago. What changed is the prices (went up). “We’re about 98 percent domestic. That’s because of price and availability. “We recondition vehicles. The average cost is about $600. That has not gone up from last year. We do that work ourselves. We don’t do outside work, just our own vehicles. “We do very little advertising. We’ve been here 33 years. Our repeat and referral rate is about 50 percent. We use cars.com and we have a website. “One recent vehicle we sold was a 2006 Toyota Highlander. It had 134,000 miles. I got $10,950. “I think the market is going to be a little softer this year. There is just more and more competition. “But the local economy is good.”
SOUTH CAROLINA Darla Booher, owner, Deal Depot, Greer, S.C.: “We just started our 17th year in business. We have two locations, one in Greer and one is in Duncan, S.C. “In stock, we’ve got close to 175. We’re up about 40 units compared to what we were last year. “I source vehicles from individual wholesalers, ones that I’ve known and trusted and have a good rapport with. I source from tradeins and auctions. I use Carolina Auto Auction, which is the closest. But I also use America’s Auto AuctionGreenville and Carmax. “We’re gearing up for tax time. We added a salesperson and increased our advertising. We feel that with subprime tightening up, we’ll have a really strong tax season. We’re doing the TRS Tax Max programs. “We’re probably 99 percent buy-here, pay-here. “I’m averaging $1,180 for down payments. The average term length is 140
Compiled by Jeffrey Bellant weeks. “The thing I’ve done this year differently is to buy some more expensive vehicles. I was able to buy some 2012, 2013 and 2014 small vehicles with good gas mileage, like the Cruze, the Sonics, Nissan Versas and Chevrolet Sparks. “I think that for our customers, getting good gas mileage is a big plus, along with getting a newer model vehicle with lower mileage. “The average retail price $9,995. “We use both starter interrupt and GPS devices. “One thing that we’re kind of steering away from is the code-based devices. I feel going away from the codebased devices will be less intrusive for our customers. We’re not totally off the code-based, but we are weaning ourselves off. “Average model year is about 2009. Last year it was probably 2005 or 2006. The average mileage is about 80,000 to 100,000. Last year it was around 100,000.
“We carry 60 percent cars, and close to 40 percent SUVs, with, maybe, 2 percent trucks. “One of the problems with trucks that we see is that a lot of the customers want to use them as commercial trucks. Because of the excessive mileage you’d put on a commercial vehicle, we’re very strict about using them for commercial purposes. “The bulk of our inventory is domestics. “The average reconditioning costs have risen to $900 a car. Part of that reconditioning (number) is any goodwill work we’d do in the first 30 to 60 days after the sale. We farm that reconditioning work out. “As for advertising, we’re heavily into TV and doing radio. We do digital ads through an ad agency out of Austin, Texas. They place our ads for us through Google searches and keywords. We recently sold a 2009 Chevrolet Impala, it had about 98,000 miles. We got $10,995.”
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14 • January 16, 2017
USED CAR NEWS
WHOLESALE MARKETS NORTH DAKOTA Loren Hallwachs, general manager/owner, Central City Auto Auction, Carrington, N.D.: “We opened in June of 2014. “Last year was horrible. It was so brutal. There was a shortage of inventory to start with in the first part of the year. Then there was just kind of lethargic business throughout the year. “So our sales went from 70 to 80 or 90 units, to 30, 40 or 50 units per week. “I think it was just due to lackluster sales in both western and southern regions of North Dakota where we draw 70- to 80-percent of our inventory from. “The economy is starting to come back. Some of the oil activity out west is starting to revive some of the business we were doing before 2016. The (drop in the) price of oil hurt last year. “Things seem to be getting better. When the oil compa-
nies see $40 a barrel, that’s considered profitable. So anything above that is good. Right now, there are 850 wells waiting to be fracked and it takes about 25 workers per well. “In the past four weeks overall, we’ve noticed an uptick in vehicles available for the auction. We run two lanes and have a possible third, if needed. Our sales percentages were in the 30s and 40s. We were hovering around 50 percent in the previous year. “About 90 percent of our volume is dealer consignment. “We have noticed a loosening of inventory. I think it’s due in part to an uptick in sales for new-car dealers. What I hear from them is that no one had seen a year as bad as 2016 in 40 years. I heard of dealers who had to borrow money just to cover payroll. “Online we use Auction Edge and Online Ringman. That works phenomenal. We have more dealers on-
line than in the lanes. “We have a monthly powersports sale. We had 23 units. We had a pretty successful one and we’ll have a spring classic car auction on May 20. It’ll have close to 100 units. “This year looks a lot better, but it might take us this year to recover.”
OKLAHOMA Mike Clopton, general manager/partner, Oklahoma Auto Exchange, Oklahoma City: “We started in January 2005. We’re starting our 12th year. We have four lanes and we run four. “We run between 650 and 750 per week. “We are a little down. The economy in Oklahoma was difficult in 2016. We were just a reflection of what the economy was doing in the state. So we saw a downturn in 2016. “Our economy is mainly petroleum and natural gas. So factors like the warm winter in the northern part
of the country and northeast this past year affected natural gas – also, the price of a barrel of oil becoming less and less as 2016 went along. “Now in 2017, we feel really optimistic. I think the change in Washington, D.C., is going to help all businesses and we’re no exception. “We’re selling about 60 percent (in the lanes). We were a little bit higher last year. We’re drawing about 350 dealers in the lanes per week. “For dealers, the last six to eight months of 2016 were really difficult. We had a $900 million shortfall in our state’s budget. So people were doing without. Dealers cut their volumes down so they weren’t stuck with a lot of inventory. We don’t operate in a bubble. Spirits were still good. We just had to adjust. “Right now 25 percent of our vehicles are fleetlease. That hasn’t changed. Even though there is talk of a whole lot of lease and
Compiled by Jeffrey Bellant rental vehicles coming back in 2017. It really won’t affect us. We still have Leaseplan, Mid-Atlantic Finance, Tinker Credit Union, Automotive Solutions and Bank of Oklahoma. “Average price was $4,775 last year. “The first sale in 2017 was good. People are optimistic. A lot of life is just how you look at things. Hopefully gas prices will continue to climb. “In December we had a neat promotion, it was my son and daughter-in-law’s idea. We went and got some nice stuff, from Burberry scarves to jewelry and designer purses – things like that. We marketed it as being for the guy who didn’t get anything for his wife or significant other. The gifts were already wrapped by the companies, so the guys could just put them under the tree. It was received really well. “I mean, how many TVs can you give away in a promotion?”
16 â€˘ January 16, 2017
USED CAR NEWS
DISCONNECTED JOTTINGS FROM So weâ€™re off to the start of a new year, possibly the start of a new era. Most people are full of trepidation and I get that â€“ even if they voted
more than a handful of office holders who donâ€™t owe their position to someone with a hand firmly planted in their pockets and can exert some
Tony Moorby â€˘ 50-year veteran of the industry â€˘ President from 1997â€“2000 of ADT Automotive â€˘ Served as ADESAâ€™s executive vice president of sales and marketing â€˘ Moorby & Associates 2006â€“present â€˘ Awarded the Ring of Honor by NIADA â€˘ NAAA Hall of Famer
for Mr. Trump. Weâ€™re into unchartered waters but isnâ€™t that what so many voters were looking for? I count myself amongst those looking for change â€“ goodness knows Iâ€™ve moaned enough about our back-scratchers in Washington. Hypocritical sniping and accusations are ricocheting all around the halls of power as finger-pointers dictate that Mr. Trump should divest himself of all his worldly interests. Really? Show me
influence over decisions they regularly make on our behalves. Whatâ€™s that expression about casting the first stoneâ€Ś? Even Nancy Pelosiâ€™s stock holdings (sheâ€™s worth over $200 million) are heavily geared to credit card and communications interests. Her husbandâ€™s an investment banker and has helped steer funds into interests that have benefitted bigtime donors to her party. It wasnâ€™t until 60 Minutes
shone a light on Congressâ€™ insider trading immunity that it stopped in 2012. Of course, they were loath to change the law that brought them so much fortune. According to the Center for Responsive Politics, over half the members of Congress are millionaires (whereas only 5 percent of their constituents are) mostly made from congressional knowledge of deals before the public was aware and able to trade on the open market. Talking of open markets, Iâ€™m sure that Mr. Trump will be made exquisitely aware that imposing tariffs on imports is a very rocky road, especially when applied to vehicle manufacture. Our new vehicle industry depends almost entirely on parts sources all over the world, not just from Mexico, Japan or China. China could probably turn off the Buick sales tap in a heartbeat. Iâ€™m not economically adept enough to figure out the checks and balances
C R O S S WO R D By Myles Mellor
Across 1. Convertible 7. Button on a James Bond Aston Martin 11. Compass point 12. Jaguar ___ 13. A3 and A5 14. Austin ____ 16. ___ stop at Indy 17. Sombrero for one 18. Goes with eggs for breakfast 21. Former line of Ford electric vehicles that were produced in Norway 22. Green, 2 words 23. Austrian mountain range 25. Cross-country and Alpine 27. Toyota minivan
31. Purchases 32. Ring site 34. Propelling force 36. Auto engine parts 39. Tit for ___ 40. Mideast hot spot 41. Isuzu SUVs 43. Light ___ feather, 2 words 44. V- ____ engine 45. Worn away 46. Changed residence
6. â€œâ€™___ death do us partâ€? 7. Oldsmobile number, 2 words 8. Like a Bugatti or McLaren 9. â€œWest Wingâ€? character â€œ___ Creggâ€? 10. Tundra and F-150 15. Cheer at a bowl game 19. Market researcher Down 20. Acura model 1. Dodge muscle car 24. Fashionable 2. Repairing the 26. Chills, as a drink exterior of a vehicle 28. Gear setting 3. Motivates to do great 29. Collectible cars things 30. Buick SUV 4. ___ target 31. Marked with a 5. Material used a lot in word or symbol luxury car interiors 33. Expression of relief
that support our own industrial infrastructure, as shaky as that may be right now, but an intricate web of international transactions and understandings form the tenuous attachments that make it work. You know what happens if you just pull a couple of points on a spiderâ€™s web â€“ the whole thing collapses into a flaccid, useless mess. Iâ€™ll bet some urgent conversations are being held at the NADA convention to try and protect the retail end of the car industry. Mark Scarpelli, the new chairman from the metro Chicago market and Wes Lutz from Michigan have their work cut out for them this year if theyâ€™re to preserve a mildly recovering trade. In the meantime, much attention is being focused on the contribution that used vehicles continue to make to the success of a dealerâ€™s
presence on the chrome strip. Certified pre-owned cars now provide a cornerstone of extra profitability as buy-here, pay-here activity is less attractive as scrutiny increases from consumer rights groups. Itâ€™s the NADAâ€™s 100th Anniversary this year, being celebrated with carnival themes in New Orleans. As attendants breath life into the tourist business there, lets hope they come up with some ideas to breath life into the retail car and truck business for when they get home. As the Chinese proverb goes: â€œMay you live in interesting timesâ€?. Thatâ€™s going to apply this year at any level of society. But I always try to be an optimist in spite of some of my curmudgeonly observations. Here, perhaps, is a more apt expression: a mind is like a parachute â€“ it only works if itâ€™s open!
To see past columns from Tony Moorby, visit www.usedcarnews.com/columnists/tony-moorby Digital version available at usedcarnews.com 1
22 23 25
35. Embossed 37. Smallest auto classiication 38. Shipwreck signal 42. Wheelâ€™s edge 43. Astonish 44. Ad medium
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*The tradename “Subaru Motors Finance” and the Subaru logo are owned / licensed by Subaru of America, Inc. and are licensed to JPMorgan Chase Bank, N.A. (“Chase”). Retail/ Loan and lease accounts are owned by Chase. *The Jaguar word mark, the Jaguar logo, and Jaguar Financial Group are trademarks of Jaguar Land Rover Limited and any use by Chase is under license. The Land Rover word mark, the Land Rover and Oval logo, and Land Rover Financial Group are trademarks of Jaguar Land Rover Limited and any use by Chase is under license. Retail / Loan and lease accounts are owned by Chase. The tradename "Mazda Capital Services" as well as the Mazda and Mazda Capital Services logos are owned by Mazda Motor Corporation or its affiliates and are licensed to Chase. Retail / Loan and lease accounts are owned by Chase. ©2016 JPMorgan Chase Bank, N.A. Member FDIC (17-002) 2/17
18 • January 16, 2017
USED CAR NEWS
AROUND THE BLOCK KAR SETS DONATION RECORD
GIVING: Major Robert Webster of the Salvation Army and KAR’s United Way Campaign Director Becky Doemland hold up one of the packages the company donated.
KAR Auction Services Inc. raised $242,884 for the United Way of Central Indiana through the company’s annual fundraising campaign. More than 330 Indiana-based KAR employees made personal contributions that were then matched by the company. The fi-
nal donation represents a 63 percent increase over 2015 and is the largest single charitable gift in KAR’s history. “As one of Indiana’s largest publicly traded companies, we are committed to supporting the communities where we live and work,” said KAR CEO Jim Hallett. “The
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United Way of Central Indiana helps our friends, neighbors and coworkers build a brighter future for themselves and their families. We are proud to be part of that important mission.” The UWCI’s goal is to help all Central Indiana residents achieve and maintain self-sufficiency by focusing on key areas of community impact – education, financial stability, health and basic needs. As part of this year’s campaign, KAR employees also assembled 450 United Way 2-1-1 kits. These immediate support packages are available free of charge to anyone in need. They include food, basic personal items such as tissues and hand wipes, and a handwritten note from volunteers. KAR employees delivered the 2-1-1 kits to the Salvation Army and the Salvation Army’s Women & Children’s Shelter for distribution.
Compiled by Jeffrey Bellant
Toy Car Raises Real Money Dealers Auto Auction Group LLC auctioned off a toy car at DAA Huntsville and raised $40,412 for the Kruz’n for a Kure foundation. The foundation aims to continue research with Stanford University to find a cure for a fatal form of dwarfism, Schimke Immuno-Osseous Dysplasia. Kruz’n for a Kure is the work of Kyle and Jessica Davenport, whose children Kruz and Paizlee were both diagnosed with SIOD. There are five cases of SIOD in the United States and less than 30 worldwide. Kruz and Paizlee represent two of these and are the only siblings with the disease. The money raised at DAA Huntsville on Oct. 28 helped to kick off SIOD research and the family is optimistic that with more funding a cure to the rare disease affecting both of their children is possible.
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: email@example.com
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