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UsedCarNews.com

November 5, 2018

Year Passes Quickly for NAAA President

Photo by Jeffrey Kowalsky HERITAGE: Warren Clauss, outgoing President of the National Auto Auction Asssociation, and incoming President Chad Bailey stand in front of a portrait of Henry Ford at the Dearborn Inn. The NAAA will host its annual convention in Scottsdale, Ariz., this month. By Jeffrey Bellant

Rush - Dated Material

DEARBORN, Mich. – A president of the National Auto Auction Association usually has a plan mapped out for the upcoming term, but sometimes the leader has to address new ideas and unexpected challenges. ADESA Buffalo’s Warren Clauss, outgoing NAAA president, turns over the president’s gavel this month to incoming President Chad Bailey of Akron Auto Auction. Clauss talked about his term recently during an interview in the city where Ford Motor Co. is headquartered. He said he enjoyed his

time in the top spot. “It was awesome,” Clauss said. “But it went quick, though. I was told it (would go quick) and it did.” Clauss said when he became president-elect, he got to travel with then-President Jerry Hinton in the year before his term. “I kind of got exposed to just about everything,” he said. “The one thing I didn’t get to do with Hinton that I got to do this year was the World Automobile Auctioneer’s Championship (at ADESA Chicago). Clauss was thrilled to serve as emcee. “That was one of the highlights of the year and something I didn’t get

to do before,” Clauss said. Although the NAAA has an orderly succession in its leadership and there is an agenda going into the year, it doesn’t mean there aren’t surprises. “You can’t really plan for the whole year, because something is always going to come up,” Clauss said. “To be honest, we were talking last year about the lack of technicians in the industry. We weren’t quite sure what to do about it.” What leadership decided was to commission industry analyst Glenn Mercer to do a study on the issue. Mercer released the results earlier this year.

Now the NAAA hopes to work with the National Automobile Dealers Association on the issue, he said. Another idea that came up in the past year is a disaster relief fund. “In the past, whenever there’s been a natural disaster, we’ve often called our members to find out if anyone is in need,” he said. “If someone is hurting, we’ll go and provide (help). “So this year, at our national convention, we’re going to have Ford Motor Co. CEO Alan Mulally sign a pedal car and have an auction. Hopefully, we’ll be able to use that as our seed money for NAAA’s Disaster Relief Fund.”

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USED CAR NEWS

November 5, 2018 • 3

Incoming President Focuses on Safety Issues (Chad Bailey, president of Akron Auto Auction, is the incoming president of the National Auto Auction Association.) UCN: Tell us about your background and how you got into the auto auction business. Bailey: It’s funny because – indirectly – I am a thirdgeneration owner-operator. We’ve been around 45 years, but this wasn’t a family plan. My grandfather started the auction with partners. Then his son, my uncle Jeff, took it over. I went to Miami of Ohio and then got my master’s degree at UWF (University of West Florida). When I finished and didn’t have a job, I moved back into my parents’ basement back in Canton. At the time, my uncle was just looking for some help. I didn’t have a job, so I worked during the days at the auction. I would bartend at night at my other uncle’s restaurant. So there wasn’t a succession plan. I had no desire or clue. I started doing more and

more at the auction and saw the opportunities there. My uncle had two daughters who weren’t involved in the business. (At that time) I had a gotten a phone call from the Hilton in Las Vegas, asking if I wanted to take over its marketing department. But I like (the auction business) and it’s family, so I told my uncle “Let’s talk about making this long term and making a career out of this.” So he said, “Let’s sit down

and figure this out.” The rest is history. It’s good because the only thing I could make as a bartender was a vodka and cranberry. So I started taking on more responsibility. A year or two later I became a general manager, then a minority partner and then majority shareholder My uncle actually lives in Scottsdale, Ariz., so it’ll be neat. He’ll actually be able to be there at the convention for me. So it’s kind of coincidental that (I’ll begin) my presidency where he lives. So it’s going to be great.

To find them, I’ve always been a big fan of referrals. If you’re a quality person, I like to believe that you surround yourself with quality people. Technology is another challenge. (The auction chains) have R&D and departments that are dedicated just to technology. We don’t necessarily have that. So the challenge is just making sure that we’re staying up to date. We talk with other independents and ask whether there are areas where we can collaborate so that we don’t have to reinvent the UCN: What are the big- wheel individually. gest challenges that you have faced as an indepenUCN: We keep hearing dent auction operator from dealers and from over the years? some auctions that cars Bailey: The challenge are hard to ind. What’s (in this business) is when happening? you’re just looking at talBailey: The common ent and trying to find qual- theme you keep hearing is ity people. It’s trying to find “There aren’t good cars. I people who just want to be can’t find a good car.” But involved. People talk about in the past, with franchise shortages in this industry, dealers, any car they took in like technicians. It’s difficult trade, they didn’t mess with to find people who it. Now a lot of them have economy lots or budget lots. They realize that some of these trades are good cars and if they put it through their service departments, it might only cost $800 to get it ready. They can make a lot more margin than they can on a new car. So these cars that used to come to me immediately, are now sitting on their lot for 30 to 90 days. We might be getting them, but the process may take longer. But I’m hearing from the banks that we deal with is that we will see more cars come offlease in 2019 and 2020.

just want to roll up their sleeves. This industry isn’t easy. It’s fast-paced. You do what you got to do. Some days you get slammed and have to be there all day. I just want people that I can trust and are hardworking that can get it. I can teach you the business. We’re not splitting the atom or doing neurosurgery. To me, I just want those core values in someone and I can teach you the rest.

UCN: What might be the efect of tarifs on the used car industry? Bailey: You can look at it in one of two ways. If someone says there will be a 25 percent tariff, for example, I have a hard time believing that Mercedes is going to take its $100,000 S-class car and mark it up to $125,000. I don’t see that happening. But on the other hand, you might have a (car buyer) who thinks, “Oh, that car is more than I’d thought it would be,” and might start looking at it in the used-car market.

You could have a large influx of potentially a new segment of used-car buyers. On the flip side, that’s one trade a dealer now isn’t taking in. So it could have an adverse effect, if the perception is the car costs too much. UCN: What are other top issues that currently concern NAAA? Are there any issues that you think are important but you don’t see being discussed enough? Bailey: One of the things we’ve talked about before is safety. We’re up to 36,000 employees within the industry that are now Safe T. Sam certified. One of the other larger chains is getting their software portal hooked up so they can get all their employees trained and that could add another 16,000. By year’s end, or shortly after, you may have 50,000 employees that have been trained on safety in the lanes. It’s important. Because I may run 55,000 cars in my auction in a year, for example, and if I had only one accident out of 55,000, you’d say, “Wow, that’s great.” But that one accident could be catastrophic on so many levels. We’ve had plenty of scares. With independents, especially, with fewer funds and resources, that might not have always been at the top of their priorities. Now, at our auction, we’re 100 percent safety certified, every one of my employees. We have safety meetings month-

ly and we watch safety videos. Our insurance company provides various things as well. Dealers are creatures of habit, but we’ve made changes so that you’re not popping the hood, you’re not opening those doors or sticking your head in the window. From the dealer’s perspective, you would have thought the world was coming to an end, but once you explain it to them, (they understand). It’s been a challenge. The other issue is what we talked about in terms of a shortage of technicians. We’ve just had a tough time finding some of those people. When I was that age, I was told to go to college to get a degree, so people didn’t get into the automotive technician field. Now I have new-car dealers telling me they’d pay technicians more than if they went to college and became a banker. But people just don’t believe it. I know dealers who will pay them $40 an hour – they just can’t find them. It’s tough in the auction business, because I don’t need them 40 or 50 hours a week. UCN: The economy is booming, but with that comes rising interest rates and some tightening in the credit market. How do you see the industry handling this and how long can this boom continue? Bailey: Typically, for us in the auction, July and August is the doldrums. Continued on page 5


4 • November 5, 2018

USED CAR NEWS

NEWS BRIEFS DriveTime Sponsors Grant Program The Fiesta Bowl announced that DriveTime has joined as presenting partner of Fiesta Bowl Charities Wishes for Teachers, a grant program that will donate up to $1 million to 200 Arizona teachers in the form of $5,000 grants this year. This is the first-ever sports partnership for Tempe-based DriveTime, the nation’s second largest vehicle retailer focused solely on used vehicles. The company operates 145 dealerships in 27 states. With the new partnership, DriveTime will sponsor the teachers’ section at the 30th Annual Cheez-It Bowl where teachers sit during the game as part of their game and onfield recognition. The company was to grant 10 teacher wishes during the first-ever Wishes for Teachers Draft Day on Oct. 25, when teachers are selected and informed of their grant award.

Sonic Debuts Latest EchoPark Store Sonic Automotive Inc. announced the expansion of its EchoPark Automotive brand to Charlotte, N.C. EchoPark is Sonic’s chain of usedcar superstores. The Charlotte location joins op-

erations in Denver, Dallas and San Antonio, Texas. Charlotte is home to Sonic’s corporate headquarters. EchoPark employees are already making an impact in the Charlotte market by volunteering their time and energy for the St. Jude organization’s 5k Run/Walk.

Lithia Partners with Shift Lithia Motors, Inc. has launched a strategic partnership with Shift Technologies, committing $54 million to lead their series D fundraising round. In October, Lithia announced Shift secured a credit line to acquire used vehicle inventory, providing the capacity to reach $1 billion in revenue. This operational collaboration resulted in Lithia receiving additional equity ownership in Shift. Shift provides consumers a digital purchase and selling experience, providing vehicle pickup and delivery at a customer’s location. Shift currently operates throughout California and is one of the largest used-car retailers in the San Francisco Bay Area. The partnership allows both companies to share technology and scale infrastructure to expand into new markets.

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Bertram Capital completed the sale of Spireon Inc. to Greenbriar Equity Group. Terms of the transaction were not disclosed. With over $3.5 billion in capital and investments in the global transportation and logistics industries, Greenbriar becomes the primary investor in Spireon as a result of the transaction. Spireon’s initial business model focused primarily on the independent used-car dealer segment. Bertram’s investment and technology teams worked side-by-side with Spireon’s executive team to drive the company’s expansion. Spireon now has a presence in the commercial fleet and transportation segments as well as a rapidly-growing service for new-car dealers.

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Toyota Financial Honors Primeritus Primeritus Financial Services received the Recovery Services Excellence Award from Toyota Financial Services (TFS). This is Toyota’s most recent supplier recognition program for fiscal year 2018. The program is intended to drive performance results in a competitive spirit amongst Toyota’s recovery service vendors. The award recognizes a vendor’s performance in results, compliance, and overall partnership, and includes a trophy that travels quarterly to each recipient’s home office.

Westlake Financial Services announces the nationwide expansion of its vehicle protection program, SecureOne. SecureOne offers two vehicle protection coverages. Powertrain covers the vehicle’s engine group, transmission, transaxle,

PAGE 14

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USED CAR NEWS

November 5, 2018 • 5

Consumer Reports Says Slow Down on Technology DETROIT (AP) — U.S. auto companies such as General Motors, Tesla and Ford faltered this year in Consumer Reports’ reliability rankings as readers reported more mechanical trouble with their vehicles. The magazine and website said all U.S.-based brands fell to the bottom half of 29 brands in the rankings. Lexus and Toyota were once again at the top. Consumer Reports got more than 500,000 responses to the annual survey of its subscribers, and it uses the data from the 2000-2017 model years to predict reliability of 2019 vehicles. The survey found that readers are having more trouble with technology designed to increase fuel economy than they are with electronic infotainment systems, which long had been a bugaboo for automakers and vehicle owners. The mechanical problems with smaller turbocharged engines and transmissions with multiple gears could leave people stranded rather than just frustrated with voice recognition or other technology, said Jake Fisher, director of auto testing at the magazine. “It’s worse for the consumer, absolutely,” Fisher said. “I would be happy to not be able to pair my phone five times than get stuck on the side of the road once.” Mazda, Subaru, Kia, Infiniti, Audi, BMW, Mini and Hyundai rounded out the top 10 auto brands. Volvo had the worst reliability followed by Cadillac, Tesla, Ram and GMC. Asian or Ko-

rean brands took seven of duced models, Fisher said. the top 10 spots. “Traditionally it’s the Tesla dropped six places older models that have the from last year and now ranks best reliability. As they cycle

extend from the body when Tesla introduced more the driver approaches. The complexity into the Model low reliability score cost the S by offering all-wheel-drive Model S its “Recommended and air suspension standard, Fisher said. The company makes hardware and software changes weekly, raising the risk of problems, he said. General Motors’ brands were hurt by mechanical problems including transmissions on its newly introduced large crossover SUVs such as the Buick Enclave, Chevrolet Traverse and GMC Acadia. Buick’s Enclave was the most reliable vehicle the brand had until the redesign, and now it’s the worst, dragging down Buick’s score, Fisher said. Cadillac, he said, pushes the edge on new consumerTOO MANY BELLS AND WHISTLES: Buick proudly displays the technology in its Buick Enclave, but Consumer pleasing technology, but that Reports is less impressed. The magazine’s readers said manfacturers are moving too quickly in adding new causes reliability problems. technology to their vehicles. Almost the opposite are Toyota and its Lexus luxury brand, which have taken the top two slots for the sixth straight year, Fisher said. Toyota is slow to introduce new technology, only now offering Apple CarPlay when other automakers did it years ago, he said. “If you’re slow to the market, you’re slow with technology, that’s the way you do get reliability and that’s how Toyota is so consistent,” he said. Consumer Reports said it 27th. GM’s Buick, normally through the fleet, we’re see- Buy” status with the maga- didn’t have enough data to a top-10 finisher, tumbled 11 ing a drop,” Fisher said. zine. Tesla’s Model X SUV rank Alfa Romeo, Fiat, Jagspots to No. 19. Ford was the In the case of Tesla, the remained “much worse than uar, Land Rover, Maserati, highest-ranked U.S. brand Model S luxury electric car average” due to problems Mitsubishi or Smart. The magazine gives more but fell three places to No. fell from “above average” with its falcon-wing doors 18. reliability to “below aver- and touch screen, while the weight to mechanical and The domestic brands age” as readers reported simpler Model 3 mass-mar- safety issues than minor largely were plagued by trouble with the air suspen- ket sedan ranked “average” problems like voice recogniproblems with newly intro- sion and door handles that in reliability. tion or wind noise.

I would be happy to not be able to pair my phone five times than get stuck on the side of the road once .” – Jake Fisher

Incoming NAAA President – from page 3 But this year we’ve seen great conversion rates and great numbers. Hopefully, it’s a trend. I was just meeting with one of our economists and a banker and they were saying they’ve been told that 2020 is when you will see a recession coming. The way I look at it, when I come to work, I see plenty of cars driving up and down the road. We still have to keep doing our job and getting those accounts. UCN: It seems like deal-

ers and auctions are continuing to take advantage of the beneits of technology. What’s your impression on this? Any speciic trends you see afecting the auction industry in the near future? Bailey: The digital component is what I’m thinking. The days are long gone when we’d pick up a car on a Sunday, run it on Monday and if it didn’t sell, well we’d try it again next week. People want their cars up for sale and marketed 24/7. Being able to have accu-

rate condition reports that truly reflect the car is huge. Again, that goes back to training. Our customers are asking for that. It’s more than fancy airbrushed pictures. The more you’re able to train your staff and going to classes and learning (is crucial). The NAAA has auction standards training and different sessions and you’re able to go to auctions quarterly and learn different things. UCN: As you take the

reins of the NAAA in November, what are some of the goals or priorities that you would most like to accomplish? Bailey: I’ve always been someone to lead by example. This past summer I went to auctioneers school so I could become an auctioneer. I want to be able to say that at my auction I can do everything. If I can become president of the association, anyone can. I just learned to get involved. So my big thing

is being able to empower these good minds we have in the industry to help better this association. There are so many people that need to get involved. There are many great minds in the auction business. I want to continue to empower people who are passionate about this business – whether it’s building up relationships with other auctions, technology, or arbitration. Whatever your passion is, bring it, because we want you here.


6 • November 5, 2018

USED CAR NEWS

Repo Firm Earns Honors By Ted Craig

What started as a small detective agency has grown into a muchawarded repossession firm thanks to a dedication to doing business with consistency. Mark Zane started Zane Investigations in his garage in 1997. The firm entered the repossession business in 2005 and now employs 32 full-time workers across five locations in Nevada. The firm recently earned the Resolution and Compliance Champion award from PAR for the second year in a row. The award recognizes repo agencies for their commitment to resolving customer issues promptly resulting in fewer customer complaints while meeting all compliance requirements and reporting on a weekly basis. “Facing added risk and navigating increased scrutiny and more stringent regulations, PAR is working very closely with its customers to ensure the highest level of due diligence and compliance,” said Lisa Scott, PAR North America president. “Zane Investigations has proven to be a strong and accountable partner in reaching this industry-leading compliance standard. We are proud to honor Zane Investigations as PAR’s 2018 Compliance Award winner.” It also received the agents’ award from Primeritus. Kristen Zane said hitting every mark for compliance is crucial in today’s environment.

“The repo industry is under the microscope,” she said. When the company started, the firm had to take every client that came its way. A major change came when the company moved into the Las Vegas Valley and started to see its fuel bills soar. In order to save money, Zane started automating and standardizing its processes. This approach grew to all aspects of the firm’s operations. This makes compliance easier, mostly by making training easier. Kristen Zane said training is more important than ever, as the firm must compete for employees. Once, it was only competing with the tourism industry, but now major companies like Tesla and Amazon have moved into the area. The actual repo drivers are paid on a salary, rather than a commission, which also improves compliance. Of course, Zane no longer needs to fill every vacancy, thanks to technology, Kristen Zane said. This includes tools from the company her brother Justin founded, ClearPlan. Another way Zane Investigations standardized was by taking the strictest contract from all its clients and applying that to everybody with whom it does business. Kristen Zane said the recognition from the industry shows their efforts are paying off and is appreciated by the staff. “It’s nice to be told they did something right,” she said.

PassTime Adds Tools PassTime recently announced a number of upgrades. The company has debuted the Elite 6 device, the latest entry in its Elite line of GPS devices. With an installer-configurable starter-interrupt setup option, installers can now integrate Elite 6 into a much broader selection of vehicles than ever before. The setup configurations also allow Elite 6 to more easily address the challenges posed by newer ignition technologies found in push-button start vehicles as well as many advanced stop-start engine systems. Elite 6 also features LTE communications for superior network longevity as well as a discrete, precision GPS system for enhanced location pinpointing. In addition to the advancements in installation flexibility, Elite 6 also boasts a 20-percent size reduction. Further, Elite 6 contains advanced self-override features that give consumers multiple options, including a mobile app, to utilize disable over-

ride commands. Elite 6 will begin shipping to PassTime customers in early November. PassTime also has launched InTouch Summit, an all-new device management portal for its InTouch product line. InTouch is a GPS solution connecting vehicles for dealers and consumers. Dealers use InTouch to monitor inventory on their lot, keep track of test drives, and as a theft recovery tool. Consumers who purchase InTouch from an authorized dealer can use InTouch’s connected car features for vehicle monitoring and theft recovery. InTouch Summit, the customer portal where dealers manage their InTouch devices, features a completely redesigned interface, faster actionable items, enhanced data analytics, and a better overall user experience. InTouch Summit is currently available to select customers.


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8 • November 5, 2018

USED CAR NEWS

CarMax Adds Two Stores REMARKETING ARTIST OR SCIENTIST?

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CarMax Inc. opened a pair of new stores recently. CarMax’s debut in Corpus Christi, Texas, is the company’s first store in the area and its 19th location in Texas. The Corpus Christi store has the capacity to stock approximately 140 used vehicles. In celebration of the Corpus Christi store opening, CarMax and The CarMax Foundation are awarding $12,500 in donations and grants over the next two years to the Coastal Bend Food Bank. The donations for this organization came at the recommendation of the Corpus Christi CarMax associates. CarMax also opened a new store

in Lafayette, La. The Lafayette store is located at 5825 Johnston St., and has the capacity to stock approximately 170 used vehicles. This is the company’s second store in the state. CarMax will soon open a third Louisiana store, located in Shreveport. In celebration of the Lafayette store opening, CarMax and The CarMax Foundation are awarding $12,500 in donations and grants over the next two years to the Boys & Girls Clubs of Acadiana. The donations for this organization came at the recommendation of the Lafayette CarMax associates.

Pols Caught in Car Scam Tammy Swofford, America’s Auto Auction

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EAST PROVIDENCE, R.I. (AP) – Rhode Island authorities say a former state lawmaker and a former mayor were among three people charged with illegally collecting fees from customers at a used-car dealership. State police said they arrested former state Rep. Thomas Palangio, of Cranston, former East Providence Mayor Bruce Rogers, of East Providence, and Anthony Pate, of Cranston. Police say they collected more For Cars, Trucks and Vans

than $150,000 in fees from 31 customers at the now closed dealership. Police allege the illegal fees included a warranty fee for a warranty that was already included in the cost of the vehicle, and an insurance cap fee they were not allowed to charge because they do not have a license to sell auto insurance. Palangino served in the state House from 1993 to 2002, and then again from 2013 to 2017. Rogers is also a police officer.

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USED CAR NEWS

Feds Settle Fake Recall Case A dealership group and its top executives have settled Federal Trade Commission allegations that they mailed more than 21,000 fake “urgent recall” notices to consumers in 2015 and 2017. The scheme was designed to lure these consumers to the dealerships. The FTC also has agreed to a settlement with a California-based marketing firm and its owner that designed the fake recall notices and worked closely with the dealership defendants to send them, according to the complaint. According to the FTC, the vast majority of the vehicles covered by the notices did not have open recalls. “Many vehicles currently on the road are subject to open safety recalls. Legitimate recall notices sent by manufacturers and auto dealers are essential to getting those vehicles fixed quickly,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “However, deceptive fake recall notices may not only trick consumers into visiting a dealership, but also may cause them to ignore legitimate recall notices in the future, risking their safety.” The affected dealerships do business as Passport Toyota and Passport Nissan of Alexandria, Va., and Passport Nissan of Marlow Heights, Md. The two dealership executives who agreed to the settlement were Everett A. Hellmuth, the founder and president of the dealerships, and Jay A. Klein, Passport’s vice president. The marketing company, Temecula Equity Group, LLC, does business as Overflowworks.com, and Jeffrey R. Bush is its founder and CEO.

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According to the FTC’s complaint, in early 2015 the defendants mailed fake recall notice postcards to nearly 7,000 Toyota owners. The complaint alleges the defendants made no effort to limit the mailing list to consumers whose vehicles were subject to open recalls. The notices warned consumers about supposedly urgent recalls, with prominent language such as “urgent recall notice” in large, boldfaced, uppercase letters. According to the FTC, despite numerous complaints, the defendants sent virtually identical “urgent recall” notices to more than 14,000 Nissan owners in June 2017. The FTC alleges the defendants again failed to take steps to ensure that the consumers who received the Nissan notices had vehicles with open recalls. The vast majority did not. The complaint alleges that the defendants sent the mailers to increase business at the dealerships’ service departments, not to alert consumers about actual recalls. According to the complaint, after receiving the fake recall notices, hundreds of vehicle owners contacted Passport’s call centers. Many of the callers were told they had to go to the defendants’ dealerships to learn whether their vehicle was actually subject to a recall. The FTC filed a federal district court complaint against the defendants alleging that the Toyota and Nissan recall notices were deceptive. At the same time, the FTC filed proposed orders signed by all of the defendants settling the allegations and prohibiting the defendants from deceiving consumers in the future.

DealShield Gains Independents DealShield’s DS360 Guarantee is available to a new group of independent auctions, thanks to an integration with the Edge AuctionOS platform. Over 100 Auction Edge partner locations can now sign up to offer their buyers the peace of mind that DealShield provides. Central Auto Auction in Hamden, Conn., is the first independent auction on the Edge AuctionOS platform to leverage the new integration. With the guarantee, dealers can purchase a vehicle at a participating auction in-lane or digitally, and if it doesn’t meet their expectations, return it to any location in the DealShield network for a full refund of the vehicle purchase price and buy fee. There is no arbitration required and no questions asked. The Auction Edge and DealShield

partnership began with an opportunity for Edge ASI auctions to join the DealShield network in 2017. Since then, over 35 independent auctions on the Edge ASI platform have secured the loyalty of thousands of DealShield dealers. In other Manheim news, the auction chain is offering its dealer clients an exclusive 60-day free trial of Central Dispatch. The Central Dispatch Instant Access promotion is available for sign up through the end of the year. The subscription service connects shippers directly with a network of nearly 12,000 transport carriers. Available to Manheim dealers who do not have an active Central Dispatch subscription, the Instant Access program enables them to have access to the self-managed transportation solution, with a fast sign-up process and no credit card required.


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14 • November 5, 2018

USED CAR NEWS

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NEWARK, N.J. (AP) - A federal court has dismissed a lawsuit brought by the widow of automaker John DeLorean over royalties stemming from the “Back to the Future’’ movies. Sally DeLorean claimed a Texas company using the DeLorean name had illegally accepted royalties from Universal Pictures for the promotional use of images of the iconic car. But a judge ruled that a 2015 settlement agreement in a separate lawsuit over trademarks prohibited her from suing for the royalties. The sleek, angular car with gullwing doors was featured in the movie franchise starring Michael J. Fox about a kid who travels back in time to engineer his parents’ meeting. In her lawsuit filed in April, Sally DeLorean, who lives in New Jersey, claimed the Texas-based DeLorean Motor Co. had illegally profited from a 1989 agreement between her late husband and Universal. That agreement gave John DeLorean and his heirs 5 percent of net receipts for any merchandising and promotions that featured the car and logo “as a key component.” The Texas company isn’t affiliated with the one John DeLorean started, but under the 2015 settlement agreement was allowed to use the DeLorean name and trademarks. Sally DeLorean claimed in the current lawsuit that the Texas com-

pany had illegally represented to Universal that it had the right to the royalties and had already received a substantial payment’’ from Universal. She argued in the lawsuit that the 2015 settlement didn’t transfer contractual rights to the company. In his opinion, U.S. District Judge Jose Linares wrote that the 2015 settlement agreement covers the Universal agreement even though it doesn’t mention it explicitly. “As both agreements apply to the use of the word DeLorean and the DMC logo, and relate to the DeLorean automobile’s image, the Court concludes that the subject matter of the agreements overlap,’’ he wrote. Attorneys for the two sides didn’t immediately respond to requests for comment. John Z. DeLorean left General Motors in the 1970s to start his own company and eventually produced the distinctive DMC 12, which became known simply as “the DeLorean.’’ Only about 9,000 of the cars were produced before the company went bankrupt in the early 1980s, but it attained cult status due to its inclusion in the“Back to the Future’’ movies. DeLorean died in 2005. His former estate in the rolling hills about 50 miles (80 kilometers) west of New York was converted into a golf course by then-developer Donald Trump in 2004.

Dealer Sold Unrepair Recalls The owner of a Kansas car dealership has entered into a consent judgment based on allegations he failed to disclose safety recalls, attempted to disclaim implied warranties, failed to disclose material facts about the car and the transaction, and used an unlicensed salesperson. The agreement between Jorge Rodriguez, owner of Rodriguez Auto

Sales of Wichita and the Sedgwick County District Attorney’s Office calls for him to pay $17,500 in civil penalties, restitution, court costs, and fees. The agreement also requires him to check all his vehicles for recalls and fully disclose the recalls before selling the cars to consumers. Jorge Rodriguez admitted to the allegations.


USED CAR NEWS

November 5, 2018 • 15

Mechanic Saves Micros By Barry Adams Wisconsin State Journal

SPRINGFIELD, Wis. (AP) – Chris Beebe-owned and operated Foreign Car Specialists in Madison, Wisc, for more than 45 years, until he closed the doors in 2014. But Beebe’s latest effort is testing all of his skills, patience and his 73-year-old knees and back. Since late August, Beebe has been self-sequestered in a storage shed on a farm north of Middleton and just west of Ashton where he is working to dry out, repair and restart 15 cars and 13 motorcycles from the Midwest Microcar Museum in Mazomanie that were damaged in August when torrential rains flooded the village. Water reached the bottom of the windows of the museum’s historic buildings and filled not only the passenger compartments of the cars but also the engines, lights and any other cavity below the waterline. And the water was far from clean. It contained not only mud, debris and likely sewage, but also oil from the vehicles. So when the water receded, every German Messerschmidt and Heinkel Bubblecar, East German Trabant and English Bond were not only soaked but left covered in a film of oil. Even the Amphicar, a car that doubles as a boat, was damaged. It failed to float and the seals on its doors were compromised, which flooded the interior. “I’ve seen everything here but I haven’t seen the internals of many of these so it’s been a real eyeopening experience,” Beebe told the Wisconsin State Journal as he took a break from cleaning the starter for a French-made Renault 4CV. “You just have to be sensitive as to what water got into what. It’s really ugly, but at least it’s not salt water, which is much more corrosive.” The water quickly receded and the vehicles were pulled from the six inches of sludge that covered the museum floors before they were hauled in multiple trips by trailer 22 miles to the farm shed. But the restoration efforts are complicated by the design of the vehicles. The microcars have limited access to the engine compartments so Beebe wears kneepads and a headlamp. In some cases he has to crawl through interiors to reach small openings in the back of a vehicle to where the engine is located. And the engines themselves, in many cases, are glorified lawnmower engines. That means there are no drain plugs so motors need to be tilted to drain, which really isn’t an option since they’re installed in a car body. Putting the vehicles on a lift doesn’t work because of their odd

designs, although Beebe thought about lifting the cars and then attaching straps and inverting the vehicles. But because of the logistics, he has instead chosen to drill into the engines small drain holes that are then threaded and plugged once the water is removed. De-humidifiers and fans have been constantly running in the shop and at the museum buildings, while the seats and other interior coverings have been removed and are now laid out on the floor of the shed until they can be repaired and put back into the vehicles by Vic’s Auto Upholstery in DeForest. Tags with detailed notes have been attached to each car and motorcycle indicating what has been done so far in the restoration process. Carlo Krause is a longtime car collector who opened the museum in 2015. Krause bolstered his car-collecting hobby after health problems forced him to retire about 20 years ago from his business designing and selling components for automated processing machinery. Krause and his son, Sven, got the idea for the museum after some of their microcars were showcased at a three-day car show at Discovery World in Milwaukee about five years ago. The exhibit drew more than 4,000 people. The first museum building is located in the former blacksmith shop of John Parman, who built the facility across the street from his 1864 brick home that still stands across the street. All of the vehicles on the ground floor of the building were damaged, but 10 microcars on the second floor remain in place and were unscathed. The remainder of the collection is about 25 yards to the west in the Mazomanie’s town hall, constructed in 1878 but now owned by the village. Krause began leasing space in the building in 2017, made improvements to the structure and had cars and motorcycles on the ground floor and about 15 motorcycles on the second floor. Most of the 30 microcars in Krause’s free museum are from the 1950s and 1960s. Microcars became popular modes of cheap transportation after World War II and were built by manufacturers across Europe. Beebe had visited the Microcar Museum just a week prior to the flood and reached out to Carlo Krause shortly after learning of the museum’s plight. Just days later he was at Krause’s farm shed, which holds other cars in Krause’s collection. “He’s a gift from God,” Krause said of Beebe. “You’d never find another guy around here that even comes close to what this guy is doing.”

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16 • November 5, 2018

USED CAR NEWS

PEOPLE IN THE NEWS Compiled by Jeffrey Bellant

Carolina Auto Auction has expanded its management team, naming two assistant general managers.

MATT FETTER Both will report to Eric Autenrieth, the auction’s general manager and managing partner. Joe LeMonds has been promoted to the post of assistant general manager of sales and marketing. New to the auction is Vann Humphrey, who

has been named assistant general manager of operations. LeMonds has worked for Carolina Auto Auction since 2015, most recently as national remarketing manager. In his new role, he will continue to oversee the auction’s national accounts as well as managing both the fleetlease and dealer sales team and the auction’s marketing efforts. Humphrey is new to the auction. He was an auction customer for many years as the director of remarketing for First Investors.

RVI Names Business Director RVI Group announced that Wei Fan will lead the Passenger Vehicle Insurance and Analytics businesses. The two businesses are being consolidated. RVI Analytics was

launched in partnership with Maryann Keller & Advisors (MK&A) earlier this year. Fan holds a Ph.D. in economics from the University of Michigan and a master’s in physics from the University of Delaware. Prior to joining RVI, he was the director of used vehicle market solutions for JD Power & Associates. Since 2007, Fan has had extensive experience with RVI’s Passenger Vehicle Insurance and Analytics business as the head of the Quantitative Analysis team.

CarMax Adds to Board The board of directors for CarMax Inc. has elected Pietro Satriano to membership on the board. Satriano will serve on the Nominating and Governance commit-

tees. Satriano has been the chief executive officer and a director of US Foods Holding Corp., a publicly held foodservice distributor, since 2015 and chairman of

ERIC AUTENRIETH the US Foods board since 2017. Previously, Satriano served as chief merchandising officer of US Foods from 2011 until 2015. Before joining US Foods, he was president of LoyaltyOne Co. and served in a number

of leadership positions ServNet’s officers at Loblaw Companies include John Poteet Limited. (Louisiana’s 1st Choice Auto Auction), treaServNet Elects Board surer; Bruce Beam

Directors

ServNet recently elected two new members to its board of directors. Ryan Clark, director of Greater Rockford Auto Auction, and Matt Fetter, president of Clark County Auto Auction, were elected to the board at a recent ServNet owners’ meeting. The pair replace outgoing board members Steve DeLuca of Auto Auction of New England and Ashley Dietze of the W. Walker Auction Group, both of whom completed twoyear terms. Clark and Fetter join Beth Barber (State Line Auto Auction), who will continue as a director for an additional year.

PIETRO SATRIANO (Dealers Auto Auction of Oklahoma City), vice president; Eric Autenrieth (Carolina Auto Auction, Indiana Auto Auction), president; and Kevin Brown (Missouri Auto Auction), Chairman of the Board. ServNet is a network of independentlyowned wholesale auto auctions.

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Auction Names Assistant Managers


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18 • November 5, 2018

RETAIL MARKETS FLORIDA Kirk Thomas, owner/ president, Golden Oldies Auto Sales, Hudson, Fla.: “We’ve been in business 22 years. I have two locations. They are on opposite sides of Hudson, Fla., about 10 miles apart. “I keep about 200-plus units between the two lots. By the first of the year, I always try to have it up to 250. Tax season is our breadand-butter. I buy the cars all myself. I go to three auctions a week. I also still have a lot of dealer contacts. My granddad was a car dealer and my dad was a car dealer. I’m lucky to have friends. “I use Manheim, I use XLerate – which is Your Auction of Tampa Bay – and Dealers Auction Xchange, which is a new auction that opened in Hudson. “I’m actually carrying more now than this time last year. I’m carrying about 240. But 49 are in recon. “We have 600-feet (of frontage) on both lots. We get a lot of repeat business

and a lot of drive-by business. “Year-to-date, we sell about 88 cars a month. We’re 15 units (per month) ahead of last year. “Over the years, the business (has remained) onethird cash deals, one-third primary finance and one –third secondary finance. A lot of people actually still pay with cash. “My average retail is about $16,000. “The average model year is 2013 to 2014. I try to keep under 100,000 miles, unless it’s a trade-in that’s in decent shape. The whole idea of selling a nicer car is to get a nicer trade-in. But I don’t get enough of those. I can probably use 15 a month (to put on the lot). We also wholesale 10 a month from trades. “But I also have a couple of 2018s each with 6,000 miles. I’ll buy the Enterprise cars. I have a little bit of everything. “SUVs are a large part of the mix. So probably 25

/AuctionMgt

/AuctionMgt

percent are SUVs, probably 20 percent minivans and the rest are cars. Minivans have become a big market. “I’m heavy on the import side for the cars. On the trucks and minivans, it’s more domestics. “Reconditioning is $700 per vehicle. But I have my own shop so pretty much everything is done in-house. “A majority of our advertising is Internet, with things like CarGurus and Cars.com. “I also use television. Probably 40 percent of our budget is in TV for the local markets. We use Bay News 9 (a local cable news network). It’s a 24-hour news channel. When you turn your TV on this market, that’s the channel that comes on. It’s like ‘weather on the 9s’. When you go to the doctor’s office or anywhere, it’s the channel that is most on. “We just delivered a 2017 Volkswagen Passat. It had 12,000 miles. It sold for $21,500.”

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$ MISSISSIPPI Josh Seal, operations manager, Riverside Auto Sales, Gautier, Miss.: “We’ve been here eight years. We have two locations, Gulfport and Gautier. “We keep about 80 in stock. We’re probably up a little bit from last year. We’re just trying to grow. We used to keep 60. “We sell about 35 per month. “Mostly we sell retail and a little bit of subprime. We’ll increase a little bit to a lease-to-own inventory for tax season. “Mostly we get our cars from auctions. We also get some through trades and some wholesalers. We go to (Manheim) Pensacola, Hattiesburg (Manheim Mississippi), and Slidell, La. (Manheim New Orleans). “We also go to Long Beach Auto Auction in Mississippi. “Our sales in September and October have trended up from the year before. “Our average retail price is $20,000.

$

USED CAR NEWS

Compiled by Jeffrey Bellant “We try to stay eight years old or newer, and 100,000 miles, give or take. It’s a lot more work than it used to be to acquire inventory. I still like to put my hands on the vehicles and look over them. “Our biggest niche would probably be trucks, even though we sell an equal amount of cars and SUVs. “With trucks, they are mostly domestics, while cars will be a little bit of a mix of domestic and import. “We average about $500 a unit for reconditioning. We do that all in-house. “We use all the traditional (digital advertising) like CarGurus, AutoTrader, Kelley Blue Book, Cars.com and some Facebook advertising. Occasionally, we’ll do some radio. Most of our leads come through the Internet. “One recent truck we sold was a 2014 Chevy Silverado. It had 64,000 miles and we got $34,000. “The local economy is steady.”


USED CAR NEWS

November 5, 2018 • 19

WHOLESALE MARKETS Compiled by Jeffrey Bellant ILLINOIS Shawn Glatz, general manager, Morton Auto Auction, Morton, Ill.: “The auction has been in business since the winter of ’78, so it’s 40 years. That was the blizzard of 1978. The story here is that we had snowdrifts over the eightfoot fence-line and they were taking dealers back and forth over the fence on snowmobiles. “We have four lanes. We’re running in the 500- to 600car range on a weekly basis. We are down a bit from last year with both sides of the business. Dealer consignment and the fleet-lease side of the business have been down a bit. Repossessions have been a little bit higher for us. “Our percentages have been steady in the lowto mid-60 percent range. That’s been pretty steady throughout 2018. “The mix of (dealer to institutional) is 75 to 25. On the institutional side, we do business with ARI and Re-

marketing by Element. “We just had our first sale for Westlake Financial (in October). “It’s definitely been a struggle here locally for our dealer base. With that said, they are still selling cars, so things are OK. “It seems like the demand is out there, but they do struggle in finding and sourcing cars. They’re going outside their normal realm to find cars. “The dealer trade is definitely different than it has been historically. That trade-in that the consumer is bringing in to the dealer is older, edgier and has more miles on it. “We’re directly between St. Louis and Chicago. Our core selling base is fairly local. “Our buying dealers come from everywhere, obviously, with Internet sales that grow exponentially. We’ve signed up 275 new dealers just this year. I think close to 150 of those are online through Edge Pipeline.

“About 8 to 10 percent of our total sold cars are touched by the Internet. I never thought I’d see the day we’d sell a 1998 Bonneville online, but stuff like that happens every week. “Our average price in the lanes is around $5,300 to $5,400. “We’ve historically been known as a great truck market. The fleet companies have done business here for 25 years. For three years in a row, we were the regional auction of the year for ARI. “Traditionally, this is the time of the year when the market corrects itself and we have seen that. But I think demand is still out there, especially for decent cars with good miles. They are going to break the bank.”

NEW MEXICO Ray Vickers, owner/general manager, Farmington Auto Auction, Farmington, N.M.: “We’ve been in business since 1994. We have two

lanes and just use one. “We’ve really had a tough summer. Volumes have been down all summer. We’re down about 20 percent. The local economy was really tough all summer. “Starting in September, it began to fight back so we’ve seen things get better. “We had a really good September and October was good. We feel good about the future. “Our conversion rates are about 65 percent. “We have dealer consignment and we have a lot of repos. We also have fleet-lease units and the GSA contract. Dealer consignment conversion rates are down a little bit, except for newcar trades. Those have been strong. “Title loan repos are up. The other bank/credit union repos are down a little bit. “(Dealers in the lanes) have said it’s really been a tough summer for the buyhere, pay-here guys and smaller dealers. “The new-car stores did

fine. “I think the independent used-car dealers are seeing the business change a lot. I think the money has been so easy, that no matter how bad your credit has been, you don’t have to drive a low-end car. The guy that used to buy a $1,000 car can now buy a $3,000 or $4,000 car. “GSA sales are once a month from our region. Those are sedans, SUVs and trucks with good mileage. They are good vehicles. We’ll run between 75 and 100. But those taper down at the end of the year. The overall volume of GSA was down this year.” “The average price in the lanes is about $3,500. If you include the GSA, it’s somewhere around $11,000. “Because of our location – being off the beaten path – we get a lot of online buyers, especially for the GSA. We also work hard at our customer service. We’ll answer questions on the phone about the cars, go out and test-drive them.”

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20 • November 5, 2018

USED CAR NEWS

DISCONNECTED JOTTINGS FROM They say that disasters occur as a result of a string of smaller events going wrong. I can attest to that. Six weeks ago, the circuit board in our dishwasher went pop so we couldn’t run the normal programs and it failed to drain the inal rinse water. Time for a new machine and we decided to replace the kitchen sink at the same time. I’m familiar with Bosch dishwashers, as I’ve had them before. They’re quiet and reliable – and expensive. So I visited the large do-ityourself superstore with an orange logo and the staf, including the men, wearing orange aprons with their names on them. The assistant in the appliance department suggested that GE made a quiet machine that was half the price of a Bosch and was as reliable. I’ll say this up front – I’ll never spend one more red cent of my money on any GE product ever again, not even a light bulb! Their shabby

TONY MOORBY

machines are built halfway ’round the other side of the world and their customer service is Medieval. In fact it’s non-existent. Let me explain. The assistant suggested I order both the sink and the dishwasher online “as it would be quicker and easier,” arranging for them to be delivered and installed at the same time. I inquired about itting the sink in the existing hole and was assured it would be a simple drop-in. The irst attempt at installation was aborted, as my machine needed an extended drainpipe. “Is this fairly common?” I asked. “Oh yes, happens all the time,” was the glib reply. “So why don’t you carry some on the truck?” They didn’t and they didn’t care. “You’ll have to order one.” I tried going to the large do-it-yourself superstore with the orange logo thinking I might get one of the shelf. Not! The assistant whispered

apologetically that ordering it from Amazon would be quicker and less hassle. The delivery and installation crew left the dishwasher in the hall, still in its factory container, unopened and standing on a blanket. The sink installation was equally problematic. It didn’t “drop in.” There was a tack-welded stifening rod on each edge, preventing its insertion. “You need a diferent sink or get your granite cut to the new size,” was the dexterous observation by the mental giant sent to do an intelligent job. The faucet, drain, sprayer, stoppers and so on were put back in their boxes to join the dishwasher ornament in the hall. A builder friend of mine located a stonemason a couple of days later who resized the hole, as necessary. In spite of two high-powered vacuum cleaners, the mica-sized dust wafted to every nook and cranny in the house. Luckily, my wife was away

and I managed to do, what I thought, was a masterful job at cleanup. Upon her return she disagreed. Amazon, as usual, performed perfectly and delivered the extended drain tube so a new date was set for the dishwasher installers to come back. Once again, they couldn’t install it, as the sink folks hadn’t turned up – we needed the sink installed to allow the dishwasher to use its drain. My frustration meter was on the rise. We had some folks com-

Tony Moorby • 50-year veteran of the industry • President from 1997–2000 of ADT Automotive • Served as ADESA’s executive vice president of sales and marketing • Moorby & Associates 2006–present • Awarded the Ring of Honor by NIADA • NAAA Hall of Famer • IARA Circle of Excellence

To see past columns from Tony Moorby, visit www.usedcarnews.com/columnists/tony-moorby Digital version available at usedcarnews.com

C R O S S WO R D By Myles Mellor

Across 1. Car with a roof that folds down 6. Instrument panel part 10. ___ Diego 11. xc90 for one 12. Impreza and Legacy 15. Ford’s entertainment system 17. Motors 18. Cellular stuf, abbr. 20. Maintenance action 22. Elder 24. Fuel 25. Ford’s ___sport 26. Hyundai litback 27. Medical check-up professional, abbr. 28. And the others, for short 30. Energy saving type of light, abbr.

32. Not properly tightened 34. Transmission ending 35. English sports car brand that competed in Formula 1 and Le Mans races for many years 38. Former Saturn compact 39. Approve silently 41. Element or Pilot, e.g. 42. Type of braking system 43. Stylish 45. Beauty 47. Alluringly attractive 48. Bolts partner 49. Reverse or irst, e.g. Down 1. Honda SUV 2. Circular road

ing over for dinner and the thought of dealing with the aftermath of dishes with a bar sink was too much. I spoke to a manager at the large do-it-yourself superstore with the orange logo and told him that I would arrange for a local plumbing company to install both items on a Sunday morning at my own expense. He said to go for it. I did but that did not end this tale of woe. It goes on as I write this and I hope it has resolution by the time I write next. I’ll be in touch.

1

3. Shade of white 4. Weight abbr. 5. Keyboard key 6. Repair shop 7. Navy ship intro 8. Peach state, abbr. 9. Consumer, 2 words 13. Skywards 14. Overnight stay place 16. French automaker 17. Luxury sports cars might be described as this 18. Honda SUT 19. Selling condition (2 words) 21. Aka parking brake 22. Toyota SUV 23. Buick SUV 29. Vital part in many technological systems in cars 31. Durango maker 33. Cry

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46. British sports car

Solution to this puzzle in the 11/19/18 issue. Call 1.800.794.0760 for a FREE subscription.

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Solution to the10/15/2018 puzzle


22 • November 5, 2018

USED CAR NEWS

AROUND THE BLOCK IADA SALUTES AUCTION’S EFFORTS

HELPING OUT: Charleston Auto Auction General Manager Laura Taylor and assistant general manager Jason Moritz display their award from the Carolinas Independent Automobile Dealers Association.

Charleston Auto Auction was awarded the Carolinas Independent Automobile Dealers Association Waymaker Learning Community Service Award. Charleston Auto Auction has been closely involved with Proj-

ect H.O.M.E, a cause supporting local homeless teenagers that have a will to continue their education at Stall High School in North Charleston, but unfortunately do not have a home to call their own. A home was built

in close proximity to the high school and staffed with Project Home parents to assist with the needs of the teens housed there. The auctions team has currently raised over $60,000 for Project H.O.M.E and has no intention of ending their support. General manager Laura Taylor and assistant general manager Jason Moritz both currently sit on the board of directors for Project H.O.M.E and take a personal interest in helping support our local youth. In addition to Project H.O.M.E, the auction truly shows their community support assisting other causes, including Low Country Food Bank, Victory Junction, Dorchester Children’s Center, Low Country Orphan Relief, SPCA, and others.

Compiled by Jeffrey Bellant

Dealership Group Gives Away Prizes Dealers Auto Auction of the Rockies partnered with Larry H. Miller Automotive with a Kick Off to Football Season promotion in August. Larry H. Miller Automotive consigned over 300 units from all its Colorado stores for the month of August. All buyers of Larry H. Miller vehicles during the Aug. 16 and 20 sales were entered to win a drawing that took place in the lane after their run. On Aug. 13, Larry H. Miller Automotive ran over 150 vehicles and gave away an 82-inch Samsung television. The lane was packed with buyers bidding for a chance to be entered. Brian Brinkley with Cool Rides of Colorado Springs was the winner of the television. Tickets to the Denver Broncos vs. the Seattle Seahawks home opener was the big giveaway on Aug. 30. The winner was Jason Calaway with Mile High Auto LLC.

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: jeff@usedcarnews.com


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Used Car News 11/05/2018  
Used Car News 11/05/2018