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UCN

Used Car News

usedcarnews

11/23/2020

Industry Prepares for Change at the Top By Jeffrey Bellant

karglobal.com

IN THIS ISSUE:

• HURRICANE RECOVERY • CHARITY

Rush - Dated Material

• RETAIL MARKETS

Former Vice President Joe Biden is expected to be sworn in as the 46th president of the United States, although President Donald J. Trump, at press time, was still contesting through lawsuits the results in several states. It was Biden’s third attempt to win the presidency and this time the election wasn’t called by the media until several days after election night. A Biden adminstration will be facing several challenges, from the ongoing COVID-19 pandemic, to the economic challenges caused by lockdowns and a divided Congress. While Biden’s Democratic Party will still have a majority in the House of Representatives, it unexpectedly lost more than a half-dozen seats this year, with several races still too close to call nearly a week after the election. In the Senate, the Republicans hold a two seat edge, 50-48 with two Georgia Senate runoffs scheduled for Jan. 5. Those races will decide the balance of power in the chamber. If the GOP wins at least one of the seats, it will hold a one-vote majority. If the Democrats win both – making the split 50-50 – they will effectively have control of the chamber since the Vice President breaks ties in the Senate. Good news for Biden was the announcement that a COVID-19 vaccine was on the way. Ironically, the Trump administration’s efforts to speed up the development of a vaccine will likely be a boost for his successor. On other issues, Biden has mapped out a path much different than Trump. Biden has already stated he will repeal the Trump tax cuts while

focusing on healthcare, climate change, infrastructure and immigration, among other issues. Biden has also said he would raise taxes on those earning over $400,000. The reaction from the industry

administration did nothing for small business. But economists with Cox Automotive were more optimistic. Chief Economist Jonathan Smoke said a Biden administration means

Photo By Jeffrey Bellant BIDEN HIS TIME: Then-Vice President Joe Biden tours the 2017 North American International Auto Show in Detroit. Three years later, he is preparing to become the 46th President of the United States.

has been mixed. Longtime dealer Henry Mullinax said he’s only voted Democrat one time in his life – Jimmy Carter. He said the issue then is the issue now. Mullinax does not think Biden has the strong leadership needed for the job and questions whether he will garner the confidence of the entire country. “I’m afraid that the economy will suffer and it will be a tough time,” he said. “The Republicans holding the Senate is the only firewall we have.” Earlier this year, other dealers had praised Trump’s leadership in providing a relief package that included help for small businesses. One dealer said that during the recession in 2009, the Obama-Biden

“reduced friction” in trade. A stimulus package is also expected, though it may have been bigger if Democrats had done better down the ballot. The divided Congress should present one benefit, Smoke said. “Without full support in Congress, the biggest negative of a Biden administration – sweeping tax policy – will be harder to achieve. That’s good for maintaining luxury demand and avoiding anything outlandish with corporate taxes that could complicate depreciation of fleet vehicles.” Cox Senior Economist Charlie Chesbrough added there will be less uncertainty under Biden, especially in trade after Trump pulled out of the Trans-Pacific Partnership.


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Auctions 11/23/2020

Auto Auction Battles Through Pandemic, Two Hurricanes By Jeffrey Bellant

One pandemic and two hurricanes add up to a brutal year for Lake Charles Auto Auction. But owner Matt Pedersen is not only pushing through it, he and his staff are helping others along the way. Lake Charles Auto Auction is a four-lane sale originally owned by Matt’s father, Mike. “We sell about 11,000 cars per year,” said Pedersen, whose slogan is, “We are Louisiana’s Frontline Leader.” But earlier this year, it became the frontline of two destructive storms that hit the area. On Aug. 26, Hurricane Laura, a Category 4 storm, pounded Lake Charles, La., and the auto auction suffered massive damage. “The detail shop was gone,” Pedersen said. “The whole metal building was gone. We didn’t even find it anywhere. “I have 11 bay doors on my auction barn and all 11 doors were gone, ripped in half. The inside of the auction barn – as you can imagine – was just demolished.” Minor structures were also lost in the storm. “It demolished every outside building,” Pedersen said. “Any awning or any lean-to – any stuff like that – weren’t even on the property,” he said. The auction also had a lot full of cars but consolidated them and tried to keep them secure. “Still, I’d say about 90 percent of the cars had busted windows and shrapnel – you can just imagine metal flying, just hitting cars,” he said. Three months after that first hurricane, he’s still got workers at his home repairing damage. Pedersen said the front office – less than two-years-old – had significant damage, but still did OK compared to some of the other parts of the property. “We’re working out of it,” he said. Pedersen said after the storm auction workers immediately began the rebuilding process. “During those three weeks we were down, we were just working our butts off,” he said. “We had to put a tent up (as a makeshift auction) that’s costing me a crazy amount of money each month. But you have to do what you have to do.”

Photo Courtesy of Matt Pedersen RIDING THE STORM OUT: Lake Charles Auto Auction was hit by two hurricanes over a six-week period. The auction still had time to serve as a food distribution site (top left) despite damage to the auction (top right). The sale is currently operating out of a rented tent (bottom).

By the fourth week, the auction held a sale, followed by a “pretty dang good auction,” and then the next week Pedersen was planning the auction’s 29th anniversary sale. “I mailed out 5,000 flyers – and then Delta hit in October,” he said. “Delta” was Hurricane Delta, the fourth hurricane to strike Louisiana and the second to hit Lake Charles Auto Auction. “The wind damage wasn’t as bad, but it flooded the whole town,” Pedersen said. Residents who had piled up all the debris from the first storm saw it all scatter again after the second hurricane. Fortunately, no one that Pedersen knew was harmed in either hurricane. After Delta, the auction missed just one sale and dealers were shocked that Lake Charles Auto Auction opened back up so quickly – for its anniversary sale. “We just did it, man,” he said. “My

thought process was, if we could just have this anniversary sale, it would be a good kickoff to get back in, following the storm. “Our whole team felt the support from the dealers.” The rebuilding process has continued and the auction is still working out of the tent. Pedersen said every auction in the state has reached out to him to offer help during these storms. “Some of them came out and cooked for all of my employees and people in the area,” he said. “One auction sent me a check. We’re competition for each other every week, but at the end of the day, they came out and helped us. “A car dealer even sent us a check for $1,000.” Pedersen said the support made it hard to get too down, even considering all that happened. Despite what the business went through, Pedersen and his staff came together to serve others, too. After Hurricane Laura hit, Lake

Charles Auto Auction acted as a food distribution site for the area. “We had lines and lines of cars coming to us,” Pedersen said. “What really hit me was, as we served food, a car pulled up and rolled down the window. It was a friend of mine in the line to get food. “I thought: ‘this was bad.’” People expressed gratitude for the auction’s service during this time, but Pedersen said it made a difference for him, too. “Helping others helps my heart, too,” he said. Lake Charles Auto Auction has continued to hold sales. The auction sold 166 cars at its most recent sale at press time. “We’re making our way back up,” Pedersen said, even though the auction is down about 50 cars a week from this time last year. “The team that I have is the reason we’re able to do what we do,” Pedersen said. “They all had my back and we came together to take care of it.”

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Subprime/BHPH

UCN usedcarnews

11/23/2020

By Jeffrey Bellant

The auto industry may be experiencing flashbacks as states begin to shut down again due to coronavirus spikes and discussions continue in a divided Washington for a new stimulus package. Right-sizing your busines, improving cash flow and better knowing a customer’s situation will be critical to succeeding through the next wave, experts said. Leaders in the subprime/buyhere-pay-here industry discussed these challenges during the National Independent Automobile Dealers Association Virtual conference. “It seems like the subprime consumer prioritized transportation in their car payment as they used what cash flow they had available to them,” said Ken Shilson, president of Subprime Analytics. The pace of losses slowed down during the summer as dealers tightened up on underwriting. Shilson saw a trend during the first wave of pandemics and stimu-

lus payments that may help dealers going forward. “What I’ve seen is some operators, rather than just granting extensions or deferrals, they’ve looked at how the additional checks and additional unemployment have impacted their customers,” he said. Getting on top of that and encouraging customers to apply extra money to outstanding debt will help dealers with cash flow and keeping customers current, Shilson said. “It’s important because we don’t know what the stimulus payments will be going forward” he said. “We don’t know how long this is going to last.” It goes back to understanding each customer’s particular situation. Chuck Bonanno, NIADA’s vice president of dealer development said collections were on a record pace earlier in the year. Dealers who haven’t gotten on the technology train should make adjustments. Advice going forward is the same as everyone’s being hearing. Dealers should embrace

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technology, either through digital marketing or using it to limit a consumer’s time at the dealer. “Customers want to spend less time in the dealership,” Shilson said. Brent Carmichael, of NCM Associates, added that dealers who already favored remote work handled the pandemic better that folks who weren’t prepared. Dealers who haven’t embraced technology by now, may struggle even more in the coming months. With tax season around the corner, Bill Neylan, CEO of Tax Refund Services, said dealers, especially BHPH, should consider the opportunities. The 2020 tax return deadline was extended to July, delaying the tax season. So, 2021 could be a return to a normal tax season. The industry is also awaiting a potential new relief/stimulus package in the new year, depending on the final outcome of the elections in the Congress, Senate and lawsuits involving the presidential election. But divided government could be a delay in any potential stimulus agreement, Neylan said. “If there’s not additional stimulus (in the near future) the next stimulus will be tax season,” he said. “We recommend every dealer get a tax season partner and have a tax marketing program.” BHPH dealers can start a tax marketing program now, before tax season, by offering refund anticipation loans. Steven Carsten, partner of SGA Accounting, said the operating expenses were up as of late summer, but that’s because of losing sales in March and April. Carstens said one good trend was in the debt-to-assets category. “I think dealers are cash-flowing because of the strong collections and not replacing inventory,” Carstens said. “They were paying down their debt, which is the right thing to do.” Carstens was prescient when he added at the time: “Things could change on a moment’s notice,” he said. “Being conservative and reducing debt levels is a good thing to do right now.” Inventory issues, which were starting to show in the summer, are continuing. Chris Macheca, Passtime president, said since inventory is at such a premium, the GPS provider offers dealers help in this area. “Anything that you can find to help recover that inventory faster, more efficiently and cost-effectively should be on your radar,” he said.

Volume 26 | No.12 Published By General Media LLC USED CAR NEWS (ISSN 1555-7413) is published at 24114 Harper, St. Clair Shores, MI 48080 Phone: 586-772-5200 or 800-794-0760 Fax: 586-772-9400 www.usedcarnews.com Charles M. Thomas Founder (1947-2002) Lynda R. Thomas, Publisher Emeritus Colleen Fitzgerald, Publisher Editorial: Jeffrey Bellant, Managing Editor Ed Fitzgerald, Staff Writer Advertising: Shannon Colby, Account Manager Tony Moorby Columnist: Circulation: subs@usedcarnews.com Production: Tom Savage, Production Manager Cee Lippens, Web Master Used Car News is published every third week. Subscribers: We print advertisements as sent to us by auctions and other advertisers. It is not possible to verify the correctness of listed vehicles in auction ads. Most lists are partial and all lists are subject to last minute changes by auto auctions, so before travelling a long distance for a particular auto auction event, contact the auction by telephone for a fax of vehicles in the sale. Used Car News assumes no guarantees or liabilities concerning the accuracy of any advertisements. All Rights Reserved. Reproduction in any form is prohibited without the written consent of the publisher. OUR ADVERTISING APPROVAL POLICY Payments from first time advertisers must accompany the insertion order. Distribution is guaranteed by the USPS. The advertising reservation deadline is 12:00 noon Thursday, 11 days prior to the issue cover date. Ad materials are due by 5 pm Friday, 10 days prior to issue cover date. For advertising specifications please email colleen@usedcarnews.com.

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Auctions 11/23/2020

Manheim Index Rises, Uncertainty Over COVID Remains Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 0.47 percent month-over-month in October. This brought the Manheim Used Vehicle Value Index to 161.9, a 15.4 percent increase from a year ago. The non-seasonally adjusted monthly change was -1.9 percent, which was more in line with weekly price trends. The difference between the price metrics is primarily a result of the seasonal adjustment, which expects a larger decline in October. For example, across the full history of the Manheim Index, October has averaged a 2.1 percent monthly decline in the NSA price. Indeed, last year the decline was 2.7 percent. Manheim Market Report (MMR) prices declined at a decelerating pace over the four full weeks of October, resulting in a 2.8 percent cumulative decline on the ThreeYear-Old Index. In the last full week of October, the Three-Year-Old Index declined 0.5 percent, which was the smallest weekly decline in nine weeks, and the decline was less than the average decline for that week over the last seven years. MMR retention, which is the average difference in price relative to current MMR, averaged 99.2 percent for the four full weeks of October. The sales conversion rate averaged 56 percent over the same period, which was a decline from September but typical for this time of the year. On a year-over-year basis, all major market segments saw seasonally adjusted price increases in October. Luxury cars and pickup trucks outperformed the overall market, while most other major segments underperformed the overall market.

The October used retail SAAR estimate is 20.4 million, slightly down from 20.6 million last year and down month-over-month from September’s 20.7 million rate. Using a rolling seven-day estimate of used retail days’ supply based on vAuto data, the used retail supply peaked at 115 days on April 8. Normal used retail supply is about 44 days’ supply. It ended October at 44 days, which is a normal level. Manheim estimates that wholesale supply peaked at 149 days on April 9, when normal supply is 23. It was up to 26 days by month end as the wholesale sales pace has slowed since August. October total new vehicle sales were up 0.9 percent year-overyear, with one more selling day compared to October 2019. The October SAAR came in at 16.2 million, a decrease from last year’s 16.8 million and down from September’s 16.3 million rate. Combined sales into large rental, commercial, and government buyers were down 27 percent yearover-year in October. Including an estimate for fleet deliveries into the dealer and manufacturer channel, Manheim estimates that the remaining retail sales were up 5 percent yearover-year in October, leading to an estimated retail SAAR of 14.3 million. That is up from 14.1 million last October but down from September’s 14.4 million rate. Manheim estimates that fleet sales are down 39 percent in 2020 through October, while retail sales are down 12 percent, and the overall new vehicle market is down 17 percent so far this year. New vehicle inventories increased in October and came in around 2.7 million units. Rental risk pricing declines. The average price for rental risk units sold at auction in October was up 5.3 percent year-over-year. Rental risk prices were down 5 percent compared to September. Average mileage for rental risk units in October (at 54,400 miles) was up 13 percent compared to a year ago and up 28 percent monthover-month.

Recovering retail results for vehicle sales. According to Cox Automotive estimates, total used vehicle sales volume was down 5 percent yearover-year in October. The estimated October used SAAR is 37.5 million, down from 39.6 million last October and down Coronavirus uncertainty amid compared to September’s 39 mil- mixed conditions. lion rate. The first estimate of the third-

quarter real GDP increase came in at 33.1 percent (annualized), which was better than the expected 27 percent increase It was the biggest quarterly increase in the history of the quarterly GDP data, which started after WWII. However, the Q3 increase fell far short of the growth needed to see economic output fully recovered. With the growth, real GDP was down 2.9 percent year-over-year, which is close to the average 3.3 percent year-over-year decline experienced during the Great Recession of ’08. The economy has recovered a little more than two-thirds of the year-over-year decline created in

the second quarter, but the economy is left down by more than any prior recession since WWII other than the Great Recession. Consumer Confidence according to the Conference Board declined a modest 0.4 percent in October and left confidence down 20 percent year-over-year and down 24 percent from February. Plans to purchase a vehicle in the next six months declined in October to the lowest level since April. The index of consumer sentiment from Morning Consult saw a second week of modest decline in the last week of October and left sentiment down 18.6 percent since Feb. 29.

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Charity 11/23/2020

Auction Staff, Dealers Come Together for Charity Effort By Jeffrey Bellant

Dealers Auto Auction of the Rockies recently rallied its staff and dealer community to hold a fundraiser for Chad Lamb, a ringman and auctioneer at the sale. Lamb, who has worked at DAA Rockies for 12 years, was diagnosed with cancer at the beginning of October and has started chemotherapy. Lamb’s father, Randy and his brother, Wes, are both auctioneers at the sale. DAA Rockies held the Oct. 29 fundraiser to support Chad and his family. “We’ve raised just over $13,000,” said Alexandra Zyla, marketing manager for the auction. “That doesn’t include money that some people gave directly to Randy the day of the auction. I’m sure the total raised was more than ($13,000).” Auction employees Lori Martella and Dina Whitten led the effort. Whitten contacted the CIADA Charity Fund, which donated $5,000.

Martella reached out to some of her clients who contributed money per vehicles sold during the sale. James Ayers with Phil Long Automotive donated $2,925, Ajet Zalli with Zalli Motors LLC donated $1,250, and Troy Segal with The Auto Connection donated $750. DAA Rockies customers donated cash to help support Chad. “When I heard about Chad’s diagnosis I knew we had to do something to help him and his wife. I was blown away by the generosity that our customers showed throughout the day,” said Martella, auction sales operations manager. “This community is like a family and we support each other when it is needed,” said Whitten, Auction OVE sales manager, . David Cardella, CEO of the CIADA Charity Fund, said the Lamb family has been involved in the auto industry for years, including working his organization’s annual charity gala. Lamb’s dad, Randy, said he and his

Photo Courtesy of DAA of the Rockies TOGETHER: Taking part in a fundraiser at DAA of the Rockies are (from left) Dina Whitten, Dean Gunter, Lori Martella, Wes Lamb, Teshome Tesfaye, Randy Lamb, Ajet Zalli and John Lindberg. The group pitched in to help Chad Lamb and his family.

family were grateful for “all the love treatments prior to press time. from this community.” “He’s not just sitting around. Zyla said, from what she knows, He’s trying to do what he can from Chad is in “good spirits” after two home,” Zyla said.

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Manheim New Jersey December 9, 23 609-298-3400

ADESA Boston December 18 508-626-7000

Manheim Milwaukee December 9 262-835-4436

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ADESA Golden Gate December 1 209-839-8000

Manheim Nashville December 16 615-773-3800

Manheim Pennsylvania December 3, 17 800-822-2886

Manheim New Jersey December 9 609-298-3400

Manheim Phoenix December 17 623-907-7000

Manheim Orlando December 8 800-822-2886

Manheim Riverside December 10, 18, 22, 24 951-689-6000

Manheim Atlanta December 2 404-762-9211 Manheim Dallas December 8 877-860-1651

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ADESA Boston December 4, 23 508-626-7000

Manheim Fredericksburg December 10 540-368-3400

Manheim Pittsburgh December 9 724-452-5555

ADESA Salt Lake December 22 801-322-1234

Manheim New Jersey December 23 609-298-3400

Manheim Seattle December 2 206-762-1600

Columbus Fair AA December 16 614-497-1177

Manheim Orlando December 22 800-337-8491

Manheim Southern California December 3, 17 909-822-2261

Manheim Denver December 9 800-822-1177

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Southern AA December 9 860-292-7500

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Manheim Dallas December 8 877-860-1651

Manheim Nashville December 16 615-773-3800

Manheim Pennsylvania December 3, 17 800-822-2886

Manheim Atlanta December 2 404-762-9211

Manheim Milwaukee December 9 262-835-4436

Manheim Palm Beach December 16 561-790-1200

Manheim Phoenix December 10, 18, 24 623-907-7000

Manheim Riverside December 10, 18, 22, 24 951-689-6000

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The Jaguar word mark, the Jaguar logo, and Jaguar Financial Group are trademarks of Jaguar Land Rover Limited and any use by JPMorgan Chase Bank, N.A. ("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 JPMorgan Chase Bank, N.A. ("Chase") is under license.

2

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").

3

Maserati Capital USA, the Maserati logo and model designations are registered trademarks used by JPMorgan Chase Bank, N.A. ("Chase") under license from Maserati S.p.A.

Neither JPMorgan Chase Bank, N.A. ("Chase") nor any of its affiliates are affiliated with ADESA, Inc. or Manheim, Inc. Each auction is solely responsible for their website content, sales events, promotions, fulfillment and operation of the auction. Š2020 JPMorgan Chase Bank, N.A. Member FDIC (20-0012) 12/20


Marketing 11/23/2020

To Find Inventory, Go Digital By Jeffrey Bellant

Aggressive marketing is critical for independents sourcing inventory and improving margins, according to one automotive digital marketing firm. In today’s used-car industry, there is a “ping-pong game of good news, bad news going on,” said PureCars’ Lauren Donalson, senior director of accounts, national. The bad news is on the new-car side, as COVID-19 and manufacturer shutdowns caused significant decreases in new-car production. “That’s led to a forecast of 36 million fewer new vehicles being sold globally over the next three years,” Donalson said. In the U.S. the forecast is for 3.5 million fewer cars. “Those are massive numbers,” she said. The silver lining is that it will likely push more people into the usedcar market. “There’s been a significant swing in demand for, what I would say ‘nearly-new,’ but used cars.” Despite that good news, the pendulum swings back as wholesale prices jumped. Donalson said, in the truck segment alone, wholesale prices are up 27 percent year-over-year, according to Manheim. “The fastest movers that we’ve seen in demand for trucks have been the domestics,” Donalson said. “RAM 1500, Ford F-150 and Chevy 1500.” When COVID-19 hit, manufacturers of those units – learning lessons from 2008 – immediately went to the market with aggressive APR financing rates that have not been seen in five to 10 years. “It probably would have been much darker times for them had they not made those moves,” Donalson said. Customers keep migrating to crossovers, SUVs and trucks, and she doesn’t see that trend going down anytime soon. It squeezes used-car dealers’ margins as they struggle to find cars and buy them at prices they want, said Donalson, whose background is in the car business. Donalson said she is a “PhD, not of the doctoral type –‘Papa had a Dealership,’” with a collection of four stores in southeast Texas. She spent her teenage years “doing parts inventory in the 100+ de-

gree Texas heat, counting lug nuts or whatever. “That’s how I got the automotive bug.” Like other companies, PureCars has tried to be creative to help dealers. “Demand exists and we’ve been able to see massive efficiencies, specifically in social media,” she said. “I want to say that Facebook reported its usership is up 12 percent yearover-year, which is a big (increase) when you’re talking about numbers in the billions.” Facebook also changed a rule in September 2020, which had previously limited ads to 20 percent text. Ads that didn’t follow that rule faced penalties, from limiting their reach to rejecting them outright, according to PureCars. One strategy where Facebook can help is in buying more cars off the street. Donalson said one dealer group client spent $1,500 to $2,000 in social media for a month or so and saw a “200 percent increase in trade leads, which was good for a $32 cost per lead.” It worked so well, the dealer group had to stop doing the ads because it acquired so many cars, Donalson said. Less expensive used cars – sub$20,000 – tend to be the fastest moving segment, she said. One critical element is using tools to find out which cars are most in demand in your market, Donalson said. It’s the old adage, you make your money when you buy the car, not when you sell it. “You do have to source it at the right price,” Donalson said. Using service equity mining – finding customers already in the business’s database who might be looking to trade – is also a good strategy. Despite the ping-pong effect of recent months, Donalson is seeing the market start to normalize. Referencing her dad’s business, they got a massive first shipment of new trucks in October following the shutdowns. “New-car availability is going to help with used as the more new-cars sold means more used cars in trade,” Donalson said. “Those things work hand-in-hand.” She added that 60-percent of people planning to buy a car in the second half of the year do it during Black Friday sales and the last few weeks of the year.


Retail Markets 11/23/2020 Compiled by Ed Fitzgerald

ARIZONA Jared Halstead, owner, Double H Auto Exchange, Queen Creek, Ariz. “I have been in the car business since 2001. I didn’t come from a family that had a dealership so I learned from other dealers. I got involved with Arizona Independent Automobile Dealers Association right away. “The state did not include dealers as essential workers (for COVID). Our association was able to get with the governor the day after. He issued an executive order and dealers were able to stay open if we wanted to. “I usually keep about 40 cars available. We have about 50-55 in stock. This year we’ve been selling an average of 14-16 a month. “Until COVID happened and this shortage of inventory, we did a lot more trucks and SUVs than cars. We’re

on the outskirts of town, we literally have hitching posts in front of our dealership. “I do more domestics than imports, probably 60 to 40 percent. The trucks are almost all domestic. “I get cars from ADESA and Manheim. We’ve also got Metro Auto Auction and Dealers Auto Auction of the Southwest, those two have stayed open throughout COVID. Before COVID, in all my years in the business, I bought six cars on the Internet. Since March, I’ve probably bought 100 cars online. Last month was the best month I’ve had all year long. “I’d say about 80-85 percent of all my sales are buyhere, pay-here. My average down payment is between $900 and $1200. I don’t do my underwriting based on stimulus checks or unemployment, but this year has been pretty good.

“My average cost of reconditioning is $450 to $650 per vehicle. That’s a skewed number because the labor is included in my monthly nut. “The average age of our vehicles is 11 years old. We try to stick with the 2008 to 2014-15 model years. The average mileage this year is a lot lower than it used to be. On cars it’s probably 125,000 to 135,000 miles. On the trucks it’s about 135,000 to 160,000. “The last car I sold was a GMC Yukon Denali XL ’06. I sold it for $8,000.”

MICHIGAN Dave Knapp, owner, Dave Knapp Used Cars, Lapeer, Mich. “I’ve been in business 31 years, all in the same location. “We shut down for 4-6 weeks for COVID, but after that it’s been bang, bang,

bang. I think I’m having a record year. “I don’t have any trouble selling, but I can’t buy any inventory. That’s the worst. “My average inventory is 50 vehicles, and I probably sell 20-25 a month. “I think trucks and SUVs are outselling the cars. The prices on trucks are crazy, you might as well go buy a new one. As a matter of fact, I don’t have a truck on my lot right now. “I sell more domestics than imports. This is GM country. “For inventory, I pretty much stick with Manheim and ADESA. I have to laugh when you look at what we do. A customer can research the value of a car, go online, ask Uncle Bob to inspect it, but when I go to buy a car I’ve got 30 seconds to make a decision. “My average down payment is very low. The banks

have been lending, the money’s there, rates are low. If the customer has good credit, they don’t need any cash. “Reconditioning, for 320, 330 cars a year, averages to about $350 apiece. I do the mechanical in-house. The actual scrubbing and cosmetic work I send out. “I sell a lot of 2010 models and up, with 70,000 miles and up. I do better with ma-and-pa cars; four-doors, minivans, down-to-earth transportation. My customer is making 50 to 60 grand a year and is living paycheck to paycheck. I live on return customers and referrals. “For advertising I do Cars For Sale and that goes straight to my Facebook. Believe it or not, Facebook is really good. “The last car I sold was a 1991 Corvette convertible. It has 80,000 miles, for $7,500. It’s going out tonight.”

9


Wholesale Markets 11/23/2020 Compiled by Jeffrey Bellant

CALIFORNIA Justin Soghomonian, vice president, All Valley Dealers Auto Auction (AVDAA), North Hollywood, Calif.: “We’re still running two sales, on Tuesdays and Fridays. But Tuesday has become a digital sale only, because of the coronavirus going on. So that’s strictly online. “Fridays we’re still open for regular sales. We’re not running cars through the lanes, but we are having dealers come into the lanes and bid on cars. “For the sale, we have three video screens in each lane. Two of the screens show the current car and one shows the upcoming car – the car on deck. “We’re still parking all the cars outside like we would for a normal sale. Dealers can at least look at the cars.

10

They can come all week and view the cars. We’re still seeing most of the people view them on Thursdays, just because most of the vehicles are here. “We’re lucky because we’re kind of outdoors. Our facility is kind of an outdoor/ indoor type facility with the open walls. “Our volume kind of picked up in the last month. Obviously, our percentage went down a bit as a result. From May until almost midOctober, we were rockin’ and rollin.’ We had 65 percent sales, up to the 70s and even touched 80 percent for a couple of sales. “We’re still selling about 55 to 60 percent overall. Our inventory’s gone up a bit. “We run about 800 cars weekly, about 600 on Friday and 200 on Tuesday. “Our average price is about $8,000 for both sales togeth-

er. That’s higher than this time last year. Our commercial is good. I’d like to say our commercial (volume) on Friday is about 25 percent of the total. I’m trying to build that more and more to get that to 50 percent. “The franchise guys are just trying to buy all the cars they can. Now I’ve got newcar dealers buying $5,000, $6,000 or $7,000 cars.”

TEXAS Luke Pidgeon, general manager, El Paso Independent Auto Auction, El Paso, Texas: “We’re making national news here in El Paso (at press time) because of a spike in coronavirus. “In February, we’ll be here 10 years. “During a normal time, we’d be running four lanes. Right now, we’re running two lanes, sometimes three.

“The volume has been down. We have what we call an off week, when one of our big consignors doesn’t run. So, we’re running maybe 330 on the good weeks and 230 on the bad weeks. “During the (initial COVID spike) we had crazy conversion rates. So yes, it’s been a very good year. “In terms of volume, it started going down in March and April, but now we’re starting to see a little bit more volume. But now the demand is down. “Our conversion rates were in the 70s and even 80s during the COVID-19 (initial outbreak) and now we’re back down to 50s to 60s, which isn’t bad. It was just so high before. “During the beginning of the (outbreak), I had to go to digital only for about four weeks. That was in April. “After that, we started run-

ning cars live in the lanes. Masks are mandatory. The building (apart from the auction lanes) is closed. No dealers are allowed inside. Even when the rules became more lenient, we stuck to it and it’s paid off. So, we do a walk-up window for titles. “When COVID was in its spike, dealers were saying, ‘I need cars, I need cars.’ Now, I’m not hearing that so much. Now it’s just, ‘need a couple of cars.’ So now I know the demand isn’t as much. Our dealer customers are pretty quiet. “November is always a slow month for us and then we see a spike up in December. “I’m anticipating it will pick up like normal. But we just went backwards with our lockdown until December, so I don’t know what happens when that gets lifted.”


Wholesale Numbers UCN usedcarnews 11/23/2020

Type Car Car Car Car Car Car Car Car Car Car Truck Truck Truck Truck Truck Truck Truck Truck Truck Truck Car Car Car Car Car Car Car Car Car Car Truck Truck Truck Truck Truck Truck Truck Truck Truck Truck Car Car Car Car Car Car Car Car Car Car Truck Truck Truck Truck Truck Truck Truck Truck Truck Truck Car Car Car Car Car Car Car Car Car Car Truck Truck Truck Truck Truck Truck Truck Truck Truck

Model Honda Civic Toyota Camry Toyota Corolla Nissan Altima Chevrolet Malibu Ford Fusion Nissan Sentra Hyundai Elantra Ford Mustang Volkswagen Jetta Ford F150 Chevrolet Silverado 1500 Ram 1500 Toyota RAV4 Chevrolet Equinox Jeep Grand Cherokee Ford Escape Ford Explorer GMC Sierra 1500 Toyota Tacoma Honda Civic Toyota Camry Toyota Corolla Nissan Altima Chevrolet Malibu Ford Fusion Nissan Sentra Hyundai Elantra Ford Mustang Volkswagen Jetta Ford F150 Chevrolet Silverado 1500 Ram 1500 Toyota RAV4 Chevrolet Equinox Jeep Grand Cherokee Ford Escape Ford Explorer GMC Sierra 1500 Toyota Tacoma Honda Civic Toyota Camry Toyota Corolla Nissan Altima Chevrolet Malibu Ford Fusion Nissan Sentra Hyundai Elantra Ford Mustang Volkswagen Jetta Ford F150 Chevrolet Silverado 1500 Ram 1500 Toyota RAV4 Chevrolet Equinox Jeep Grand Cherokee Ford Escape Ford Explorer GMC Sierra 1500 Toyota Tacoma Honda Civic Toyota Camry Toyota Corolla Nissan Altima Chevrolet Malibu Ford Fusion Nissan Sentra Hyundai Elantra Ford Mustang Volkswagen Jetta Ford F150 Chevrolet Silverado 1500 Toyota RAV4 Chevrolet Equinox Jeep Grand Cherokee Ford Escape Ford Explorer GMC Sierra 1500 Toyota Tacoma

2019-11-01 10850 11450 10450 9750 11600 10400 8850 8450 14600 9250 24000 26200 22300 13800 11750 17250 11250 19300 26300 24425 12200 13000 11650 11450 12450 11900 10150 10050 16300 10900 26200 28000 23800 15300 13425 20725 12600 21600 28200 25650 13750 16250 12900 13200 14250 12950 11250 11100 18000 12700 27700 30000 25100 17000 16050 23475 14450 24850 30000 27000 15400 17800 13750 14650 15250 14150 12400 12150 20000 14300 30200 34800 19050 18450 27000 17100 28275 35700 28200

2020-05-01 9850 10500 8500 8650 11000 8550 6400 6600 12800 8200 22000 23500 20400 12650 10700 14525 10000 16550 23800 21925 11200 12250 10100 10450 12200 10700 8050 8400 14250 9750 24500 24700 21500 14200 12525 18925 11450 19950 24800 23950 12700 15600 11450 12050 13700 11850 9450 9400 15600 10850 25500 26200 23000 16100 14150 20925 13050 22075 26200 25475 14450 16900 12750 14000 14800 13600 10650 10800 18050 12350 26800 31000 19250 15700 24900 15550 25175 32000 27175

2020-11-01 11000 10650 8750 8750 10975 9400 6800 7500 15200 8700 26400 27400 23700 13500 10800 16000 10100 17225 27500 26050 12100 12825 10800 10900 12900 11500 9050 9400 16700 10500 29300 29900 26700 15650 12950 21125 11850 21850 29000 28075 14050 15400 12250 12425 13800 12575 10800 10650 18250 12100 31600 31700 28000 17675 14300 23075 13350 23725 31000 30225 15300 16375 13700 15350 15450 13875 12150 11650 19950 14750 33300 36800 20600 15775 25400 15350 25075 37200 31425

2021-11-01 8150 7675 6400 6175 7975 6825 4525 5050 10400 5650 18150 20750 17325 9450 6250 10250 6400 10600 21175 19725 9125 9125 7775 7550 9400 8375 5975 6375 11600 6900 20200 22775 19550 10850 7600 13325 7425 13150 22675 21450 10600 11025 8850 8650 10275 9275 7275 7300 12875 8050 22500 24425 20850 12250 8875 14900 8450 14725 24550 23200 11750 11900 9925 10525 11775 10400 8375 8175 14125 9950 24200 28500 14425 10075 16975 9875 16400 29450 24300

2022-11-01 7125 6875 5750 5575 6575 5700 3825 4200 8675 4525 15650 18325 15200 8650 5375 9325 5750 9050 18650 18450 8100 8025 6875 6675 7775 6975 4975 5325 9800 5600 17450 20250 17150 9850 6575 11850 6600 10925 20300 20275 9400 9725 7850 7675 8675 7800 6125 6150 11050 6575 20025 21975 18625 11100 8025 13525 7600 12625 22200 22050 10600 10650 8800 9350 10175 8875 7250 6975 12150 8225 21950 25575 13200 9325 15875 9025 14750 26525 23300

Actual Wholesale and Projected Residual Values

M/Y 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019

Source: Black Book


Disconnected Jottings From

Tony Moorby 11/23/2020

It would seem that insurance companies know the costs of everything but the value of nothing. I recently got t-boned at a traffic light on my way to my daughter’s house locally. It was on a fine, early fall evening and had just become dark. The other driver received a citation for failing to obey a red light. He told the police he’d had three beers. They didn’t breathalyze him but made him take a roadside sobriety test. They considered him to be able to control a motor vehicle. Really? I thought a Breathalyzer test would have been automatic, as he’d just proven not to be in charge of his car – or his mind. I was driving a favorite car that I’ve owned from new – a 1997 AA yellow Range Rover Vitesse, which

thanks to colleagues in the business, I’ve maintained to look like new. In fact, a guy approached me in the grocery store parking lot about a month ago saying, “I didn’t realize they still made these!” They only made 125 of them in 1997. It has all kinds of upgrades and, of course, cuts a noticeable dash in any parking lot. I’ve absolutely doted on this car from day one. It’s performed all kinds of duties from hauling artwork to trailering my Harley around the country. It wouldn’t break any speed records but is strong as an ox and could pull a house down. It’s carried everything from lingerie to logs and tea bags to tree stumps. It’s taken kids to school and helped them move. It’s almost part of the furniture! I turned down $25,000 for

it last year – it means that much to me. It gets serviced every six thousand miles and runs like a Swiss watch. I’d have to spend four times that to get some modern equivalent. The insurance company is offering me less than $5,000 and they want $400 for me to buy the salvage. They calculate the repairs somewhere north of $10,000. I get that the math dictates a write-off, going by the market value, adjusted for condition, yada, yada, yada. CCC can only go by the numbers to defend the insurance company’s position. I’ve never had a wreck in all the time I’ve been here – 38 years. I think my last speeding ticket, for 46 in a 35, was nine years ago. I love driving and consider myself pretty good at it. So, for something that was

By Myles Mellor

Across 1. Full-size Chevy SUV 6. Muscle car, 2 words 10. Bar check 11. Nickname for BMWs 12. Dodge minivan 13. Mazda sports car, 2 words 16. Enthusiasm 18. Toyota ____ 4 20. Recordings in sleeves, abbr. 22. Load software, for example 24. Has a debt to 28. It’s found in a Jiffy 29. Mid-size sedan from Hyundai 30. Ferrari’s parent company

32. New drivers have to pass them 33. Type of car sometimes used by law enforcement agencies 34. Radio band 36. Alfa in “The Graduate” 38. Vital vehicle safety feature, goes with 41 across- 3 words 39. Wheel’s edge 41. See 38 across 42. Ford model that was made in England from 1939 to 1967 43. Quick getaway Down 1. Makers of the Ascent 2. Mid-size Chevy SUV 3. Road sign abbr. 4. Word after sports or wet

not my fault there is no way the insurance company can make me whole – to put me back where I was before the wreck. In a way it was lucky I was in the Range Rover because it’s built like a brick outhouse. I have an equally aged Jaguar XK8 coupe that I use as often as the Rover. If I’d been in that I may not be writing this article! Still, calling things unfair is the same as whistling Dixie – useless. To add insult to injury – my doctor is still assessing damage to my shoulder and torso – I have to deal with all the rigmarole that goes along with making a claim, dealing with towing companies, storage yards, salvage pools and the insurance company itself. It’s an unmitigated mess when all I want is a quiet life.

• 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 • NAAA Hall of Famer • IARA Circle of Excellence To see past columns from Tony Moorby, visit www.usedcarnews.com/ columnists/tony-moorby

The insult is propagated even further when I see the insurance companies’ mindless and meaningless advertising flippantly making light of a serious business. It may tell you something about how they value themselves.

Play Online at Us e d C a r N e ws. c o m 5. Braking system 7. Entrance to a freeway, 2 words 8. Luxury car model that BMW sold 9. Lair 12. Honda SUV 14. Hyundai ____ G80 15. Metal often used in engine components 17. “___ Follow the Sun” (The Beatles) 19. Sees 21. Therefore 23. Car that was recently made or designed, 2 words 25. Flashy looking tire, 2 words 26. Former Dodge subcompact model 27. Like the lights on an ambulance

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Solution to this puzzle in the 12/14/2020 issue. Call 1.800.794.0760 for a FREE subscription.

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Tony Moorby

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Solution to the 11/2/2020 puzzle


Special Advertising Section

11/23/2020

Training is Key to Connecting With Customers

Consulting • Training • DMS

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Building the relationship – when the lines of communication are more open, information is easier to gather from your customers. This is the first thing we teach and train – talking with the customer not to the customer. The most successful dealerships in the buy-here, pay-here and lease-here, pay-here businesses know customers are the reason for the business and if you have a good relationship with them, they will normally take care of you first. Efficiencies within your business

and technology allow you to focus on the customers that need more attention and assistance. With over 30 years in the buyhere, pay-here and lease-here, pay-here businesses, understanding and working through almost every situation, AFS Dealers has helped dealers grow their business, increase profitability, build efficiencies in any department and helped them achieve their vision. If your technology, training, or consultants do not help you with this then it is time for a change.

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13


Special Advertising Section

11/23/2020

Introducing PayMyCar: An Online Payment Portal from Frazer

How to Maximize Tax Season

PayMyCar is a new payment portal from Frazer that allows OpenEdge customers to take payments from anywhere! Simply help your buy-here, pay-here customers set up an online account and they can log in to the secure PayMyCar portal to make their payments electronically. The PayMyCar platform features a customizable dealership branded website where your buy-here, payhere customers can go to review their current account status and send electronic credit card payments. Those payments are automatically linked with Frazer for easy customer management to save your dealership both time and money.

By William Neylan President/CEO Tax Refund Services Tax Max  

Did we mention that it’s 100% free for Frazer’s OpenEdge users? As if you needed another reason to check out OpenEdge after learning about PayMyCar, OpenEdge is offering a free iPP320 payments device to all customers who sign up through the end of 2020. Save big on your “card present”, inperson transactions by running them through this secure iPP320 PIN Pad, provided free of charge to all who sign up for OpenEdge from now until December 31st. For more information about PayMyCar, visit frazer.com/ paymycar.

refund within hours Contact the customers that you turned down in November and December and tell them to bring in their W2 as soon as they receive it • Drive Now Network – a lead generation web site that is designed for consumers looking to buy a car using their future tax refund Buy-Here, Pay-Here: • Start advertising the tax season promotion beginning October • Estimate the future tax refund and setup a tax season payment • Irregular Payment right in the contract • Pickup payment or Deferred down • Tax Max tax season Underwriting Checklist • Tax Max Reminder Program • Collections Program • Repairs Program • Follow instructions mentioned above for Retail Dealers • List your inventory on Autotrader’s Buy-Here, PayHere Center Tax season is upon us and it is time to be ready for what may be the most important tax season ever! For more information visit www. TaxMax.com, call 813-987-2199, or email: trs@taxrefundservices.com. •

Dealers will utilize a tax season partner so they can use their customer’s tax refund towards the purchase of a car or to apply the refund to a delinquent account. Using a Refund Advance, a dealer can tap into a customer’s tax refund up to 8 weeks before the IRS releases it. The money from the Refund Advance, and the customer’s refund that gets released by the IRS, is forwarded to the dealership and not to the customer. The dealer can apply what is due to them and give the customer back the difference. Now you have the customer coming to the dealer for their portion of the refund vs. the dealer chasing after the customer for their portion of the refund. It’s the perfect scenario. Following are some of the best practices for retail and buy-here, payhere dealers: Retail: • Start advertising the tax season promotion after Christmas with a start date of January 2: -Bring Your W2 – Drive Out Today -FREE Tax Preparation -We’ll Match Your Refund up to $1000 • Refund Advance - access up to $6000 of the customer’s

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Profile for Used Car News

Used Car News 11/23/2020  

Used Car News 11/23/2020