August 2012

Remarketing Impact of Hertz-DTAG Deal Yet to be Determined


Less than a day after the definitive merger agreement was announced between Hertz Global Holdings and Dollar Thrifty Automotive Group, it had not been decided how vehicle remarketing would be handled with the two companies under one corporate umbrella.

When asked this question by Auto Remarketing, as well as whether all Hertz and DTAG vehicles would be remarketed under one entity or separate entities at the auction, Hertz senior vice president of corporate affairs and communications Richard Broome said in an email Monday: “This is an implementation/integration issue which will not be addressed until after we have secured government approval for the transaction. At that point, we will be closer to completing the deal.”

However, after years of a back-and-forth saga involving three companies, one thing was certain this week: Hertz and Dollar Thrifty have entered a definitive merger agreement.

Under the deal announced Sunday night, Hertz would purchase Dollar Thrifty for $87.50 per share in cash, translating into a purchase worth a corporate enterprise value of approximately $2.3 billion.

Each of the two companies’ boards has unanimously approved the transaction.

Hertz will also be selling the Advantage business to Franchise Services of North America and Macquarie Capital, per an agreement announced Sunday, as well.

The company stressed that the “closing of that divestiture is conditioned upon, among other things, Hertz completing an acquisition of Dollar Thrifty.”

Hertz chairman and chief executive officer Mark Frissora said: "We are pleased to have finally reached an agreement with Dollar Thrifty after a lengthy — but worthwhile — pursuit. We have always believed that a combination with Dollar Thrifty is the best strategic option for both companies.

“The transaction provides Hertz instant scale with two new, well-established brands with airport concession infrastructure in the mid-tier value segment. We'll be a stronger global competitive player with a full range of rental options not only in the U.S. but in Europe and other markets given Dollar Thrifty's strong international presence. In addition, we look forward to moving efficiently and swiftly through the regulatory process having reached an agreement to divest our Advantage brand,” he continued.

DTAG president, CEO and chairman Scott Thompson added: "Hertz has made a compelling offer to our stockholders that reflects the strength of our business and our team. Hertz is the logical partner for us with the resources to expand our value focused leisure brands in key car rental markets around the world. After three years of merger-related activity and speculation, I am pleased that we have reached a win-win transaction for both Hertz and Dollar Thrifty."

As far as how the deal is structured, officials noted that it is a two-step acquisition.

There will be cash tender offer for all outstanding shares of Dollar Thrifty common stock. Then, there will be a cash merger where Hertz will purchase any remaining outstanding shares of DTAG’s common stock.

Officials emphasized the transaction is subject to the following:

—The tender of at least a majority of the shares of Dollar Thrifty common stock.
— Other customary closing conditions.
—Regulatory approval from the Federal Trade Commission.

“Hertz has remained closely engaged with the FTC to secure antitrust clearance for the proposed transaction and Dollar Thrifty will fully cooperate in the process,” they shared.

Before providing an update on the FTC review Monday morning during a conference call, Frissora said, “I want to acknowledge that it’s been a long road getting to this point. And the wait hasn’t been an easy one for management, employees or investors. So I want to thank everyone for their patience and understanding, as we have continued to work through what has turned out to be a very complex, extended FTC process.”

In its conference call presentation materials, Hertz said it is, “closely engaged with FTC staff to secure antitrust clearance;” and has signed a definitive purchase agreement and intends to divest Advantage and certain additional assets as well as Dollar Thrifty airport concessions.

It says it anticipates making “swift progress getting proposed settlement before Commission for consideration” and notes that it has “full cooperation” from Dollar Thrifty in obtain TFC clearance. Hertz added that a “favorable outcome” with the Commission is expected based on “the extensive divestitures agreed upon.”

“We will continue to work with the FTC to reach a favorable conclusion and we hope the final steps in the FTC review will be swift,” Frissora added.

As far as timing goes, the plan was for the merger agreement to be filed with the Securities and Exchange Commission on Monday, “and soon thereafter, launch the tender offer,” Frissora noted.

“We hope to have an FTC consent decree in about six weeks or so. To be clear, we aren’t basing this on any definitive guidance from the FTC, but our lawyers believe this is a realistic assumption,” he continued. “Finally, we expect to complete the tender offer by the end of October.

“Based on this schedule, we’ll start integration actions before year-end,” Frissora shared.

Beggs Not Expecting 2008 Repeat, Although Gas Keeps Moving Higher


As pump prices moved higher again last week, Black Book’s Ricky Beggs remains confident the wholesale market isn’t about to hit a vehicle-price patch similar to what happened in 2008 when gas soared above $4 per gallon on average.

Still, Beggs acknowledged gas prices continue to climb, as this past week they crept up another 2 cents to a national average of $3.74 per gallon.

“The comments and ultimate effects on the market do not follow the traditional expected pattern,” Beggs stated during his latest online video analysis, “Beggs on the Used Car Market.”

Beggs mentioned the topic of gas prices was brought up numerous times during the International Automotive Remarketers Alliance Summer Roundtable last week.

“The consensus is that even though prices continue to climb, and is now 16 cents higher than one year ago, the steady slope up is smoother right now while the current level is still well below the record $4.11 of 2008 and also below that mental mark of $4,” Beggs explained.

“We are not at a level that is causing an overreaction or major change in current buying habits and car selection on the retail side,” he added.
Beggs also touched on other highlights of IARA’s gathering.

“In attendance were some of the industry’s leading vehicle consignors and remarketers, vendors who support those remarketers, as well as many auction personnel,” Beggs shared. “This is a time where industry issues are addressed through expert presentations, panel discussions and very interactive group roundtables.

“Education and networking are both at the forefront with transportation and titling issues addressed this past week to help the remarketers with existing challenges in their daily business efforts,” he continued. “Keynote addresses focusing on social media, corporate positioning and non-traditional customer relations kept everyone on the edge of their seats. This was coming from a former Harley Davidson communication spokesperson who was in the middle of Harley’s revival as a motor company with tremendous brand strength today.”

While long-range issue were discussed at the IARA, Beggs reiterated that Black Book’s editors and survey personnel continued their auction attendance gathering current market data and insight from all across the country.

Black Book editors adjusted prices on a little less than 2,000 vehicles per day last week, and the overall average price decline for cars and trucks settled at $69 and $55, respectively.

Editors discovered the car price decline was the largest since Oct. 28. And trucks posted their highest average drop in five weeks.

“At the same time, the 21 percent of adjustments that were increases was the highest increasing percent over the past seven weeks,” Beggs pointed out, “so if something is in more positive demand and thus value, it was reflected in a smaller increase.”

Taking a deeper look at cars, Black Book noticed that prices for both prestige luxury cars and premium sporty cars both sunk by more than $100, and prices for near luxury cars were not far behind, dropping by $98.

Even within one of the more fuel-efficient segments, entry mid-size cars, prices slipped by $98 or 1.19 percent for the week, according to editors.

However, Beggs indicated prices for entry level cars “reacted in a steadier manner this past week,” as those prices softened by just $14 or 0.20 percent.

On the truck, van and utility side of the market, Black Book noticed prices for full-size SUVs  took the largest turn south, dropping $118 for the week.

Prices for other truck segments softening by significant levels included full-size crossovers (down $103) and luxury SUVs (down $85).

Beggs pointed out that “even though vacation season is basically over” minivan models showed the most price stability as cargo versions ticked just $7 lower while passenger versions dipped by just $10.

A year ago, Black Book recapped that the average truck segment change was a price decline of $42 with full-size crossovers leading the way with a $140 drop.

Beggs made one other point as he closed his latest analysis.

“As new-car sales continue the increases of 2012 over 2011 volumes, much of the conversation at the IARA roundtable was regarding the slightly increasing used supplies in the wholesale market,” he noted.

“Although not all will end up at the auctions, either physical or online, we should continue to see overall softening in used values because of the additional choices in the market,” Beggs projected. “We’ll be here reporting these changes as they occur. We truly appreciate your interest and valued business. Have a great week.”

Beggs’ video can be viewed below. 

Trade-In Marketplace Integration Designed to Simplify Used Inventory Acquisition for Dealers

OAK BROOK, Ill. - 

In a move that can help dealers generate much-needed trade-ins,’s Trade-In Marketplace will now be integrated into vAuto’s suite of inventory management tools, the companies revealed Monday.

The integration was planned to enable “dealers to efficiently acquire more trade-ins and deliver a more market-transparent and customer-satisfying appraisal and purchasing process,” officials explained.

Both companies are part of  the AutoTrader Group.

Jim Menard, vice president and general manager for vAuto, expressed his enthusiasm for the news, noting, “This integration advances our goal to build greater synergies between AutoTrader Group companies and provide more value for dealers.

 “Combining TIM and vAuto simplifies the trade-in appraisal and acquisition process at dealerships. It helps dealers more efficiently identify and purchase a greater number of the used vehicles they need from the best source possible — their own customers,” he continued.

And what exactly are the benefits for dealers?

First, the companies contend the partnership will ensure that it takes “less time and effort” to access TIM offers and complete appraisals. Officials noted that now, specific vehicle data will move “seamlessly” from TIM to vAuto’s appraisal tool.

“This eliminates the data entry and multiple logins dealers currently perform to view vehicle condition and valuation reports to complete appraisal offers,” officials added.

Next up, the partnership also provides dealers with additional market data. Specifically, the integration includes the new TIM Market Report, “which dealers can use with customers to detail the vehicle-specific options and conditions that drive TIM offers and their own appraisal amounts,” the companies explained.

Lastly, officials noted the partnership could inspire “greater confidence in trade-ins.”

The companies noted that the integration synchronizes vAuto Provision’s Inventory Recommendations List with TIM offers.

“Dealers no longer have to guess or double-check whether a customer’s trade-in vehicle is a ‘right’ car for their store,” officials asserted.

“Similarly, Provision’s letter grade ranking helps dealers quickly assess the retail opportunities and risks each TIM offer vehicle represents. Dealers can receive e-mail or text alerts when customers complete TIM offers that match vehicles Provision recommends for their used vehicle inventories. The feature allows dealers to respond more quickly when vehicles they need most become available,” they continued.

Wrapping up the commentary on the new partnership, David Berry, senior manager of operations for TIM, said, “TIM offers car shoppers the most transparent and easy-to-use method to determine the current market value of their trade-in vehicle and locate a dealer who wants their car.

 “This integration streamlines the workflow for dealers as they match TIM offers to their used vehicle buy lists and use market-specific data with customers to appraise and acquire their vehicles,” he concluded.


NADA to Host Free Webinar about Tax Implications of Tangibles Regulations

McLEAN, Va. - 

The National Automobile Dealers Association is hosting a free Webinar this week to explain the tax implications of tangibles regulations, a rule that came on the books last year.

The 90-minute session — which is set to include several experienced certified public accountants — is scheduled to begin at 1 p.m. ET on Wednesday.

NADA recapped that last December, the IRS issued temporary “tangibles regulations” to clarify whether certain expenditures by taxpayers to acquire, produce or improve tangible property, may be expensed or must be capitalized or depreciated.

Dealer accountants have advised NADA that, while some dealerships will be impacted more than others, two other factors come into play, including:

—It is highly likely that every dealership in the country will be affected in some manner.
—To comply with the regulations, and to take advantage of new opportunities in the regulations, dealers must request a change in their accounting method.  

NADA has arranged for several experienced CPAs from the accounting firm Boyer & Ritter to present a NADA University Webinar to explain this development and the time frame in which dealers must act.

The Webinar will be moderated by Paul Metrey, NADA’s chief regulatory counsel of financial services, privacy and tax.

The event is free for NADA and ATD members and their contracted professionals such as accountants and attorneys. Click here to register. For more information, call (800) 557-6232.

The Car Connection Integrates Vehicle Searches with Review Data

PALO ALTO, Calif.  - 

Car review and data site The Car Connection is adding something new to its information offerings: searchable new- and used-vehicle inventories.

High Gear Media, publisher of The Car Connection, has announced that within a matter of days it will launch this vehicle search section on the company’s flagship site, integrating the listings with its research, reviews and ratings data.

By working with industry partner sites, the company’s plan is to offer more than 3 million vehicle listings.

“That 3 million number shows we’re serious," Jeff Birkeland, vice president of product management for High Gear, told Auto Remarketing on Monday. "The point being that we’re not just publishing listings; we’re connecting them to our great content created over the years. For example, if you’re looking for a 2009 Toyota Camry, we have a review for that too.

“Secondly, we’re adding an interesting data layer on top of the listings. Users can see, for example, how a vehicle’s price and mileage compare to other similar vehicles in the area,” he said.

Users will also have the ability to contact vehicle sellers through the site.

All of the search listings and related information will also be available on The Car Connection’s mobile site, an integration Birkeland said is particularly important.

“The world is going mobile; we’ve seen that in our activity,” he said, noting that mobile web accounts for 30 percent of High Gear’s traffic. “Our users on mobile, in some ways, are more transaction-defined than those using desktop.”

For both desktop and mobile, Birkeland said, “We want to make the overall experience as easy and fast as possible.”


instaVIN Offers New Service Contract, CPO Offering


In an effort to help dealers attract and retain used- and new-car customers, instaVIN revealed it has launched two new offerings.

Dealers utilizing the company will now be able to purchase certified pre-owned warranties, as well as service contracts.

First up, “The new instaVIN CPO program enables franchised dealers to certify their off makes and older nameplate vehicles, and independents to reap the benefits of a trusted certification program,” officials noted.

It is available for most car/truck makes and models and consists of three parts: current instaVIN Vehicle History and Title reports (when available), vehicle inspection performed by the dealer as dictated by vehicle type and a 3-month limited warranty.

Just how can a dealership use this program?

First, when a dealer chooses to certify a vehicle, a certification package is purchased from instaVIN, “which allows the dealer to run instaVIN Vehicle History and Title reports to check for negative title brands and similar events.”

If all is clear with the instaVIN History Report, the dealer performs a vehicle inspection according to the program’s certification standards.

Then, if the vehicle passes inspection, it is registered with instaVIN through an online Express Lane portal, and a 3-month limited warranty is issued.

“Following registration, the dealer has access to a free copy of the comprehensive CPO report they can provide to their customer to validate the warranty, including the instaVIN Vehicle History and complete inspection reports,” officials further explained.

Service Contract Offering

Highlighting another new offering from the company, the instaVIN Vehicle Service Agreement Program was revealed Monday, as well.

“Car and light truck dealers also need to be able to offer their customers comprehensive, reliable service contracts to help protect them from factory installed mechanical and electrical component breakdown and more,” officials stressed.

“With multiple options beginning with powertrain and other key component coverage all the way to programs that cover nearly everything, instaVIN VSA programs are a one stop shop for a turn-key service program that sells itself,” they continued.

Here are a few highlights from the new service contract program:
•    Online rating & order entry
•     Stated coverage up to 120,000 miles
•     Terms from 24 to 60 months
•     You choose the repair shop
•     Financing available
•     24/7 online claims
•     include roadside assistance

The company also explained how the two new programs can work hand-in-hand.

“When used in conjunction with the instaVIN CPO program, dealers can up-sell the consumer from the 3-month CPO warranty to a longer term service agreement,” officials noted. “This allows for further direct revenue on top of the increased gross of the CPO vehicle, plus stronger future opportunities for service and other ancillary products.”

For more information, see