Auto Remarketing is launching a new project this year to honor the “Best Auto Auctions to Work For,” and it’s one in which you can get directly involved.
In fact, we need your help to make it work. First, the details:
Best Auto Auctions to Work For
What is it?
A workplace study for the auto auction industry that will recognize the best auto auctions to work for (on an unranked basis).
It is designed and intended for individual auction locations — no corporate or HQ offices; just individual auction locations.
It is absolutely free/no charge for auctions to participate.
Winners will be recognized in the Sept. 15 edition of Auto Remarketing and at a special Best Auto Auctions to Work For recognition breakfast on Nov. 17 during the National Remarketing Conference/NAAA Convention.
Who is conducting the study?
Auto Remarketing, teaming with Best Companies Group in Pennsylvania, is underwriting the study.
However, the study will be managed by, and data analyzed 100 percent, by the staff of Best Companies Group (BCG).
Best Companies Group will directly administer all of the surveys and manage/analyze all of the data and information. No input from Auto Remarketing staff.
How are auctions chosen?
The Best Companies Group will analyze the data from the group of auctions choosing to participate and develop metrics and standards based on that data to determine which auctions are named to the list of Best Auto Auctions to Work For.
It’s either pass or fail, and ONLY those auctions that pass will be included in results. Auto Remarketing will NOT publish information on auctions that participate and do not meet the criteria required. And, again, there are no rankings.
Alright, I’m in. What do I need to do to participate?
For individual auction locations to participate, the general manager/leader of that auction needs to opt in at this website, www.bestautoauctionstoworkfor.com, by April 22.
Registration is now open.
More information and answers to many of your questions can also be found at that same website. Auto Remarketing and its print, digital, email and social media channels will be keeping you posting as this project progresses.
But for now, if you are an auction GM, make sure your auction has what it needs to participate by registering at www.bestautoauctionstoworkfor.com by April 22.
If you have a question about Best Auto Auctions to Work For, contact Mor Aframian at [email protected] or (800) 608-7500, ext. 126.
The battle between supply and demand is nothing new to dealers — and as we head further into the forecasted growth in used-vehicle supply, wholesale price softening is to be expected.
The latter is the message from ADESA Analytical Services’ executive vice president and chief economist Tom Kontos in the December edition of Kontos Kommentary, where he summed up the year quite succinctly and set the scene for 2016.
“2015 was largely a year when strong retail used vehicle and CPO demand, benign new-vehicle incentive activity, and the embrace of upstream as well as traditional auction processes among remarketers diluted the usual negative impact of growing supply on wholesale values,” Kontos said in the report.
“Further masking that impact was the displacement of off-rental program vehicle volume that appeared in the first half of the year rather than the last quarter of 2014,” he added. “These high-dollar, late-model units biased average wholesale prices upward for much of the year.”
Unfortunately, that dilution of wholesale values started to clear up by the end of the year, most notably in December, where Kontos says prices fell by upwards of 1 percent on both a month-over-month and year-over-year basis for various segments.
Let’s break it down. Wholesale used-vehicle prices in December averaged in at $9,763, a decrease of 1.2 percent month-over-month and down 1.0 percent relative to December 2014.
The only vehicle segment that showed any significant monthly increase was the minivan segment, while truck values, in general, declined less than cars and crossovers.
Looking at the various types of sellers, wholesale prices for vehicles remarketed by manufacturers were up 1.6 percent month-over-month but down 3.5 percent year-over-year. For fleet/lease consignors, both metrics were down 0.1 percent and 0.7 percent, respectively.
Within the fleet/lease consignment category, off-rental risk units showed small month-over-month and year-over-year price increases.
Three-year-old vehicles, however, did not, Kontos said. These vehicles — which he said are a “proxy for off-lease vehicles” — showed significant declines in both pricing metrics.
Dealer consignment saw a 2-percent decrease in December, compared to November, and a 1.2-percent decreased compared to December 2014.
To check out Kontos’ full breakdown of wholesale used-vehicle prices by vehicle model class, click here.
At the close of the third quarter, our nation’s seven publicly traded dealer groups collectively averaged their 25th consecutive quarter of same-store used unit sales increases.
Cox Automotive’s chief economist Tom Webb, speaking during the Manheim Index Quarterly Conference Call on Friday, says a 26th is probable, but will be a challenge to achieve.
“Slide 14 shows the seven publicly trade dealership groups and it shows that they have had 25 consecutive quarters of same-store growth in used-units retailed,” Webb said, referring to slides accompanying his presentation. “Achieving the 26th quarter will be a little bit difficult because CarMax has already reported a 0.8-percent decline in their quarter, which ends in November.
“But I still think the 26th quarter will be achieved because CarMax was more focused on supporting gross than I believe that the others will be. Which, obviously, writes in the equation, that by extension, I expect the downward sloping lines in Slide 15 will also continue.”
And the latter slide, as you probably inferred, references the used-vehicle retail gross margin for the same publicly traded dealer groups. The gross margins for used sales for the public groups is currently trending to its lowest percentage in several years — a trend Webb says has two faces.
“Now, there are two ways of looking at that gross margin trend. One could just say it’s plain ugly, and it’s dangerous,” he said. “Or, you can argue that it’s just simply the case of a competitive industry passing on its efficiency savings to the consumer. Obviously the truth lies somewhere between the two.
“But more importantly, from my perspective, I do not believe that grosses should, and hopefully they won’t, go much lower. So that means don’t look for operating efficiencies at the retail level to continue to bail out the commercial consignors. The dealers have done more than their part,” Webb said.
He says dealership proficiencies have helped that margin decline due to the lowered costs of operation that result from such efficiencies.
“A lot of that reduction in gross, I wouldn’t say was ‘willingly’ given away, but because there were tremendous increases in operation efficiencies, other dealers were able to give it away,” Webb said. “The ability to keep achieving those operating efficiencies I think are a little bit limited going forward. And certainly the benefit of exceptional growth in the throughput has probably slowed it a little bit, too.”
For more takes on Webb’s analysis, including the used-car market’s current stretch of wholesale price stability, click here.
KAR Auction Services closed out 2015 on a philanthropic note, announcing toward the end of December that it had raised $173,228 for the United Way of Central Indiana.
Following two weeks of fundraising, the campaign involved employees partaking in various activities to raise awareness about United Way’s endeavors. The events included a trivia contest, a coffee chat with Torchbearers and loaned executives, a silent auction, collectively raising $3,890. Another $84,669 was raised by employees. KAR matched the funds raised dollar-for-dollar, bringing the total over $170,000.
The figure broke last year’s total funds raised of $129,000.
“It is inspiring to work with people who are so generous and so dedicated to giving back to the communities in which we live and work,” said Jim Hallett, KAR’s chairman and chief executive officer. “We continue to surpass our record each year, and I couldn’t be more proud of our team and thankful for the positive impact this will have in helping those in need in the Indianapolis area.”
KAR’s annual United Way fundraising campaign is part of the company’s year-long corporate giving campaign. To learn more about the company, click here.
The Juvenile Diabetes Research Foundation, a global organization focused on Type 1 diabetes research, received a healthy donation from ADESA and Emkay toward the end of December.
ADESA announced in late December that it, in partnership with Emkay, raised $50,660 in support of JDRF, bringing the partnership’s total contribution tally for the last four years to nearly $160,000.
How were the donations collected? During the eight-month campaign, both companies donated $10 for each Emkay vehicle sold at an ADESA location.
“At ADESA, we appreciate every opportunity to support JDRF, so joining forces with industry partners like Emkay, who is also a longtime supporter, is a natural fit,” said ADESA president and chief executive officer Stéphane St-Hilaire. “We hope that the funds raised will help to someday find a cure for Type 1 diabetes, which affects the lives of so many people in our families and communities.”
To learn more about JDRF or provide support, click here.
In December, Element Fleet Management announced its 17th annual Remarketing by Element Awards in Chicago, honoring a few handfuls of auctions and a top-ranking female leader in the remarketing business.
Earning top honors as Auction of the Year was Manheim Kansas City.
“Remarketing by Element appreciates all of our partner auctions and commend those that are the best of the best,” said Paul Seger, vice president, Remarketing by Element. “We congratulate all of our winners, especially Manheim Kansas City for achieving the top honor as Auction of the Year.”
In addition to the various auction locations receiving awards, Element recognized Manheim Pennsylvania assistant general manager Amy Taitano as the winner of the Laurie Dobberphul Award.
That award is given each year to a leading female in the remarketing industry in memory of the Dobberphul, an Element Fleet Management team member who passed away in 2009.
The complete list of winners is below, with a description of each award from Element in parenthesis:
- Mid-Market – National: DAA Northwest (best overall performance, all criteria, small volume sale)
- Above and Beyond – National: Manheim Seattle (auction that showed innovation and risk-taking to think out of the box with a successful result)
- Outstanding Promotion Event – East: DAA Huntsville (best overall promotion regional)
- Outstanding Promotion Event – Central: Manheim Milwaukee (best overall promotion regional)
- Outstanding Promotion Event – West: Manheim Riverside (best overall promotion regional)
- National Internet/Technology – East: Manheim Pennsylvania (best overall use of Internet to sell and market vehicles)
- National Internet/Technology – Central: ABC St. Louis (best overall use of Internet to sell and market vehicles)
- National Internet/Technology – West: Manheim Nevada (best overall use of Internet to sell and market vehicles)
- National Operations: Manheim Utah (best overall operations)
- Canada – National Operations: ADESA Toronto (best overall operations)
- Canada – National Promotion: ADESA Montreal (best overall promotion)
- Canada – National Above and Beyond: ADESA Edmonton (auction that showed innovation and risk-taking to think out of the box with a successful result)
- Silver – Northeast: Americas Harrisburg (best overall performance regional, all criteria)
- Silver – Southeast: Manheim Central Florida (best overall performance regional, all criteria)
- Silver – Midwest: ADESA Minneapolis (best overall performance regional, all criteria)
- Silver – West: Manheim Phoenix (best overall performance regional, all criteria)
- Laurie Dobberphul Award: Amy Taitano (outstanding female performer for GE account)
- Gold – National: Manheim Kansas City (best overall performance, all criteria)
Citing historical trends, NADA Used Car Guide points out that November saw an easing in used-vehicle depreciation, staying the course for the typical seasonal pattern of the industry. November’s depreciation – 1.9 percent – was noticeably lower than October’s 2.7-percent drop.
In the December edition of Guidelines, NADA UCG’s seasonally adjusted used-vehicle price index rose 1 percent compared to last month, to 123.8. Year-to-date, the index falls just 0.2 percent shy of the index’s all-time high averaged last year.
"It's normal for used-vehicle depreciation to slow during the end of the year,” Jonathan Banks, NADA UCG’s executive analyst, said in the analysis. “That said, while the slow is normal for the month, it was steeper than last November's 1-percent slide."
Diving a bit deeper, compact cars saw the biggest hit last month, falling by an industry high 2.7 percent in November, continuing its trend of dropping roughly 3 percent each month for the last seven.
While depreciation for the industry, as a whole, stood at 13.2 percent YTD at the end of November (compared to 12.7 percent for 2014), let’s take a look at all of the segments’ price drops last month, according to NADA UCG:
Change in Wholesale Used-Vehicle Prices – Oct. vs. Nov. 2015
| Segment |
Price Drop Percentage (all values negative) |
| Compact Car |
(2.7) |
| Large Car |
(2.3)
|
| Subcompact Car |
(2.1) |
| Luxury Mid-Size Car |
(2.1) |
| Luxury Compact Car |
(2.0) |
| Industry Average |
(1.9) |
| Mid-Size Van |
(1.9) |
| Luxury Mid-Size Utility |
(1.7) |
| Luxury Compact Utility |
(1.6) |
| Large Pickup |
(1.6) |
| Mid-Size Utility |
(1.6) |
| Compact Utility |
(1.4) |
| Mid-Size Car |
(1.4) |
| Mid-Size Pickup |
(1.1) |
| Luxury Large Car |
(1.1) |
| Large SUV |
(0.8) |
Year-to-date auction volume, by the end of November, stood at 3.83 million units, up 4 percent compared to the same period last year.
Looking forward, NADA UCG predicts that the prices for used vehicles aged zero to 8 years will fall roughly 1 percent in December compared to November. Zooming in to the segment level, the organization also predicts that subcompact and compact cars will drop by 1 percent, more than any other mainstream segment, while both luxury cars and utilities are expected to lose 1 to 1.5 percent in December.
January prices are expected to remain flat before increasing approximately 0.5 percent in February.
The answer to the above question? That’s simple: We truly don’t have a selling fee because that is not the auction industry’s true role in the consignor-auction-buyer dynamic.
Our true role is to market used vehicles into the buying niches that absorb that type of product, but “selling it” is the consignors role based on make, model, miles, announcements and price.
Hold that thought and ponder the dynamics in that statement: Auctions are a PARTNERSHIP between themselves and their consignors. And the cost per car is a marketing fee which truly should be charged on every single unit, because it is the consignor’s decision to sell or not sell, based on aspects only they can fully control.
If the market is flooded with “cookie-cutter” RACs, that increases — not decreases — the marketing work needed by each auction to sell, store and process each unit in-lane and online.
I can hear everyone now saying, “That’s a success fee.”
Then why have the success fees been going down versus inflation for the past 20 years? Is it because salaries have, regulation costs have, technology costs have gone down or inflation has?
Maybe it’s because the auctions, especially the chains, use price instead of service as the logic in marketing their services. So, the consignors, as great business people, use that logic effectively.
Why worry if you’re a consignor, about using varied auctions to market your products more widely and effectively when you can use “one size fits all” and hope for the best as long as the costs are low?
I will continue to push the partnership concept in all my relationships with my consignors and the concept that we are the marketing arm for their companies, and more importantly, that the utilization of technologically enhanced brick-and-mortar auctions are the total package and not just a segment of the remarketing needs of their companies, reflected in static websites or Internet-only platforms.
The last issue I would ask you to ponder today is, if the sales aspect is not on the consignor side, why would an auction ever charge a “no sale” fee?
Because they realize there is a cost of marketing for every unit, whether a consignor chooses to sell it or not, but they don’t apply the concept universally. They choose to selectively give away their product as opposed to creating industry-wide value for it at all times.
A per-car marketing fee and a per-car buyer fee, is a FAIR and equitable auction cost model that values the important impact that multi-faceted auctions bring to the remarketing industry.
Editor’s Note: Jim DesRochers is vice president at Dealers Auto Auction of the Southwest. As with any contributed content, the opinions expressed in this and other editorial columns are solely that of the author’s and do not necessarily reflect those of Auto Remarketing or its parent company.
The folks at the Carolina Auto Auction find themselves in a “bittersweet” transition period as they celebrate the career of their fleet/lease manager, Sal Terranova, who is headed for retirement.
Announced by the company on Wednesday, CAA’s well-known Terranova is succeeded in his position by Joe LeMonds, who has been shadowing Terranova in the position for the last six months in preparation for the transition.
Looking back at his career, Terranova highlighted some of his fondest memories at the South Carolina auction.
“Certainly the thing that I have always really enjoyed has been testing market modifications to see if there was any way to enhance the value of a vehicle,” Terranova said. “Testing the value of a wholesale certification program; running vehicles with / through a manufacturer’s captive remarketing program; pushing the Internet and simulcast opportunities; testing the impact of various repairs; etc., all have been a lot of fun, and very mentally engaging. But the most rewarding part of the job has probably been the ability to communicate the results of some of those value-enhancing experiments with other sellers, and clients in the business.”
After retiring at the end of the year, Terranova looks forward to spending time with his wife, five children and seven grandchildren.
Continuing that theme of looking forward, Terranova says that the biggest change during his career that will continue to affect the auction industry is online buying.
“Buyers can now view and interact with a vehicle online — from viewing a CR to the consummation of a buying decision without ever leaving their home or office,” he said. “However, I also believe that the physical auction will also continue to grow in that there will always be a number of buyers that want to physically inspect the vehicle, and interact with the market live.”
In other CAA news, the auction’s next major sale will be hosted on Jan. 6 with its Tax-Time Sales Event that will continue through Fe. 17. Dealers will have the opportunity to win a share of $30,000 in cash and prizes and stock up on vehicle inventory. Those most interested in picking up some pickups can check out CAA’s Truck Sale on Feb. 9.
For more information on CAA, visit its site here.
Dealer's Auto Auction of Huntsville, as well as Dealers Auto Auction of the Southwest, have recently received awards of various types, including organizational and individual acknowledgments.
DAA of Huntsville announced Thursday that it was recognized as the Outstanding Promotion Event East Region Top Auction for 2015 during the Remarketing by Element awards ceremony at the beginning of December.
The Huntsville, Ala. location hosts a weekly sale every Tuesday morning.
Further west, DAA of the Southwest also reached out to Auto Remarketing to let us know that two of its auctioneers have been awarded at the recent U.S. Bid Calling Championship.
DAASW’s Mitch Jordan has been recognized as the 2015 U.S. Bid Calling Champion and Sean Hanafi has been awarded as the 2015 Rookie Champion.
To see them both compete, check out the video of the competition here or in the window above. Jordan can be viewed at the following timestamps: 1:34:40, 2:10:07, and 2:42:48. Hanafi can be viewed at: 00:13:40 and 2:45:47.
Moving over to the east coast in Corry, Pa., the Corry Auto Dealers Exchange has been busy over the holidays. For the fifth consecutive year, Corry ADE held its annual food drive with local dealers who partook in a Thanksgiving meal in exchange for a donation to the Corry Area Food Pantry.
Donations were made in the form of non-perishable food items and cash donations.
“Donations weighed in at 547 pounds, well over last year’s total — plus we received nearly $200 in cash,” said George Kirik, a member of the Corry Area Food Pantry’s board of directors. “It was a great turn out for a wonderful cause. We appreciate what Corry ADE does to help so much.”
Corry ADE also assisted the international charity, Stop Hunger Now, with a donation of $17,400 over the Thanksgiving holiday in association with a local congregation.
This was the third year that Park United Methodist Church has assisted Stop Hunger Now and the second year that Corry ADE has helped them raise funds.
“This year we upped our donation with an added twist,” said Tad Swift, Corry ADE auction manager and family spokesperson. “We challenged the congregation to fundraise to add to our donation. The combined amount is making it possible to send 30,000 meals more than last year — 80,000. It’s awesome to be a part of this effort with our local church and especially to make a difference to people thousands of miles away.”
To learn more about Stop Hunger Now, click here.
