Wholesale prices fell by almost 2 percent on a monthly basis in August, and depreciation is expected to ramp up even more this month.
According to the latest Guidelines report from NADA Used Car Guide, prices fell at auction by 1.9 percent last month.
And looking forward to the end of September, NADA UCG forecasts prices of vehicles up to eight years old will fall by 2.5 to 3 percent compared to August.
“This year’s anticipated rate of depreciation would be slightly better than the 3.4 percent decline recorded in September 2014, but right on par with the 2.7 percent decline averaged in the two prior years,” NADA Used Car Guide's Johnathan Banks said in the report.
This month, the largest price drops are expected in the midsize van segment, and NADA UCG expects subcompact and compact cars to also see large price declines, as well. Depreciation for these three segments is expected to come closer to the high end of NADA UCG’s forecast.
On the other hand, midsize cars, utilities and pickup price movement is expected to come in on the lower end of the spectrum this month. Banks also pointed out luxury vehicle losses should be more “severe” than their mainstream counterparts.
And the report stated depreciation will continue to ramp up as fall continues, with NADA UCG predicting prices will drop by approximately 3 percent in October.
Taking a look back at August price movement, which saw stronger used price movement than expected over the course of this month, Banks said, “Considering the index is down a mere 0.5 percent year-to-date, used vehicle demand — and thus prices — has remained strong despite higher new vehicle incentives (particularly lease incentives) and an ongoing rise in supply.”
Banks pointed out the market continues to favor trucks, while car prices continue to drop.
In August, subcompact cars took what Banks called a “nosedive”, dropping by 3.4 percent for the largest decline seen last month.
Prices for this segment have dropped by a whopping 14.6 percent this year, which is beat out only by the luxury large car decline of 16.2 percent.
“A burgeoning supply of subcompact cars at auction isn’t helping matters for the low demand segment. Supply for the group has grown by more than 30,000 units over the year, up nearly 60 percent from 2014,” Banks said, providing background for the significant price declines in the lanes.
Compact and midsize cars saw slightly stronger price retention last month with a combined 2.4 percent average drop. Large car depreciation was just under 2 percent.
For trucks, “losses were roughly half those of cars last month,” Banks said.
For example, midsize pickup, large pickup and mid-size utility depreciation averaged 1 percent.
Year-to-date, midsize pickup prices have only fallen by 3.1 percent, while large pickups have seen a decline of just 4 percent.
Compact utilities saw a slightly larger drop with a decline of 1.7 percent last month, while large SUV prices stayed flat. Midsize vans dropped by just 1.2 percent last month, but that number is expected to ramp up in September.
For those interested in price movement for 1- to 3-year-old used vehicles, specifically, KBB’s latest Blue Book Market Report broke down the numbers. The average vehicle value for younger used vehicles declined by 1.4 percent or $250 in August, according to the report. This is a significantly better performance than movement seen in June and July, when prices dropped by 2.6 percent and 2.2 percent, respectively.
On Friday, Xcira unveiled its new floor plan management system, which will begin its launch sequence at BSC America’s Bel Air Auto Auction later this month.
Designed to allow an auction to manage its own floor planning program for its dealers more efficiently, the company highlighted the system is the most recent in a series of cutting-edge technological solutions developed for the auction industry by Xcira, creator of the patented OnLine Ringman program.
“Xcira continues to support the auction industry with innovative technology,” Xcira chief executive officer Nancy Rabenold said. “Our newest product, the Floor plan Management System, has been designed to optimize the workflow at the auction level, reducing the steps and user actions required to floorplan vehicles.”
Rabenold indicated that the new system integrates a number of processes that previously were managed separately by auction finance departments. The solution can accommodate:
— Variable rate interest calculations
— Multiple fee tables
— Flexible dealer curtailment schedules
— A tool for calculating payment estimates
Rabenold also pointed out the program also can provide a central location for collection notes, compliance information, notification of expirations, lot audit reporting and vehicle loans across a historical portfolio.
“We’re excited about the system’s ability to streamline the floor planning process for auction finance departments,” Rabenold said. “Using a tablet or other mobile device, an auction representative can meet a dealer in the auction lane and floorplan a vehicle right at the point of sale.”
“In addition to its very extensive core capabilities, our new Floorplan Management System also accommodates a number of customized reports, including dealer vehicle reports, outstanding balances, aging, vehicle payment history and dealer credit balance at external auction houses,” Rabenold continued.
BSC America president Charles Nichols described what it’s been like to be involved in the program launch.
“The auction team at Bel Air Auto Auction has enjoyed collaborating with Xcira using its agile development process to build this great new auction tool,” Nichols said. “We look forward to the work flow improvements that this enterprise-level Floor Plan Management System will provide, which will allow us to better serve our dealers."
Rabenold also mentioned that future enhancements to the program are planned, the least of which includes a mobile-based lot check capability and integration with price guide books and an auction’s management system.
Xcira will demonstrate the new product during the upcoming NAAA Convention in Orlando, Fla. Officials will stationed in the Escambia Boardroom at the Hilton Orlando Bonnet Creek Hotel from Sept. 22-24.
An appointment can be arranged by calling Xcira at (813) 246-3558 or by sending a message to Mark Cameron at [email protected].
The ServNet Auction Group has brought in a new member: Akron Auto Auction.
Announcing the new addition, ServNet president Patty Stanley said: “It continues to be our goal to identify the best independent auto auctions in markets not currently covered by one of our ServNet member auctions, and we are delighted to announce that Akron Auto Auction is now a member of the ServNet Auction Group.”
She added: “As one of the auction industry’s pioneer facilities, tracing its beginnings back to 1945, Akron Auto Auction has played an important role in the market for 70 years, incorporating service, commitment and innovation to produce superior results for its customers.
“I join with the other ServNet auction owners in welcoming Akron Auto Auction and look forward to working in collaboration with auction owner and president Chad M. Bailey and his auction team.”
Founded in 1945, Akron Auto Auction is located on 30 acres, runs six lanes and has four separate buildings. The auction features a full transportation department, reconditioning department, inspection department and floor planning services. It runs an average of 1,200 vehicles each Tuesday.
“We are very pleased to join the ServNet Auction Group, and to be part of a network of auctions that continues to set the bar for leadership and service to the industry,” said Bailey, the third-generation owner of the Akron, Ohio auction.
“I look forward to collaborating with the ServNet auction owners as well as working with ServNet’s executive team to expand Akron Auto Auction’s influence and opportunities on both a regional and national level,” he continued.
Following KAR Auction Services’ announcement earlier this year that it planned on opening an auction facility in the Chicago area, the company said Friday that it broke new ground for its future ADESA Chicago location.
The 65-acre plot is located in Hoffman Estates, Ill., and the company hopes to open the facility in spring of 2016.
In a previous KAR statement, Jim Hallett, KAR’s chairman of the board and chief executive officer, said the auction location was an ideal deployment of capital to help provide a return for the company’s shareholders.
“Identifying opportunities for strategic growth has been a priority of KAR,” Hallett said. “The investment in an ADESA auction facility in Chicago is just one example of how we can deploy our capital to expand our market share, serve additional customers and enhance our financial performance.
“We will not only serve the Chicago market with a new physical auction facility, but I see an opportunity to expand the use of our online offerings in Chicago,” he continued.
In other recent ADESA-related news, the company recently announced on its company blog the winners of its Wear1Share1 summer sales campaign. The promotion worked around ADESA lapel pins, which were given to customers who had toured the company’s website and been trained on how to utilize its auction technologies along with an ADESA representative.
The potential customers were then encouraged to take a selfie while wearing the pins and share the photos on social media with the hashtag #wear1share1. In addition to the participants being entered into a drawing for various prizes, ADESA pledged to donate $1 to JDRF for each selfie uploaded with the hashtag in the months of June and July.
Ioannis Koutsakis, of Yanni’s Auto Sales, and Thomas Smith, of Smitty’s Auto Sales, each won grand prize trips for two to the St. Regis at Monarch Beach in California. Four other winners were also selected as winners of Surface Pro3 tablets.
The TPC Management Co. put three more sessions in the books this summer for its Auction Academy aimed at providing continued education for auction industry professionals.
The academy will host its next and final event for 2015 as a joint-class session in Detroit this fall.
The first of the three summer sessions was hosted in mid-July in Spokane, Wash., the Auction Academy’s fourth annual trip to the location. The academy’s Class 4 Group participated in DAA Northwest’s Rock & Roll Sale along with interacting with key managers at the auction.
Len Roll, the auction’s manager of reconditioning shops, led the first day, focusing on auction operations along with a tour of the auction facility. Lecturers for the academy’s students included Greg Mahugh, the auction’s co-owner, and Mitzi VanVoorhis, the auction’s marketing manager, as well as an interactive exercise led by Gonzaga University professor of leadership studies Dr. Shann Ferch.
The second day included a discussion with Dave Woods, director of remarketing for Harley Davidson, followed by a Harley auction at DAA Northwest. The day ended with the Rock & Roll concert headlined by Heart following an industry overview by Charlie Vogelheim and an outline of auction technology by Scott Finkle, president of Auction Edge.
“We cannot thank Bob McConkey, Greg Mahugh and the entire staff of DAA Northwest enough for once again allowing the Academy to participate in their largest sale of the year,” said Penny Wanna, the academy’s vice president of administration. “It is amazing to see how the team is able to handle record breaking consignment volumes and so graciously accommodate us being right in the middle of all the auction action for the entire week.”
The academy hosted its first “Seminar Series,” later in July, featuring a Digital Manager’s Session in Chicago. The single-day session featured several presentations on various technology platforms, followed by open discussion on the challenges and opportunities of operating their businesses.
“That afternoon was the single most dynamic discussion session I have ever witnessed in our industry,” said Pierre Pons, the academy’s chief executive officer. “I am convinced that due to the interactions of that afternoon, the state of online sales for independent auctions has been enhanced dramatically.”
The academy’s Class Group 3 went to Brasher’s Sale Lake in late August for an auction tour and several discussion sessions. One academy student, Wanda Jowers, a 23-year employee of Carolina Auto Auction, commented on her experience.
“In all my years at the auction I thought I had seen just about everything,” Jowers said. “But over the course of my Academy experience, which allows me to visit so many other facilities around the country, I have picked up something new each and every time. The Salt Lake City session was my favorite to date — but quite honestly I have loved them all.”
For more information on the Auction Academy, visit its site here.
Whann Technology Group announced Tuesday that founder Keith Whann will now head up day-to-day operations of the company, having stepped down from his post as chief executive officer of Columbus Fair Auto Auction.
Whann joined CFAA in 1987 and had been CEO and an owner for the last 10 years. He will be an owner for the short term, but won’t be involved in the business operations.
“Relinquishing the reins is always difficult, especially when you care so deeply about your employees and your customers. I will remember my time at CFAA fondly and miss the relationships that have developed over the years,” Whann said.
He added: “As much as I enjoy the auction lanes (we all know there is nothing else on earth like an auction on sale day), I really love the technology side of our industry.
“We are very fortunate for the unique opportunities that currently exist for WTG. I see technology continuing to be at the forefront of our industry and being a disruptive force in both the wholesale and retail automotive sectors and being able to devote full time to WTG will allow us to play a part in all of this.”
The Southeastern Auto Auction celebrated its anniversary last week, recognizing 19 years of operation in its Savannah, Ga., location.
SEAA’s 19th Anniversary Sale featured a large consignment of vehicles from a variety of consignors, including new-car dealers, independent dealers and institutional accounts.
According to the auction, it had a record-breaking number of dealers involved, both in the auction lanes and online via Simulcast.
The celebration culminated at the sale after a month of anniversary related events, with prize giveaways at every sale. In-lane dealers had weekly chances at diamond-plated shrimp and oyster steamers while online shoppers had a chance at winning an iPad mini.
The anniversary sale itself featured a free Georgia barbecue along with more than $15,000 in cash and prizes. The event also included a generous act of philanthropy, a donation given to the Shriners Hospital for Children from money raised during the event’s 50/50 drawing.
“It has been a long year for breaking records here at Southeastern Auto Auction and our anniversary month was no different,” said Bill McCready, the auction’s vice president. “For an auction to be in business this long you need to have great employees and great customers. I would like to thank the hard-working Southeastern Auto Auction team members for all they do and also our amazing dealers. Everyone is looking forward to see what our 20th anniversary year holds!”
For more information on SEAA, visit its site here.
Auto Remarketing has launched a new series this year called “Consignor Connection,” in which we catch up with a leading remarketing executive at a different consignor each month.
In a Q&A format, we talk about best practices, auction industry trends and more. The latest in this series features Jeannie Chiaromonte, vice president/national remarketing manager at Bank of America.
Auto Remarketing: How is consignment volume trending this year for Bank of America and what have been some of the stronger performing segments for you?
Jeannie Chiaromonte: Bank of America's repossession volumes have been steady year-over-year. We are expecting a slight uptick in volume going into next year on the auto portfolio. That said, we are starting to see a vintage change in our auto portfolio as our average vehicle in the lane is a more recent model year.
The bank is currently utilizing our own brand recognition for the certification program, not having yet adopted the NAAA certification program. We have brand certification program consisting of our 14-day, which is mechanically sound and as close to front-line ready as possible.
Our seven-day certification program now consists of mechanically sound vehicles with no severe collision damage. Interestingly enough, we changed our seven-day program years ago and widened the cosmetic portion, allowing for some minor collision damage which would be quick and easy for the buyer to fix.
Both programs are based with model-year as well as mileage criteria. Our seven-day certification program performed better this year as the buyers were making those needed cosmetic repairs.
The continued focus at Bank of America is our customers' satisfaction and getting the most for our customers' vehicles, thus reducing their bottom line deficiency balance owed. Equally important on the back end is our buyers in the Bank lane has the confidence they can return the vehicle within the timeframe allowed in our certification programs.
We are focused on the buyers' needs, thus drawing them to our lanes.
I would be remiss not to mention our Specialty Portfolio consisting of motor home, fifth wheels, etc., and marine product. With the limited supply of marine product in the wholesale market, our boat values have remained in demand. We also experienced a lift in values for our diesel motor home segment.
AR: How has the increase in volume, particularly off-lease units, impacted the auction industry in 2015?
JC: With an increase in late-model vehicles in the lanes, buyers have the option to be selective. Increased inventory in this segment created downward pressure on our 14-day certified products —basically a retail-ready vehicle, Grade 3 and higher. More online sales and upstream selling puts product in dealers' hands before auction sales in the lane.
We will rely on our business partners to deliver the continued level of service during these times, which may present a challenge with increased volumes, while we continue to focus heavily on days to sell.
The key to this being a continued success for all is communication. Communicate our needs as well as the auctions to communicate theirs. Being a national consignor, understanding where the vehicle saturation will be. Online buyers will continue to be critical to the success during this time, increasing bidding, thus boosting prices.
AR: How does your company strike a balance when it comes to choosing how your cars are sold, be it auction sales, online sales, open/closed sales, etc.?
JC: Bank of America has a varied mix of year, make and model vehicles. Due to our entire portfolio consisting of repossessed vehicles, we opt for physical auction sales (open sales only) that also have the Internet sales channel available on sale day. We post all no sales from the auction lanes on the Internet awaiting our next sale date often utilize event sales.
The Bank has had some success in exposing our vehicles to buyers in other markets by offering product via "postcard" on sale day. While the collateral is not physically at the sale, it is offered via condition report and pictures in a virtual format. We have a Bank representative attending all sales in person or rep on-line for lower volume sales if needed.
AR: What importance does Bank of America put on condition reports when selling in the wholesale lanes?
JC: The industry has come a long way when it comes to condition reports. As the newest president of IARA (International Automotive Remarketers Association), myself as well as all the volunteers on our board have found the importance in helping remarketers voice their concerns and working with our auction partners to ensure we all strive for excellence.
As most consignors do, Bank of America relies heavily on the quality of condition reports including quality control assessments in our presale review. Our remarketing process begins with the information and pictures documented on condition reports. Accuracy is key! Equally, we rely on our auction partners to update information once identified or when repairs are completed.
Our goal is to provide the most accurate condition report reflective of vehicle condition and accurate announcements at time of sale. Full disclosure to the dealer is the Bank's ultimate goal to ensure their satisfaction and to reduce the likelihood of arbitrations.
While the physical auction continues to be our first most source of disposal, the internet buyer continues to play a critical part in sales and well as playing a huge part in increased bidding. Might I add, with Auto Grade implementation at all of our auction sites, we are finding the importance of Post Recon Grade updates, as dealers have become more familiar with the industry's grading scale. Many buyers now use the Grade as part of their criteria to source product.
AR: What have been some of the biggest challenges (and opportunities) in the auction market for consignors this year?
JC: While speaking from a repossession only consignor, taking possession of collateral without keys has been a huge concern. No-keys on repossessions have caused delays in transporting collateral and obtaining miles for title work when required.
Since our focus is on days to sell, as most, this continues to be a hurdle in addition to "one off" transport assignments while trying to reduce transport costs. Vehicles under warranty are a small concern in ensuring they are fixed quickly if need be. Recalls have had little impact on us at this time however will continue to remain a watch item.
As a consignor that does a good amount of reconditioning, there continues to be opportunities in condition report writing with respect to consistency. Once reconditioning is completed it is critical for timely updates to the condition reports as well as new and accurate grade values being updated in the system of record.
Target marketing for consignors that have smaller portfolios is another. With a smaller portfolio, trying to determine the best run time and lane along with which weeks to run are a challenge being a consignor who reps in person.
Working diligently with our business partners on the repossession side, transporters and the auctions has been and will continue to be the key to the continued success for us all. Timely communication is a critical component for not just the consignor's success but the industry's success.
I pressed “send” on the email to notify recipients of the inaugural “Remarketing & Used-Car Industry’s 40 Under 40.”
It wasn’t even five minutes later that I got the first response back. Then another. And another, and another.
It went on like that for a while.
As a magazine editor, this was awesome; folks in my line of work love quick responses.
But that wasn’t the best part. See, it wasn’t that people responded, it was how they responded to earning 40 Under 40 recognition.
Just a few examples:
“Wow! Thank you!”
“This is quite an honor, and I’ll be honest, I’m shocked.”
“ … wow this is amazing, thank you!”
“Thank you for such great news!
It was extremely humbling to hear such positive response from our 40 Under 40 recipients, especially after learning all the great things these folks are doing in this business and within their communities.
It’s touching to know that this award is meaningful and impactful to some of the very people who are making a significant impact in the industry.
And at such young ages, I might add.
As a 32-year-old myself, I’m right at the midpoint of the age range for our honorees. Being a part of this same generation, I can appreciate the broader economic, political and cultural environment in which our honorees grew up, went to school and eventually made their way in the workforce.
That makes this whole project even more rewarding.
And inspiring. If I ever need a swift kick of motivation, reading these people’s stories certainly provides that to a 30-something like me.
Speaking of inspiring, it was also heartening to see how many people nominated their peers.
Unfortunately, the very nature of this project doesn’t allow us to pick all the nominees, although many are equally impressive in their own right.
But good news: this is just the first edition. This industry is full of people under 40 (and under 30, for that matter) who are making waves, and this project is going to allow us to recognize many different folks year after year. Congratulations to all the honorees, nominees and the great companies you represent. And thank you for making this project rewarding!
And now, without further ado, is the inaugural Remarketing and Used-Car Industry's 40 Under 40:
Sarah Amico, Jack Cooper Holdings Corp.
Chad Bockius, CarStory
William Brigance, City Auto Sales
Chase Channell, Rick Case Kia
Jose Delgado, PAR North America
Steven DeLuca, Auto Auction of New England
Joe Derkos, J.D. Power
Dan Diedrich, Auction Edge
Kirby Durham, J.D. Byrider
Jenifer Eggert, Manheim
Josh Elias, Del Mar Recovery Solutions
John Elizaga, Emkay
Summer Ernsberger, ADESA
Scott Fontaine, Ally
Adam Galema, NextGear Capital
Brent Garrett, CarLotz
Alec Gutierrez, Kelley Blue Book
Spencer Henney, Manheim
Jason Herman, U.S. Bank
Casey Hughes, Toyota Financial Services
Chris Knaub, Bill Luke Chrysler Jeep Dodge Ram
Joe Mappes, Primeritus Financial Services
John Mathiowetz, Avis Budget Group
Brian McBrearty, ARI
John Messiha, Capital One Auto Finance
Joe Miller, Auto Auction Services Corp.
Nick Ouritski, Thrift Auto Sales
Jodie Plaunt, Grand Rapids Auto Auction
Todd Rea, Dealers Auto Auction of Chattanooga
Jenn Reid, Equifax
David Rice, Cox Automotive
Dustin Ruch, MetroGistics
Christina Schrank, National Auto Care
Michael Scott, Consumer Portfolio Services
Brian Skutta, AutoAlert
Revathi Srinivasan, ADESA
Jessica Stafford, Cox Automotive
Michael Vincent, Newell Auto Group
Jordan Walters, Black Book Auto
Jeremiah Wheeler, Digital Recognition Network
Amal Zahri, DriveTime
These honorees will be recognized during a ceremony at the National Remarketing Conference portion of Used Car Week this fall.
Complete coverage of our 40 Under 40, including special feature stories about these honorees, can be found in the Sept. 1 issue of Auto Remarketing.
Manheim Riverside celebrated the opening of its two new facilities in Riverside, Calif. on Thursday.
The new facilities include its indoor Vehicle Inspection Facility and the Kelley Blue Book Resource Center, adding to its already significant 89,000-square-foot Manheim California Service Center, which opened in 2013.
The celebration on Thursday morning included local community members and government officials, in attendance, followed by a Highline sale and dealer-appreciation lunch.
“Manheim Riverside continues to invest in new and better ways to make it faster and easier for dealers to conduct business while delivering high-quality products and services,” said Chris Brown, Manheim Riverside’s general manager. “As vehicle volumes continue to rise, these collective facilities will ensure that our team is prepared for anticipated growth, delivering new technology tools to enhance the auction experience and better serve our customers.”
The auction’s new Vehicle Inspection Facility features a 21,000 square feet of climate-controlled space, allowing the creation of condition reports of an anticipated 125,000 vehicles per year. It also features energy efficient LED lighting.
The Kelley Blue Book Resource Center, which the company says is the first of its kind, is located in the main auction lobby and will provide training, information sessions and customer meeting space. It features seven workstations and business technology tools to help buyers and sellers access product and evaluate auction information.
“Helping car buyers and sellers achieve their respective goals is at the core of Kelley Blue Book’s mission, making the implementation of the all-new Resource Center at Manheim Riverside a no-brainer,” said Mike Sadowski, vice president of operations and general manager at Kelley Blue Book. “Delivering the company’s trusted information and the availability of space for dealers to conduct business directly at the auction, as part of the Cox Automotive family, is just another example of how we intend to carry out that mission for our customers.”
