ADESA announced that its subsidiary, AutoVIN, has closed its acquisition of DataScan Field Services, a vehicle inspection business.
“The closing of this acquisition allows us to move forward with new and improved services for our customers,” said Stephane St-Hilaire, ADESA’s president and chief executive officer. “Combining the best of what both companies have to offer is a win for everyone. We welcome 500 new employees to the KAR group of companies, and are excited to provide an improved product for our customers.”
DataScan leverages Internet-based technology for its vehicle inspection services for auto manufacturers, financial institutions, leasing companies and warranty companies.
Brasher’s Rallies Support for Family Member
The Brasher’s Northwest Auto Auction as well as Brasher’s Portland recently hosted its Brasher’s Golf Challenge, which it has held annually since 2007 to help defray the medical costs of Natasha Melton, the youngest daughter of Mark Melton, the general manager of Brasher’s Northwest, the former of which works to overcome the effects of spina bifida.
Now 15 years old and in high school, Natasha has undergone 26 surgeries so far but remains as active and positive in life as possible. The annual golf challenge, which was this year hosted at the Langdon Farms Golf Club in Aurora, Oregon, has raised over $170,000 since the first benefit to help manage the medical costs associated with her treatments. This year’s tournament raised a total of $27,680.
“Because of your generosity over all these years you have helped my family in such a huge way,” she said, following the tournament. “I am so grateful for the generous gift I have received every year as a result of the Brasher’s Golf Challenge. It has opened a world of wonder for me.”
All proceeds from the tournament go toward the funding of Natasha’s medical costs and equipment. In the past, the proceeds have helped pay for tutoring, wheelchairs, crutches and more.
Manheim Louisville announced recently that it will host its “Cruisin’ for Wishes” car show and fundraiser on the rescheduled date of June 13 due to it being rained out on Saturday.
The event, which will benefit Make-A-Wish Ohio, Kentucky and Indiana, will feature cars, trucks and bikes in the show to help raise funds for children with life-threatening illnesses. For more information on the festivities, check out our previous story previewing the event.
AANE 20th Anniversary
In other auction news, the Auto Auction of New England (AANE) celebrates 20 years of providing its services with its “Roaring Twenties Event” sale on June 4. The event will feature food, prizes and events that will reminisce on the days of prohibition. Among other festivities, the auction staff will give out memorabilia and look back on the auction and its customers over the past two decades.
“It’s amazing to look back 20 years and see how AANE and the industry, as a whole, have evolved, and we appreciate being part of this unique and diverse business,” said Steven DeLuca, the auction’s general manager.
“We are looking forward to giving back to the partners who have supported and encouraged us for the last two decades,” DeLuca said. “The auction is always such a busy place, and we don’t always have the chance to shake all our dealers’ hands and express our appreciation for their decision to do business here year after year. This event gives us that opportunity.”
State Line AA Honors Loyal Employee
In Waverly, N.Y., the State Line Auto Auction and its founders, the Barber family, celebrate the career of Jim Terwilliger, who has spent the last 31 years with the auction after starting his career there in a position in the auction’s reconditioning shop. Terwilliger now works in sales, where he supervises a team of eight employees as the auction’s sales manager.
“I was just a kid needing a job when I went to work for the auction all those years ago,” Terwilliger said. “But ‘work’ turned quickly into a great career. The Barbers have always treated me like family, and working with Jeff Barber, from whom I’ve learned so much, has been a dream come true.”
Jeff Barber, the auction’s owner, reflected on the auction’s history with Terwilliger.
“Because of his dedicated involvement and great interaction with State Line’s customers, ‘Jimmy T’ is known to everyone as a person who can ‘get the job done,’” Barber said. “It means a great deal to me to work with someone like Jimmy who is so good at what he does and is so dedicated to the auction. His contribution to State Line’s success is immeasurable.”
ServNet has added a new member, expanding its reach into Illinois. The latest to join the independent auction group is Greater Rockford Auto Auction, which is now in its third generation of ownership by the Clark family that founded it.
ServNet president Patty Stanley announced the addition at the recent ServNet Owners meeting in Dallas.
“I am extremely pleased to welcome the Greater Rockford Auto Auction to ServNet,” Stanley said. “The Clark family, and the auction they have operated for more than 40 years, are highly regarded, and are known throughout the region for their dedication to their customers, high standards of service and commitment to the industry.
“We look forward to working with Mark and Ryan Clark and the auction staff to build an even stronger presence in one of the country's leading automotive markets,” she added.
Greater Rockford has grown from a two-lane sale to the six-lane, 35-acre auction it is today, a path that includes a move to its current location in 1993 and the opening of a new reconditioning facility earlier this year.
In addition to its six lanes and recon services, the auction also offers on-site mechanical services, inspections, transportation, simulcast and an in-house floor plan program.
The auction's location in Rockford, Ill., is less than 100 miles from Chicago, Milwaukee, and Madison, Wis., and is about two hours from the Quad Cities area of Iowa.
“As an independent, family-owned auction ourselves, we are excited to join forces with ServNet and are pleased to be part of a group that has distinguished itself as a leading voice in the auto auction industry," says owner Mark Clark.
“We are looking forward to deepening our relationships with the other auctions in the group as well as with remarketers across the country as we continue to grow our business and provide greater services to our customers,” Clark added.
Recently, someone asked me why our seller revenue streams seem to be going down on a RPU (revenue per unit) to RPU basis, year-to-year, not even factoring in normal inflationary factors.
My knee-jerk reaction was to say that we had benefited from hardware and software enhancements, which have increased productivity and thus lowered costs; as opposed to the whole truth, that price had become a sales tool that was devaluing our products and our service in search of fleeting growth in market share.
Anyone who heard the simplistic answer would probably have laughed internally if they had any knowledge of the business, because investment in technology is expensive and requires a different employee skill set.
Uploading data from CRs, images, etc., are extremely more labor-intensive than just parking the vehicles and driving them through the sale.
Also, even though we have a sliding scale of revenue streams based on sale price, the truth of the matter is that it does not cost any more or any less to sell a new car versus and old car at auction, unless you factor in mandated consignor marketing and promotional costs.
So now we have devalued our products and services, by discounting and rebating on the consigning side to gain share while trying to increase fees on the buying side to make up for the revenue compression.
The interesting parts of that dynamic are:
— Is no one factoring in the backside costs and the dropping purchase price?
— Are customers expecting increased service with lowered fees?
— Are exclusive one-auction-only contracts on compressed fees maximizing a vehicles exposure and driving the highest prices in competitive bidding?
Let's face it, the industry has allowed itself to be under-valued and then compounds the problem by trying to drive returns back to prior-year levels by going for increased share at those revenue streams, using price as a marketing tool versus service and product value.
At one time, I think we called that working more and making less, but compensating for it with volume; some have called it an anti-competitive market model.
No matter what, the devaluation will take years to correct; let’s hope we start soon!
Edtior'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.
To put the crossover vehicle boom in perspective, consider new-car registration data shared recently shared by Black Book’s Anil Goyal in an April interview with Auto Remarketing.
Over the past decade, there has been a 400-percent increase in the number of new crossovers registered, compared to a 25-percent decrease in midsize cars and a 33-percent decrease in full-size cars.
Not only are there more automakers producing crossovers, but many are also going with increasingly smaller versions, said Goyal, who is the company’s vice president of automotive valuation and analytics.
In fact, Black Book had found that there are dozens of models within the compact crossover category itself. And now, Black Book has created another category within this segment: subcompact crossovers, which appear to be generating the same kind of strong consumer demand that crossovers, in general, have been generating.
In discussions with OEMs about how they are competing in the crossover segment, “it became apparent to us that we should create a separate category to help (the industry) understand that particular segment differently. Because when we looked at the subcompact crossover, they seemed to be more targeted in between the compact cars and midsize cars, still providing that perception of a bigger car,” Goyal said.
He added: “Americans love to drive big cars. Although it’s not big in footprint, it still has that height, which provides that bigger car functionality, as well as perception.”
Current models in this category include the Buick Encore, Chevrolet Trax, Jeep Renegade and the Fiat500X (for 2016).
Debuting in March, the subcompact crossovers had a combined retention rate of +1.1 percent for that month, trailing only the full-size passenger van segment (+1.5 percent). In April, retention was at +1.7 percent, good for fourth on Black Book’s list.
During the mid-April interview, Auto Remarketing asked Goyal about the March retention rate for these subcompact crossovers and what was impacting it.
It does go back to consumer demand.
The segment is a new category, Goyal said, “where that consumer is really interested in getting a very functional vehicle, but wants more roominess and versatility … which this segment offers. It’s also helped the manufacturers from a CAFE requirement perspective.”
He added: “So, we think that this segment is going to continue to grow, and at some point, of course, we will see that there will be some stabilization and the supply will increase more than the demand, but at this point, we continue to see that more and more consumers are interested in this kind of functional vehicle.”
Interestingly enough, they don’t have the same kind of price volatility in reaction to fuel prices that one might find in hybrids/electrics or pickups and SUVs.
In terms of fuel-efficiency, “they’re kind of in the middle, where they’re somewhere between a midsize car and a compact car,” Goyal said.
“So, there’s not a lot of impact from a fuel-price perspective,” he concluded.
The Southeastern Auto Auction of Savannah hosted its annual “Masters Sale” and golf tournament earlier this month, feeding on the hype for The Masters Tournament and raising funds for the Shriners Hospital for Children.
On May 6, the sale featured a free breakfast, free golf visors and over 900 vehicles; the sale concluded with over a dozen dealers who were selected to putt on the auction’s putting green for a chance to win up to $1,000. Over $3,000 in cash was given away at the event.
The next day, the auction hosted its golf tournament, featuring a record number of teams and a $25,000 hole-in-one challenge, a closest-to-the-pin contest and a longest-drive challenge. A free lunch followed the tournament, along with an award presentation for the top teams in the tournament, individual challenge winners, as well as the presentation of a $2,000 check to the Shriners Hospital for Children.
“It was a great week,” said Bill McCready, the auction’s vice president. “We sold a lot of cars, had beautiful weather for the sale and golf tournament and raised money for children in need. The only thing not great was the way I played in the golf tournament.”
The auction will host its next promotional sale on June 10, with its first annual “Georgia Peaches & BBQ Sale,” which will feature 1,000 vehicles, a $5,000 cash giveaway and BBQ with peach cobbler for customers to enjoy. More information about the auction can be found here.
As its parent company, KAR Auction Services, received another accolade, business unit Insurance Auto Auctions announced on Tuesday that its newest salvage auction location in Shady Spring, W.Va., is now open.
The newest branch that company leadership says can service three different states is located at 4163 Pluto Road in Shady Spring.
Insurance Auto Auctions chief executive officer and president John Kett said, “IAA continues to strategically locate branches to better service our customers.
“We are committed to providing buyers and sellers with access to greater inventory and more convenience at auctions, and the Shady Spring location is in a prime location to support our customers across three states — West Virginia, Virginia and Kentucky,” Kett went on to say.
Preview and auction times vary for each of IAA's facilities. For more information, call the IAA Shady Spring branch at (304) 253-4970 or go to IAA's branch information page at www.iaai.com.
KAR Recognized by Winning Companies
In other news, KAR chief executive officer Jim Hallett shared that the company has been selected by Winning Companies as a 2020 Women on Boards Winning ‘W’ Company for 2014.
KAR highlighted that Winning Companies recognizes the importance of board diversity, and highlights companies that have 20 percent or more women on their board of directors. KAR currently has two women serving on its board — Donna Ecton and Lynn Jolliffe.
2020 Women on Boards is a non-profit grassroots campaign committed to increasing the percentage of women who serve on company boards to 20 percent or greater by the year 2020. The group is dedicated to educating corporate stakeholders on the importance of board diversity and promoting companies as examples of good corporate governance.
“The KAR group of companies is committed to creating an empowered, diverse environment for our more than 12,000 employees worldwide,” Hallett said. “We are proud of this recognition, and honored to have so many outstanding women professionals leading our board and teams.”
ADESA announced recently that one of its locations, ADESA Golden Gate, was named the Auction of the Year for 2014 by VW Credit Inc. based on year-round measurements of key performance indicators.
The auction location was also recently honored with LeasePlan’s 2014 Stellar Performance award as well as with General Motors’ Overall Achievement awards for December, January and March.
“We are honored that so many of our industry partners are noticing the outstanding level of service ADESA Golden Gate offers,” said Stephane St-Hilaire, ADESA’s president and chief executive officer. “I want to congratulate General Manager Jeff Hoyt and everyone at the auction for their commitment to our customers.”
In other auction news, Dealers Auto Auction of the Southwest recently announced that it will be operationally paperless as of June 1, along with the release of its new app available on the Apple Store.
“With this piece of the puzzle now in place, our integrations with WhannTech mobile operational software and the ‘Web Guys’ website interface, we have been able to end the use of paper/sticker bidder badges, as our app recognizes you as you enter our building and assigns you a bid number reflected on your mobile device,” said Stephanie Gingras, DAASW’s general manager. “We also eliminated run lists as our ‘real time’ DAASW.com and .mx sites are complete with both dealer and repo condition reports, announcements, our proprietary Mexico Ready and CarFax Transparent Transactions products and at least eight pictures of each vehicle.”
For more information on DAASW’s offerings, visit its site.
KAR Auction Services might not nearly be finished acquiring independent auctions, with chief executive officer Jim Hallett saying there are “five to 10 really good strong independents that we would be very interested in acquiring if the opportunity presented itself.”
Back in March, KAR announced that business unit ADESA expanded its presence in Pennsylvania with the acquisition of Pittsburgh Auto Auction in New Stanton, Pa., joining two other ADESA auctions in the region — ADESA Pittsburgh and ADESA PA.
In light of that move, Hallett responded to inquiries from investment analysts after the company reported its Q1 performance about whether more acquisitions are in the company’s future.
“First of all I would say to you that in the pipeline, we feel there’s a number of opportunities, a number of good opportunities,” Hallett said. “There are some very good independents out there. And I’ve always kind of sized it that there’s probably five to 10 really good strong independents that we would be very interested in acquiring if the opportunity presented itself. We know that we can buy these auctions at attractive multiples.
“And I can’t promise you that we’ll have a number of them done before the end of the year. But I can promise you that we’re working on a number of them. And at some point in time we would expect that we’ll get some of these over the line,” he went on to say.
Acquisitions aren’t the only growth avenue KAR is using to expand ADESA’s footprint. On April 9, the company highlighted the development of ADESA Chicago, which will be located in Hoffman Estates, Ill., near I-90. While the auction isn’t expected to open in spring 2016, Hallett touched on the expectations KAR already has for this facility.
“Well, you know, I'm a pretty optimistic guy, but I would say, first of all let's talk about greenfields in general,” he said. “In general, we would tell you that starting a greenfield site usually takes 12 to 24 months to become cash flow positive. And our recent experience in Las Vegas, which was the last greenfield we’d done, was basically cash flow positive in a year.
“I have some very high expectations for Chicago, being the size of the market that it is,” Hallett continued. “And not only the size of the market, but being the location in that Chicago market. Matter of fact, in that location, our major competitor is quite a significant difference in terms of miles to the south. So we think we've really got a prime location there.
“So without spitting out any specific numbers, the third-largest market, we’re well-positioned there with a great location. We know there's a huge buyer network out of that market. I would expect that we would see very strong results in the first 12 months, comparatively speaking, to a greenfield,” he went on to say.
Given the demand they’re fetching and the resulting short supply, perhaps it’s no surprise that the auction value of sports cars increased more than any other segment in April, according to Kelley Blue Book.
Between March 27 and April 24, the KBB Auction Value of model-year 2012 to 2014 sports cars jumped 2.6 percent, the company said in its latest Blue Book Market Report. The next highest increase was for the full-size SUV/crossover segment, where prices went up 1.9 percent.
“It is typical to see the sports car segment gain momentum prior to summer months, as consumers have more options to choose from due to warmer weather,” KBB’s report indicated.
The company mentioned the BMW Z4, Ford Mustang, Chevrolet Camaro, Dodge Challenger, Scion FR-S and Mazda Miata as some of the popular cars in this segment.
And according to the most recent scarcity report from KBB’s Cox Automotive sister company Autotrader, the majority of scarce late-model and certified pre-owned vehicles in March were sporty cars, both at the national level and in specific metro markets. The scarcity report, which is provided to Auto Remarketing each month, ranks CPO and late-model non-CPO used vehicles that are in high demand but short supply.
“Spring has arrived, and car buyers’ desires have turned to sporty cars,” Autotrader senior analyst Michelle Krebs said in the report.
Going back to KBB’s auction value rankings for April, the minivan/van segment came in at No. 3 (up 1.5 percent), while full-size cars and midsize cars were next, each up 1.4 percent.
At the opposite end of the pricing spectrum, electric vehicles (again, model-year 2012 through 2014) had the greatest dip for the four-week period. Their KBB Auction Values fell 8.5 percent. Next on the list were high-end luxury cars (down 1.6 percent), hybrid/alternative-energy cars (down 1.3 percent), luxury cars (down 1.1 percent) and sporty compact cars (down 1.0 percent).
“The electric vehicle segment was the worst-performing segment in April, down 8.5 percent, or $1,300, due primarily to the Nissan LEAF and Mitsubishi i-MiEV, while the hybrid segment was down only 1.3 percent, or $187 dollars,” KBB analyst Sean Foyil said in the report. “Low fuel prices as well as increasing lease returns have been the largest contributing factors in pushing values for the Nissan LEAF lower.”
For more analysis, see Auto Remarketing's recent story on the EV and the hybrid/alternative-fuel car market, which includes insight from Edmunds.com, NADA Used Car Guide, ALG and Black Book.
In a similar but separate analysis, Tom Webb — chief economist for Manheim, another Cox Automotive company — gave some additional perspective to the upswing in midsize cars he observed in April, while also touching on a few other top-performing segments.
“In what was likely a temporary turnaround, midsize cars had an uptick in pricing in April. They remain, however, one of the weaker segments over the past year,” Webb said. “Pickups, vans, and large SUVs continued to be the significant outperformers.”
Overall, the Manheim Used Vehicle Value Index dipped 0.6 percent to 124.2 in April, its third straight month of decline, as wholesale prices dipped 0.2 percent on a mix-, mileage- and seasonally adjusted basis (but increased modestly prior to the seasonal adjustment).
But take that decrease with a grain of salt, Webb says.
“Although April represented the third consecutive monthly decline in the Manheim Index, it would be incorrect to say that wholesale pricing is weak. In fact, it is fairer to say that used-vehicle values are elevated and have remained in a relatively narrow range for more than four years,” Webb said.
“Higher new-vehicle transaction prices and disciplined marketing have clearly played a role in supporting used-vehicle residual values,” he continued. “And, although wholesale supplies are beginning to grow quite nicely, the aggregate numbers are not yet outside of historic norms.”
Staff Writer Sarah Rubenoff contributed to this report.
