Auction Broadcasting Co. recently announced a new general manager for its ABC Baton Rouge location. Hired for the position was Colin Chancellor, whose background in the auction business goes back more than 22 years.
Chancellor started his auction career in November 1993 working for Stuart Frankenthal, who owned both Louisville and Cincinnati Auto Auctions, as the dealer sales manager at the Clarskville, Ind. location.
After the auctions were sold to Manheim, Chancellor would become assistant general manager at Manheim Louisville. He became GM of Manheim Flint in September 2005. Chancellor managed that location for nearly five years and also worked as branch manager at TRA Flint and regional manager in Michigan and Florida.
In 2012, Chancellor moved over to Copart Dealer Services, where he was a regional manager for two years.
In his new post, Chancellor will head up day-to-day operations and oversee the performance of the auction.
KAR Auction Services reported year-over-year increases in revenue, adjusted EBITDA and net income during the first quarter as each of its three major divisions — ADESA, Insurance Auto Auctions and Automotive Finance Corp. — all registered jumps in gross profit.
The company reported Q1 total revenue came in at $632.4 million — an increase of 8 percent from the year-ago figure of $583.8 million.
KAR’s adjusted EBITDA for the quarter that ended March 31 increased 10 percent to $162.2 million, up from $147.1 million during the first quarter of last year.
Officials highlighted their net income spiked a whopping 163 percent to $54.5 million, or $0.38 per diluted share, as compared with net income of $20.7 million, or $0.15 per diluted share, in the first quarter of 2014. They acknowledged net income for the first quarter last year was negatively impacted by $20.6 million ($0.15 per diluted share) resulting from the company's refinancing activities.
KAR’s Q1 adjusted net income per diluted share for the quarter ticked 2 percent to $0.42 versus adjusted net income per diluted share of $0.41 for the same quarter in 2014.
ADESA Performance
KAR reported Q1 revenue from ADESA increased year-over-year by $29.9 million, or 10 percent, to $328.0 million. The company explained the increase in revenue arrived primarily a result of an 8-percent rise in the number of vehicles sold, as well as a 2-percent uptick in revenue per vehicle sold, which includes the impact of a decrease in revenues of $6.1 million due to fluctuations in the Canadian exchange rate.
As a result, the company determined, gross profit for ADESA from the first quarter increased $13.0 million, or 10 percent, to $140.9 million, compared with $127.9 million in Q1 of 2014. Gross profit for ADESA constituted 43.0 percent of first-quarter revenue, a slight improvement from 42.9 percent of revenue a year earlier.
Like revenue, KAR pointed out the gross profit improvement was primarily the result of the increase in vehicles sold.
IAA Results
Officials highlighted revenue from Insurance Auto Auctions climbed in the first quarter by $13.0 million, or 6 percent, to $238.0 million. Sparking that revenue rise was an increase in vehicles sold of approximately 8 percent.
However, the overall upward revenue move was partially offset by a 2-percent decrease in revenue per vehicle sold, related to lower average auction prices. IAA's total loss vehicle inventory has increased approximately 20 percent year-over-year.
All told, the company reported Q1 gross profit at IAA increased to $91.4 million, or 38.4 percent of revenue, compared with $87.1 million, or 38.7 percent of revenue, for the same quarter last year.
Officials explained the increase in gross profit was mainly attributable to a 6-percent increase in revenue, partially offset by a 6-percent increase in cost of services.
The increase in cost of services was primarily attributable to variable cost increases related to the increase in volume specifically pertaining to towing and processing costs, as well as labor and occupancy related costs.
AFC Update
Meanwhile, KAR said AFC’s Q1 revenue increased year-over-year by $5.7 million, or 9 percent, to $66.4 million. Fueling that revenue increase was a 10-percent rise in loan transactions and an increase of 20 percent in “other service revenue” generated by PWI.
But the revenue performance was partially offset by a 1-percent year-over-year dip in revenue per loan transaction
KAR tabulated that its managed receivables increased to $1,355.8 million as of March 31, up from $1,107.9 million on the same date a year ago.
Officials said that gross profit for the AFC segment increased year-over-year by $3.7 million, or 8 percent, to $48.0 million. That figure represented 72.3 percent of revenue, compared with $44.3 million, or 73.0 percent of revenue, for the first quarter of last year.
AFC also incurred a 12-percent increase in cost of services primarily the result of increases in compensation expense and expenses associated with PWI.
Manheim Louisville is set to host its Cruisin’ for Wishes car show and fundraiser next week, the proceeds of which will benefit Make-A-Wish Ohio, Kentucky and Indiana.
Scheduled for May 16, this will be the first year the annual car, truck and bike show will benefit this specific chapter of the Make-A-Wish foundation.
“We are honored that Manheim Louisville and its employees have chosen to give back to Make-A-Wish through their Cruisin’ for Wishes car show,” said Alana Karl, Make-A-Wish’s development officer. “Local wishes are made possible by the support of the community, and the funds raised through this event will help touch even more kids and their families with an unforgettable wish come true.”
The car show will run from 10 a.m. to 3 p.m. next Saturday at Manheim Louisville; registration will begin at 9 a.m. The event will be free and open to the public.
Those interested in showcasing a classic car at the event have until May 11 to benefit from the early registration fee of $15; it will cost $20 after that.
Manheim Louisville is expecting to showcase more than 100 vehicles. Prizes at the event will include best in show as well as first, second and third places for individual brands. The event will also feature door prizes, raffles and food for the attendees. The auction is still recruiting vehicle owners to showcase their classic cars, trucks and motorcycles.
“Please join us and show off your beautiful car, truck or motorcycle and help children at the same time,” said David Kaflik, the auction’s general manager. “This fundraiser can really make the difference in the lives of many children and their families.”
2015 Warren Young Scholarship Winners
In other auction news, the Warren Young Sr. Scholastic Foundation announced today that it has selected the 12 student recipients of its 2015 scholarship. The foundation, established in 2004 by the National Auto Auction Association, awards a total of $52,000 annually via a dozen merit scholarships for full-time study.
Annual recipients are chosen based on academic record, leadership skills, honors, goals and aspirations, work experience and community involvement. The awards range from $3,000 for two-year college or vocational-technical school programs up to $5,000 for four-year programs.
“Over the years our Scholastic Foundation has helped dozens of deserving students from the NAAA family pursue their dreams of a higher education, thanks to the benevolent spirit and generous support of member auction and their affiliates,” said Ellie Johnson, NAAA president.
To see the full list of the 12 students selected from the 60 applications received, see the image above.
Spring might seem to have barely started weather-wise in places such as Michigan that saw snow flurries as recently as seven days ago. But according to the latest edition of Black Book Market Insights, spring might well be nearly finished in the auction lanes.
Black Book editors acknowledged that they began to see signs of a tiring spring tax season when they compiled last week’s report. When the editors shared their latest analysis on Wednesday, they indicated those signs became more obvious.
This week’s data showed the largest drop off of the spring for car and truck segments.
In particular focus this week, Black Book noticed the full-size car and upper midsize car segments have continued to perform well in the used market. Editors mentioned three drivers creating this movement may be:
— Low gas prices continue to place stress on smaller car segments.
— The continuously improving economy is incentivizing buyers to consider cars with a little more size.
— Relatively lower supply of full-size cars as compared to compact cars to meet the increased demand.
“The spring market strength is starting to wane as most segments showed slight decline or remained flat in wholesale values last week,” said Anil Goyal, vice president of automotive valuation and analytics at Black Book.
Goyal mentioned a half dozen other developments Black Book editors uncovered, including:
• Overall, the volume-weighted car values decreased by 0.11 percent from last week.
• Overall, the volume-weighted truck values were flat from last week.
• All car segments except full-size car and upper midsize car dropped in value.
• Most truck segments did not change much except for full-size CUV, full-size passenger van and luxury SUV segments which dropped more than 0.4 percent from last week.
• The top three truck segments with the most cumulative value increase over the last eight weeks are compact SUV (up 2.7 percent), full-size pickup (up 2.0 percent) and full-size cargo van (up 1.6 percent).
• The top three car segments with the most cumulative value increase over the last eight weeks are upper midsize car (up 1.5 percent), entry-level car (up 1.5 percent) and compact car (up 1.4 percent).
Along with the data trends, Black Book also shared some dealer comments gathered from the more than 60 auctions representatives attend each week.
A dealer from Minneapolis said, “Internet activity strong today on late-model low-mileage units,” while another dealer from Nashville, Tenn., added, “Plenty of selection but floors still up so a lot of no-sales here today.”
An attendee at a sale in Illinois noted, “Prices are very strong here due to low inventory of clean cars,” as a bidder at a Florida auction noticed, “More no-sales here this week than normally.”
Finally, a buyer in Atlanta touched on some specific units, saying, “Lots of no sales, but pickup trucks and passenger vans continue to be in high demand.”
The entire Black Book report can be downloaded here.
U.S. Bank recognized 2014 Auction of the Year winners, spotlighting five auctions with annual honors.
The winning locations are listed below:
Highline Segment Winner: Manheim Pennsylvania
Lease Return Segment Award: Manheim Milwaukee
Retail Repo Segment Winner: Manheim Riverside
U.S. Bank Asset Remarketing Director's Award: ADESA Kansas City
Marine/RV Segment: Brasher's Northwest
Time Change at Manheim Daytona Beach
In other auction news, Manheim Daytona Beach announced it is changing its Wednesday sale time to 5 p.m. The change will start next week with the auction’s Cinco de Mayo celebration.
The pre-sale celebration begins at 3 p.m. on May 5, and the auction will give out a $2,500 prize at the end of the sale.
“This is a great opportunity for us as we are growing and changing our time in order to accommodate our buyers and sellers,” Manheim Daytona Beach general manager Toni Williams said. “The dealers will be amazed at the vehicle selection and promotional giveaways happening weekly for the sale.”
KAR Auction Services has promoted Jay Bahel to the position of vice president of strategic initiatives, the company announced Monday.
His duties in the new role include playing an integral role in building and executing company growth initiatives, while implementing technology to simplify internal and customer-facing processes, the company said.
Making the announcement was KAR chief operating officer Don Gottwald.
“Jay’s insight in applying IT solutions will help us advance our objectives company-wide,” said Gottwald. “We are confident he will continue to contribute to KAR’s success through his creative problem-solving and customer-first mindset.”
Bahel moved into a vice president at KAR’s Automotive Finance Corp. business in 2011. Prior to his time with AFC, Bahel as chief information officer for a division at Brunswick Corp. and as a consulting group leader with Project Leadership Associates.
Fiserv announced its auction award winners on Monday, and the top-performing accolade went to the same location for the second year in a row.
Taking the 2014 honor from Fiserv was Carolina Auto Auction for its continued outstanding customer service and strong sales results. Carolina AA, based in Anderson, S.C., also received this award for 2013.
Fiserv began ranking auto auctions in 2001 as a way to aid finance companies seeking the greatest potential return on their outsourcing investment. Fiserv scores auctions in order to identify qualified partners.
The National Quality Control Program scoring that Fiserv uses is based on overall sales effectiveness, operational excellence, sales preparation and marketing.
“Carolina Auto Auction is a trusted partner that works to deliver outstanding results every day,” said Jarrod Nawojski, auction sales and performance manager, Remarketing Strategies, Lending Solutions, Fiserv. “They have been a top performer in our ranking every year since 2002.”
Indiana Auto Auction in Fort Wayne, Ind., was ranked second, placing it in the top three auto auctions in each of its first three years of eligibility. Rawls Auto Auction in Leesville, S.C. ranked third overall for 2014, the first year the auction has been eligible for the Fiserv ranking since 2005.
To be eligible for the top performance designation, an auction must be a member of the National Auto Auction Association, have sold vehicles with Fiserv for the last 12 months or more, have a minimum of eight represented sale audits in the calendar year and sold more than 500 vehicles in the calendar year.
Fiserv also recognized two auctions that had the strongest performance in customer service and excellence in timeliness in 2014:
— Manheim Orlando based in Ocoee, Fla.
— Manheim Tampa based in Tampa, Fla.
Fiserv provides end-to-end solutions to the automotive market that minimize risk, expedite vehicle sales, maintain compliance and lead to higher levels of borrower satisfaction. These solutions are used by captive finance companies, banks, specialty lenders and credit unions for loan and lease origination, account servicing, loss and risk mitigation, lease maturity management and vehicle remarketing.
As part of its outsourcing model for auto finance companies, Fiserv partners with auction groups to remarket off-lease and repossessed vehicles. Fiserv managed the remarketing of more than 72,000 vehicles in 2014.
In a contest that organizers said was “as close as it’s ever been,” the title of world champion auto auctioneer now belongs to Bobby Ehlert of Phoenix. Manheim Nevada hosted the 2015 World Auto Auctioneers Championship held Friday in Las Vegas.
Ehlert managed to hold off New Hampshire’s Michael Chambers and Indiana’s TJ Freije in the final round to win. Chambers was runner-up.
“The competition was as close as it’s ever been in the 27 years of the championship,” said WAAC president Paul Behr.
Taking the ringman trophy was Sean Allen of Morrison, Colo. Additionally, Allen was part of a duo that won the team competition. Allen’s teammate was Scott Goodhue of Colorado. Placing second and third were two teams from Alabama: Blake McDaniel and Dustin Taylor, and Jeff Bynum and Ben Gunter.
Manheim Pennsylvania is hosting next year’s competition.
One of the fundamental issues dealers have with buying vehicles online is the inability to lay hands on the vehicle and get a true feeling for its condition.
Manheim’s Enhanced Vehicle Imaging product aims at curbing such issues. Made in partnership with fellow Cox Automotive company HomeNet, Manheim provides several packages of vehicle image portfolios to help provide peace of mind for dealers bidding at auctions online.
After an expedient six-month turnaround from concept to testing, Manheim partnered with Toyota Financial Services between February and April of last year to see what kind of effects the packages of 1,600-by-1,200-pixel resolution images could have for their online sales at Manheim Ohio and Manheim Phoenix.
What they experienced was a 17-percent increase in conversion rate, up to 62 percent, in the sample size of 2,700 vehicles being sold by TFS.
Bids increased by 26 percent and retention values increased by 1.1 percent, or $132 per vehicle. Arbitration cases dropped by 17 percent.
This was convincing enough for TFS to begin using Manheim’s EVI at the 20 locations with the product by May of 2014. This year, TFS will use the EVI product on all of its consigned vehicles at the 21 Manheim locations fitted to produce the images, including 20 in the United States and the newest location in Canada at Manheim Toronto.
Mike Reid, the national remarketing manager at Toyota Financial Services, helped Manheim create the product after seeing a need in his own business, which currently sells 82 percent of its inventory in the virtual space. The transition to digital imaging, according to Reid, was not at all a painful process.
“It certainly went smooth,” Reid said. “When we (Toyota) started this process of selling cars online, we had a vision that we needed to make the sales process more efficient for dealers, who may have lost their opportunity to make it to the physical auction on a regular basis.
“We certainly wanted to make sure that the images were quality, the pictures told the story of what was going on with the vehicle, and it really made that decision easier for the dealer to make sure they can transact and be confident with that purchase.”
Manheim currently offers its EVI product in three different flavors: “good,” which includes seven high-resolution images taken outdoors; “better,” which consists of 15 high-resolution images taken outdoors; and “showroom quality,” which are 15 high-resolution images taken in the studio booth which is fitted at 21 of Manheim’s locations.
According to Bonnie Hensler, Manheim’s vice president of product development, almost everyone (about 98 percent) opts for their photos to be taken in the showrooms.
“What we’ve found is that the majority of our customers really want that showroom quality,” Hensler said. “They’re great for presenting images online, digitally. And we have found that with those images we have increased sales conversions for our customers. We’ve increased our sale price or MMR retention. And we’ve also decreased arbitration rates.”
Reid says his dealer customers have given him a lot of positive feedback about the imaging system, a key metric being the consistency of the photos from auction to auction. He also says that many are becoming more and more okay with the idea of buying cars online without getting to see them first in person.
“It’s been a progression for us,” Reid said. “We’ve been selling cars in the virtual space since 2009. And that really came out of necessity when dealers weren’t really making it to the auction and they had to multitask at their dealerships. Yes, the comfort level, it’s certainly been a work in progress.
“The comfort level has been something they have acquired over time. But this has just been the icing on the cake, getting these pictures to a certain level where the dealers really have confidence in what they’re buying.”
Instead of doling the task out to current auction staff, Manheim went out and hired professional photographers to be a part of the full-time staff at the Manheim locations that offer the product.
“This is a pretty well-oiled machine now,” Hensler said. “We have made the investment in professional photographers. So we’re not just taking some people off the street and saying, ‘Hey, take some pictures.’ These are professional photographers that are full-time employees.”
The whole process takes five minutes or less, featuring a streamlined process leveraging photography equipment from Samsung and integrated cloud technology to get the images online as quickly as possible. Each of the locations has a showroom with standard operating procedures and specific service-level agreements which Manheim stands behind 100 percent.
Manheim currently plans to expand the program to include other OEMs and also plans to develop a version of the product for dealer use at its auctions.
The 21 locations that offer the product include: Manheim Atlanta, Manheim Baltimore-Washington, Manheim Denver, Manheim Fredericksburg, Manheim Kansas City, Manheim Milwaukee, Manheim Minneapolis, Manheim Nashville, Manheim Nevada, Manheim New Jersey, Manheim Ohio, Manheim Orlando, Manheim Pennsylvania, Manheim Phoenix, Manheim Riverside, Manheim San Diego, Manheim San Francisco Bay, Manheim Seattle, Manheim Statesville, Manheim Texas Hobby and Manheim Toronto.
To read the full case study of Manheim and TFS' trial of EVI, click here.
In an event that began Tuesday and culminates at the “It’s a New Season at Manheim Denver” sale, Manheim Denver is in the midst of hosting two days of sales, featuring more than 4,000 vehicles.
The auction is celebrating and showcasing its renovated sales lanes, blocks and main office improvements during the event, marking not only its grand re-opening but also the return Mercedes-Benz Financial Services’ vehicles at the auction. Mercedes-Benz has not offered vehicles for sale at Manheim Denver for more than 10 years. Two hundred vehicles with a special introductory rebate on Mercedes purchases will be offered.
The sale will also feature GM Financial’s NASCAR-themed Elite Sale of late model, low mileage vehicles along with a chance at various prizes for GM Financial buyers. Other featured sellers include General Motors, Ford and Ford Motor Credit, BMW Financial Services, Toyota Financial Services, Ally Auto Remarketing, Fiat Chrysler Automotive, Infiniti Remarketing Services, Nissan and TD Auto Finance, among others, including a multitude of independent and franchise dealer groups with an emphasis on highline vehicle offerings.
More News from the Lanes
In other auction news, Dealers Auto Auction of Oklahoma City is hosting what it expects will be one of the best vehicle consignments of the season in the form of its Carnival Sale on Thursday, which will feature consigners such as Santander USA, Chrysler Capital, Hertz, Thrifty Car Sales, Ally Auto Remarketing, GM Financial, Avis Budget Group, Midwest Car, and more.
“We’re planning for a great lineup of vehicles at our Carnival Sale and we’re expecting a great crowd of dealers who will come to the sale ready to buy — and ready to have some fun once the sale is over,” said Gary Smith, the auction’s owner. “We’ll have great games to play, including darts, a golf putting contest and the highly anticipated cash grab that could net up to $500 for a dealer with quick hands and the right technique!”
More information on DAA of OKC and its schedule of sales can be found on its website.
