The unofficial start of summer is just ahead with Memorial Day weekend coming, but the wholesale market is still seeing a few signs of the spring market.
This week’s Market Insights report from Black Book indicated that the spring market has been persistent through the middle of May.
“Prices remained stable for a second consecutive week, retaining the spring season strength while luxury vehicles dropped further,” Black Book executive vice president operations Anil Goyal said in the latest report.
Based on volume-weighted information, editors noticed overall car segment values decreased by just 0.05% last week. In comparison, these market values had increased by 0.09% on average during the prior four-week period.
Among cars, Black Book reported values of luxury cars decreased the most, sliding by 0.78%.
Again looking at volume-weighted data, editors determined overall truck segment values (including pickups, SUVs, and vans) decreased by just 0.02% last week. Like cars, Black Book mentioned truck values edged 0.09% higher on average during the previous four weeks.
Within trucks, values of full-size luxury crossover/SUVs declined the most, dropping by 0.59%.
Next, Black Book shared anecdotes its representatives collected at nearly 60 sales nationwide. The rundown began with what an auction general manager in Pennsylvania told Black Book.
“Late model, off-lease units remain very hot. Dealers are clamoring for those low mileage, clean, retail ready vehicles that are in short supply,” the auction GM in the Keystone State said.
The other observations included:
— From Florida: “The sale was up and down with the result being more no-sales. The bank repossessions had the highest sales percentages.”
— From South Carolina: “Prices remain fairly stable and auction reports sales conversions around 65%. The smaller passenger vehicles continue to bring strong money.”
— From Massachusetts: “More franchised dealers were bidding and buying today, which may indicate further softness in new-vehicle sales. They are buying late model used vehicles at auction.”
This week, Veros Credit, a finance company that specializes in the subprime space, announced the winner of its Auction of the Year.
Earning the accolade was North Bay Auto Auction of Fairfield, Calif. Veros Credit officials said North Bay AA was chosen this year for its excellence in overall inventory management, retention and customer service.
“We value our partnership and the auction's dedication demonstrated by each of your team members. North Bay Auto Auction goes above and beyond to ensure that our vehicle inventory is in the best hands,” Veros Credit officials said in a message to Auto Remarketing.
The newly completed 20,000-square-foot reconditioning facility at Texas Lone Star Auto Auction includes features such as 14 mechanical bays with 10 lifts and three state-of-the-art detail lanes.
XLerate Group Auctions’ Texas Lone Star Auto Auction also added two lanes to the six auction sales lanes it currently uses.
“And we have increased our dealer sale day paved parking by 150-plus additional spaces,” TLSAA-Lubbock’s general manager Dale Martin said in a news release. He said the moves are due to “a lot of growth in both our commercial and dealer sales.”
“We are lucky to have the backing of the XLerate Group to help us expand our facilities and services to meet the needs that growth brings us,” Martin said.
The auction has also added 18 acres to its fenced and security camera-controlled vehicle storage capacity, making it a 48-acre facility.
Additional features of the new facility include:
— Full tire service capability
— Full line mechanical service/inspections
— Photo booths for comprehensive online views
— De-identification, wrap removal
— Drive-through car wash
— New restroom facilities
— 65 acres for future development
Texas Lone Star Auto Auction – Lubbock offers consignment from remarketing groups, institutional sellers, and franchise dealers.
“We’re excited to make this commitment to serve the dealers and clients of Texas Lonestar in Lubbock,” XLerate Group Auctions chief executive officer Cam Hitchcock said. “This expansion represents one of the flagship commitments we’ve made to our auctions, and we look forward to even more success from Dale and his team.”
After 12 years in the position, Pierre Pons will step down from his role as chief executive officer of ServNet Auctions at the end of 2019.
ServNet will move to a single executive director system, which it had before Pons became CEO in 2008, versus its current corporate staff operation.
“Ten years is a solid run for any CEO position, and the end of the year will mark a full 12 years that I’ve worked with ServNet,” Pons said in a news release. “It has been an absolute privilege working with the ServNet auction owners and their families who head some of the very best independently owned auctions in the industry.
“We have worked hard together to navigate and overcome the many challenges our industry has faced in the past decade,” he said.
ServNet president Eric Autenrieth, who is the managing partner of Carolina Auto Auction and Indiana Auto Auction, said: “Pierre and his team have provided our group with both structure and leadership, helping us to manage monumental changes in the auction industry.
“Not a small part of that was adjusting to major industry acquisitions and consolidations, and a major restocking of auctions within the ServNet group, with more than half our membership joining the group during Pierre’s tenure as CEO,” Autenrieth said.
Pons is the founder and president of TPC Management firm, which separately provides consulting, recruiting and succession planning services to 18 of ServNet’s 22 auction members. Those services will continue and expand.
Pons said stepping down from the ServNet CEO role will allow him and the TPC team to expand their services to additional independent auctions. They also plan to add more resources to TPC’s Auction Academy continuing education program.
Pons will work with the ServNet board as it looks for an executive director.
“Over the coming months, our team will work closely with the ServNet Board to help identify candidates for the executive director position and to effect a smooth transition of administration,” Pons said.
“We have a number of projects, conferences and initiatives yet to implement for ServNet through the end of the year, each of which will receive the attention and diligence needed and expected,” he said. “Our clients and industry partners can expect a full continuation of everything they have come to expect from ServNet Auctions.”
Pons added: “Personally, this move will allow me and my team to expand our service offering under our TPC umbrella to more independent auto auctions across the country. We look forward to helping them with their competitive positions in what is certainly an ever-challenging business climate and providing some of the tools and processes that have been proven to be effective.
“TPC also provides services to other facets of the wholesale automotive industry, working with technology, transportation, and inspection companies as well as a number of financial and strategic parties that seek or have made investments in the auto auction and related industry.”
A new expansion of online vehicle auction company Copart’s Atlanta East facility in Georgia adds 20 acres to its existing 54 acres of storage capacity.
Copart said in a news release that it expanded the site — at 6089 Highway 20 in Loganville, Ga. — to help meet increased demands of its Atlanta metropolitan area customers.
Copart's Atlanta East auctions take place every Monday at 9 a.m. central time. Eligible buyers can use the company’s patented VB3 online auction platform, or kiosks at the location, to bid on available inventory during normal business hours.
“We are excited about the opportunity to provide our buyers with a greater selection of vehicles, thanks to the additional space we have at our Atlanta East location,” said Copart chief executive officer Jay Adair.
“We are thrilled about this expansion as it will help us better meet the needs of our customers,” said Copart Atlanta East general manager Tiffany Todd.
With observers noticing some cleaner vehicles moving down the lanes, Black Book said its data showed this year’s spring market extending into a seventh week.
This week’s Market Insights report also offered a glimpse into the latest specialty markets as the industry sets its target on summertime wholesale and retail activities.
“Markets registered a slight uptick last week, even after car prices have been up for seven consecutive weeks,” Black Book executive vice president of operations Anil Goyal said in the latest report.
According to volume-weighted data, editors noticed overall car segment values increased by 0.08% last week. That reading is just a portion of the four-week average rise of 0.22%.
In car segments, Black Book reported compact cars showed the most lift in values (rising 0.33%) while prestige luxury cars showed the highest decline (dropping 0.48%).
Again considering volume-weighted information, editors found that overall truck segment values (including pickups, SUVs, and vans) ticked up by just 0.05% last week. That level is half of the four-week average of 0.10%.
Among the truck segments, Black Book determined compact vans produced the highest rise in values (up 1.18%) while full-size luxury SUVs sustained the most significant decline (0.33%).
Turning next to what Black Book lane watchers spotted a nearly 60 sales nationwide, the top anecdotes reflected the possibility that dealers found more vehicles that were front-line ready. Here is the rundown:
—From Pennsylvania: “The auction sold around 65% today which made for a really good sale. We had a good number of clean, front-line vehicles.”
—From Indiana: “Retail is really strong here. Low consignment has resulted in more buyers than sellers.”
—From Nevada: “Several dealers expressed frustration with the low number of units available. The truck values improved but the midsize and full-size crossovers were definitely in demand.”
—From Tennessee: “The quality of the vehicles in many lanes was the best I have seen in a while.”
Specialty markets update
As they do near the beginning of each month, editors also shared their latest observations about the specialty markets. Here is what Black Book relayed:
—Collectibles: So far, Black Book indicated 2019 has been a great year for collectible vehicle auctions. “It seems that every week we hear about another record setting performance,” editors said. “We’re seeing a significant surge in the interest in later model or nearly new exotics, especially if they are ‘as new’ with little or no miles.”
—Recreation vehicles: Spring has officially arrived, according to Black Book, and many dealers have been reporting increased activity on their lots. Editors noted auction volume was up slightly over last month, with wholesale prices increasing as well.
—Powersports: Black Book explained the Powersports market sees steady gains for May as the industry enter the height of the spring selling season. Editors added most segments are up, but by smaller amounts than last month, with entry-level, mid-size, and sport bikes seeing the greatest demand.
—Heavy duty: Whether the need for late model used over the road and regional units is becoming satisfied or not, Black Book acknowledged the miles they are showing on their ECM alone is really affecting their value.
—Medium duty: Editors closed by stating used-truck prices continue to fall as an increase in new and used inventory continues to add downward pressure on the overall market.
Vehicle sales at National Auto Auction Association-member auctions remained fairly steady year-over-year in 2018, with the projected gross of those sales up nearly 2% — this despite a 4.2% decrease in the number of vehicles entering those auctions' lanes.
That’s according to the association’s annual survey released Wednesday, which found that there were 9.9 million vehicles sold at NAAA-member auctions last year.
That equates to a projected gross value of units sold of $107.6 billion, which is up 1.9% year-over-year and the third straight year at $100 billion or more.
The vehicles sold tally (9.9 million) is down 0.8 percent from 2017.
There were 16.6 million units arriving at those auctions last year (down 4.2%). But the percent of those sold climbed from 57.8% in 2017 to 59.8% last year.
By consignor type, percentage of units sold to enter was 53.7% for dealer consingment, 68.9% for lease/fleet/repo, 56.8% for manufacturer and 68.6% for other consingment types, according to the survey.
“The 2018 results are encouraging,” NAAA chief executive officer Frank Hackett said in a news release.
“The survey results show the strength and depth of an established industry that has demonstrated its resiliency,” Hackett said. “I am confident we'll continue to be a vital and growing part of our nation’s economy for years to come.”
Of the units sold at NAAA auctions last year, 49.1% were dealer consignment, and lease/fleet/repo had a 44.3% share of auction sales. Meanwhile, 5.7% was manufacturer consignment and 0.9% came from other sources, NAAA said.
Price per unit was estimated at $10,836, up 2.8% year-over-year. As for average vehicle prices in Internet sales, online-only was at $18,081, with simulcasting at $15,113.
The survey was conducted by Robert A. Casey Consulting on behalf of NAAA. Detailed results can be found here.
Wholesale volumes likely to peak in '19
In a separate analysis released last month, Cox Automotive — which owns the Manheim auction chain — said the “total volume of wholesale requiring disposal” will reach a peak this year.
Specifically, 16.6 million units are projected to be wholesaled, up from 16.4 million units last year, 15.9 million units in 2017 and 15.5 million units in 2016, the company said in this Data Point report.
It is expected that 9.6 million of those vehicles will be wholesaled at physical auctions this year, Cox Automotive said, down from 9.8 million in 2018 and 10.0 million in 2017. In 2016, 9.9 million units ran at physical auctions, according to Cox.
The company is expecting an increase in upstream volumes (offsite and online sales) and dealer-to-dealer volumes.
Here’s how that shakes out:
— Commercial direct-to-consumer: 700,000 (same as 2018, but up from 600,000 in both 2017 and 2016).
— Direct-to-dealer/dealer-to-dealer: 4.9 million (up from 4.7 million in 2018, 4.3 million in 2017 and 4.1 million in 2016).
— Offsite/online: 1.4 million (up from 1.2 million in 2018, 1.0 million in 2017 and 900,000 in 2016).
Auction averages
Going back to the NAAA survey, it had a 71% response rate, as 247 members participated. Figures for vehicles entering auction/sold at auctions and related gross values are projected to estimate for NAAA’s entire body of member auctions.
Participation was up from 244 members taking part last year.
The survey found that NAAA-member auctions have an average of eight lanes and 78 acres of property. The average employee count for an NAAA auction is 137 and average payroll is $4.6 million.
The average annual charitable contributions for an auction were at $15,000.
ADESA’s newly relocated facility serving Mexico City sits on 13 acres of land strategically near major thoroughfares in neighboring Toluca. It features enhancements such as additional on-site security and reconditioning resources.
The new location will help meet needs related to ADESA’s continued growth, as well as for future vehicle volume increases and the needs of commercial and independent dealers, ADESA said in a news release.
ADESA is a business unit of KAR Auction Services, and KAR’s executive vice president of international markets and strategic initiatives Benjamin Skuy said his company was excited to continue expanding its international footprint.
“Being prepared to meet the increased volume needs of our customers is essential in creating a positive customer experience,” Skuy said. “ADESA Mexico City had outgrown its previous facility, and we wanted to provide a solution before our customers asked for it.”
Evidently the closer the wholesale market moved toward May, the more pricing intensity germinating from this year’s spring market started to diminish.
This week’s Market Insights report from Black Book offered data that suggested the spring market is beginning to lose some of its steam, especially with units not immediately heading for dealer inventory.
“Spring market strength is starting to fade as positive adjustments to values slowed down last week. We are seeing more no-sales in auto auctions than in recent weeks,” Black Book executive vice president of operations Anil Goyal said in the latest report.
Based on volume-weighted data, Black Book reported that overall car segment values increased by 0.12% last week. That figure is half of the four-week average increase tabulated by editors at 0.24%.
Among cars, Black Book noticed values of luxury cars decreased the most, dropping by 0.51%.
Again in connection with volume-weighted information, editors found overall truck segment values (including pickups, SUVs and vans) edged higher by just 0.06% last week. That’s on par with the four-week average uptick of 0.07%.
In the truck space, Black Book found that luxury crossover/SUVs had the highest decreases, with the full-size models sliding by 0.49% and the midsize units softening by 0.57%.
Turning next to what Black Book’s lane observers spotted at nearly 60 sales nationwide, the sentiment reinforced the assertion that the spring market already hits its peak. Here is the rundown:
— From Florida: “We had a normal number of consigned vehicles, but more no-sales than in previous weeks.”
— From Indiana: “Retail is good here, but dealers are not trading for front line merchandise, which is forcing them to pay up at the auction.”
— From North Carolina: “Sales percentages remain high as it seems the dealers are buying anything that rolls through the lanes.”
— From California: “The market remains good, but there more no-sales, especially on the higher mileage units.”
— From Pennsylvania: “The activity seems to have cooled a bit. There were plenty of good, clean cars, but the sales percentages were down.”
Xcira is taking steps not only to improve functionality of its wholesale market platform, but online security for users, as well.
On Monday, the company announced the launch of its new audio/video service associated with its Online Ringman simulcasting system. Xcira said this audio/video service will replace the now unsupported, and potentially insecure, Adobe Flash player integrated into some auction simulcast services.
Xcira explained the Adobe Flash offering is currently being retired, and with it, support and security updates will no longer be available. The company acknowledged this situation poses additional reliability and security challenges for users.
Xcira went on to mention many automotive buyers have already starting to experience issues when using Flash. Search engines (e.g., Google, etc.) are inquiring about the use of Adobe Flash and are actively starting to block its use.
“Xcira will always take all necessary steps to protect our customers from technical threats while maintaining technological superiority,” Xcira chief executive officer Nancy Rabenold said in a news release.
“While some of our competitors have spent time developing cosmetic changes to address reduced support,” she continued, “we have taken on the bigger and more important challenge of developing an alternative to Adobe Flash while continuing to aggressively invent and provide patent safeguards for mission-critical activities like multiple simultaneous lane participation, buyer interest determination, conversion modeling, etc.
“By doing so, we have positioned our Online Ringman simulcast system for a robust future, emphasizing usability and modern, secure technology standards,” Rabenold went on to say.
