You might have read in my prior editorials that I don’t believe the current physical auction is the wave of the future.
Counters and their inherent lines should be a thing of the past, with counters creating the “them and us” mentality. My view is that customer service representatives should be floating through all aspects of the auction, with mobile devices that can access any customer’s information and serve him instantly.
Your traditional counter staff is titles, registration, payments with an office manager. Ponder if every one of them was mobile, with tablets and smart-phones, hip printers, in the arena, in the lanes, at check-in, all able to access and answer any of your customers’ needs.
Think productivity, when your payment clerk has a line, and our registration clerk has no customers. Think no separation between you and your customers; it’s an integrated interface. In these days of e-titles, automated payments and gate passes on mobile apps, everyone should be into sales and marketing.
But I digress from the key issue at hand. The bigger issues are heat, cold and gas fumes that make the physical auction experience distasteful at times. And these are issues for which there are solutions. No physical auction in this country cannot be modified to change these negatives into positives, just as we corrected so many inherent safety issues in the past.
Nothing makes me shake my head more than seeing block heaters, fans and AC on the block for employees and sellers, with nothing for the buyers who are the core of auction success. Two things I attempted to use in this regard were at Manheim’s Anaheim location, called CADE, in 1995, when we reversed the car flow from exterior to interior viewing by bringing in six to eight units into the building and created an updraft system in the lanes and under the blocks to extract the fumes from smokers.
In 2015, I modified Dealers Auto Auction of the Southwest with downdraft coolers, a huge overhead fan and mister systems to drop the interior summer heat by 15-plus degrees. But it’s 2019 now, and the technology allows us to totally correct the issues of heat and cold and create an incredible environment for all our customers and employees to enjoy.
Just ponder solar-powered heat pumps with updraft systems in every auction and dual entrance and exit areas, that maximize the productivity of those systems.
Ponder the entire vision from the moment you enter to the moment you leave:
1. You arrive and walk in with no counter check-in — just a customer service representative if you have a question, as your smartphone app has assigned you a digital bidder badge that doesn’t require a paper sticker on your chest.
2. You know you don’t have to walk to a non-existent front counter, as every sales representative and customer service representative has mobile access to your account and can assist you with anything from arbitration to titles, to gate releases.
3. Lane leaders all have mobile technology to assist you with any questions on any vehicle, along with the auction’s website having every vehicle and its information in real time for you to review, including scannable VINs for AutoCheck, Carfax and other apps to read.
4. Prior to and during the sale, enjoy the in-lane internet and concierge center and HD simulcast in each lane.
5. During the sale, enjoy the 75-degree average and ongoing temperature. Freezing and sweating are a thing of the past.
6. Post sale your buys with your app, have your unit’s gate pass scanned as you drive out, contact arbitration online and communicate with your sales rep, by phone, text or email, and your invoice is sent to your mobile device.
What are auctions waiting for to create this new wave of physical auction? I know if I was still working, any auction I managed would have this implemented by the end of 2019 and blow away my competition.
As always, just on man’s opinion.
Jim DesRochers is a past president of the NAAA and a winner of the association’s Industry Pioneer Award.
Make that 23 locations in the ServNet family.
The auction group closed its 30th year by bringing in FastLane Auto Exchange, in the Michigan town of Mount Morris, which is north of Flint.
This gives ServNet a presence in the Upper Midwest.
“The ServNet auction owners welcome yet another new facility to our ranks,” ServNet president Eric Autenrieth said in a news release.
“Led by owner/operator Greg Price, an industry veteran who comes from second-generation family lineage in the industry, FastLane Auto Exchange is taking the industry by storm, recording exponential growth over the past two years,” he said. “Greg is a colleague with great experience and talent, and we are pleased to expand ServNet's geographic footprint into the all-important upper Midwest region.”
The auction, which opened in 1978, was purchased by a Price-led group two years ago.
Price said: “"I have spent my life in the auction business and have always considered ServNet auctions to be the best of the best.
"With a prestige that is unmatched, ServNet auctions have distinguished themselves by consistently offering an exemplary auction experience, blending superior service and genuine customer relationships. We have worked hard at FastLane Auto Exchange to prepare our operation to provide that level of service, and are thrilled to be counted among the auctions in the ServNet group,” he said.
Lake Charles Auto Auction finished 2018 on quite a high note.
On Dec. 12, the operation located in Lake Charles, La., celebrated the grand reopening of its new main office building that consists of 4,000 square feet. The auction offered more than 700 vehicles and sold more than 400 units with an average value of $9,100.
Lake Charles Auto Auction owner Matt Pedersen said, “We are very excited to celebrate the opening of our new facility. The sale had a record number of cars consigned, and we couldn’t be prouder of the team work that everyone put in to make this a very successful event for us.”
The auction gave away more than $10,000 in cash and prizes throughout the celebration.
Established in 1991, Lake Charles Auto Auction was started by Mike Pedersen as a two-lane night sale, catering to independent dealers in the area. Today, the operation is run by the second generation, Mike’s son Matt, who purchased the auction from his father in 2012.
LCAA expanded the facility in 2015 to a four-lane auction and has now completed a $2 million renovation to the main office building, including additional dealer parking. Pedersen added, “We are happy to offer our dealer and consignor partners a comfortable place to do business.”
LCAA is a member of the AMS Auction Network.
Tom Stewart, president of AMS, added “We are proud to have Lake Charles Auto Auction be a part of our network. It is great to see an auction owner re-investing into their business that benefits both employees as well as dealers and consignors.”
LCAA consists of four lanes, offering more than 400 units and more than 200 buyers attending in-lane and online weekly. The auction has a full suite of services that include transportation, mechanical and reconditioning.
For more information, visit www.lcaa.com.
A winner of Auto Remarketing’s Certified Pre-Owned Dealer of the Year Award was the location for Manheim’s latest growth initiative in the Midwest.
In a move the company described as being “committed to meeting local dealer needs and establishing operations in underserved markets,” Manheim established Manheim Iowa, its first mobile auction site in the state. The company held its first sale on Dec. 2.
Despite the cold weather, 124 dealers participated in the sale, including 57 in-lane and 67 via digital channels. Of the 118 vehicles offered, more than half were sold, according to a Manheim news release.
“When Manheim approached me about hosting an auction, I felt it was a great opportunity,” said Carl Moyer, owner and dealer principal of Karl Chevrolet in Des Moines, Iowa, and recipient of the 2011 CPO accolade from Auto Remarketing.
“The Manheim brand is synonymous with quality, something I’ve spent 40 years building at Karl Chevrolet, so the partnership was a natural fit,” Moyer continued.
Manheim highlighted expansion of its mobile auction network into Iowa is part of a planned commitment to meeting local dealer needs and establishing operations in underserved markets. With the addition of the Des Moines sale, Manheim now operates mobile auctions in 25 states.
“The ideal mobile auction candidate will have at least 100 vehicles per sale,” said Greg Smith, director, mobile auctions and offsite solutions at Manheim. “Consignors such as Karl Chevrolet provide the vehicles and location, and our mobile auctions deliver a targeted buyer base while reducing the consignor’s transportation and travel costs.
“Manheim makes it easy and convenient for the dealer by bringing the auction to them,” Smith continued.
Manheim Iowa hosts its regular sale every other Monday at 3 p.m. CT. Manheim Iowa is located at 723 SW 8th Street in Stuart, Iowa.
Auto Auction Services Corp., which is also known in the industry as AutoIMS, has named a new chief executive officer.
Replacing the retiring Mike Broe in this post is Venkat Krishnamoorthy, who was most recently the company’s chief operating officer.
Krishnamoorthy has been with AutoIMS since 2002.
“I’m delighted that the board has promoted Venkat. He embodies the values that have served AutoIMS so well over the years, valuing employees and clients so strongly,” Broe, who retired at the end of 2018, said in a news release. “The industry can share my confidence that AutoIMS is in great hands.”
Board member Warren Byrd of KAR Auction Services said in the release: “The KAR team congratulates Venkat on this well-deserved promotion. His deep knowledge about the company, the technology, and our industry positions Venkat perfectly to lead the next chapter of AASC.”
Steve Krupa of IAASC, also a board member, added, “As a member of the AASC board for the past six years, I have been impressed over and over by the leadership team at AutoIMS. Venkat has earned the trust of the entire AASC team and the board, and we know the company will thrive with his leadership.”
Before his time with AutoIMS, Krishnamoorthy was with the tech team at Delta Airlines.
“It is an immense honor and privilege to be asked to lead AASC. I have had the good fortune to work closely with and learn from two great leaders — Don Meadows and Mike Broe. We have an awesome team and great talent at AASC, and we are in the service of a niche industry,” Krishnamoorthy said.
“One of my immediate goals is to work in partnership with the AASC Board and AASC’s leadership team to make AASC the employer of choice, provider of choice and investment of choice for the remarketing industry. Mike Broe is leaving AASC in a strong position, and I look forward to leading our company and the remarketing industry into its next chapter.”
In an episode recorded at Used Car Week in late 2018, ADESA president John Hammer sat down with Joe to talk about the challenges and opportunities for auctions, where ADESA is finding the next generation of talent and the investment in brick-and-mortar.
Plus, how ADESA decides whether to build or buy, the trends driving major purchases by larger companies, auction safety and more.
The podcast discussion can be found below.
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Late-model auction volume showed some decline heading into the final month of 2018, according to the latest Guidelines report from J.D. Power Valuation Services.
Through 11 months, however, year-to-date volume was still beating year-ago figures by 4.7 percent, the report said. For context, late-model auction volume had climbed 5.3 percent through 10 months of 2018.
As for November, there was a 16-percent month-over-month decline in the auction volume of vehicles 5 years old and younger. Large utilities vehicles were the only segment not to see a double-digit sequential decrease in volume, J.D. Power said.
Compared to the year-ago period, late-model auction volume was off 4 percent in November.
Offering some projections, J.D. Power said that “used supply is expected to increase in 2018 relative to 2017 before peaking in 2019 and leveling off in subsequent years.”
In a separate report, RVI Analytics discussed the impact of off-lease supply on used-car prices going forward.
In that report, released in late October, the company said the RVI Used Vehicle Price Index for full-year 2018 was likely to grow 3.1 percent over 2017. However, the index is likely to see a 1.6-percent year-over-year decline in each of the next two years, before rebounding 3.3 percent in 2021, the RVI data shows.
Compared to where used-car prices currently stand, RVI projecting them to be down 4.5 percent by 2021.
“We expect lease penetration to decline from record highs over the next three years,” RVI analysts said in the report’s synopsis. “Thus, this supply of off-leased vehicles (record highs) will enter the market, and drive further declines in used-vehicle prices.”
Speaking of leases and off-lease supply, RVI gave some more concrete numbers within the report.
It pegged lease penetration at 22.3 percent of new-car sales in the second quarter, a figure the firm is anticipating will soften in the next two years.
But off-lease volume, which was up 9.8 percent year-over-year in September, should remain on the upswing for the next two years, RVI said.
It’s the midst of winter and the analysts at J.D. Power Valuation Services are still seeing the impacts of what happened in the wholesale market during the summertime.
The December installment of Guidelines included the forecast of how wholesale prices would land for 2018. Analysts explained that because of the “exceptionally strong performances observed over the summer months” that they projected wholesale prices would come in 3 percent higher at the close of 2018 compared to the end of the previous year.
While just a couple of days into 2019, J.D. Power Valuation Services thinks that wholesale prices will soften by 1.2 percent when the year finishes.
This edition of Guidelines also included the latest reading of J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index. The November figure declined by 0.8 points compared to October to settle at 119.7. The slight tick lower still kept the reading at its highest level since early 2016 and 3.6 points above the mark registered in November 2017.
Looking deeper into the data, analysts found that passenger cars kept prices robust on the mainstream side of the market.
J.D. Power Valuation Services projected that compact-car prices would finish 2018 at a point 9 percent higher than 12 months earlier. Analysts pegged the expected price jump for midsize cars at 7 percent.
While still rising, analysts contend that compact utility prices would come in 2 percent higher at the close of 2018 compared to a year earlier. And J.D. Power Valuation Services sees midsize utility prices finishing 2018 at about 5 percent above the same point.
Analysts explained in the report why car prices are rising more than utilities.
“Mainstream SUV prices are also expected to increase, however not nearly to the same level as their car counterparts,” analysts said. “There are a few reasons for this. One of the primary drivers is the increase in used supply of these segments along with affordability, which favors more competitively prices passenger cars.”
On the premium side of the wholesale space, J.D. Power Valuation Services indicated a much different story is unfolding.
“Prices are expected for be down for most segments, with some of the worst losses expected in the luxury midsize car segment, which has seen steady year-over-year declines since 2012,” said analysts, who are thinking prices for these units could soften by 7 percent at the close of 2018.
KAR Auction Services chief economist Tom Kontos easily explained the notable wholesale price decline he and his analyst team spotted after compiling November data.
According to ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, Kontos noted wholesale used-vehicle prices in November averaged $10,599 – down 4.2 percent compared to October and down 1.8 percent relative to November of last year.
“Average wholesale prices in November softened on a year-over-year basis in part from comparison to last year’s inflated prices from Hurricanes Harvey and Irma,” Kontos said in his latest edition of the Kontos Kommentary that arrived on Friday afternoon.
“Still, prices were down on a month-over-month basis in November at a greater-than-seasonal level, indicating weaker market conditions,” he continued. "Off-lease units remain a major bright spot, as these vehicles are scarcer at physical auctions, despite growth in lease terminations, because more of these units are being purchased upstream.
“As a group, the truck segments held up somewhat better than the car segments, but virtually all model classes showed declines,” added Kontos, who elaborated about the latest trends in this video.
When holding constant for sale type, model-year age, mileage, and model class segment — using criteria that characterize off-lease units — Kontos also pointed out that prices were up significantly on a year-over-year basis for both midsize cars and midsize SUV/CUVs when he examined specific units at 3-years-old and less than 45,000 miles.
Wholesale prices for those specific cars climbed $652 or 6.1 percent to $11,308 while wholesale prices for those particular SUV/CUVs spiked $1,734 or 9.8 percent to $19,374.
Looking elsewhere at November activity in the wholesale space, Kontos mentioned average prices for used vehicles remarketed by manufacturers softened 3.0 percent month-over-month and 2.8 percent year-over-year.
He added that prices for fleet/lease consignors declined 3.8 percent sequentially rose 4.6 percent annually.
Kontos also noted average prices in November for dealer consignors slid 3.7 percent versus October and 1.9 percent relative to November of last year.
Based on data from the National Automobile Dealers Association, Kontos wrapped up his latest analysis by highlighting retail used-vehicle sales by franchised dealers rose 2.2 percent year-over-year in November, but ticked 0.9 percent lower for independent dealers.
Kontos also said November certified pre-owned sales dropped 3.3 percent compared to the prior month but increased 1.8 percent year-over-year, according to figures from Autodata Corp. On a year-to-date basis, he mentioned CPO sales remain up 2.2 percent versus last year.
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
November 2018 |
October 2018 |
October 2017 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$10,599 |
$11,059 |
$10,797 |
-4.2% |
-1.8% |
| |
|
|
|
|
|
| Total Cars |
$8,197 |
$8,672 |
$8,546 |
-5.5% |
-4.1% |
| Compact Car |
$6,315 |
$6,586 |
$6,565 |
-4.1% |
-3.8% |
| Midsize Car |
$7,149 |
$7,565 |
$7,794 |
-5.5% |
-8.3% |
| Full-size Car |
$7,822 |
$7,874 |
$7,190 |
-0.7% |
8.8% |
| Luxury Car |
$12,516 |
$13,311 |
$13,223 |
-6.0% |
-5.3% |
| Sporty Car |
$13,143 |
$14,315 |
$13,739 |
-8.2% |
-4.3% |
| |
|
|
|
|
|
| Total Trucks |
$12,635 |
$13,079 |
$12,950 |
-3.4% |
-2.4% |
| Minivan |
$8,141 |
$8,660 |
$8,554 |
-6.0% |
-4.8% |
| Full-size Van |
$11,583 |
$12,547 |
$12,940 |
-7.7% |
-10.5% |
| Compact SUV/CUV |
$10,890 |
$11,025 |
$10,599 |
-1.2% |
2.7% |
| Midsize SUV/CUV |
$10,982 |
$11,551 |
$11,133 |
-4.9% |
-1.4% |
| Full-size SUV/CUV |
$14,070 |
$14,061 |
$14,208 |
0.1% |
-1.0% |
| Luxury SUV/CUV |
$17,463 |
$18,218 |
$18,844 |
-4.1% |
-7.3% |
| Compact Pickup |
$9,600 |
$10,046 |
$9,102 |
-4.4% |
5.5% |
| Full-size Pickup |
$15,540 |
$16,224 |
$16,419 |
-4.2% |
-5.4% |
Source: ADESA Analytical Services.
Another consignor is enhancing its remarketing efforts by leveraging technology and high-level mathematics.
On Thursday, Sagent Lending Technologies announced the integration of Manheim Market Report (MMR) into its suite of business process outsourcing (BPO) solutions for its remarketing operations. With this integration, Sagent now can leverage MMR as a key input into its proprietary pricing algorithms, enabling it to more accurately and competitively price vehicles.
Sagent remarketing specialists using MMR can search with a full VIN number or just the first 10 digits of a VIN number. They can also search using qualifiers such as the year, make, model and style of a vehicle.
“While our resale values were already above industry averages, this integration to MMR allows us to further improve our performance — ensuring that lenders are getting increasingly greater resale results from their inventory,” says Stephen Bissett, vice president of client services at Sagent Lending Technologies.
“Continual and meaningful data integrations are something that our clients have come to expect from Sagent over the years, and those integrations are something that we’re more than happy to deliver upon,” Bissett continued.
Manheim director Sarah Bannister added, “Manheim and Sagent have been long-time partners, and this integration is indicative of our common goals. Greater pricing accuracy leads to stronger performance and results, something that we both aim to deliver for our clients.”
