As auctions in the region continue to modify their businesses in the wake of Hurricane Harvey, Black Book shared an estimation on Thursday morning that 500,000 to 1 million damaged vehicles will have to be replaced in the city of Houston and surrounding regions.
The National Weather Service said on Wednesday that the storm dumped 51.88 inches of rain in Cedar Bayou, Texas, establishing a new record within the continental U.S.
“Black Book expects the impact of the hurricane to have far-reaching effects, not only on Houston-area automotive businesses such as dealerships and wholesale auctions, but also throughout the South and Midwest,” the company said in a message to Auto Remarketing.
“In fact, the storm continues to actively affect parts of Louisiana, moving northeast toward Tennessee,” Black Book continued.
According to an announcement posted on LinkedIn by Casey Allison, who is operations manager at America’s Auto Auction Houston, both of the company’s facilities in the Bayou City cancelled their weekly sales.
“Taking into consideration the safety of our America’s Auto Auction employees and dealers, we have decided to cancel this week’s sales,” the announcement said. “Both North Houston and South Houston America’s Auto Auction locations will resume next week.
“Our main priority is to focus on the well-being of those effected by the hurricane,” the announcement added.
Earlier this week, Cox Automotive officials explained how its Manheim facilities in the region initially would be handling challenges presented by Harvey.
According to an updated message sent to Auto Remarketing late on Thursday afternoon, the company said no sales will be held at Manheim Houston, Manheim Texas Hobby and Manheim South Houston during the week of Sept. 4.
In Louisiana, the team at Lake Charles Auto Auction sustained the impact when Harvey circled back into the Gulf of Mexico and struck near the three-lane facility this week.
“We have experienced tremendous volumes of rain and experienced some flooding,” Lake Charles Auto Auction owner Matt Pedersen said in a release sent to Auto Remarketing, “but nothing like our neighbors in Texas.”
Lake Charles AA delayed its usual Wednesday sale with plans to host it on Friday. The auction serves dealers from Lake Charles, Baton Rouge, Lafayette and New Orleans and throughout Louisiana, and because of its proximity to southeast Texas, regularly welcomes dealers from Port Arthur, Beaumont and Houston, as well.
“This delay has given us time to begin the logistic preparations that will occur in coming weeks,” Pedersen said. “Vehicles will be moved across the country to begin replacing the thousands of vehicles flooded and destroyed throughout southeastern Texas and in pockets of Louisiana.”
As auctions and dealers look to reorganize, Black Book projected that the rental industry will be impacted first with the supply challenge as thousands of residents will need to find immediate replacement of personal transportation.
“This entails not only a large quantity, but also the right mix of vehicles. Work trucks and service vehicles will be in extremely high demand immediately,” Black Book said.
Black Book recapped that early estimates say more than 500 dealerships have been impacted in the greater Houston area alone.
“We believe there is enough new inventory in the U.S. to supply the consumers’ needs, and the timing may actually be good with new-car stores looking to deplete the 2017 models at model-year changeover,” Black Book said.
“New-vehicle SAAR that has been on a decline this year will see a lift in the coming months as residents start replacing their damaged vehicles,” editors continued.
Pedersen noted how commercial consignors likely will be steering volume toward the region to meet upcoming demand. He added that his operation in Lake Charles could be a prime place for dealers to find the inventory they need. The auction recently broke ground on a new 6,500 square-foot office facility, which will open in next fall.
“We have heard from consignors around the tri-state area who want to be able to market their vehicles to dealers who must fill this important need quickly and efficiently,” Pedersen said. “The transportation companies like the logistics of our location to facilitate the movement of vehicles from around the state.
“Given the extent of this disaster,” Pedersen said, “we expect the need for slightly older and late-model used cars, trucks and SUVs to last for months. We will be doing all we can to help facilitate this recovery. The first thing people will need to begin the process of their homes and businesses back in order is a vehicle.”
Both portions of the RVI Group’s latest analysis of wholesale prices showed an upturn from June to July but softening versus year-ago figures.
The RVI Used Vehicle Price Index (Real) increased from June to July by 0.9 percent. However, when compared to July of 2016, prices were down by 3.8 percent.
The firm’s Used Vehicle Price Index (Nominal) also climbed by 0.9 percent in July when compared to June. When compared to July of last year, the index fell by 1.4 percent.
Analysts indicated used-vehicle prices for most segments are down on a year-over-year basis.
“Prices of full-size pickups increased slightly while prices of compact cars and full-size sedans show greater declines on a year-over-year basis than the rest of the market,” they said in the analysis.
RVI Group pegged the decline for compact cars and full-size sedans at 6.6 percent and 8.3 percent, respectively.
Also of note, the report noted a 5.4-percent year-over-year price decline for both midsize SUVs and small sedans.
Elsewhere in RVI Group’s latest analysis, the firm noted that on a year-over-year basis, new-vehicle prices ticked 0.12 percent higher in June.
Analysts added that new-vehicle transaction prices, on a seasonally adjusted basis decreased by 0.3 percent from May to June.
Finally, RVI Group pointed out that gas prices fell in July to $2.41 percent gallon from $2.46 per gallon in June. In July, gas prices fell by 1.9 percent from the previous month. On a year-over-year basis, prices were up by 2.9 percent.
Along with the perspective of an auction owner from the West Coast, the latest Black Book Market Insights report took a look at comparing the weekly retention strength of cars and trucks dating back to the beginning of the year.
Editors found that cars have started to see larger depreciation since late spring after a stronger-than-expected tax season earlier in the year.
“Clean quality used vehicles with low mileage remain in demand, however as expected, the overall wholesale market continues to soften as we enter the last month of summer,” Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics, said in a news release.
According to volume-weighted data, Black Book indicated overall car segment values decreased by 0.57 percent last week, with six of nine segments depreciating more than half a percentage point.
Editors noted the midsize car and luxury car segments declined the most: 0.87 percent and 0.82 percent, respectively.
Turning back to volume-weighted information, Black Book determined the overall truck segment values — including pickups, SUVs and vans — softened by 0.28 percent last week. The report also mentioned only three truck segment received steeper weekly depreciation rates than that of the prior week.
Editors pointed out small pickups declined the most among truck segments, dropping by 0.71 percent. That segment also has the highest four-week depreciation rate with an average of 0.66 percent.
Moving along to what Black Book’s personnel in the lanes reported back to headquarters, an auction owner in Washington shared this assessment.
“The market has been really solid as of late. The slight shortage in certain sectors, combined with good retail activity has caused a bit of an uptick in auction activity. Across all segments, it seems that demand is really strong right now,” the owner said.
Two other auction reports originated out of the Midwest, with the first one coming out of Indiana.
“As has been the case all summer the consignment was down. The demand seems high so the prices are holding steady even with the huge truck rebates,” the lane watcher in the Hoosier State said.
Meanwhile, out of Ohio, Black Book’s representative stated, “Miscellaneous credit unions and dealer consignment made up a good portion of the auction with pretty good results. Dealers have a positive attitude about the late summer market conditions we are experiencing.”
Sliding to the South, the story coming out of Tennessee was, “Pickup trucks were strong today and it appeared that all of the vehicles floored under $10,000 did exceptionally well.”
Wrapping up in Florida, Black Book’s observer noted, “The finance lanes did well today but the dealer consigned vehicles had a tough time of it.”
As torrential rain from Hurricane Harvey keeps falling, the National Automobile Dealers Association and Cox Automotive are taking actions in an effort to support member dealerships as well as Manheim facilities and personnel in the region.
While dealers like Wyatt Wainwright had to flee rising waters, officials from Manheim are modifying activities near Houston, emphasizing that safety of employees is paramount.
“In the wake of Hurricane Harvey, the entire Manheim Texas team is focused on ensuring the safety and well-being of our team members,” said Nick Boris, regional vice president for Manheim Central, in details obtained by Auto Remarketing on Monday afternoon.
“We have thankfully confirmed that the more than half of our Texas employees are accounted for, and we are continuing to diligently reach out to additional staff,” Boris continued. “Manheim’s corporate human resources team based in Atlanta is leading the effort to share relief resources and information with those affected by the storm, record-breaking flooding and loss of utilities.
“In addition, they are coordinating access for Manheim team members to the Cox Employee Relief Fund (available through Manheim’s parent company Cox Enterprises) which provides immediate financial assistance for unexpected needs resulting from a disaster,” Boris went on to say.
Below is an update from Manheim’s business operations at some of its sites in Texas:
• Converted Tuesday morning physical sale at Manheim Houston to a digital sale
• Converted Thursday physical sale at Manheim Texas Hobby to a digital sale
• Proceeding with Wednesday sale at Manheim San Antonio
• Still assessing operations at Manheim South Houston
• Manheim Dallas, Manheim Dallas-Fort Worth, Manheim El Paso and Manheim West Texas are not impacted at this time.
“We are proactively communicating with clients about the status of our operations and inventory, as well as their assets,” Boris said. “Currently, affected sites are offering digital sales to support our clients’ used-vehicle buying and selling needs, and we will keep them informed about future in-lane sales.”
Undoubtedly dealers like Wainwright would like to get back to inventory acquisition. He is experiencing just how devastating the impacts this hurricane is leaving.
Wainwright is a resident of Sugar Land, Texas, about 20 miles southwest of Houston, as well as president of the Houston Automobile Dealers Association, which represents 175 dealerships. He learned in the middle of the night about orders to evacuate his home.
“We are struggling with the evacuation right now,” Wainwright said in a press release shared by NADA on Monday.
“There are large scale mandatory and voluntary evacuations going on right now. We don’t know where we can go to escape. I don’t know how I could drive three miles right now without getting blocked,” he added.
The NADA Foundation has mobilized its Emergency Relief Fund to assist dealership employees who have been impacted by personal property damage caused by the hurricane and flooding.
“There’s still 20 to 30 inches of rain that still has to pass through. We are not even near to the peak flooding yet,” Wainwright added. “A big issue we haven’t faced yet are rivers and streams that have yet to overflow. There is so much more of this to go which is the problem.”
Dealership employees affected by the flooding can apply for financial assistance. (Lost wages or commissions are not eligible for reimbursement from the fund.)
The NADA Foundation is also calling on dealers and dealer association groups to donate online to its Emergency Relief Fund. Checks can be made payable to Emergency Relief Fund and sent to:
NADA Foundation
8400 Westpark Drive
MS 7
Tysons, Va. 22102.
For more information, call (703) 821-7102.
Cox Automotive is also committed to helping the American Red Cross with disaster relief efforts.
In addition to the company’s corporate partnership, charitable banner ad campaigns are running on Autotrader, Kelley Blue Book and Manheim.com. Red Cross ads click directly to the Cox Automotive partnership donation site at https://www.redcross.org/coxauto-emp.
State and federal officials continue to deploy all resources available to help Texas residents impacted by this storm.
On Monday, Gov. Greg Abbott announced he has activated the entire Texas National Guard in response to Hurricane Harvey, bringing the total number of deployed guardsman to roughly 12,000. These National Guardsman will assist in the ongoing search and rescue effort for any Texans in immediate danger, and will be heavily involved in the extensive recovery effort in the aftermath of the storm.
“It is imperative that we do everything possible to protect the lives and safety of people across the state of Texas as we continue to face the aftermath of this storm,” Abbott said. “The Texas National Guard is working closely with FEMA and federal troops to respond urgently to the growing needs of Texans who have fallen victim to Hurricane Harvey, and the activation of the entire guard will assist in the efforts already underway. I would like to thank FEMA Administrator Brock Long, as well as all our brave first responders for their hard work in helping those impacted by this terrible storm.”
FEMA Administrator Brock Long added, “While this is still a dangerous situation with a long response effort ahead, the state and people of Texas are resilient. FEMA was here before the storm hit, and we will be here as long as needed, actively coordinating the full resources of the federal government, to support Gov. Abbott and the state.”
Two ServNet member auctions have implemented the Deal Shield buyback guarantee assurance product from Cox Automotive, and two more are set to utilize the program, as well.
That’s according to a news release from ServNet, which said BSC America’s Bel Air Auto Auction and Tallahassee Auto Auction have already begun using the DealShield program.
Up next are Missouri Auto Auction and Houston Auto Auction. DealShield’s parent company, Cox Automotive, is also the parent company of the Manheim auction chain.
“DealShield essentially protects a dealer's auction vehicle purchase, adding an extra level of protection against risk and market fluctuation,” BSC America president R. Charles Nichols said in the release. “We’ve implemented DealShield with excellent results at both Bel Air and Tallahassee Auto Auctions, and dealers have embraced it as yet another tool that gives them even more confidence in the vehicles they buy at our auctions,” he said.
The protection on the DealShield DS360 guarantee is good for 21 days and 360 miles.
ServNet president Kevin Brown, an owner/general manager at Missouri Auto Auction, said the group’s members are among the early crowd of independents to utilize DealShield.
“This move is a further indication that ServNet Auctions are constantly seeking and embracing ways to help its customers to purchase vehicles in our auction lanes with less risk and more flexibility,” Brown said. “DealShield essentially allows the dealer more control in the marketplace, giving the customer, rather than the market, the edge in the auction transaction.”
ADESA announced Thursday that its Kansas City auction recently raised a total of $50,457 for a local children’s hospital.
The auction held a special sale and live charity auction event named “Cars-n-Kids” for Children’s Mercy Kansas City.
In addition to donating $150 for every car sold during the sale, ADESA Kansas City sold event T-shirts, hosted a shrimp boil dinner, and auctioned items such as end zone pylons autographed by Kansas City Chiefs players.
“As a not-for-profit children’s hospital, Children’s Mercy is so appreciative of community partners like ADESA Kansas City, who do more to make a difference for our patients and families,” Megan Stock, assistant director of philanthropic community engagement and events, said in a news release. “We are grateful to everyone involved with the Cars-n-Kids charity car auction for making it such a successful fundraiser.”
ADESA said auction general manager Kevin Rhoads and his team chose to help Children’s Mercy this year because the hospital has helped several auction employees and their families.
“When we were choosing a charity to sponsor, Children’s Mercy immediately came to mind,” Rhoads said. “The event was a huge success, with dealers raving about the shrimp boil and the charity auction. But the best part is we raised over $50,000 for Children’s Mercy.”
BSC America Auction Group said Thursday that its new facilities for the Bel Air Auto Auction in Belcamp, Md., will welcome customers in September following several years of planning and 24 months of construction.
Bel Air’s new 185-acre location will also house BSC America’s corporate headquarters and regional staff, according to the company.
The auction will host its first regular sale at its new facility on Sept. 14. The sale will begin with breakfast in the lanes at 8 a.m., followed by a ribbon-cutting ceremony at 9 a.m.
“The new auction will be able to accommodate continued growth in the marketplace and allow us to serve better our customers’ needs with ease and efficiency in a new state-of-the-art auction facility,” BSC America chief executive officer Raymond Nichols said in a news release.
Bel Air’s new location includes a new 75,000 square foot, 10-lane auction facility and a 50,000 square-foot Vehicle Enhancement Center that includes a mechanical shop, body shop, recon center, paint booths and imaging center.
Before the inaugural sale, BSC America has also planned a series of special events to commemorate Bel Air’s new location.
To give customers an in-depth look at the new site, on Sept. 13, the auction will host a preview and happy hour event from 5 p.m. to 8 p.m. The night will include food, refreshments and facility tours.
“Our objective is to provide large, modern auction facilities centrally located in the Mid-Atlantic Region near Bel Air, Maryland just off I-95 to better serve our sellers and buyers. We will provide a convenient environment for our customers and for our employees”, Michelle Nichols-Neff, vice president of BSC America, said.
“We’re also excited about our new dealer restaurant, and customer service suites with Wi-Fi provided workstations for customers to use. Those new service facilities will be attractive and convenient for customers. They will be able to enjoy Bel Air Auto Auction’s delicious fare while attending our regular weekly Thursday auctions and the bi-weekly GM Financial Factory auction,” she said.
Additionally, the auction has planned a two-day grand opening celebration in October that will feature both a GM Financial Closed Sale at 10 a.m. on Oct. 18 and a reception from 5:30 p.m. to 9:30 p.m. that evening.
The following day, on Oct. 19, Bel Air will hold its annual Harvest and Grand Opening Sale, which will include the season’s largest consignment of vehicles and a special Classic Car Event, according to BSC America.
A GM Financial Closed Sale on Sept. 6 will be the final regular sale at the current Bel Air facility in Bel Air, Md., followed by the last regularly held Weekly Consignment Sale on Sept. 7.
In addition to monthly specialty auctions, BSC America said it will continue to host sales at their Edgewood, Md., location on Thursdays at 8 a.m.
“It has taken us many years of planning and a tremendous amount of work on the part of everyone involved in the building and moving process to bring us to this exciting point in our auction’s history. We are enthused to be providing it for our customers and employees,” added Nichols.
Bel Air Auto Auction is the flagship auction of BSC America, which also operates Tallahassee Auto Auction in Tallahassee, Fla.
Note: Edited to correct date of first sale at new location, and locations of Sept. 6 and Sept. 7 sales.
As both car and truck values softened at a pace similar to what’s been seen during the past month, Black Book’s Anil Goyal and the company’s representatives at the auctions are noticing a clear strategy dealers are using nowadays as they walk the lanes or watch the online sales.
“Dealers continue to remain interested in clean units from auctions to make up for a lower number of good trade-in vehicles,” said Goyal, senior vice president of automotive valuation and analytics, in the latest Black Book Market Insights report.
Looking at the volume-weighted data, editors determined that overall car segment values decreased by 0.45 percent last week, similar to the average weekly decrease of 0.48 percent in values over the previous four weeks.
Black Book indicated that the subcompact car and luxury car segments declined the most by 0.76 percent and 0.71 percent, respectively.
Over on the truck side, the volume-weighted data showed that overall truck segment values — including pickups, SUVs and vans, softened by 0.39 percent a week ago, not far off of the average weekly dip of 0.33 percent in values over the previous four weeks.
Editors pointed out that luxury crossover/SUVs in the midsize, compact and subcompact sizes declined the most among truck segments by 0.73 percent, 0.70 percent and 0.70 percent, respectively.
Turning back to what Black Book’s observers saw at the auction, the anecdotes back up what Goyal assessed about the overall market.
Out of Florida, the story was, “Dealers only buying vehicles to fill holes in their inventory.”
A similar situation played out in Tennessee as Black Blook’s representative said, “A good sale today and a great day for pick-up trucks. There seemed to be more clean vehicles being represented today, which was a welcome change for dealers struggling to get quality trade-ins on their lots.”
Two reports surfaced out of Pennsylvania. The first recap stated, “Attendance was better in the lanes today, but the majority of the sales were via the Internet.” The other one noted, “A lower sold percentage as dealers are anticipating lower prices around the corner.”
Finally, the observations from the lanes wrapped up in Massachusetts where lane watcher said, “Overall, a typical August market here with some expected anxiety preceding another fall season.”
In this episode, Auto Remarketing publisher (and conference emcee extraordinaire) Bill Zadeits goes on the road to Nashville.
While in the Music City, Bill chatted with Auction Edge president Dan Diedrich at last week's IARA Summer Remarketing Roundtable. Check out their conversation below.
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Metro Auto Auction of Phoenix has been named the National Auto Auction Association’s 2017 Western Chapter Auto Auction of the Year for its commitment to supporting community youth.
NAAA said the auction’s notable efforts include hosting an annual Christmas party for seriously ill children and funding a mentorship program for thousands of at-risk Phoenix-area high school students.
The award was established last year to honor the charitable acts that auctions perform each year and to encourage volunteer outreach. The auction will join other chapter finalists competing to win NAAA's 2017 Auto Auction of the Year Award for Excellence in Community Service.
In November, each finalist will be recognized at the NAAA Convention — which is being held in partnership with the National Remarketing Conference — with a crystal trophy and a $5,000 prize for a charity of the auction's choice.
The winner receives a large crystal loving cup, a feature story in both NAAA's On The Block magazine and annual Membership Directory, as well as a $20,000 donation to the charity of the auction's choice.
“As part of National Auto Auction Week I’m honored to announce Metro Auto Auction of Phoenix as the representative auction from NAAA’s Western region for Auction of the Year,” NAAA Western Chapter President Michele Noblitt said in a news release. “Our nation’s children are the future of this great country. Metro owners and staff help provide youth and their families in the Phoenix area the ability to heal through Hope Kids and the tools needed to achieve education through Elevate Phoenix.”
In support of Hope Kids, since 2007, Metro has hosted a Christmas party each year for more than 600 children and family members, according to NAAA.
The annual party includes a Santa, gifts, games, crafts, train rides, petting zoo, Disney characters, a holiday dinner and real snow.
Additionally, NAAA said Metro employees have raised over $275,000 to help fund Elevate Phoenix.
Currently, the organization provides 3,400 students in two high schools with an accredited program designed to build both character and life skills.
Elevate Phoenix hires instructors who serve as mentors on a 24/7 basis and teach their students via a leadership curriculum attune to its mission. Students in the program for three years or more have a graduation rate of 91 percent, NAA said.
Other charities Metro currently supports include Best Buddies, Wounded Warriors,The Society of St. Vincent de Paul of Arizona and 2Gether We Live.
