The auto auction industry will set a new sales record of more than 10 million vehicles this year, auction experts predict. That’s up from 9.8 million in 2016.
Ira Silver, National Auto Auction Association chief economist, believes 10 million sales for the industry is on target. He attributes the growth to an increase in the commercial consignment segment, which is made up of off-lease vehicles and retired rental and fleet vehicles.
Conversely, sales of dealer consignment vehicles are down, he noted.
“We’re seeing strong growth in the order of around 10 percent in commercial consignment, while dealer consignment is declining somewhat,” Silver said. “Dealer consignment is closely related to current new (vehicle) sales and new sales for the first half of the year are down slightly from last year.
“When someone buys a new car they typically trade-in an older car and some portion of those cars will go through the auction. Until this year, dealer consignment had been growing since the end of the recession.”
Tom Kontos, KAR Auction Services Inc. chief economist, said his analysis of AuctionNet data pegs auction sales up 2 percent for the first half of 2017 compared to the same period last year.
But sales would have been higher had some vehicles not been sidelined because of manufacturer recalls, he opined.
“They are sitting in inventory at auctions but they are not being sold,” Kontos said. “It’s enough cars that the percentage would have been higher than 2 percent.’’
He also believes the industry is tracking to sell “more than 10 million” units this year.
More cars, but just barely
Industrywide, more cars than trucks have been sold at auction so far this year, but just barely, Kontos said.
Through June, cars represent 50.8 percent of vehicles sold at auction versus 53.9 percent for the year in 2015.
When combined, compact and midsize cars represented 66.4 percent of the cars sold in the first half of 2017 versus a combined total of 63.0 percent for the year in 2015.
Grace Huang, senior vice president of inventory services at Manheim, said cars were about 51.5 percent of the vehicles being sold at Manheim. Midsize cars at 20 percent of the vehicles sold and SUVs at 31.6 percent were the two largest vehicle segments, Huang said.
“For us, the most popular (model) year is 2014 because that was the peak of leasing after the downturn,” she added.
Jonathan Smoke, Cox Automotive chief economist, said the company’s analysis of industrywide auction data indicates that much of the 500,000 to 600,000 off-lease unit volume increase expected this year occurred in late 2016 and early 2017 as a result of manufacturer and dealer pull-ahead programs and efforts.
When cars “like the Nissan Altima and Hyundai Sonata are depreciating at lower than what is considered to be normal, it’s because earlier in the year they were depreciating more significantly,” said Smoke during Cox Automotive’s quarterly conference call on July 10.
Same industry, different view
Just as the nation’s largest auction companies offer a big-picture look at the auction industry, smaller auction companies and independent auctions offer a different view.
“In Texas, we’re pickup and SUV country, so predominantly, that’s what you’re going to see at auction, especially around Austin, San Antonio and places like that,” said John Swofford, vice president at America’s Auto Auction which owns 21 auction locations around the country.
Dealer consignment vehicles make up 75 percent to 80 percent of the sales at the company’s four Texas locations under Swofford’s watch. He is also in charge of America’s Auto Auction locations in Tulsa, Okla., and Baton Rouge, La.
“In Dallas, it may be a little bit different because of the population base and the amount of highline vehicles there. We’re simply dealing with what was retailed five to seven years ago. Compact cars aren’t a big retail item in Texas.”
George Pero, general manager at Corry Auto Dealers Exchange, which was acquired by the XLerate Group in March, said he is seeing an increase in off-lease and commercial fleet vehicle volumes at the Corry, Pa., location.
“We’re seeing an influx of SUVs from the off-rental market,” too, Pero said.
CADE sold about 10,500 vehicles at auction in 2016 and expects an eight to 10 percent sales increase this year, Pero said. XLerate owns 14 physical and mobile auctions in eight states.
More repos coming
In the first six months, sales of both fleet-lease and dealer consignment units were down “a little bit” and dealer consignment units were in “rougher” condition, at Carolina Auto Auction, in Williamston, S.C., said the site’s general manager, Eric Autenrieth.
Autenrieth said he has also seen a downturn in sales of repossessed vehicles because consumers “got caught up” with their car payments during income tax refund season.
He said there is typically a three-month lag between loan default and vehicles making their way to auction. “I think it’s following the normal trends we’ll see (repo sales) climb as we hit the fall months,” he said.
Carolina Auto Auction specializes in sales of fleet-lease vehicles, retired rental vehicles, repossessed vehicles and dealer consignment units.
About 1,000 to 1,200 vehicles roll through its lanes each week, Autenrieth said.
As dealers looked to accelerate sales to close July, Black Book noticed vehicle depreciation moved in a similar way to finish the month.
The latest Black Book Market Insights report indicated most vehicle segments increased in depreciation during late July. Out of all car and truck segments, editors determined full-size pickups retained their value the best, only decreasing in value by 0.06 percent.
“Car values dropped sharply in the last week of July. It was the highest depreciation in car segments in 20 weeks,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.
Editors offered more details after looking at the volume-weighted data where they found that overall car segment values decreased by 0.54 percent last week. That figure is higher than the average weekly decrease of 0.30 percent in values spotted during the previous four weeks.
Black Book reported the midsize car, sporty car, full-size car and prestige luxury car segments declined the most — each one by about 0.65 percent.
Reviewing volume-weighted information, editors discovered overall truck segment values (including pickups, SUVs and vans) softened by 0.32 percent last week, higher than the average weekly decrease of 0.15 percent in values registered during the previous four weeks.
Editors added small pickup and compact crossover/SUV values declined the most among truck segments by 0.64 percent and 0.54 percent, respectively.
Turning next to cover what lane observers relayed back to Black Book headquarters, one of the highlights likely stemmed from DAA Northwest’s Rock & Roll Sale.
While not mentioning the annual event by name, the Black Book representative from Washington reported, “I attended a huge event sale that had over 5,000 vehicles consigned over two consecutive days with a concert sandwiched in between. They sold around 70 percent of the vehicles and an average sale price of $18,000, both of which were amazing numbers.”
Elsewhere around the country, some auction reports weren’t quite as rosy, beginning in Tennessee.
“Not much speculating happening here as a lot of dealers are buying only the vehicles that they have retail orders for,” Black Book’s representative in the Volunteer State said.
Up in Michigan, it still might be summertime, but, “Dealers are already preparing for fall as the four wheel drive trucks are receiving most of the attention.”
Down in Florida, the hammer didn’t fall as much as it sometimes does. Black Book’s personnel noticed, “It was a tough auction here because the corporate reps were holding tight on their floor prices. The result was a lot of no-sales.”
And finally from Pennsylvania, the action was a bit busier, at least in one part of the facility.
“I watched a dealer lane sell almost everything that came through with most fetching good values. In-lane attendance was sparse, but there were consistently around 115 online buyers for the entire run in that particular lane,” Black Book’s observer said.
Black Book editors could have broken out a thesaurus on Tuesday when releasing their Used Vehicle Retention Index for July. Upon looking for the right adjective to summarize the latest reading, they could have picked among steady, stable, firm, fixed, unchanged or unwavering.
The reason why is the July index reading came in the same as it was in June, resting at 113.0. Black Book’s index has now moved slightly positive or remained unchanged during three of the last four months.
The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles, as percent of original typically-equipped MSRP.
Editors noticed full-size cars, full-size pickups, luxury cars, and near-luxury cars all saw noticeable gains in their respective segment Indexes during July. Black Book added that pickups remain popular because of the price of gas and overall supply in the market, while each of these car segments offer decent value currently, resulting from several months of sharp valuation declines over the last few years.
“What we’re experiencing over the last few months are signs of a resilient used-vehicle market, where the bottom is not dropping out as some had expected this year,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book.
“We’re paying close attention to several car segments, in particular, compact car and midsize car, which continue to weaken as demand remains soft and used supplies build,” Goyal continued. “In addition, the overall economy and credit availability conditions will influence the retention strength moving forward.”
The index dates back to January 2005 when Black Book published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1 percent while during 2016, the index fell by just 6.4 percent.
During 2011, the index rose strongly from 113.3 to 123.0 by the end of the year as the economy picked up steam and used-vehicle values rose higher. It continued to remain relatively stable, rising slightly until May of 2014 when it hit a peak of 128.1.
To obtain a copy of the latest Black Book Wholesale Value Index, go to this website.
To strengthen and grow its digital offerings, Manheim announced on Monday that Nick Peluso will lead the company’s digital strategy as president of Manheim Digital Marketplace, while continuing as president of RMS Automotive.
In his dual role, the company indicated Peluso is responsible for Manheim’s digital channels, including OVE, Manheim.com and Simulcast, in addition to RMS Automotive’s global business.
“By aligning our digital resources under one proven leader, we can better ensure our clients benefit from the advantages delivered by our market-leading digital platforms,” said Grace Huang, senior vice president of inventory services for Manheim. “Nick’s deep knowledge of the ever-evolving digital marketplace makes him the ideal executive to direct our next-generation digital future.”
Reporting to Huang, Manheim highlighted Peluso will leverage his more than 30 years of automotive experience and tap the synergies between the two companies’ diverse portfolio of leading digital solutions to drive transaction velocity and efficiency. His efforts will focus on setting the industry standard by making the client experience faster, simpler and more convenient.
“I’m eager to help shape the next phase of our digital remarketing strategy, especially at a time when dealers and commercial clients increasingly rely on digital channels to conduct business anytime, anywhere,” Peluso said. “My goal is to broaden our services and deliver a suite of digital tools that advance our clients’ speed to market.”
Peluso joined Cox Automotive in 2000 as president of remarketing solutions for Manheim and soon became senior vice president of customer management for Manheim before being named president of RMS Automotive in 2014.
Prior to 2000, Peluso spent 12 years in leadership positions with ADT Automotive, including vice president of sales and marketing.
Auctions across the country are finding ways to have fun this summer.
A few include a Louisiana auction, an Illinois auction and 20 southeastern Manheim locations.
Manheim’s southeastern locations participated in the company’s fourth annual Cargaritaville sales event this month.
The sales day featured beach-themed prize giveaways, live entertainment and steel drummers.
NextGear Capital partnered with each participating location to offer special promotional terms and Margarita Machine giveaways.
A 2016 Kawaski Jet Ski, the grand prize, was given away at Manheim Orlando to Ed Burgess with Mazda of Roswell, Ga.
The 20 locations offered more than 30,000 participating dealers a total of roughly 40,000 vehicles.
“Each year Cargaritaville grows and grows,” said Mark Ford, Manheim's regional vice president for the Southeast. “Our clients here in the Southeast truly look forward to and plan in advance for this annual event. We can’t thank them enough for their participation and the excitement they bring to make it such a huge success.”
Additionally, Manheim team members also made time for costume contests and photo booth opportunities during the sale.
Cargaritaville began in 2013 at 11 Manheim locations in Florida. In 2016, the event expanded to Alabama, Georgia, North Carolina, South Carolina and Tennessee locations.
Manheim locations in the Southeast weren't the only ones within the company to have summertime fun.
Manheim Baltimore-Washington helped clients knock sales out of the park at the third annual ‘Summer Slam’ sale on July 18. This year's event featured more inventory, more buyers and more transactions than last year. Some 3,000 units were available at the baseball-themed event which brought more than 2,000 buyers contributing to an overall sales rate of more than 60 percent.
“Our spirited sale is a great opportunity for dealers to refresh their inventory for the summer,” general manager John Eriksen said. “We love all the dealer engagement, both in our lanes and online. This sale is one of the ways we offer value to our consignors and show our clients how much we appreciate them.”
Meanwhile, Greater Rockford Auto Auction in Illinois recently celebrated 43 years with a special sales event featuring $15,000 in prizes and giveaways on July 19.
Prizes included off-road dune buggies, Cub Cadet lawn mowers, patio furniture sets and electric smokers.
Louisiana's 1st Choice Auction’s (LAFCAA) 2017 Lagniappe Sale was also this month.
“It was a great day at the auction, with a terrific lineup of cars and trucks, and lots of prizes to go around,” LAFCAA owner and managing partner John Poteet said in a news release.
“Dealers received free shirts, free 28-day floats and free root beer floats. One lucky dealer won $500 as another won a 2-night vacation package.”
LAFCAA's annual football-themed Tailgate Event is set for Aug. 22.
The sale will feature 900 plus units from ARI, CPS and several large dealer groups.
This year's sale will also include a special visit from 2003 NCAA and 2009 Super Bowl champion wide receiver Devery Henderson.
Henderson will mingle with buyers attending the event and provide opportunities for photos and autographs.
Themed prizes valued at an estimated $10,000 will also be awarded during the sale, according to LAFCAA.
Visit lafcaa.com for more details.
AutoBuy, a Florida-based car buying company supplying dealers across the country with often desired, non-advertised used inventory, recently celebrated 100,000 private car sellers served.
With more than $1 billion dollars in inventory appraised in eight years of business, AutoBuy founder Anthony Maida says his used-car inventory rivals that of other auction consignors because the vehicles from his private sellers haven’t been previously marketed.
“Our inventory is fresh, non-advertised or remarketed to consumers,” Maida said during a phone interview with Auto Remarketing. “We‘ve been able to establish an inventory that is of the hottest premium automobiles that are being looked for in the used-car market.”
Gabriel PeerDrake, a dealer who’s just been in business for over year, said he stumbled across AutoBuy by accident, before becoming a fan of the company’s unique supply of inventory.
“The one thing that set them apart is, when I got to an auction and I’m buying in a normal lane, I’m buying cars from other dealers that have their vehicles down there for a myriad of reasons,” said PeerDrake, owner and operator of CARite of Cocoa.
PeerDrake said eight times out of 10, vehicles at auctions have been advertised online by another dealer and carries a digital footprint.
“AutoBuy cars don’t have a digital footprint. There’s no digital history to them. They're buying direct from consumer and selling direct to dealer. There’s no middle retail step involved. So when I offer a vehicle for sale that I get from them, my competitor and my consumer hasn’t seen that car in the marketplace,” he explained.
AutoBuy has also become consumer friendly because it can offer private car seller appraisals that rival those of local markets as well, according to Maida.
Looking at the markets across the U.S., AutoBuy makes purchases on a national basis. So it can offer consumers appraisals not limited to the local market.
“We’ve brought to the table something that is beneficial to the consumer, as well as the dealer industry,” Maida said. “We’re able to provide that premium inventory that all dealers are looking for to supply in their dealer market for retail.”
As Auto Remarketing reported in May, when it's time to trade-in, U.S. consumers have been found to be often disappointed with their vehicle’s appraisals. Maida said much of this disfavor stems from dealers just strictly evaluating and making offers based on local market values.
“A lot of it has to do with dealers evaluating cars on the local market, compared to us evaluating cars on the national market value,” he explained.
Private car sellers can either bring a vehicle to one of AutoBuy’s seven locations or they can visit the company’s website WEPAYTHEMAX.com, to arrange for a certified buyer to come by their home of office to make an appraisal.
Most of AutoBuy’s vehicles are ready for auction within seven days of a purchase, boasts Maida.
“Our average vehicles lifetime in the possession of AutoBuy is seven and a half days from the time that we acquire it, to the time that we buy it and sell it,” he said.
This summer, following its continued growth, Madia said AutoBuy plans to add two locations in central Florida.
“Our goal is to continue to grow this rapid market, and since we are somewhat competitors with CarMax, that we can grow this as we continue to on a national basis,” he added.
Ready Logistics highlighted that the company is trying to bring a new level of automation and transparency to the manual process-oriented vehicle transportation sector with the launch of the HUB, a centralized communication platform that is geared to increase efficiency for clients.
By automating procedures that typically delay vehicle movement, Ready Logistics explained that the HUB can improve the carrier pickup process, speeds delivery and provides real-time insights.
“The vehicle logistics business hasn’t changed much in decades, using a manual process to get cars from point A to point B,” said Patrick Brennan, senior vice president of logistics at Cox Automotive.
“At Ready Logistics, we’re on a mission to make it faster and easier for clients to move vehicles from anywhere to everywhere — and the HUB is an example of how we’re doing it,” Brennan continued in a news release.
The Ready Logistics HUB’s two main tools are designed to increase efficiency across the transportation process:
—The Vehicle Assessment HUB can allow location agents to provide 24/7 status updates, enabling carriers to experience a seamless pickup process and improve days to deliver. It also can send instant notifications that eliminate the need for phone calls to determine vehicle location.
Additionally, this tool can offer improved reporting and greater visibility into which locations are performing to ensure timely and accurate pickups.
—The My Vehicles HUB can enable clients to access real-time status and the order history of their units in the Ready Logistics transportation system, eliminating the need to contact a representative.
The tool’s dashboard can allow clients to search VINs, export vehicle lists, view stats and average days to deliver, as well as track the performance of origination locations.
“The more we automate the transportation process and deliver valuable insights, the quicker our clients can get vehicles onto the frontlines of their dealerships or into an auction to be sold,” Brennan said.
Insurance Auto Auctions recently launched Active Inventory Management, the company’s latest innovation designed to help buyers and sellers outsource their salvage inventory management process to IAA.
“IAA developed the Active Inventory Management solution to help our insurance customers streamline their salvage management process and generate better economic returns,” IAA chief executive officer and president John Kett said. “IAA is committed to providing the tools, resources and technology needed to deliver an unmatched customer experience. Active Inventory Management is the latest enhancement in this effort, and early adopters have already seen improved results in returns, cycle time and internal expense.”
Using IAA's CSAToday platform, the new solution can regularly monitor vehicles, identify issues and coordinate any resolutions through its dedicated customer service team.
CSAToday is the salvage industry's first mobile vehicle inventory management tool, boasts the company.
Additionally, Active Inventory Management currently offers a turnkey alternative that can boost APD process efficiency, according to IAA.
“As an industry leader in technology and innovation, IAA continues to develop new capabilities like Active Inventory Management that address and anticipate the needs of salvage buyers and sellers,” the company added.
As the temperatures spike outside, Black Book isn’t quite seeing wholesale prices behave in the opposite extreme, which is sometimes the norm as we enter the remaining days of July.
The newest Black Book Market Insights report showed more SUVs dropping in price last week. In fact, editors noticed sub-compact luxury crossovers saw the most depreciation out of all segments, decreasing in value by 1.53 percent.
Meanwhile, the volume-weighted information determined that overall car segment values decreased by 0.34 percent last week, higher than the average weekly decrease of 0.27 percent in values over the previous four weeks.
Editors noted that sub-compact car, mid-size car and luxury car segments declined the most by 0.53 percent, 0.53 percent and 0.48 percent, respectively.
Again volume-weighted, Black Book found that overall truck segment values — including pickups, SUVs and vans softened by 0.30 percent last week, higher than the average weekly decrease of 0.14 percent in values during the previous four weeks.
Editors added full-size pickup was the best performing truck segment while the sub-compact luxury crossover segment declined the most.
“Used vehicle values are holding well considering it is middle of July when we normally start to see a steeper seasonal drop,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics.
Turning next to what Black Book’s representatives in the lanes noticed last week, observers didn’t spot any situations too out of the ordinary with August approaching.
According to a report out of the Northwest, action in Washington produced, “A normal July sale this week. Pickup trucks commanded the most attention and the strongest values.”
In Colorado, a similar situation unfolded. “Everything sold pretty well today but the inventory is down here from a normal July. Overall, it was a typical sale with regard to the number sold.”
Up in Wisconsin, Black Book’s lane watcher said, “It seemed as if there were more average and rough vehicles in the sale today. Despite the condition of the vehicles they sold well overall.”
And the other two reports percolated out of Texas where one observer mentioned, “Values were down on the rental vehicles today especially when the vans hit the sale blocks.”
The other anecdote from the Lone Star State mentioned, “Attendance was down considerably in the lanes, but the Internet buyers were stepping up. They were paying the floor prices or more which made for a good sale.”
Manheim’s presence in one of the BRIC nations became more robust this month with a long-term commitment in Brazil.
Cox Automotive announced that Manheim acquired Pacto São Paulo along with developing commercial partnerships with six other auction companies to invest in the local marketplace.
Manheim highlighted that Pacto São Paulo is located approximately 250 kilometers, or 155 miles, from the São Paulo metro region in the city of Ibaté. The auction began operations as Manheim facility on July 3 with chief executive officer Daniel Nunes Romero heading up the new venture that’s also set to include a heavy investment in technology.
Besides the acquisition of Pacto São Paulo, Manheim is part of a commercial and technological partnership with Pacto North and Northeast as well as Leilomaster. In the coming years, Cox Automotive highlighted that Manheim technology will be implemented into local businesses, meaning they will use the same level of facilities as Manheim’s existing auction centers in Guarulhos and its newest auction in Ibaté.
Manheim will work with six additional auction centers as part of the partnership in order to boost the logistics and support networks in Brazil. Manaus, Belém, Fortaleza, Goiânia, Brasília and Salvador will be opened in August.
Romero explained that making the sales clearer is the main goal of this acquisition.
“Brazil is one of the only countries with a particular regulation in the auction sector, but we are way below the USA and Europe on sales of used cars, with just 8 percent of them made through auction,” Romero said. “This is due to a lack of information provided, and we are set to change that by combining our local expertise with Manheim technology.”
The vehicle inspection process developed by Manheim in Brazil will be introduced to Pacto, bringing new technology to Brazil’s vehicle remarketing sector and expanding the use of 360-degree imagery in the market. This system forms part of a rigorous inspection process with photos, vehicle details, demonstration of damages and extensive information to assist the purchase decision.
Romero has a strong name in the Brazilian auction market, with more than 14 years’ experience at Pacto North and Northeast. He will work alongside Marcelo Valland, chief operating officer and official auctioneer of Manheim, who has more than 20 years of experience in the industry.
The partners will also work together on Leilomaster, an auction company from Goiânia state.
Extensive knowledge of local markets led Manheim to choose the executives who would lead the business expansion in Brazil.
“We looked for a partner who knew the local culture and was ready to transform the whole local market, applying our technologies and services to physical and online auctions, which represent 55 percent of the sales here,” said Nuno Castel-Branco, international business director from Cox Automotive.
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