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May wholesale volume dips 3%

Compared to the previous four-week period, J.D. Power Valuation Services determined auction sales volume for used vehicles up to 8 years old dropped by 3 percent in May, settling at 366,212 units.

According to the June edition of Used Car and Light Truck Guidelines Industry Update, J.D. Power Valuation Services recapped that the volume figure for the same month last year came in at 360,394 units.

Analysts determined that late-model vehicle volume — units up to 3 years old — ended up flat in May versus the previous month as they put the figure at 210,426 units. Through the first five months of the year, late-model vehicle volume sits at 1,235,897 units. The report puts the increase for this metric at 7 percent, as the year-to-date sum a year ago was 1,158,234.

At the segment level, analysts from J.D. Power Valuation Services — formerly NADA Used Car Guide — noted that late-model compact car volume rose 6 percent month-over-month in May while large pickup and midsize car volume grew by 2 percent and 1 percent, respectively.

Subcompact car volume softened by 3 percent, according to the report, which also mentioned midsize pickup and midsize van volume dropped by 4 percent and 10 percent, respectively.

KAR’s new analysis again shows ‘significant price softening’

KAR Auction Services chief economist Tom Kontos reported overall wholesale prices in May rose nearly 4 percent year-over-year. But a recent addition to Kontos’ analysis in order to give the industry a better understanding “once again shows significant price softening.”

According to ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale used vehicle prices in May averaged $11,138. The May figure ended up flat compared to April but 3.9 percent relative to May of last year.

Kontos explained that the year-over-year rise came mostly from larger vehicles, including full-size cars, midsize and full-size SUVs/CUVs and full-size pickups. He also pointed out that the year-over-year growth in minivan prices is exaggerated by newer models as discussed in January’s Kontos Kommentary.

“Average wholesale prices in May were flat versus April but up on a year-over-year basis, primarily due to the strength of truck prices and a younger mix resulting from off-lease supply growth,” Kontos said.

“As introduced last month, a drill-down into the data clearly reveals price softening when accounting for sale type and vehicle age, model class and mileage,” he continued.

Kontos again took a look at fleet/lease sales of 3-year-old vehicles with 36,000 to 45,000 miles. He found that May prices for midsize SUVs and CUVs softened by $225 or 1.1 percent year-over-year to settle at $20,225.

The drop-off for midsize cars in this analysis was even steeper as May prices softened by $685 or 5.6 percent to fall below $12,000, landing at $11,595.

“We will continue to monitor and report this information as a supplement to the averages traditionally provided here,” Kontos said while also elaborating in an online video available here as well as at the top of this page.

Elsewhere, Kontos mentioned that average wholesale prices for used vehicles remarketed by manufacturers in May rose 3.3 percent month-over-month and up 4.9 percent year-over-year.  Overall May prices for fleet/lease consignors ticked down 0.2 percent sequentially but rose 3.5 percent annually.

Kontos added that average prices for dealer consignors were up 0.2 percent versus April and up 5.9 percent relative to May of last year.

Kontos closed by mentioning data from the National Automobile Dealers Association that indicated May retail used vehicle sales by franchised and independent dealers were down a combined 2.8 percent year-over-year. As also reported by Auto Remarketing, May certified pre-owned sales climbed 7.0 percent year-over-year, according to figures from Autodata.

Source: ADESA Analytical Services.

IAA to open 16th Texas branch

Insurance Auto Auctions has begun constructing IAA Fort Worth North, the company’s upcoming new branch scheduled to open in November.

The new 18,000-square-fot branch will sit on 200 acres north of the Dallas-Fort Worth area, complementing IAA branches in Grand Prairie and Wilmer, IAA said.

IAA Fort Worth North will include office, run and drive and warehouse space.

"The office space will include multiple conference rooms and offices that will be available for IAA's insurance customers to use for training claims adjusters on site," IAA explained in a news release announcing the opening.

Additionally, the new branch will incorporate enhanced sustainability practices, such as using both recycled asphalt and concrete for resurfacing and collecting water for landscaping, according to IAA.

"This expansion will provide the flexibility to respond to the growing inventory needs of current and future customers as well as offer a wider vehicle selection for buyers," IAA chief executive officer and president John Kett said. "The location will also ensure critical reserve capacity for catastrophic events."

IAA Fort Worth North is located at 11863 Harmonson Road. and when it opens for business, weekly auctions will be held on Tuesdays at 9:00 a.m.

Truck prices stay strong as dealers seek clean units

As lane watchers noticed dealers intensify their search for clean or better units, the latest Black Book Market Insights report showed truck segments continuing to out-perform their car counterparts.

Ironically out of all segments — and perhaps a nod to the first official day of summer coming in a few days — editors found that the sporty cars increased their value the most.

“Midsize cars continued to depreciate at a higher rate as used supplies are rising while demand has softened. On the other hand, pickup truck values remained strong,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book

Considering volume-weighted information, editors determined overall car segment values decreased by 0.33 percent last week; similar to the average weekly decrease of 0.37 percent in values spotted during the previous four weeks.

Midsize car, prestige luxury car and sub-compact car segments declined the most by 0.65 percent, 0.65 percent and 0.64 percent, respectively.

Again looking at volume-weighted data, Black Book reported overall truck segment values — including pickup, SUVs and vans — dipped by 0.14 percent last week; better than the average weekly decrease of 0.26 percent in values seen in the previous four weeks.

The sub-compact crossover was the worst performing truck segment, while pickup trucks improved in value last week.

Turning next to Black Book’s representatives at more than 60 auctions nationwide, the common theme revolved around dealers looking for vehicles that needed the least amount of reconditioning and could be front-line ready more quickly.

First, out of Colorado: “Dealers are chasing the clean units at the auction. The crowd size on a particular lane is pretty much reflective of the quality of the vehicles on that lane.”

Down in Florida, too: “Buyers are searching hard for clean cars but are concerned about over-paying when they find them. Most of the buyers and sellers spoke of softening market.”

As well as in Tennessee: “Consignment and attendance were off but the vehicles that sold brought good money. Front-line ready vehicles sold well, but the others were just OK.”

Up in Washington, it appeared those clean units were tough to find, as the lane watcher indicated: “Below normal sale this week with a higher number of high mileage vehicles and no-sales.”

And finally, out of the Midwest, an auction observer in Wisconsin relayed: “The market is still OK here. Two of the larger accounts here were holding their floors, which resulted in a higher than normal amount of no-sales.”

Copart acquires National Powersport Auctions

Having reached 200 locations worldwide and updating its mobile app earlier this year, Copart made another significant move on Monday, announcing that it has acquired Cycle Express, which conducts business primarily as National Powersport Auctions (NPA).

Officials highlighted NPA currently operates facilities in Atlanta, Cincinnati, Dallas, Philadelphia and San Diego. They explained NPA predominantly auctions pre-owned powersports units on behalf of finance companies, dealers and manufacturers.

“We are thrilled that NPA is now part of the Copart family and believe the team’s expertise will enhance our capabilities,” Copart chief executive officer Jay Adair said. “NPA is the leader in the powersports auction industry and shares our ownership mindset, commitment to challenging the norm, and focus on delivering results.”

NPA chief executive officer Cliff Clifford added, “We are very excited about teaming up with Copart.

“Leveraging Copart’s resources and capabilities with NPA’s industry expertise and market leadership will allow us to kick NPA into high gear,” Clifford continued. “We’re looking forward to taking NPA to a whole new level of growth and success.”

KAR leadership set to speak at NIADA

KAR Auction Services announced that four of its leaders from KAR and its ADESA and Automotive Finance Corp. business units will be featured speakers and panelists at the National Independent Auto Dealers Association Convention & Expo this week in Las Vegas.

The vehicle remarketing and technology solutions provider’s speakers include KAR chief economist Tom Kontos, AFC chief operating officer Joe Keadle, ADESA director of dealer consulting services Doug Hadden and AFC vice president of operations Johnny Shroyer.

KAR said Kontos and Keadle plan to discuss the current and anticipated economic strengths, weaknesses, opportunities and threats related to independent dealers on Thursday from 8:30 a.m. to 9:30 a.m. (PDT).

On Tuesday, Hadden will deliver a presentation on higher net profits that examines different ways to navigate through lower margins while achieving higher net profits and Shroyer will join other industry experts on the Floorplanning Tips for the Independent Dealer panel.

Both of those are on Tuesday from 4:15 p.m.to 5:00 p.m. (PDT).

For more information about the convention and this year’s speakers, visit www.niada.com.

Mobile auctions continue to evolve & attract dealers

 As the mobile auction format continues to attract more dealers across the country, companies within the industry are continuing to push the wholesale auction experience and communicate the benefits that many used-car managers praise.

“We’re averaging well over 60 mobile auctions per month around the country right now, and that’s a huge increase from just barely over 20 a year and a half ago,” said Manheim’s Randy Beil. “Our core product is what we call true mobile; that is where we bring either a trailer or a bus fully equipped to handle an auction, simulcast, and an auctioneer.”

Beil, who is vice president of local/mobile at Manheim, said a large part of what he and his team does is to grow Manheim into different markets across the country where the company might not already have a presence.

“What we’re really trying to do is create a model to get into these markets, partner with dealers we already do business with and try to get more of their low-end business,” Beil said. “That’s exactly what we’ve done largely in our growth in the past year and a half.”

He said Manheim has been able to get in many cities through existing partnerships with dealer groups.

The company’s mobile sales are launched by two different platforms it refers to as true mobile and mini mobile. True mobile is its largest and core product.

“You get 100 percent of what you see in the auction but you bring it to the dealership, so we bring the auction to the dealership, and that’s what we call true mobile because that’s exactly the core of our product,” Beil said.

“We bring that auction to the dealership and we largely sell their trade-ins from that store or four or five stores at that auction. Some locations host sales once a week, sometimes we do it every other week, sometimes we do it once a month. It all depends on the volume that dealership has.”

Manheim has been expanding its mini mobile product over the past six months, according to Beil.

What differentiates them from a true mobile is it’s much more of a permanent auction, such as a two, three or four-lane facility.

“This is a basically a full on auction as far as a dealer is concerned, often it’s a one, two, three-lane auction that we get into a market and we open up a small auction and it’s a stand-alone auction for all practical purposes, but internally from our standpoint it’s kind of like a satellite auction because its’s still managed by a parent auction,” he said.

“We rely on the parent auction’s staff to help support the functions of the satellite auction.”

Of all the cars Manheim sells at its mini locations, all of the revenue and all of the expenses flow up to that parent auction.

“We brand them and we market them, we advertise them, it’s a stand-alone auction that looks a like just an others,” Beil said.

Mini mobile auctions bring in about 40 to 50 different sellers to each sale, while true mobile is usually one consigner, according to Beil.

The fundamentals of mobile

Digital technology is a fundamental resource mobile actions depend on, says Ryan Rickey, general manager of XLerate Group’s Your Auction Mobile sales.

“Traditional brick-and-mortar, where dealers go in and can check out cars week-in and week-out, sometimes these mobile auctions have a greater travel time. Rickey said. “We depend on the internet and our marketing tools via the internet so people can check out extensive pictures, pre-sale inspections — things of that nature, just to give them the confidence to bid online and or show up in person.”

Your Auction Mobile’s sales allow dealers managers to remain in their stores and focus on retail as opposed to running the “gauntlet of auctions,” he said.

“In today’s climate, post the recession, secondary lending became more aggressive and dealers started holding on to that c-paper. Having the auction onsite gives you a chance to potentially retail some of those vehicles you'd otherwise be wholesaling weekly,” Rickey said.

Taking it to a higher level

Auctions In Motion (AIM) started in 2006, as a completely mobile sale. It was purchased by what is now known as XLerate in in 2012.

“We literally went to the dealers’ lots and we would set up our pop-up tent along with a couple of trailers that would support the auction,” said George Pero, AIM founder and general manager at Corry Auto Dealers Exchange, an XLerate auction.

“The business gained momentum,” Pero continued. “First it was a bi-weekly sale and then it was a weekly sale and then it gained so much attention and critical mass business that we thought that the next step in progressing the expansion and growth of the business was to get a single free-standing facility where we would run a one-lane auction.”

When asked about any challenges associated with mobile sells, Pero said: “Challenges really aren’t that many or significant; I would say running out of space when you have a lot of consignment.

“For consignment, for a one-lane mobile sale is 150 to 200 units, they become so popular that we run out of space.”

Challenges remain

The challenges associated with mobile sales are similar to those of any auction, according to Jane Morgan, who is president of specialty auction divisions at ADESA and oversees mobile auction offerings and helps in geographic expansions.

“Educating dealers on how mobile sales work, why they should try mobile sales, and how mobile sales can benefit their business may be considered a challenge,” Morgan said.

Space may be a challenge, depending on the size of a dealer’s lot or the type of inventory, like if it is a mobile auction for heavy-duty trucks, for example.

Mobile auctions entails working with the seller to select their inventory in advance so it’s competitive in the marketplace, Morgan explained

She said selecting inventory far enough in advance is important to allow time to best match the right buyer to the right product.

Rickey added that a challenge he recognizes is larger competitors within the industry. “As an auction company, you see groups such as the larger groups in the industry — AutoNations, CarMaxes, they’re figuring out ways to do it themselves,” he said.

“The margins I think, are getting skinnier,” Rickey went on to say. “Profitability has to change, we just need to be aggressive and provide a service above and beyond our competition.”

Manheim Index climbs to new record

So much for the theory that rising wholesale volume would cause used-vehicle prices to soften — or even crash, as some doomsday observers feared.

The Manheim Used Vehicle Value Index climbed to a new record high in May as analysts determined wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) rose 2.6 percent month-over-month. The movement brought the index reading to 127.9, which is a record high and represented a 2.8-percent increase from a year ago.

The previous index high came last September when it was 126.9.

“The May index result challenges concerns that increasing wholesale supplies from near peak off-lease volumes and rising rental volumes would lead to rapidly declining used-car values. Indeed, the opposite appears to be happening,” new Cox Automotive chief economist Jonathan Smoke said in commentary that accompanied the latest index update.

“Higher commercial volumes at auction are providing the used vehicle market with quality and choice that offers a compelling value to consumers,” Smoke continued.

“Dealers responded to the consumer demand for used vehicles by purchasing the most vehicles at Manheim for the month of May since 2008,” he went on to say. “Year-over-year growth in sales outpaced the growth in inventory, which helped result in the record high index value. A slightly younger mix of vehicles also likely contributed to the record index level.”

Looking deeper at the six vehicle segments Manheim tracks for its update, analysts spotted May prices for pickups and vans helped to lead the charge to the new index record as they rose 9.1 percent and 7.3 percent, respectively, on a year-over-year basis.

Only the midsize car category dropped year-over-year, declining by 2.4 percent in May.

Within the off-rental market, Manheim determined the average price for rental risk units sold at auction in May dipped 2 percent year-over-year and 1 percent compared to April.

Analysts also mentioned SUV/CUVs accounted for 29 percent of rental risk sales in May versus 25 percent during the same month last year.  Compact cars’ share fell from 31 percent to 27 percent.

Manheim added that the average mileage for rental risk units in May (at 38,900 miles) settled 9 percent below a year ago.  

Auction roundup: Grand openings for IAA & Clark County AA

Both Insurance Auto Auctions and Clark County Auto Auction celebrated grand openings on Wednesday.

IAA, a business unit of KAR Auction Services, hosted the grand opening of IAA Portland West, its newest branch in Portland, Ore. The development marks IAA’s third facility in the state, with additional branches in Portland and Eugene. The company indicated this new facility expands the overall capacity needed for this marketplace by nearly 15 percent.

“Increasing our presence in this growing market demonstrates IAA's commitment to meet the expanding inventory needs of our buyers and sellers,” Insurance Auto Auctions chief executive officer and president John Kett said. “We continuously evaluate opportunities in strategic locations and add resources and capacity where it best serves our customers.”

As part of IAA's continued commitment to better serving its buyers, the state-of-the-art facility includes large indoor bay space to accommodate the area’s frequent inclement weather. The facility also provides additional acreage and storage space in anticipation of acute inventory increases due to severe weather events.

“We are very pleased to be part of Portland's continued growth,” IAA Portland West branch manager Carrie Preisinger said. “Our branch is looking forward to advancing the city’s economic development and working alongside other businesses to positively impact the community.”

IAA Portland West is located at 10498 N. Vancouver Way in Portland. Weekly auctions will be held every Tuesday at 9 am.

For a list of IAA’s more than 170 locations in North America, visit www.iaai.com/locations.

Meanwhile, Clark County Auto Auction opened its doors on Wednesday, too, highlighting its brand-new, 44-acre facility.

Clark County Auto Auction serves the southern Indiana, southern Ohio and Kentucky markets. Ownership highlighted that this new expansion will allow Clark County Auto Auction the opportunity to continue to offer its customers and partners the best service possible in the best atmosphere possible.

The main building covers more than 40,000 square feet and includes a seven-lane sales arena, administrative offices and 100-seat restaurant. Clark County AA also operates a reconditioning center.

The auction was founded in 1982 by father and son, Charles and Mark Fetter, and is operated today by third generation co-owner Matt Fetter. 

CCAA specializes in the sale of bank and finance company repossessions, lease remarketing, rental car fleets, franchised dealership trades, independent dealership trades, donated vehicles, government vehicles and corporate fleets, with sales held each Wednesday.

For more details, go to www.clarkcountyautoauction.com.

KAR again hosting charity auction during NIADA Convention

Along with announcing the newest addition to its national member benefit program the National Independent Automobile Dealers Association highlighted that for the fifth consecutive year, ADESA, AFC and IAA — all part of KAR Auction Services — will auction off a premier vehicle during the NIADA Convention and Expo to benefit the NIADA Foundation.

This year's vehicle is a red 2016 Nissan Frontier SV crew cab pickup with a 4.0L V6 engine, 5-speed automatic, 26,167 miles on the odometer and gray cloth interior.

The truck will be on display in the Expo Hall during the Convention, which begins Monday at The Mirage in Las Vegas. The Expo opens the next evening.

The auction will be held at 1:30 p.m. next Thursday at the NIADA Dealer Lounge in the center of the Expo Hall.

ADESA will transport the vehicle for free for the winning bidder to any location in the continental U.S.

All proceeds from the auction will benefit the NIADA Foundation, which spearheads the association’s commitment to charitable giving as well as awarding scholarships to deserving college-bound students across the nation and providing training and educational opportunities to automobile dealers and the general public.

Past foundation activities include significant donations to charities such as the Heart of a Warrior Foundation, contributions for disaster relief efforts and endowments for university scholarships.

Over the past four years, the ADESA/AFC/IAA-sponsored auctions at the NIADA Convention have raised a total of $97,200 for the NIADA Foundation. During last year's event, a 2015 Chrysler 300 Limited sold for $27,500.

Net Driven partners with NIADA

In other news, Net Driven has joined NIADA’s national member benefit program to provide association members with a variety of digital marketing solutions, from custom websites and SEO to social media and online reputation management.

Net Driven provides digital marketing services exclusively to the auto industry, working with more than 3,000 automotive businesses across North America to deliver custom, mobile-first website design, Internet marketing and SEO, social media management, call tracking and recording, online review management and more.

Net Driven's digital marketing capabilities are coupled with a 97 percent retention rate and customer support.

“Partnering with NIADA creates an opportunity for us to help its members by providing a results-driven program to achieve online success,” Net Driven general manager Eric Wellner said. “The website is just the beginning. What we offer NIADA members is a true business partner that will invest in their online success and work with them every step of the way. We don’t succeed unless they succeed. It’s that simple.”

Association members can take advantage of an immediate cost savings of up to $1,500 and a monthly savings of $25 on Net Driven's services through NIADA’s BenefitHub or by calling Net Driven directly.

Net Driven will set up a free one-on-one demo for NIADA members and offers an evaluation of their unique business needs to develop a custom solution.

“Net Driven's three-part solution is focused on one thing: results,” NIADA senior vice president of member services Scott Lilja said. “One hundred percent of what they do is focused on our industry, so we know our members are in good hands.

“Having a successful online presence today is about much more than just a website. Net Driven can provide services to help our members be present and get found online, and develop a positive and trustworthy online reputation,” Lilja went on to say.

For more information or to request a free personal demo, call (877) 860-2005 or visit netdriven.lpages.co/niada.

NIADA CPO program gets boost from eBay Motors

Furthermore, NIADA said it has launched an enhancement to its Certified Pre-Owned program, powered by eBay Motors.

The improved NIADA CPO program can enable independent dealerships to effectively manage and merchandise inventory, which can help increase sales, profits and inventory turn.

 For eBay shoppers, the NIADA CPO program will continue to add quality inventory and instill purchasing confidence from reputable independent dealers.

“Through this improved NIADA CPO program, we're continuing to supply auto dealers with the tools and technology that support enhanced inventory management and lead generation," eBay Motors general manager of vehicles Tony Hoang said.

 “We constantly focus on offering buyers the best selection and a convenient, secure experience. Working with NIADA dealers provides buyers additional peace of mind and access to a large selection of certified pre-owned vehicles from trusted independent auto dealers,” Hoang continued.

This strengthened CPO program can give more power to dealers who manage listings on eBay Motors by providing tools that:

—Efficiently export CPO inventory to third-party digital marketing auto portals, including dealers' own websites.

—Process and print standardized buyers guides and window labels.

—Report inventory movement and pricing trends.

The NIADA CPO program’s new merchandising platform can offer value to dealerships and can help drive increased inventory turnover, online lead traffic, market intelligence and cost reductions and efficiencies.

“This new platform builds on the success of previous initiatives of the NIADA Certified program,” Lilja said. "Through this enhanced digital platform, NIADA member CPO program clients will gain increased insights to traffic and inventory leads, which we believe will lead to increased sales.”

For more information, call (877) 310-0288.