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Update on Manheim’s $17M investment in southern California

On track to complete its five-year, $17 million investment in its four southern California auction locations in 2018, Manheim this week highlighted how dealers and commercial consignors are already benefitting from what the company says is a simpler, faster and easier client experience.

Manheim emphasized that enhancements to its physical and digital properties at Manheim California, Manheim Riverside, Manheim San Diego and Manheim Southern California demonstrate the company’s ongoing commitment to the region.

Collectively, Manheim mentioned in a news release that these operations cover more than 400 acres and register more than 577,000 vehicles annually.

“We take industry leadership seriously, and Manheim’s physical presence in Southern California is unmatched in the industry,” said Chris Brown, general manager at Manheim Riverside. “We now offer more efficiencies and innovative end-to-end solutions to our clients, improving their ability to source and sell inventory faster and better.”

Some of the region’s enhanced services and facilities include:

—Manheim Southern California is in the midst of a three-year project that will streamline the vehicle entry experience for clients and accommodate increased inventory volume. The Fontana-based location has already added charging stations for electric vehicles and Xeriscaping to save water.

Planned investments at this site include a new Manheim Retail Advantage reconditioning facility with 14 lifts, as well as a remodeled building to provide an indoor sale environment for heavy truck, boat, RV and salvage specialty units.

 —Manheim Riverside offers a variety of services for clients, including a Volkswagen Credit (VCI)/Audi Financial Services (AFS) Technical Operations Center with 22 lifts, a Ready Logistics office and a 21,000-square-foot indoor condition report writing facility that can process more than 125,000 vehicles per year.

Enhanced Vehicle Imaging booths have been added to more efficiently process images for wholesale and vehicle remarketing, and Xeriscaping was installed to conserve water.

—Manheim San Diego in Oceanside, Calif., recently renovated the front office and dealer services center in its main building and upgraded equipment in the mechanic and reconditioning shops. In 2013, a ground-mount solar array was installed, which has prevented some 300 tons of carbon emissions to date.

—Manheim California recently installed a new digital hub with supplemental technology to help clients efficiently expedite their business, as well as a new inspection canopy to improve the condition report writing process at the Anaheim-based location.

“Manheim offers lots of options and flexibility to its clients conducting wholesale transactions in Southern California,” said Chad Ruffin, general manager of Manheim Southern California. “Our four Manheim sites, located within 100 miles of each other, are all designed to drive enhanced profitability for our clients.”

Lane watch: Car-demand rebound strengthens

The demand for cars — especially units that could be retailed to potential buyers on the lower end of the credit spectrum — continued to be the topic in both the lanes and among Black Book editors last week.

The latest Black Book Market Insights report shows both car and truck segments retaining their values better than they have in the past six months. Editors highlighted car segments even increased their value as a whole by 0.21 percent as they said, “The lackluster performance of car segments seen in recent weeks was overcome by strong values last week."

Black Book noticed compact car and midsize car segments gained the most by 0.57 percent and 0.45 percent, respectively.

“This year promises to have a seasonal lift which was lacking last year,” editors added as the volume-weighted car market had declined on average by 0.38 percent in the previous four weeks.

On the truck side, looking at volume-weighted data, Black Book determined overall truck segment values (including pickups, SUVs and vans) decreased by 0.12 percent last week, lower than the depreciation rate of 0.40 percent spotted during the previous four weeks.

Editors said the sub-compact crossover segment declined the most by 0.89 percent, while compact van values increased by 0.37 percent.

 “The typical spring market lift was evident last week with most vehicle segments performing well. Increased demand for compact and midsize cars drove values higher," said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.

What Goyal conveyed also was confirmed by Black Book’s representatives stationed at auctions nationwide. A large wholesaler and retail dealer from Kentucky told Black Book, “Full-size trucks have softened while compact vehicles have begun to hold their own.”

And next door in Tennessee, a scenario that’s unfolded multiple times this month surfaced again as Black Book’s lane watcher reported, “Not enough clean, older model vehicles at auction to keep up with the retail demand being driven mostly by tax refunds.”

Further south, the story continued as Black Book’s auction attendee in Georgia added, “The tax/spring market was evident today with vehicles selling often with strong values.”

Meanwhile on the opposite end of the East Coast, winter weather is still playing a role in the wholesale market, at least in Massachusetts.

“Low supply here this week led to strong prices. The negative effect on values that the snow storm would have created was off-set by the low supply,” Black Book’s representative said.

In Pennsylvania, the hammer didn’t exactly pound, especially in certain lanes. “Lots of activity in the dealer consignment lanes but the sales percentages weren’t great.”

Black Book also attended the grand opening of ADESA Chicago — which Auto Remarketing chronicled here. The Black Book observer added, “Great mix of vehicles and prices were strong.”

Finally, out West, Black Book’s watcher in Washington noted, “Prices are stable with a good selection of clean inventory. Sale percentages were up from last week.”

How California is responding to defective airbags

Here’s a statistic that might startle auctions and dealerships in the Golden State and beyond.

Southern California leads the nation in fatalities caused by defective airbags, according to Airbag Recall: Southern California, a group that comprises community organizations, public interest groups, private companies, elected officials, faith communities and other concerned parties unified in the effort to raise consumer awareness about the ongoing airbag inflator recall.

With claims such as that one as a backdrop, Silicon Valley tech startup Recall Masters explained that it is using digital forensics — the process of culling, processing and organizing enormous quantities of unstructured recall data — to identify hundreds of thousands of problem vehicles per month.

Recall Masters claims to have compiled these five achievements:

 * Identified 63 million vehicles in open recall since 2000.

* Gotten hundreds of thousands of recalled vehicles into dealerships for repairs — reducing the danger on America's roads.

* Plugged 46 data sources into its system, making it the most comprehensive recall database in the world.

* Been the first software company to digitize “don’t drive” and “stop sale” recall tracking into its SaaS API and batch processing platforms.

* Generated millions of dollars in revenue without any outside funding.

Airbag Recall: Southern California asserted that at least 11 Americans — including three Californians — have been killed by defective airbag inflators, and approximately 180 Americans have suffered serious injuries, including cuts or lacerations to the face or neck, broken or fractured facial bones, loss of eyesight and broken teeth. The group insisted the risk for serious injury or death is particularly acute in southern California due to high temperatures that exacerbate the defect in the airbag inflator.

A new community mobilization effort organized by Airbag Recall: Southern California is educating communities across the region about the magnitude of the recall and helping affected drivers schedule life-saving, free repairs with local dealerships, where replacements parts are available for higher-risk vehicles.

“In southern California, many of us drive or ride in a car every day, several times a day. If your vehicle contains a defective airbag, this part of your daily life could threaten your life,” said Kenn Phillips, president and chief executive officer of Valley Economic Alliance, an organization whose mission is to elevate the economic vitality and stability of a five-city region including Burbank, Calabasas, Glendale, Los Angeles and San Fernando.

“To confront this issue head-on, the Valley Economic Alliance has partnered with auto body shops throughout the area to check drivers’ vehicles for outstanding recalls and to educate them on how to get their airbags replaced free of charge at a local dealership,” Phillips continued. “Our organization is committed to supporting outreach efforts throughout Southern California and to helping prevent another deadly accident caused by a defective airbag inflator.”

Gil Dyer, board director of the Latin Business Association, mentioned another component of the matter that’s making repairs to these recalled vehicles more complicated.

“It is critical that information about the airbag recall reaches all residents of the greater Los Angeles area, regardless of the neighborhood they live in or the language they speak,” Dyer said. “We must work together with local organizations to educate drivers about the airbag recall and to assure them that their privacy will be protected throughout the airbag repair process.

“Regardless of your immigration status or what type of vehicle you drive, visit AirbagRecall.com today. If your vehicle is impacted by the airbag recall, a dealership will fix it for free — no questions asked,” Dyer went on to say.

BSC names GM for Tallahassee Auto Auction

BSC America has named a general manager for its Tallahassee Auto Auction, appointing Eric Wagner to the position.

Wagner’s 30-plus years in the auction business includes time with both corporate and independent auctions. 

“Eric will lead the operations and sales teams to the next level with excellent service and the latest offerings in technology. Eric will report to Tommy Rogers, a member of BSC America’s Management team,” BSC America president R. Charles Nichols said in a news release.

Wagner’s professional experience includes stints as general manager for Direct Auction Services as well as president of Wagner’s Auto World. From 1986 through 2013, he served as general manager of Manheim Daytona in Daytona Beach, Fla.

In the same release, Wagner said: “I am excited to return to my roots in the independent auction segment. To join BSC America, as they expand their footprint in the Bel Air, Md., region and beyond, gives me great pride to incorporate that same attitude of growth and expansion in the Tallahassee region. Continual investments in technology and the latest ideas are a testament to the success and values that we want to bring to our dealers.”

Michelle Nichols-Neff, vice president of BSC America, said: “We are excited to have Eric join us at Tallahassee Auto Auction. His experience and auction knowledge will serve us well as we continue to expand our footprint and develop the relationships that will add to the growth and success in the Florida market.”

GM Financial names auction of the year winners

General Motors Financial on Monday named the winners of its 2016 Open Sale Auction of the Year as well as its 2016 Closed Sale Auction of the Year.

Claiming the first prestigious award presented annually that’s part of the company’s nationwide Auction of the Year program, ADESA Kansas City, in Kansas City, Mo., was named as GM Financial’s 2016 Open Sale Auction of the Year

“It is always a privilege and an honor to be recognized by our customers, especially one of our long-standing partners like GM Financial,” said Stéphane St-Hilaire, president and chief executive officer of ADESA. “This award is a reflection of the hard work and dedication of the entire team at ADESA Kansas City. We are proud of their accomplishments and congratulate them on this well-deserved honor.”

GM Financial named Manheim Statesville, in Statesville, N.C., as its 2016 Closed Sale Auction of the Year.

“Being recognized by our clients for helping them meet their business goals is one of the highest compliments Manheim can receive,” said Mark Ford, regional vice president in the Southeast for Manheim.

The consignor highlighted that 2016 marks the second year GM Financial has recognized two winners — one for open and one for closed sale performance. Recipients were chosen after reviewing each of the company’s 48 auction partners’ performance in customer service, marketing promotions, pre-sale activities and overall auction success.

“The auctions that we are recognizing with these awards produce outstanding results each and every sale throughout the year. They are committed to creating an excellent customer experience and take significant pride in what they are able to accomplish each and every day,” said Brad Bollman, vice president of GM Financial Remarketing.

Copart reaches 200 locations worldwide

Copart now has 200 physical location to facilitate its online salvage auction endeavors. The latest one came aboard on Thursday, representing the company’s 15th location in California.

Copart opened its newest location in Wilmington, Calif., as now the company operates seven locations in southern California.

“More than three decades ago, Copart opened its first yard in California, so it’s only fitting that the landmark opening of our 200th location is also in California,” Copart chief executive officer Jay Adair said in a news release. “I’m extremely proud of the hard work that has gotten us here, and I look forward to continued success.”

In 2002, Copart expanded to 100 locations in the United States. One year later, it opened its first international location in Canada. Today, Copart has operations in 11 countries across five continents.

“A growing global presence is a win for both our sellers and buyers. For our sellers, it improves cycle time and reduces costs. For our buyers, it increases access to a greater volume and variety of vehicles,” Copart president Vinnie Mitz said.

Through Copart’s multi-channel online platform, sellers are linked to potential buyers, and bidders can view location information, search vehicles, place bids and participate in live online vehicle auctions on their mobile devices, tablets and computers.

In addition to conducting online vehicle auctions, Copart is a proud community partner. Visit TeamCopart.com for a glimpse into the many ways that the company supports local, regional and national charities, law enforcement and first responders.

7 European execs chosen for Remarketing Advisory Board

In an effort to enhance the fourth Fleet Europe Remarketing Forum coming later this year, seven European wholesale market executives have been named to the Remarketing Advisory Board.

Helping to craft the agenda and more for the event that’s set for Dec. 5 in in Estoril, Portugal, will be this group that represents rental and lease companies, an automaker, an auction company and a pan-European trade organization. According to an announcement from Fleet Europe, the board includes:

—Pierre-Olivier Bard, Remarketing Director Europe for the Avis Budget Group.

—Ingo Schlosser, International Remarketing Manager at ALD Automotive.

—Ralf Kostrewa, Head of Sales International at Volkswagen Group Fleet International.

—Morten Holmsten, Global Sales Director at Autorola.

—Roland Gagel, Vice President Field Services at SGS.

—Wolfgang Reinhold, President of the European Car Remarketing Association CARA.

—David Baudeweyns, Sales & Business Development at Nexus Communication, parent company of Fleet Europe.

The announcement indicated the Remarketing Advisory Board has already had its first (virtual) meeting, defining current remarketing trends and exploring possible topics for the next Remarketing Forum in Estoril.

“This structured approach will ensure an even better fit between the content of the conference and the concerns of the industry,” officials said.

“The final agenda of the Remarketing Forum will be fine-tuned via future meetings, meanwhile allowing members of the Advisory Board to reflect and consult the wider industry,” they continued.

ADESA Chicago opens its doors: Part II

Speaking to a crowd gathered for the grand opening of the company’s Chicago auction last week, ADESA president and chief executive officer Stéphane St-Hilaire emphasized the importance of brick-and-mortar auctions to the company.

Building a $40 million facility in the nation’s third-largest metropolitan area is certainly one way to show that.

St-Hilaire also emphasized in that speech, however, that ADESA’s online offering is something in which the company places a great deal of importance, too.

That’s evident in parent company KAR Auction Services announcing that recently that it will put between $20 million and $25 million into upgrading its online sales platforms over the next three years.

This approach of investing in both online and brick-and-mortar was clear at ADESA Chicago, where the “hybrid model” of a physical and Web presence takes center stage as a means to serve the customer.

“It’s a reflection of our approach to the market,” St-Hilaire said in an interview with Auto Remarketing at the grand opening of the auction.

For example, near the auction blocks are digital displays with lights, announcements and other bits of information. The point, says vice president of auction operations Kurt Madvig said, is to make sure that the dealer in the lane — whether he or she is tech-savvy or not — has the same easy access to information to the person bidding online, simply by looking at the screens.

In a news release ahead of the opening, St-Hilaire called ADESA Chicago the company’s “most integrated, customer-centric and technologically advanced physical auction.”

He added in that release: “Everything at ADESA Chicago was designed around our customers to deliver a more efficient, convenient and personalized auction experience. This state-of-the-art facility, paired with our customer-first approach and end-to-end vehicle remarketing services, fills an unmet need for car dealers in the Illinois, Wisconsin and Indiana markets.”

Speaking of those places, ADESA Chicago’s location in Hoffman Estates is a plus, as well, says ADESA chief operating officer Paul Lips. It’s easy access, he said during an interview here.

Located northwest of the city, ADESA Chicago is 23 miles from O’Hare International Airport and is between six interstate systems.

The Chicago area also includes KAR’s Insurance Auto Auctions and Automotive Finance Corp. business units, each of which has a presence here. All told, the parent company has seven locations within 40 miles of the Windy City.

The new auction is one of several moves by ADESA to increase its physical footprint. The company purchased all eight of the Brasher’s auction locations in 2016, expanding ADESA’s presence in the West, Sanford Auto Dealers Exchange in Florida; and Flint Auto Auction in Michigan.

In expanding to the Chicago market, St-Hilaire said it made more sense to build rather than acquire, given the market’s landscape. 

For more on ADESA Chicago's grand opening, see Part I of this story. 

Car prices stay strong as tax season continues

With one auction general manager describing the impact of tax refunds in the lanes, this week’s Black Book Market Insights report indicated the car segment retaining its value better than the truck segment as a whole.

However, editors pointed out that compact vans increased their value by 1.17 percent in the truck department, outperforming all other vehicle segments.

“The various car segments experienced broad market strength, particularly within compact, midsize and full-size models. Increased interest from dealers and higher sale percentages were noted in the auction lanes last week,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics.

Volume-weighted, the report said overall car segment values decreased by only 0.17 percent last week, lower than the depreciation rate of 0.46 percent reported during the previous four weeks.

The prestige luxury car and sub-compact car segments declined the most, sliding by 0.99 percent and 0.58 percent, respectively.

Again considering volume-weighted data, editors found that overall truck segment values including pickup, SUVs and vans decreased by 0.36 percent last week, similar to the depreciation rate of 0.37 percent spotted in the previous four weeks.

As mentioned, compact van values generated an increase of 1.17 percent, while the midsize luxury crossover/SUV segment posted the most decline at 0.77 percent.

Black Book’s representative caught up with an auction general manager in Pennsylvania after last week’s sale and reported this recap back to headquarters: “Great sale today. Tax money has caused percentages and values to be very high. Anything $7,000 or less with decent miles sells. Anything.”

Trucks also were in demand in other parts of the country as Black Book’s lane watcher in Illinois relayed, “Lots of snow on the cars coming through in Chicago today, but the prices were stable and especially good on full-size trucks.”

A similar scene unfolded in Tennessee as the observer reported, “Prices were up from last week with half ton pick-up trucks in demand.”

While not specifically mentioning tax refunds, Black Book’s representative in Ohio shared upbeat assessments, saying, “Activity was really good today on almost every consigned vehicle. Several dealers presented a very positive outlook for the spring market.”

Even further north, the positive vibe continued as the story coming out of Massachusetts was, “Prices exceptionally strong in Boston today. Sold percentages had the remarketers smiling.”

The only remotely negative anecdote passed back to Black Book originated in Texas where the observer said, “Watched a closed sale today and while they sold at a high percentage the values weren’t as strong as normal for a closed-sale environment.” 

More evidence of usual February price moves

More confirmation about the unusual path wholesale prices took in February arrived from the team at KAR Auction Services on Tuesday.

Coming on the heels of what J.D. Power Valuation Services shared, ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class showed wholesale used vehicle prices in February averaged $10,688 — down 2.3 percent compared to January but up 4.8 percent relative to February of last year.

KAR Auction Services chief economist Tom Kontos explained that almost all model classes showed monthly declines. Kontos indicated in his monthly report, Kontos Kommentary, that although the slight increase to compact car prices was “encouraging,” this segment has been especially hard-hit by oversupply in recent years. 

Kontos also noted the year-over-year growth in minivan prices is exaggerated by newer models as discussed last month.

“Further concrete evidence of price softening appeared in February as prices uncharacteristically, and unseasonably, softened rather than firmed versus January,” said Kontos, who elaborated about these trends in the online video available here and at the top of this page.

“Prices fell for virtually all model years and all model classes,” he continued. Prices were still up on a year-over-year basis, but this was again primarily due to the influx of younger off-lease units.”

Elsewhere in ADESA’s data, analysts found that average wholesale prices for used vehicles remarketed by manufacturers dipped 0.1 percent month-over-month and 1.0 percent year-over-year.

They also pointed out that prices for fleet/lease consignors dropped 3.4 percent sequentially but rose 3.6 percent annually.

“Within this segment, however, rental risk units showed month-on-month and year-on-year price declines,” Kontos said.

He went on to mention average prices for dealer consignors decreased by 1.2 percent versus January, but climbed 2.5 percent relative to last February.

Based on National Automobile Dealers Association data, Kontos closed by stating retail used-vehicle sales by franchised and independent dealers were down 3.8 percent month-over-month but jumped 6.5 percent year-over-year. As highlighted in Auto Remarketing, he also mentioned February certified pre-owned sales rose 9.8 percent month-over-month but came in flat year-over-year, according to figures from Autodata Corp.

Source: ADESA Analytical Services.