When a dealer walks in the front door of the new ADESA Chicago auction, he or she might think it looks a lot like home.
And that is by design.
In designing the front office to the 167,000-square-foot auction in the Chicago suburbs, ADESA visited new-car dealerships throughout its home turf of Indianapolis to get a sense of how those stores were laid out, says Kurt Madvig, the company’s vice president of auction operations.
The goal, he said while showing Auto Remarketing the new digs on Friday, was for the dealer “to feel like he’s coming into his own office.”
Aside from floor plan finance and fleet/lease offices that are tucked away (for legal reasons), the front office has a spread-out feel to it, with a fair bit of open space and no long counters.
Walking through the front office and then through two pairs of double-doors under a horizontal cityscape image of Michigan Avenue, you enter the auction arena.
On the left side of the arena (from the entrance) are doors to the outside that can be opened and closed as necessary. Exhaust fans aim to keep the air fresh even if the doors are shut.
These doors feed into the auction lanes.
At the opposite are gateways to a space that’s still under the roof of the facility, but feeds out to the back of the facility.
From entry-to-exit, the vehicle essentially goes in a backward J route. This is designed to avoid the “wind-tunnel effect,” Madvig said.
No doubt that will come in handy, mere miles from the broad shoulders of the Windy City.
In the lanes themselves, near the blocks are digital displays with lights, announcements and other bits of information. The point, 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.
“It helps transition from the old paper days to digital,” Madvig said.
In addition to the ADESA-teal on the floor, another color you may notice in the arena is yellow.
Pylons in this hue line the lanes and are designed for safety. These steel tubes are filled with concrete, have plastic outer covers and go four feet into the ground, Madvig said.
Should a car go off course, this helps to keep it contained within the lane.
Another unique part of the facilities: the cafeteria and Internet are smack dab in the middle of the arena, allowing the dealer to “feel like this is the only place they need to be” during the sale, Madvig said.
Now, as far as those bright floors, they’re actually an epoxy surface with grit, which is designed to make them anti-slip with all the weather Chicagoland can get, be it rain, snow or ice.
Speaking of weather, the exterior is prepared for weather: besides the area out front, the entire facility utilizes rolled concrete instead of asphalt.
You will also see ADESA Chicago employees with mobile printers, vehicle stickers with bar codes and folks using mobile phone apps to conduct business. All of this with the intention of making the customer’s day quicker and more efficient at the auction.
In other words, using technology to take care of the dealer’s needs within the walls of the arena and reduce the cycle time.
Meaning, they can get back home — and take care of retail business — sooner.
Read more: Part II of our look inside ADESA Chicago.
On Monday, Copart announced the opening of its second location in the state of Utah.
The online vehicle auction company’s newest site is located near Ogden, Utah.
"Gaining a greater foothold in the Mountain States with another Utah location sets the stage for continued growth in the region," Jay Adair, chief executive officer of Copart, said in a news release.
"As we approach our 200th Copart location, each new opening is another testament of our ability to provide our sellers with an unmatched experience."
The new location will host online car auctions every Monday at noon, according to Copart.
The company remarkets vehicles via Internet sales using its VB3 technology.
Through Copart’s multi-channel online platform, sellers are linked to potential buyers.
Buyers can view location information, search for vehicles, place bids and join live online car auctions on a mobile device, or computer.
Currently, Copart said it connects sellers to more than 750,000 members in over 150 countries worldwide.
Only twice since 1997 has the analyst team at J.D. Power Valuation Services seen February wholesale prices move this way.
According to the latest Guidelines report and in a reversal of what typically occurs in February, J.D. Power indicated wholesale prices of used vehicles up to 8 years old fell “substantially” last month, dropping 1.6 percent compared to January.
The report noted the decline was counter to the 1-percent increase expected for the month and marked just the second time in the past 20 years prices fell in February. The other instance came a year ago, and the dip was just a “scant” 0.2 percent.
NADA Used Car Guide’s seasonally adjusted used vehicle price index fell for the eighth straight month, declining 3.8 percent from January to 110.1. Analysts noticed the drop was by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6 percent tumble.
Analysts also mentioned February’s index figure was 8 percent below the year-ago reading of 119.4, representing the index’s lowest level since September 2010.
“February’s outsized drop is likely due to a variety of factors,” analysts said via Guidelines. “Manufacturers dialed up incentive spending 18 percent last month to help reduce new vehicle inventory levels that are at a decade-plus high.
“In addition, late-model auction sales volume (vehicles up to 3 years old) continued to move higher, rising by 6 percent versus the four-week period ending Jan. 30,” they continued. “Finally, federal tax refunds — which historically support demand and thus pricing through a given first quarter — haven’t been distributed quickly compared to past years.”
As referenced by Cox Automotive chief economist Tom Webb as well, the delay stems from new laws requiring the Internal Revenue Service to withhold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until mid-February, with the hold applying to the entire refund and not just the portion associated with the credits.
“The IRS cautioned EITC and ACTC filers that refunds wouldn’t start arriving in bank accounts until the week of Feb. 27,” J.D. Power said. “Checks would take longer to receive, of course.”
Per the IRS, the total number of refunds issued through Feb. 10 was nearly 52 percent lower than over the same period last year while the total amount distributed fell from $94 billion to $29 billion, a drop-off of 69 percent.
The situation was much better by the week of Feb. 24, however, as total refund numbers and amounts were still down by 11 percent and 10.5 percent, respectively.
“The sizable sum of disposable income sidelined in February logically played a role in pinching used vehicle demand over the month,” analysts said.
At the segment level, J.D. Power determined mainstream segment prices were “almost universally” softer than what is typical for February.
Dropping 2.1 percent, analysts said prices for the “ailing” subcompact car segment fell most among non-luxury vehicles, while large utility prices decreased 1.9 percent.
“While subcompact car price weakness is a running trend, it appears softer large utility prices are developing into one as well,” J.D. Power said via Guidelines. “Following several years of relative strength, the large utility segment has turned in subpar performances in five of the past seven months.”
Analysts also pointed out that compact and midsize utility prices were also “weak,” falling an average of 1.6 percent or about 1-percentage point worse than what occurred last year. Compact and midsize cars, two segments whose prices normally firm up most over the first quarter, experienced a 1.5-percent decline on average, according to the report.
As has been the case for numerous months, analysts found that midsize and large pickup prices slipped by roughly 0.5 percent last month, the least in the industry.
J.D. Power went on to mention luxury segment losses were bookended by the luxury large car segment’s 3.1-percent drop and the luxury midsize utility segment’s 0.9 percent decline.
“Overall, luxury segment losses were generally in line with what occurred during the month the past few years,” analysts said.
So what price trends could develop in March? J.D. Power closed its segment on pricing in the latest installment of Guidelines by looking ahead.
“February’s unusually soft showing makes pinpointing where used prices will go over the next few months a bit more challenging. However, given the slower than usual rollout of federal tax refunds, it’s assumed prices will be somewhat stronger in March and April than originally anticipated,” analysts said.
For March, J.D. Power predicted prices of vehicles up to 8 years in age should increase by approximately 2.5 percent and then decline by 1 percent in April. Expectations are roughly 1-percentage point better than last month’s forecast.
“Across segments, mainstream car prices should rise close to the industry average in March with mainstream truck and utility increases slightly less,” analysts added. “Luxury segment prices are expected to rise by an average of 1 percent to 1.5 percent over the month.”
Director of market intelligence Larry Dixon elaborated about these points further in the video available here and at the top of this page.
According to the latest Guidelines report from J.D. Power Valuation Services, auction sales volume of models up to 8 years old rose just 1 percent over the four-week period ending Feb. 27 compared to the previous four-week period. The volume rise included 379,700 units.
Analysts determined volume for the cohort was also essentially unchanged from levels recorded over the same period last year. They added that late-model vehicle volume (units up to 3 years old) increased “substantially” in February, rising 6 percent to nearly 222,000 units.
Volume for this age group was also 5 percent above February 2016 levels.
The report mentioned more significant monthly increases occurred for subcompact and compact cars (up 12 percent) and large cars (up 13 percent). At the opposite end of the spectrum, luxury midsize car sales volume fell 4 percent while luxury midsize utility volume was off by 15 percent versus January.
In share terms, J.D. Power indicated cars represented 55 percent of late-model auction sales volume over the period, up from 54 percent in January.
“It’s worth noting that car share of new-vehicle sales was just 37 percent in February,” analysts said via Guidelines.
J.D. Power closed by noting sales volume of models up to 8 years old was up nearly 5 percent over the first two months of the year versus the same span in 2016, while late-model volume was 10 percent higher.
The National Auto Auction Association shared the announcement about the passing of Ray Clanton, part of the brother tandem that took the lead in running the auction founded by their father and now known as Manheim Darlington. Clanton died on March 15 in Darlington, S.C. He was 89.
Clanton’s Auto Auction began as Dealers Motor Auction in 1943. During the next six decades, the operation grew to be one of the largest in the Southeast, as Manheim Darlington now registers 1,300 vehicles each week for regular sales that happen on Thursdays. Manheim Darlington was one of the honorees highlighted last year among the “Best Auto Auctions to Work For.”
Ray Clanton tried to instill a customer-first approach when he was general manager.
“Clanton’s has grown in multiples since it started in the early 1940s, but it has never grown too big to listen to its customers,” Clanton said in an auction history article published by NAAA in 2013. “Dealers seem to appreciate that because some of them have been coming back to Clanton’s for more than five decades.”
According to the obituary NAAA shared with Auto Remarketing, Ray Clanton became the owner of Clanton’s Auto Auction along with his brother J.C. Clanton Sr. in 1985.
Before getting into the auction business, Ray Clanton was an accomplished athlete. He graduated in 1945 from St. John’s High School and was active in all sports. Receiving a four-year college scholarship, he attended Clemson University and played football as a left guard under legendary coach Frank Howard. After graduation in 1949, Clanton remained at Clemson to serve on the coaching staff and later volunteer coached at St. John’s High School.
As a young man, Clanton served with the Darlington County National Guard in the medical unit. He served as a board member of the Darlington County Board of Education, First National Bank of Darlington, Wachovia Bank of Darlington, and the Darlington Country Club and a member of the Brockington Hunt Club. A faithful and dedicated member of the Presbyterian Church, he served as a Sunday School teacher, superintendent, deacon and on numerous committees.
In lieu of flowers, the family requests that memorials be made to the Darlington Presbyterian Church for the Mozambique Bible Project or the Susan Johnson Memorial Fund at 311 Pearl Street, Darlington, S.C. 29532.
Manheim Pennsylvania is hosting its largest and most extensive Xtreme Spring sales event for specialty consignment on Thursday and Friday. Officials said the sale will feature seven vehicle types across eight sales lanes, including modern muscle, rare classics, Corvettes and motorcycles as well as cars priced $75,000, $100,000 and $200,000.
“If dealers haven’t attended the Manheim Pennsylvania sale, or haven’t been in a while, this is certainly the best week to do it,” said Joey Hughes, vice president and general manager of Manheim Pennsylvania. “With non-stop auction sale action, food, charitable giving, dealer giveaways, rare classics and super cars over two days, there is something for every dealer segment.”
Dealers and commercial clients are offering more than 12,000 vehicles for the Thursday Highline, Thursday Value Sale and the Regular Friday Sale along with a 400-unit GM Financial sale and a multi-day/multi-location 36 Hours of Nissan Infiniti Sale with Manheim New Jersey and Manheim New York.
A new sale addition, the Xtreme 20, will feature a collection of rare classics and vehicles listed at $200,000 and higher. One of the vehicles offered, a 1968-70 Dodge Charger R/T, was driven by the late Paul Walker and Vin Diesel in The Fast and The Furious film series.
Other vehicles featured in the Xtreme 20 sale include a 2016 Lamborghini Aventator SV, a 1978 Pontiac Trans Am Macho Edition 1 of 203, a 1989 Lamborghini Countach and a 2015 Rolls Royce Drophead convertible.
The Xtreme 20 will run during the Xtreme Spring Charity Gala supporting Keystone Warriors, which supports veterans in the state of Pennsylvania. Dealers can attend by making a donation to the Keystone Warriors in the lobby during each sale and at the event.
Of particular dealer interest is the Thursday Xtreme Specialty sale featuring 500 classics and modern muscle cars of all price ranges over four lanes. According to John Crispeno, Manheim Pennsylvania marketing manager, the hidden gem of this entire event will be a rare 1963 Chevrolet Corvette Split Window Coupe. This classic is in pristine condition having sat in a Texas barn for more than 30 years where it was driven just once a year.
Activities during the Xtreme Spring two-day extravaganza include:
—Manheim Pennsylvania’s world famous Highline sale at 9 a.m. ET on Thursday
—36 Hours of Nissan event featuring more than 1500 units on Thursday and Friday
—GM Financial event sale with 400 units at 10 a.m. ET on Thursday
—Value vehicle sale on Thursday at noon ET
—Classic, Specialty and 100 Grander sale on Thursday at 2 p.m. ET
—Xtreme 20, featuring rare classics and 200+ Grander cars on Thursday at 5 p.m. ET
—The world’s largest weekly sale on Friday
Buyers can also participate online via Simulcast
“The Xtreme Spring event satisfies dealer Spring inventory needs with a full spectrum of inventory opportunity,” Hughes said. “Selling dealers and commercial consignors are always asking months in advance when the next Xtreme Spring Event is going to be held.”
This week, KAR Auction Services announced that Sriram “Srisu” Subrahmanyam has joined the company as senior vice president of business transformation. The company noted Subrahmanyam brings more than 20 years of executive operations and consulting experience to the role, including leadership positions across multiple Fortune 1000 companies and industries such as aviation, technology, logistics and education.
Subrahmanyam will report to Don Gottwald, chief operating officer for KAR.
“KAR has accumulated an extensive portfolio of capabilities focused on simplifying automotive remarketing through data analytics, innovative technology and exceptional service,” Gottwald said. “Srisu is widely recognized for his ability to optimize performance, operations and outcomes across complex and diversified global companies.
“His broad expertise will help accelerate KAR’s go-to-market strategy and identify new ways to make our company and customers more effective, efficient and successful,” Gottwald added in a news release.
Prior to joining KAR, Subrahmanyam served as global vice president of engineering for Ingram Micro, a wholesale technology distributor. He previously served as executive vice president and chief operations officer for BrightPoint Americas and in executive leadership positions at Career Education Corporation and United Airlines.
“The wholesale automotive eco-system is undergoing a rapid transformation,” Subrahmanyam said. “KAR’s end-to-end remarketing platform presents a unique opportunity to lead this transformation and deliver innovative new solutions across existing and emerging markets.
“I am excited to help shape KAR’s future and to work with this incredibly accomplished leadership team and company,” he went on to say.
Subrahmanyam holds a doctorate in chemical engineering from Purdue University and a bachelor’s degree in chemical engineering from Birla Institute of Technology and Science in Pilani, India. He is a frequent author and lecturer on topics including organizational optimization, design and culture.
Subrahmanyam also is a member of the board of directors of the Boys & Girls Clubs of Indianapolis and has served on a variety of other prominent industry and community organizations throughout his career.
Used-car managers looking for luxury cars might be finding deals in the lanes, according to the latest Black Book Market Insights Report.
Black Book senior vice president of automotive valuation and analytics Anil Goyal said, “Luxury brand cars have shown higher drops in value on a percentage basis in the recent weeks in comparison to mainstream brand cars.”
The report indicated that volume-weighted, overall car segment values decreased by 0.31 percent last week, lower than the depreciation rate of 0.43 percent seen in the previous four weeks.
As mentioned, editors determined prestige luxury car and near luxury car segments declined the most by 0.94 percent and 0.57 percent, respectively.
Again volume-weighted, Black Book found that overall values in the truck segment (including pickups, SUVs and vans) decreased by 0.43 percent last week, higher than the depreciation rate of 0.36 percent noticed during the previous four weeks.
Editors spotted that the full-size luxury crossover/SUV and small pickup segments declined the most a week ago, softening by 0.80 percent and 0.63 percent, respectively.
Turning next to what Black Book representatives at auctions nationwide observed last week, activity might have been most intense on opposite ends of the country.
In California, the lane watcher relayed, “Lots of action here today with above normal amount of consignment and a normal amount of buyers.”
And in Florida, a similar scenario unfolded where Black Book personnel reported, “Awesome sale today with a very high sold percentage. As usual, sales did start dropping off towards the end.”
Elsewhere, the pace wasn’t quite as intense, as the observer in Georgia said, “Consignment and attendance both below normal here today with sales being moderate.” Next door in Tennessee, the story was “Rainy today but an overall positive market outlook with full size trucks leading in demand.”
Out West, the report coming out of Nevada indicated, “Midsize cars and all trucks sold well today with vans a little slower than last week.”
And finally, the Midwest recap indicated dealers might have a little extra work to do before getting the units front-line ready as the situation in Illinois was, “Consignment today had several that had previous paint work and some visible damage but still sold well overall.”
On Monday, Black Book announced another regular analysis offering covering the wholesale market — the Black Book Used Vehicle Retention Index — saying this product is designed to offer an “unbiased, accurate” view of the strength of today’s used wholesale market values.
Editors explained 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. Black Book’s wholesale average is a benchmark value for used vehicles selling in the wholesale auctions with the vehicle quality in average condition. The index is weighted based on used vehicle registration volume and adjusted for seasonality, vehicle age, mileage, condition, segment mix, and inflation (MSRP).
Aggregated from daily vehicle value updates, and captured throughout hundreds of wholesale physical and online auto auctions across the country, the company went on to note the Black Book Used Vehicle Retention Index is designed to represent data across all regions of the U.S. The index is based on a comprehensive list of vehicles included in the Black Book wholesale database, and includes no bias toward any brand, auction or region, ensuring a more accurate reporting of the used vehicle market.
The Index dates back to January 2005, three years prior to the beginning of the economic recession, where Black Book published a benchmark index value of 100.0 for the market. In March of this year, the index reading came in at 115.9, indicating a 16-percent increase in used vehicle retention strength since 2005.
That being said, editors pointed out the index has fallen steadily since October 2015, when the index registered a score of 127.0. This recent trend illustrates a continued, slow weakening of the used-vehicle market as a result of cresting demand and increased supply in the used market.
As more 2- to 6-year vehicles return to the market in the coming years, Black Book said this index can provide an overall measurement of strength/weakness in wholesale used vehicle value retention. During the recessionary period, the index experienced a sharp drop of about 14 percent from Jan. 2008 to Jan. 2009.
In 2010, the index recovered nicely and gained 10 percent during the year. After the recession, the index continued to rise persistently until 20111 and remained high till 2015. The index lost 6 percent in 2016.
Black Book added the index is expected to continue its slow decline in 2017 as the used-vehicle market loses strength.
When broken down by segments, the index shows some interesting trends, especially comparing two contrasting vehicle segments.
Compact car values have continued to decline sharply during the last two years due to the lack of consumer demand and higher supply for these vehicles.
On the other hand, full-size SUV index values are currently near all-time high.
“Automotive professionals today base critical, profit-dependent decisions on accurate, unbiased data that offers clear insight into the market,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book. “The Black Book Used Vehicle Retention Index represents the industry’s guide into the strength of the market, with no bias.”
To obtain a copy of the latest Black Book Wholesale Value Index, go to this website.
The XLerate Group has purchased Corry Auto Dealers Exchange, the auction group announced Friday.
This marks XLerate’s first foray into Pennsylvania and brings its auction brand count to 10. The group now has auction sales in California, Florida, Michigan, Pennsylvania, South Carolina, Texas and Wisconsin.
“CADE is the latest step in XLerate’s plan to grow our business, footprint and service offerings by acquiring high-quality independent sales with strong operating management,” XLerate chief executive officer Cam Hitchcock said in a news release.
CADE began operating in 1946. Merle Swift bought the auction in 1982 and the Swift family has operated it ever since. The Corry, Pa., auction has a four-lane arena, reconditioning facility and a mechanical shop. It is located on about 30 acres.
Sales are held each Thursday, with the auction working with dealers and consignors from Maryland, New Jersey, New York, Ohio, Pennsylvania and West Virginia.
With this purchase, running the auction will George Pero, who founded the Auctions in Motion company that XLerate purchased in 2012 (when the latter was known as the American Auto Auction Group). Pero relocated to the Erie, Pa.-area a few years ago.
“We are honored that the CADE operating team will join XLerate and that Merle has entrusted XLerate Group with his highly respected sale and auction team,” Pero said in the news release.
“CADE is an award-winning sale with excellent operating management and great, loyal clients,” he said. “I look forward to leading the team through CADE’s strategic growth plan, creating opportunities and leveraging the XLerate family resources to grow the business.”
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