The auction market hasn’t wasted any time carrying over the auction sales volume momentum from 2016, and late-model vehicles are driving that charge.
According to the latest Guidelines report from J.D. Power Valuation Services, there was a 17-percent gain in auction sales volume of cars up to 8 years old during the first four weeks of the year, as compared to the same time frame in December (which was impacted by the holidays).
What’s more, auction sales volumes (which came in at 350,723 units, to be specific) were up 5 percent year-over-year.
Late-model volumes were particularly strong in January.
Sales volume of vehicles from 1-3 years old were up 24 percent month-over-month and took a 56-percent share of total sales volume for units up to 8 years in age, the report said.
Driven by lease returns, vehicles from the 2014 model year alone had a 23-percent share.
Within the late-model crowd, the largest auction sales volume growth was in the luxury midsize utility segment, which was up 44 percent. It was followed by the midsize car segment (up 31 percent) and luxury midsize cars (up 30 percent). The only late-model segment to see a drop were large utilities, which were down 4 percent.
Cars had a 54-percent share of late-model volume with trucks at 46 percent. Last year, those numbers were 59 percent and 41 percent, respectively, J.D. Power indicated.
Utility vehicle volume (both mainstream and luxury) climbed 26 percent, which was the primary push behind the overall late-model truck gain.
On the pricing front, J.D. Power was predicting a month-over-month gain of a little more than 1 percent in February, which would beat the “abnormal” 0.2-percent decline in February 2016.
This month usually shows a price increase.
You can anticipate a 2-percent sequential price gain in March as prices peak, then move downward in April.
For the full year, J.D. Power predicts the used-vehicle price decline (4.5 percent to 5 percent) will be moderately steeper than last year, when prices fell 4 percent.
Used-car prices began the current year by falling 0.4 percent sequentially, which reflects “historical seasonal trends,” the company said.
KAR Auction Services will put between $20 million and $25 million into upgrading its online sales platforms over the next three years as part of a project known as New Wave, which chief executive Jim Hallett called “our next-generation online solution.”
During opening comments of KAR’s earnings conference call on Wednesday, Hallett said KAR plans to launch the New Wave solution later in the year.
“Our online selling platforms represent one of the most valuable and differentiating assets, with nearly 750,000 vehicles sold upstream in 2016,” Hallett said. “To remain at the very forefront of this segment of the business, we are investing $20-25 million over the next three years to redesign and enhance our market-leading position.
“New Wave leverages the latest advances in online and digital technology to deliver a more simplified user experience and enable seamless use across desktop, mobile and tablet devices,” Hallet. “It will also integrate the advanced analytics, pricing and reporting capabilities generated by KAR’s Data Science Solutions team.”
According to KAR’s annual earnings slides, the ADESA business unit had online-only volume of 743,000 units last year, up from 592,000 units in 2015.
During the Q&A portion of the call, Hallett was asked about the timing of the investment and the degree to which he believes the upgrade will help KAR competitively.
Hallett reiterated the leadership position of KAR's online platform, noting that it generates about $80 million in revenue and is the most profitable of all the company’s offering.
“And I believe that it’s our responsibility to enhance that value proposition, provide more flexibility and more services to our customers. We talk about integration that we can do with our data and analytics, which has become a real major focus of KAR as well as a major focus of our customers. This is what they’re asking for,” Hallett said.
“And I think there’s an opportunity to not only take care of our existing customers and provide a better experience for them, but I also think there’s an opportunity to grow new customers on that platform as we go forward,” he said.
TPC Management Co., an automotive industry consulting and executive recruiting firm now in its 21st year in business, announced on Wednesday the promotion of Jiles Wanna to the position of vice president of client services.
Wanna joined TPC in 2004 and has worked on projects under all three umbrellas of the firm, including TPC Consulting & Recruiting, Auction Academy and ServNet Auctions.
“Since joining our firm 13 years ago, Jiles has become an invaluable member of our team,” TPC vice president and co-founder Pauline Pons said. “He has worked through each and every discipline by which we provide services to our clients, expanding his industry knowledge and excelling in his effectiveness for our customer base.”
In 2012, Wanna completed the course requirements to become a Certified Automotive Remarketer (CAR) in the program initiated by the International Automotive Remarketers Alliance. Previous to his CAR certification, he completed the Vehicle Remarketing Industry Certification through the IARA/ Northwood University program as well as Manheim’s Condition Report Writer Certification, and is currently enrolled in additional college curriculums.
“We are incredibly proud to move Jiles into the executive ranks within our firm, recognition long overdue as his efforts have been extremely well received by both the clients we service and our larger industry partners,” TPC president Pierre Pons said. “There has never been a task too big or too small for him not to throw in 110-percent effort.
“We know he will continue to play a significant role in our firm’s growth and success as he works with our clients to help them expand their business opportunities and industry relationships,” Pierre Pons added.
TPC provides industry consulting to over 50 Independent auto auctions across the country as well as corporate administrative management to ServNet Auctions. TPC also specializes in management recruiting across automotive disciplines and advises parties on industry business divestitures and acquisitions.
“I want to thank Pierre and Pauline for affording me the opportunity to enter the vehicle remarketing industry,” Wanna said. “Every assignment has been a great experience, and I look forward to contributing to the success not only of TPC but to that of the clients we serve.”
TPC Management Co. announced this week that Penny Wanna has been promoted to president of Auction Academy, the continuing education program the company developed to benefit the wholesale industry.
Wanna has been involved with the Auction Academy program since its inception in early 2012 and most recently served as vice president of administration.
“From the beginning Penny has been 100-percent vested in Auction Academy, and she has been instrumental in the growth of the Academy program,” Auction Academy vice president and co-founder Pauline Pons. “The Academy courses we offer today are a direct outcome of her contributions and organization.”
In addition to the Seminar Series, Auction Academy provides a two-year training and development experience for automotive auction professionals, structured like an executive MBA program. With faculty drawn from expert practitioners around the country, Auction Academy’s programs are designed to enhance essential skill sets, promote best practices and yield better auction performance.
“Without a doubt, Penny is the heart and soul of Auction Academy, a fact which can be attested to by all four class groups that have graduated to date as well as all the speakers and sponsors who have supported the program,” Auction Academy chief executive officer and co-founder Pierre Pons said. “Penny believed strongly in the Auction Academy from the early days of its inception, and many sessions have been successful because of her determination and sheer force of will.
“I concur with Pauline that the evolution and success of the Auction Academy can be attributed to Penny’s dedication and perseverance,” Pierre Pons added.
Wanna will also continue with her duties as vice president of administration for both TPC Management and ServNet Auctions.
“From the beginning our goal has been to bring a professional, top-level training experience to the auto auction industry,” Wanna said. “It has been a pleasure to work with the Academy’s first Class Group, made up of the sons and daughters of some of the best independent auto auctions in the country, and subsequently with professionals from all corners of the industry.
“I am honored to be in a position to help the Academy continue its mission,” she went on to say.
With dealers noticing tax-refund money slowly starting to impact their retail business, Black Book’s latest Market Insights report showed truck segments retaining their value much better than car segments compared with previous weeks.
Editors noticed two vehicle segments within the truck segment — subcompact crossovers and compact vans — maintained their values from the previous week.
Looking at volume-weighted data, Black Book determined overall car segment values decreased by 0.46 percent last week, higher than the depreciation rate of 0.35 percent seen in the previous four weeks.
Midsize car, prestige luxury car and premium sporty car segments declined the most by 0.82 percent, 0.58 percent and 0.58 percent, respectively.
Again reviewing volume-weighted information, editors also found that overall truck segment values — including pickup, SUVs and vans — softened by by 0.27 percent last week, lower than the depreciation rate of 0.34 percent seen in the previous four weeks.
Full-size crossover/SUV and full-size pickup segments dropped the most by 0.44 percent and 0.38 percent, respectively.
“The market sentiment in auction lanes remains optimistic. Luxury vehicles are showing higher depreciation than mainstream brands,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics.
That market sentiment also was confirmed by Black Book editors and other auction observers mingling with dealers in the lanes last week.
In North Carolina, personnel reported back to Black Book saying, “Cheaper units selling very well here with tax money slowly coming in.” And in Indiana, the story was, “Rainy day here today but cars were selling well and everyone seems very positive about the market.”
Out West, the recap was similar with the watcher noting, “Dealer optimism remains high. Midsize and compacts sold well today but luxury units were weak.”
Staying in the region, another editor conveyed observations that supported Black Book’s value trends, mentioning, “Prices stable in this market location with trucks leading demand.”
The other two lane observations coming back to Black Book also originated the South as in Tennessee it was, “Good market here with midsize cars in demand but more no-sales than last week.” And from neighboring Kentucky, “Good crowd here today with a very active Internet. Vehicles sold well most all day with more ‘if-sales’ coming along towards the end.”
Throw on a headset, “test-drive” a car.
In the middle of a convention floor space.
The merging worlds of virtual reality and automotive allowed visitors to the eBay Motors booth at the NADA Convention & Expo last month to do exactly that.
(Well, sort of. It's all virtual, of course).
And while it’s far from a fixture yet, the rapidly expanding online automotive retail space could soon call on such ancillary services as virtual reality test-drives and other amenities to offer a more complete buying experience on the Internet.
“I think all big companies around are looking at artificial intelligence; all of them are looking at virtual reality; what do you do to take this to the next level?” Clayton Stanfield of eBay Motors said during an interview here at the convention. “Because everybody’s talked about, ‘how do you complete this purchase online’?”
And for good reason.
An eBay Advertising study released Thursday says that 63 percent of consumers are either likely or extremely likely to buy a vehicle online in the future. Meanwhile, 87 percent of folks in the survey were going online to research before they buy, the same study said.
“Technology continues to evolve the automotive shopping journey,” Josh Wetzel, who is eBay Advertising’s senior director of sales and marketing, said in a news release that accompanied the study.
“Consumers are already executing pre-purchase activities related to online research with increased interest in online automotive experiences,” Wetzel said. “As more consumers continue to embrace automotive ecommerce for vehicles; enhanced experiences and technologies like virtual reality and artificial intelligence will continue to drive a larger shift to online purchasing.”
This is certainly not lost on dealers.
Stanfield said many dealerships are looking to see how they can offer a completely online purchase, something that certainly the case 10 years ago.
“I’d go out and do presentations, and they were like, ‘what are you talking about?’” he said.
These days, you can buy a car from the comfort of your home and have it delivered. Or, go pick it up from a “vehicle vending machine,” like the ones online retailer Carvana offers.
“It just shows what the consumer is ready for,” Stanfield said. “And now it’s going to have to go to the next level.”
That could include things like artificial intelligence, VR or 360-degree vehicle views. eBay, for example, offers a “valet” service that will sell your car for you.
As for VR, 43 percent of respondents in eBay’s Future of Shopping study said they were interested in doing virtual test-drives. (However, just a tenth were interested in using augmented reality during car shopping).
While VR is not part of the services offered on eBay Motors at the moment, Stanfield sees the potential in what in what it could offer online auto retail.
“Most of our buyers see the car for the first time when it’s shipped to their front door,” Stanfield said of eBay Motors. “And we know that there’s still a vast number of people who would say, ‘I would never do that’ … and, so, the virtual reality is going to be that middle ground.”
VR might not “conquer everybody” into online car-buying fans — some folks will still need to physically touch the car before purchasing — but the more complete you can make the online experience, the better, he said.
As for online car-buying, it is still in the “minority,” but as large dealership groups continue to test the waters, the comfort level will go up, he said.
And although VR test-drives are still “a ways away,” Stanfield believes virtual reality will eventually need to be a part of the online car-buying equation.
The implementation, he said, will likely be go from newer cars to older.
“It will take a long time for virtual reality, probably, to hit those private-party cars,” Stanfield said. However, he adds, “to say it’s not going to happen would be silly.”
The International Automotive Remarketers Alliance announced on Tuesday it has updated its new website by integrating association management software designed to improve online membership management.
The software was created to manage alliance membership, improve communication within the organization, streamline online education and enhance other website functionalities, according to the alliance.
“The IARA board commissioned IARA executive director Tony Long and members of the alliance’s Technology Committee to seek an AMS solution, which it found in MemberLeap, a product by Vieth Consulting,” the IARA said in a press release.
The software now helps streamline the processes for IARA’s CAR Certification program, a remarketing certification program. Things like student enrollment, course delivery, automated deadline reminders, and proctored online testing are delivered through MemberLeap. It can also be used to monitor course progress and to print certificates and maintain records.
IARA announced it had launched its new website, IARA.biz, earlier this month.
One significant change IARA made with the website is that it now allows members to access all sections of the site with one sign-in password.
Software review company Capterra ranked MemberLeap as the No. 1 top mid-range association management software, according to the IARA.
On IARA's new website, there is also now a registration link for IARA-Northwood University's remarketing course.
As the upbeat atmosphere in the lanes continued, two trends caught the attention of Black Book editors last week.
The latest Black Book Market Insights report indicated luxury segments are seeing increased depreciation so far in 2017, and compact cars are feeling the run-up to the spring selling season with stronger-than-average retention since the beginning of the year.
“All luxury segment accumulative depreciation rates for the first six weeks of 2017 are larger than that of their respective segment averages,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.
Looking at volume-weighted data, editors determined overall car values decreased by 0.22 percent last week. That’s the best weekly retention rate since May of last year. They added all but two car segments had better week-to-week depreciation rates.
In car segments, Black Book noticed prestige luxury, luxury, near luxury and full-size segments declined the most, dropping by 0.69 percent, 0.42 percent, 0.35 percent and 0.26 percent, respectively.
Again examining volume-weighted information, editors computed that overall truck values decreased by 0.36 percent last week. At this time last year, they said the average depreciation rate was 0.14 percent.
As what as the buzz in the lanes, Black Book’s personnel reported plenty of positive news from dealer, especially out West. In Nevada, the lane watcher said, “Healthy market here with several dealers announcing records retail sales for January.”
In Tennessee, dealers are making final preparations to have the inventory they need when shoppers arrive with funds from the IRS as the observer said, “Good market trend here with buyers stocking up for tax time.”
In neighboring Georgia, a similar refrain played out as Black Book’s auction visitor said, “Dealers were willing to step up and pay today for the ones they really needed.”
Staying in the South, Black Book’s representative in North Carolina offered more insight into what dealers wanted coming down the lanes, saying “Good auction today with most buyers looking for that $10,000 or less price range.”
And finally in Pennsylvania, it was the case where Black Book noticed, “Good weather with normal consignment at this location made pretty much an average sale day.”
Manheim announced general manager changes at five auction locations on Wednesday.
The company promoted Manheim St. Louis’ Jason Blake, Manheim Kansas City’s Victor Ferlaino, Manheim Denver’s Ray Priest, Manheim Milwaukee’s Tom Saldutte and newly hired Manheim Northstar’s Scott Maybee, who joins Manheim following a position as vice president of operations for Nissan Canada Finance.
“These seasoned leaders will foster the continued success of their respective locations and help our clients grow their businesses,” Manheim division vice president-national Mike McKinney said in a news release.
Previously, Blake was an assistant general manager at Manheim St. Louis. Throughout his 21-year tenure he’s served in a variety of roles and worked at six locations.
Ferlaino’s has been responsible for delivering client service in a variety of roles since joining Manheim 18 years ago. For five years he served as general manager at Manheim Cincinnati.
Most recently, Ferlaino was active in piloting Manheim’s Retail Advantage; he helped the St. Louis team identify mobile opportunities which allowed them to gain additional revenues, according to Manheim.
Prior to Denver, Priest was the general manager of Manheim Seattle. He has been with Manheim for 16 years and held a variety of progressive leadership positions.
In 2016, Priest successfully executed a cross-border mobile sale with Canadian vehicles.
Saldutte’s tenure at Manheim spans 29 years.
“He has a track record for developing teams to drive results and building client trust and credibility,” said Manheim.
Before transitioning to general manager, he was the assistant general manager at Manheim Milwaukee.
“This impressive group of leaders brings insights that will make a positive impact as Manheim continues to deliver value through end-to-end remarketing services for our clients,” said Nick Boris, Manheim regional vice president, national central region.
Auction Management Solutions (AMS) announced earlier this month that firm has partnered with KASP Auto Auction in Lexington, Ky., for business development consulting.
KASP owner Jim Williams his aligned with AMS, which was started by industry veterans Tom Stewart and Richard Curtis to provides consulting services for independent auto auctions, service providers and vendors.
“We are very excited to be a part of the AMS group of auctions,” Williams said. “We are celebrating our 35th year in business and have spent a lot of time building a great base of dealer consignment business over the years, as well as some fleet /lease and repossession business including the AVIS RAC account, and feel that it is time now to start to expand into focusing on national consignors.
“We feel that AMS can be a great help to achieve our goals,” Williams continued.
The focus of AMS is to provide strategic business development services with an emphasis on business processes and profitability that aid in the growth and success of client/partner businesses. Adding KASP Auto Auction brings the group to 15 total locations which also includes:
— Columbus Fair Auto Auction
— Greater Quad City Auto Auction
— Rochester Syracuse Auto Auction
— Greater Erie Auto Auction
— DAA Chattanooga
— DAA Murfreesboro
— DAA Memphis
— DAA Huntsville
— DAA Mobile
— Southeastern Auto Auction
— Dealers Auto Auction of Idaho
— 166 Auto Auction
— All Valley Dealers Auction
— Central Auto Auction
“We are very excited to be working with KASP,” Stewart said. “Jim and his sons have built a very strong auction in the Midwest, and consignors are looking for strong independent auctions to partner with.
“One of our goals here at AMS is to focus on providing our customers with the best service we can, while working through a proven sales strategy to help them grow their business,” Stewart continued.
KASP was started back in 1982 and offers a live weekly sale every Wednesday morning across four auction lanes on more than 40 acres of land. The operation currently offer 350 to 400 units weekly.
KASP is a full-service auction with full reconditioning and light mechanical services as well as in-house transportation.
“Tom will be working closely with Kurt Armstrong, our national sales manager, on continuing to build relationship within the industry,” Williams said.
For more details, visit the auction’s website at www.kaspautoauction.com.
