Along with its monthly update on the specialty market, the latest Black Book Market Insights report showed both car and truck segments retaining their values better than they have in the past nine months.
Editors determined subcompact cars, compact cars, compact crossover/SUVs and compact vans preformed the best, depreciating just 0.06 percent or less.
“Good sales and optimism from auction buyers reported across the country. Both car segments and light truck segments showed good retention in values with depreciation levels lowest in nine months,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics.
Volume-weighted, Black Book reported on Tuesday that overall car values decreased by 0.35 percent last week. This reading is better than the average depreciation rate of 0.43 percent seen in the previous four weeks.
In car segments, editors noticed the premium sporty car, prestige luxury car, sporty car and near luxury car segments declined the most, dropping by 0.75 percent, 0.59 percent, 0.56 percent and 0.54 percent, respectively.
Against looking at the volume-weighted figures, Black Book said overall truck values decreased by 0.20 percent last week. This level is better than the average depreciation rate of 0.42 percent spotted during the previous four weeks.
In truck segments, editors determined sub-compact crossover, full-size van, full-size crossover/SUV and midsize luxury crossover/SUV segments softened the most, declining by 0.70 percent, 0.55 percent, 0.49 percent and 0.48 percent, respectively.
The latest recap from Black Book’s observers in the lane summarized that a general upbeat vibe is emanating from dealers.
In Ohio, Black Book representative said, “Stable market here with sedans, SUVs and trucks all in demand,” while in neighboring Pennsylvania, the auction watcher added, “Above normal amount of buyers here this week which is very positive for this time of year.”
Further south in Tennessee, a similar refrain appeared as “Above normal amount of consignment and attendance both contributed today to a good amount of sales.”
Out West, Black Book’s personnel in Washington said, “Prices continue to be stable with normal amount of sales and good positive attitudes at this location.” And in Nevada, it was the case where, “Great sale with lots of optimism from buyers and sellers alike. Midsize and compacts cars both sold well today.”
The closest account to a negative observation came from Texas where Black Book’s lane watcher noted, “Nice weather today with normal amount of dealers but still many no-sales.”
Black Book’s specialty report
Editors also offered their assessment of the five segments of the specialty market they track. The rundown is as follows:
— Collectibles: “If the January auctions are any indication, and they usually are, 2017 is going to be a very good year for collectible vehicles,” Black Book said. Editors indicated that Mecum’s Kissimmee, Fla., sale, followed closely by Barrett-Jackson, Russo and Steele, RM Sotheby’s, Bonhams, Gooding, Worldwide, and Silver in the Scottsdale, Ariz., area, were very well attended, both in person and electronically via television and the Internet.
— Recreational Vehicles: “Just when you think the markets have stabilized and settled into long established seasonal patterns, they do something to surprise you,” editors said. Black Book indicated both motorized and towable units shook off their recent losses and posted “impressive” gains for the month.
— Powersports: Black Book acknowledged the powersports market is off to a slow start this year as auction activity and pricing, which usually begin to pick up steam sometime between December and January, have remained relatively flat so far this year.
— Heavy-Duty Trucks: With less than half the volume in January than spotted at auction in December, “it seems for the moment that demand has lined up with supply resulting in very little late model depreciation for month one of 2017,” editors said.
— Medium-Duty Trucks: Black Book reported that medium-duty segments dropped a bit more in January compared to the previous four months. This past month, editors calculated that the 2006 through 2013 models depreciated an average of $278 or 1.50 percent. They added the 2014 and 2015 models dropped an average of $498 or 1.2 percent.
Cox Automotive chief economist Tom Webb tipped his cap, so to speak, with regard to dealers being able to turn used metal after reviewing how wholesale prices behaved during the opening month of the year.
Manheim reported on Tuesday that wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) slipped slightly in January. That movement brought the Manheim Used Vehicle Value Index to 124.8, a decline of 0.3 percent from a year ago.
“The theme that played throughout 2016 continued into the start of 2017 as wholesale pricing remained stable despite sharply rising supplies,” Webb said in his commentary that accompanied the latest index reading. “Give credit to a retail used-vehicle market that enabled dealers to quickly and profitably sell their auction purchases.”
Webb offered more evidence as to why dealers kept deliveries going.
“After rising by 14.5 million over the past six years, total U.S. employment grew by another 227,000 in January,” Webb said.
“Although January wage growth was a disappointment and the number of people employed part time for economic reasons rose, the stability of the labor market, as represented by a low level of involuntary layoffs and a high level of job openings per job seeker, suggests that consumers will be willing to take on more used-vehicle loans and that lenders will be willing to lend,” he went on to say.
More details about price movements
On a year-over-year basis, Webb pointed out that 2017 started the same as all of 2016 with truck prices moving up and car prices softening.
Manheim reported the upward movement of truck and van prices were the most dramatic of the six categories analysts watch. Truck prices climbed 5.2 percent while van prices rose by 4.3 percent.
And as Webb referenced, prices for compacts and midsize cars softened again in January as Manheim pinpointed the drop-offs at 3.9 percent and 2.6 percent, respectively.
The other two vehicle segments including the monthly update changed little last month as Manheim indicated prices for luxury cars ticked 0.8 percent lower and prices for SUVs/CUVs edged just 0.1 percent higher.
“A cursory look at wholesale pricing by price tier and market segment suggests only a modest impact from the delayed flow of tax refunds this year,” Webb said. “That stands in contrast to the many electronic and furniture retailers who reported that late January sales were negatively affected by the reduced monies.”
How off-rental segment performed
Manheim determined that rental risk prices remained off by 4 percent from a year ago.
In January, analysts also found that rental-risk prices (adjusted for broad shifts in mix and mileage) were flat relative to December. Last month, Manheim also noticed small and midsize crossovers accounted for 26.4 percent of all rental risk units sold at auction, up from 21.5 percent a year ago. Meanwhile, small and midsize cars accounted for 45.9 percent of rental risk auction sales this year versus 51.7 percent last year.
Webb mentioned that new-vehicle sales into rental declined by approximately 7 percent in January relative to last year’s “heavily front-loaded purchasing pattern.
“Strong auction volumes in January thus suggest that rental fleet sizes were reduced,” he added.
Reviewing retail sales landscape
Along with that mention of new-vehicle sales into rental fleets, Webb delved deeper into how dealers are moving both new and used vehicles.
“Total used-vehicle sales for January have yet to be released; but channel checks suggest a small single-digit increase year over year,” Webb said, adding that certified pre-owned sales rose a “modest” 0.8 percent as a result of declining CPO car sales by domestic brands “with weak potential margins the likely headwind.”
Webb then noted, “Nevertheless, CPO sales continued to rise faster than new vehicle sales, just as they have done for a little over four years now.”
Based on CarMax results for the segment of its fiscal year from September to November and both AutoNation and Group 1 Automotive results for the fourth quarter, Webb projected that it is likely that the seven publicly traded dealership groups will achieve a gain in same-store used retail unit sales for the 29th time out of the past 30 quarters.
“For some players, gross margins showed signs of stabilizing and turn rates remained good even with a lower wholesaling percentage,” Webb said. “That backdrop suggests a continuing healthy appetite for the growing number of units coming off lease.”
Meanwhile, Webb sees the latest new-vehicle sales performance sending a mixed message.
Webb recapped that new cars and light-duty trucks sold at a seasonally adjusted annual rate (SAAR) of 17.5 million in January. This compares to a pace of 18 million in the fourth quarter and full-year total of 17.5 million for last year.
“After such a strong December, most analysts had expected a larger pullback in January. Incentives, however, continued to play an outsized role; up 15 percent year-over year, according to Autodata,” Webb said. “Somewhat offsetting that were reduced fleet sales and higher transaction prices as a result of both model mix shifts and higher trim levels.
“The coming impact of new-vehicle inventory overhang is also less than clear,” he continued. “The top-line days’ supply numbers were scary, but less so after accounting for seasonal issues, model shifts, temporary factors, and reduced fleet volumes. Still, production cuts seem warranted.”
I want to wish everyone a Happy New Year and continued success in our industry in 2017.
I have made the decision to make this my final year of writing these editorials and again, I thank Bill Zadeits and his team for the opportunity and I hope to light a fire under key issues in our industry over the course of this year.
In this politically charged year, let’s go for the “Bad Deal Jugular”: new cars and trucks flowing from Mexico on rigs and trains going north, with empty rigs and trains going south.
Now, we can play the blame game and say the old administration made another bad deal, but what are we going to say if the new one doesn’t change that dynamic?
Some people are probably saying, “Who cares?”
Well, those are U.S. buyers, not franchised dealer trade consignors and repo companies.
I will be saying that the NAAA PAC (sorry Frank and Jerry) will have failed if we don't get this changed under this new administration, because it’s time to show respect for used as well as new and get our lobbyist to understand the dynamics inherent in our industry.
I truly believe that we have been remiss in not addressing this in prior years to assist our consigning dealers. And if we don’t make it a priority, we devalue the used-vehicle market and are not being the marketing arm we say we are for our customers.
Let's keep in mind what I always tell my staff: WE DO NOT sell cars; we provide the best transactional market place we can for our buyers and sellers, and they make market value buying and selling decisions.
That's what always annoys me when we devalue our selling side revenue streams; that consignors want more and more services at lower and lower costs (including transportation) and competing auctions create low bidding wars, thus underfunding our marketing arms.
In this era of large increases in minimum wage going from recon to operations, can’t anyone see that returns need to have an increase in investments on the consigning side for those returns?
And if I hear the Internet is the low cost solution especially for units older than five years, I am going to challenge the Kool-Aid they must be drinking.
But I digress. If we are going to drive value and enhance the marketing arena we think we are, the NAAA and IARA need to work on an export solution and a revenue solution that looks at the LONG game. Prove your value as associations with some bipartisan politicking for what's best for the industry.
Simple industry consolidation is NOT going to solve our issues.
Wake up industry: What are some of our key potential consignors telling us?
Editor’s Note: Jim DesRochers is vice president at Dealers Auto Auction of the Southwest. As with any contributed content, the opinions expressed in this and other editorial columns are solely that of the author’s and do not necessarily reflect those of Auto Remarketing or its parent company.
Integrated Auction Solutions announced this week that it has launched a simulcast platform with new features that include a redesigned bidding interface called HyperLane.
This month, IAS also plans to launch IAS Marketplace and CoRe. The latter is what the company said in a news release is “IAS’s version of an agnostic fully mobile condition report application with AutoGrade integration.”
Auctions scheduled for this are: Columbus Fair Auto Auction, Dealers Auto Auction of the Southwest, Indianpolis Car Exchange, 166 Auto Auction, Central Auto Auction, startup auction chain Dealer's Auction Exchange, Crosspoint Auto Auction, Retail Automotive Alliance Group, Norwalk Auto Auction and America's Auto Auction Jacksonville.
“The IAS Marketplace will provide independent auctions the ability to give enhanced visibility to consignor’s inventory and accelerate their remarketing efforts,” Peter Levy of IAS said in a news release.
The upgrades were designed to improve the experience of users at IAS auctions, the company said.
There is also a new easy-to-use login procedure that will available at select auctions called IAS Connect. This is designed to let users register and login with their respective AuctionACCESS number or go through a local auctions registration process using a single username and password.
“Our focus is to empower an auction to be able to build their brand, with the best technology, while maximizing their customer's experience” Levy said.
As for the patent-pending HyperLane, users can view and bid on cars in up to 100 lanes at once, the company said.
“The new design allows buyers to view multiple lanes from multiple auctions in one window,” Levy said. “The buyers using this feature is exactly who an auction wants logging into their auction.”
Users can filter the lanes they’re interested in by auction name, event type, consignor, make, model, color and more, the company said.
More information can be found at www.integratedauctionsolutions.com
The International Automotive Remarketers Alliance has launched a new website and opened up its membership renewal and member enrollment period for North America, the organization said in a news release.
Starting today, current IARA members or those interested in becoming members can go to www.iara.biz to renew or apply, respectively.
IARA said in the release that there has been “continued growth” in both its membership and in the summer roundtable conference in the last three years.
“The alliance, which is referred to as ‘The Voice of the Consignor,’ has attracted auctions, service providers and all facets of the automotive remarketing industry to comprise the majority of its membership,” IARA said.
All memberships should be applied for online and are done on a single-company basis. However, parties can purchase additional memberships to identify specific division brands or locations.
IARA utilized a product called MemberLeap — which puts education, membership management and events under the same URL — to do a complete software upgrade, which included the new website.
The second major development involving Auction Broadcasting Co. came to light late on Friday. Xcira announced that it has acquired the intellectual property and certain personnel associated with ABC’s auction management system.
Xcira highlighted this acquisition will allow the company to expand its offering significantly in the auction industry, positioning the firm to offer an end-to-end automotive technology platform.
In connection with the acquisition, executives indicated current licensees of the auction management system will continue on as licensed users with Xcira. In support of its commitment to provide and support technological excellence within the automotive industry, Xcira said it will continue partnering with key automotive auction companies to ensure its technical offerings are developed to meet the evolving and specific needs of the automotive sector.
“As someone who has been around the auto auction industry for more than five decades, I’m confident that Xcira’s next generation platform will not only provide industry-led, state-of-the-art technology, it will also serve to transfer control to the individual auction owners and allow them to leverage Xcira’s technology offerings in a personalized and powerful manner for many years to come,” Auction Broadcasting Co. chief executive officer Mike Hockett said.
“I’m excited to know that our auction management system will become an integral part of this transformational, technological future,” Hockett continued.
Xcira CEO Nancy Rabenold elaborated about what this move means for the company’s future.
“Our plans to integrate this acquired auction management system into our next-generation platform will result in a superior technological offering,” Rabenold said. “We are forever grateful for those clients who have supported us over the years, and we look forward to the privilege of providing end-to-end, state-of-the-art services to both current and new clientele.”
Ritchie Bros. continues to support the development of auction technologies at Xcira, through both investment and auction industry insights.
Commenting on the agreement, Karl Werner, chief operational support and development officer as well as managing director of the Middle East for Ritchie Bros., said, “We are pleased to be working closely with Xcira and their other strategic partners in developing the next generation auction management system, and are committed to helping Xcira expand and enhance its technology offerings for the automotive auction industry.
“This acquisition further bolsters Xcira’s position as the preeminent technology provider for that sector,” Werner went on to say.
The announcement involving Xcira came on the heels as Auto Remarketing learned on Friday afternoon that America’s Auto Auction is growing to 20 locations through the acquisition of ABC’s eight auction facilities.
Auto Remarketing learned on Friday afternoon that America’s Auto Auction is growing to 19 locations through the acquisition of Auction Broadcasting Co.
America’s Auto Auction president and chief executive officer Ben Lange confirmed in a statement to Auto Remarketing that the deal is effective immediately.
“America’s Auto Auction is proud to announce the acquisition of Auction Broadcasting Company (ABC),” Lange said during a brief phone conversation on Friday afternoon.
“This consolidation will allow greater potential for dealers, fleet and lease, and institutional customers,” he continued. “The culture of both companies is built around providing quality service to our customers and employees.
“I am personally looking forward to meeting with customers and employees over the next several weeks,” Lange went on to say.
The National Auto Auction Association had projected that auction volume would reach 9.7 million units last year.
Turns out, it was even better than expected. And this year, volume could be the strongest it has ever been.
NAAA said in an Economic Report compiled by its economist Ira Silver that auction volume reached 9.8 million units in 2016 and should hit 10.1 million units this year.
The latter would be a record high, even though the rate-of-increase is expected to continue tapering.
The year-over-year increase in auction volume for 2015 was 6.5 percent. That fell to 5 percent in 2016 and is likely to dip to 3 percent this year.
“This year, we forecast continued growth in auction unit volume, but at a slower pace than in recent years as declines in dealer consignment will to some extent offset strong gains in commercial consignment,” Silver said in the report.
But, again, the anticipated 2017 volume would still be a record.
And one largely attributable to gains in commercial consignment. It was up 13 percent last year and is expected to grow 9 percent in 2017.
Meanwhile, dealer consignment was down 1 percent in 2016, with 2017 forecasted to show a 2-percent dip.
“The strength in new light-vehicle sales during the 2010 to 2016 period created a large number of off-lease, off-rental, and off-fleet vehicles that have, and will in the future come back to the market in the form of commercial consignment to auctions,” Silver said.
“Dealer consignment growth, which is closely timed with new sales and the related trade-ins declined slightly last year and is expected to drop by a bit more this year,” he said.
In a separate report, J.D. Power Valuation Services found that for vehicles up to 8 years in age, there were 4.57 million auction sales last year. This was an 8-percent year-over-year gain and the most since 2010, according to J.D. Power.
There were 2.71 million auction sales of late-model units (cars up to 3 years in age) which is a 12-percent increase, said the J.D. Power report.
KAR Auction Services chief economist Tom Kontos used a term to describe December wholesale price moves that dealership personnel who have a military background might know from their days of basic training and daily marches.
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, wholesale prices in December averaged $10,642, which was down 0.3 percent compared to November but up 3.9 percent relative to December of 2015.
Analysts determined truck prices — which fell 0.6 percent month-over-month — led the overall monthly decline, which they explained was consistent with rises in gasoline prices during the month that some dealers may have seen as a longer term trend.
“Wholesale prices did a bit of an about-face in December, as truck price softening, perhaps influenced by higher gasoline prices, drove down overall results,” Kontos said as a part of his monthly Kontos Kommentary, which also can be seen online here as well as the video window at the top of the page.
“New-vehicle incentive activity also remained high, which, along with higher fleet sales, helped the year close out with a new record in sales but put downward pressure on wholesale values,” he continued. “Fortunately, certified pre-owned used-vehicle sales also hit a new record, helping absorb growing used-vehicle supply and limiting the negative impact to wholesale prices.
“Particularly hard-hit were prices for full-size and luxury SUV/CUV models, as well as full-size vans,” Kontos went on to say. “Passenger car segments, on the other hand, registered price gains during the month, with only luxury and sporty cars (which tend to be less fuel-efficient) showing declines.
ADESA indicated average wholesale prices for used vehicles remarketed by manufacturers were down 4.2 percent month-over-month and down 0.4 percent year-over-year.
The company also noticed prices for fleet/lease consignors dropped by 1.5 percent sequentially but ticked up 1.0 percent on a year-over-year basis.
Analysts added that average prices in December for dealer consignors were flat versus November but 1.1 percent higher relative to December of 2015.
As previously reported by Auto Remarketing, Kontos also mentioned that December CPO sales were at record levels and were up 14.7 percent month-over-month and 2.4 percent year-over-year, according to figures from Autodata. For the year, CPO sales increased 3.5 percent, setting a new record at 2.64 million units.
Kontos closed with two other metrics.
Average new vehicle incentives were again above $3,000 and were nearly $1,000 higher than year-ago levels based on Edmunds data.
Fleet sales were up by 122,364 units and totaled almost 2.8 million in 2016, according to Bobit Business Media data. This helped total new-vehicle sales top the 2015 record of 17.5 million, as 2016 sales were up by 56,211, according to the Automotive News Data Center.
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
Dec. 2016 |
Nov. 2016 |
Dec. 2015 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$10,642 |
$10,672 |
$10,244 |
-0.3% |
3.9% |
| |
|
|
|
|
|
| Total Cars |
$8,576 |
$8,472 |
$8,629 |
1.2% |
–0.6% |
| Compact Car |
$6,413 |
$6,314 |
$6,535 |
1.6% |
-1.9% |
| Midsize Car |
$7,773 |
$7,446 |
$7,679 |
4.4% |
1.2% |
| Full-size Car |
$7,971 |
$7,656 |
$7,484 |
4.1% |
6.5% |
| Luxury Car |
$13,049 |
$13,182 |
$13,213 |
-1.0% |
-1.2% |
| Sporty Car |
$12,748 |
$13,064 |
$13,339 |
-2.4% |
-4.4% |
| |
|
|
|
|
|
| Total Trucks |
$12,645 |
$12,726 |
$11,942 |
-0.6% |
5.9% |
| Minivan |
$8,897 |
$8,623 |
$8,448 |
3.2% |
5.3% |
| Full-size Van |
$11,317 |
$12,320 |
$11,513 |
-8.1% |
-1.7% |
| Compact SUV/CUV |
$10,481 |
$10,439 |
$10,264 |
0.4% |
2.1% |
| Midsize SUV/CUV |
$11,336 |
$11,473 |
$10,284 |
-1.2% |
10.2% |
| Full-size SUV/CUV |
$14,379 |
$14,607 |
$12,603 |
-1.6% |
14.1% |
| Luxury SUV/CUV |
$18,141 |
$18,554 |
$17,925 |
-2.2% |
1.2% |
| Compact Pickup |
$8,757 |
$8,755 |
$8,229 |
0.0% |
6.4% |
| Full-size Pickup |
$15,624 |
$15,548 |
$14,825 |
0.5% |
5.4% |
Source: ADESA Analytical Services. November revised
It’s an unseasonably warm winter morning at the coast of North Carolina, and a vehicle resembling something between a food truck and an RV has set up shop in a parking lot with a satellite dish fixed to the roof.
But this is no tailgate party.
It’s actually a Manheim mobile auction at D&E Mitsubishi in Wilmington.
Dealers gather in and around a set of blue tents across from the truck, a makeshift lane separating them from the large vehicle.
Panel windows open, an auctioneer chants from the truck as cars pass through the lane and dealers bid on the cars. The satellite broadcasts the sale in real time for Internet buyers.
“All the accoutrements you would need to run an auction, we’ve got right here,” Matt Laughridge,director of mobile auction sales and operations at Manheim, said Friday at the sale.
This is one of dozens of Manheim mobile auction locations across the country that the company uses to host 60-plus mobile sales from coast to coast each month.
Manheim said it saw a 20-percent increase in mobile auction sales last year, and said one in five of its buyers are mobile-exclusive. More than 70 consignors sell thorugh its mobile sales, including major dealer groups like Hendrick Automotive Group and Asbury Automotive Group.
These sales are a blend of mobility and digital technology, said Grace Huang, senior vice president of Inventory Services at Manheim.
“And it can be anywhere,” Huang said during an interview at the Used Car Week conferences in November. “And we use our technology, which includes Simulcast.
“So, all of a sudden, from the middle of a baseball field or a winery or wherever we are, we have not just the people on the ground, but everybody across the country looking at this inventory.”
In fact, during a mobile sale Manheim conducted for BMW Financial Services last year in Greenville, S.C., the inventory wasn’t even moved.
The sale was conducted via Simulcast on the scoreboard at Fluor Field, as BMW dealers inside the baseball stadium bid on cars.
At this Wilmington sale, it’s all dealer consignment, most of it local. There are 218 vehicles consigned today. There are 217 dealers attending the sale, 140 of which are doing so online. (The 1:1 vehicle-to-dealer ratio is typical for a mobile sale, Laughridge said).
One of the dealers attending the sale in person is Ron Geris, owner of AutoWorld in Conway, S.C.
Though it’s sunny and warm this particularly Friday, Geris will be at the sale no matter the weather. He said he has been attending this mobile sale each week for the past seven or eight years.
“I’ll wear a snowsuit if I have to,” he said, adding: “The worse the weather, the earlier I get here.”
Conway is about an hour-and-a-half drive from Wilmington, making it a convenient option for Geris.
“If I’m saving time, I’m saving money,” he said.
Though the Manheim Darlington physical auction location, for example, happens to be a similar distance from Conway as this mobile sale in Wilmington, that’s not always the case.
For many dealers, a mobile sale may be closer than a Manheim physical auction, Laughridge said.
The mobile sale provides an option that cuts down on time and transportation costs.
And it can be a space-saver on the auction lot, which could be crucial for both consignors and auctions in coming years as inventory ramps up.
Laughridge said that space will be at a premium, with the number of units coming through auction expected to increase 43 percent industry-wide by 2021.
Mobile gives consignors — dealer or otherwise — the chance to liquidate excess inventory quicker.
During the interview at Used Car Week, Huang said one of the more talked-about topics throughout the event was capacity and volume.
While she said that it’s “much better to be on this side” as opposed to an inventory shortage, the burst in supply presents a challenge not seen in a decade.
“I think there’s a real spirit of partnership in the industry to really work on this together,” she said. “Because we know that we, collectively, don’t have enough capacity if we don’t make some fundamental changes in velocity to keep those cars selling.”
And going mobile is a way to make that happen.
