Retail demand weakened in October while wholesale prices continued to soften.
In his latest Kontos Kommentary report, KAR Auction Services chief economist Tom Kontos asserted that weak retail demand may have been a reflection of uncertainty before the election.
For the first time this year, new vehicle sales on a year-to-date basis fell below last year’s levels.
“That indicates that 2016 may not match the 2015 record in total new vehicle sales of 17.5 million,” Kontos said. “Nevertheless, the declines should be moderate — and it’s from an all-time high.
"Now that election uncertainty is resolved, it will be interesting to see whetehr there is a rebound in retail sales."
According to ADESA Analytical Services’ monthly analysis of Whole Used Vehicle Prices by Vehicle Model Class, wholesale used prices last month averaged $10,499, which was down 2.2 percent compared to September but up 3.0 percent year-over-year.
Average prices for cars were down 1.2 percent year-over-year, while truck prices were up 5.1 percent year-over-year. But even trucks are starting to feel the impact of the softening price environment, Kontos said, with several segments showing monthly declines of greater than 4 percent.
Average wholesale prices for used vehicles remarketed by manufacturers were down 0.9 percent month-over-month but up 8.6 percent year-over-year. Prices for fleet/lease consignors were down 2.6 percent sequentially but up 1.0 percent annually. Dealer consignors registered a 3.0 percent average price decrease versus September but a 1.3 percent increase relative to last October.
According to NADA data, both franchised and independent dealers saw month-over-month decreases in retail used vehicle sales in the 14 percent to 15 percent range. For the year, however, retail used vehicle sales remain up 4.2 percent.
October CPO sales were down 0.7 percent month-over-month and down 3.2 percent year-over-year, according to figures from Autodata — but CPO sales are up 3.0 percent for the year.
Kontos provided a video commentary as well that can be seen at the top of this page or by going here.
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
Sept. 2016 |
August 2016 |
Sept. 2015 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$10,499 |
$10,731 |
$10,192 |
-2.2% |
3.0% |
| |
|
|
|
|
|
| Total Cars |
$8,493 |
$8,663 |
$8,596 |
-2.0% |
-1.2% |
| Compact Car |
$6,395 |
$6,495 |
$6,652 |
-1.5% |
-3.9% |
| Midsize Car |
$7,364 |
$7,518 |
$7,527 |
-2.0% |
-2.2% |
| Full-size Car |
$7,499 |
$7,608 |
$7,865 |
-1.4% |
-4.7% |
| Luxury Car |
$13,410 |
$13,769 |
$13,196 |
-2.6% |
1.6% |
| Sporty Car |
$13,057 |
$13,353 |
$13,021 |
-2.2% |
0.3% |
| |
|
|
|
|
|
| Total Trucks |
$12,423 |
$12,735 |
$11,821 |
-2.5% |
5.1% |
| Minivan |
$8,279 |
$8,383 |
$7,553 |
-1.2% |
9.6% |
| Full-size Van |
$12,683 |
$13,587 |
$12,691 |
-6.7 |
-0.1 |
| Compact SUV/CUV |
$10,465 |
$10,525 |
$10,271 |
-0.6% |
1.9% |
| Midsize SUV/CUV |
$11,115 |
$11,655 |
$10,252 |
-4.6% |
8.4% |
| Full-size SUV/CUV |
$13,704 |
$13,255 |
$12,494 |
3.4% |
9.7% |
| Luxury SUV/CUV |
$18,210 |
$18,591 |
$18,005 |
-2.1% |
1.1% |
| Compact Pickup |
$8,405 |
$8,608 |
$7,940 |
-2.4% |
5.9% |
| Full-size Pickup |
$15,187 |
$15,878 |
$14,775 |
-4.4% |
2.8% |
Source: ADESA Analytical Services.
The National Auto Auction Association has announced the winners of its Pioneer Award and Bernie Hart Memorial Auctioneer of the Year Award.
The awards were revealed at the Auction Insurance Agency Luncheon on Wednesday at the NAAA Convention/National Remarketing Conference during Used Car Week.
The 2016 recipient of the Bernie Hart Memorial Auctioneer of the Year Award is Jack Armstrong, whose experience includes working with a variety of ADESA, Manheim and independent auctions.
Those include ADESA Birmingham, ADESA Shreveport, Manheim New Orleans, Manheim Mississippi, Tupelo Auto Auction, Dealers Auto Auction of the South, Insurance Auto Auction, Louisiana’s First Choice Auto Auction and Oak View Auto Auction. He was a part-time driver for Rea Brothers Mid-South Auto Auction in college.
Meanwhile, the 2016 Pioneer Award goes to Bob Rauschenberg, who is the executive vice president, of sales, marketing and special services at ADESA.
Integrated Auction Solutions has announced a pilot of what it’s touting as the newest, most advanced marketplace in the wholesale industry.
Beyond the functionality of a standard marketplace (bid, proxy, wish list, watch list, sort and find inventory), IAS has added features it says will command the attention of online buyers. The IAS Marketplace will retain proxies that roll into live events at the auction level, provide enhanced search functionality, and will present live simulcast embedded into the marketplace.
Peter Levy, vice president of sales and business development for IAS, shared a Q-and-A featuring customer inquiries regarding this project.
Q: What differentiates your marketplace from pipeline?
A: We have been taking a modern, forward-thinking approach that allows rapid development, maintains stability, and creates a great user experience. We are moving to where the ball is going, not where it currently is.
The IAS Marketplace will speak fluently to AWG simulcast as well as any management system that has connectivity. It will be fully transactional, with live simulcast integration. The IAS Marketplace will be launched as an auction-centric portal, focused on the independent auctions’ core radius of buyers. All of this will have full application connectivity on both IOS and Android platforms.
IAS continues to build the most cutting-edge Auction Management System “V3,” with the foundation of the proven AuctionMaster reputation of more than 20 years. IAS is getting closer and closer to delivering the industry standard — Windows-based, Web-based, fully integrated with third-party management system … V3. We are in the process of creating the major user interface screens for AuctionMaster V3.
The new user interface is coming together with invaluable input from our present and future customers. The development team has already created a dozen dealer module interfaces and is beginning development on the dealer rep module that is so user-friendly that directions are not needed.
Q: Is the system web-based?
A: We have been developing a single platform that allows it to be web-based in a browser on desktops and mobile devices, as well as a stand-alone desktop application. Our auction partnerships have been insightful and a huge benefit in the development of this platform.
Q: Is there an accounting integration?
A: Like our present version V2, our upcoming V3 will not only have a double-entry accounting interface, but will work seamlessly with auction groups having multiple locations. We have found that the market demands a more elegant way to service transactions on a multi-facility level. We intend with V3 to take our core, industry-leading accounting functionality and expand it to multiple locations.
IAS Simulcast (AWG) web interface goes fully responsive in multi-lane bidding. With many of our auctions already running IP cameras in full HD, the use of transmitters will be a thing of the past.
Along with a totally new administration interface, bidding interface, and advanced reporting functionality, IAS has also created the most intuitive and user-friendly simulcast apps — downloadable at both the Apple App Store and the Google Play Store. IAS also offers fully integrated custom auction-centric marketplace apps that interact and feed information to buyers and sellers.
The latest Market Insights report from Black Book shows that while value declines slowed a bit last week, auction no-sales remained high.
“Depreciation rate slows from steeper declines seen at the start of the quarter,” said Black Book’s Anil Goyal. “Smaller cars continue to show larger depreciation as opposed to larger crossover/SUVs.”
Volume weighted, overall car segment values decreased by 0.46 percent last week, which was lower than the rate of 0.70 percent seen in the previous four weeks.
Prestige luxury cars and subcompact cars declined the most, by 0.87 percent and 0.68 percent, respectively. Midsize cars and near-luxury cars showed the best retention, both declining by 0.40 percent.
Volume weighted, overall truck segment values decreased by 0.34 percent, which was lower than the depreciation rate of 0.58 percent seen in the previous four weeks.
Compact vans declined the most at 2.18 percent; other segments with a higher drop in value included full-size vans and small pickups. Subcompact crossover values, on the other hand, showed no change, and full-size crossover/SUV values dropped by a scant 0.07 percent.
The report took a look at retention rate trends for full-size crossover/SUVs, which showed consistency during the last six years. For the 2013 model year, the retention rate of these vehicles in November 2015 was 61 percent. For MY2014, the retention rate for the current month dropped only a little, to 59 percent.
As they do each week, Black book editors and personnel fanned out across the country to get a sense of what is happening at auctions.
Here are some of their observations:
- Good market trend at this location, with SUVs leading in demand. (California)
- Dealer lanes were slow today and the market is slightly down compared to this location last week (Texas)
- Plenty of no-sales here today but a huge selection of cars available. (Tennessee)
- Stable market here with clean, good-history units in demand. (Florida)
- Consignment was about normal today but there was a high percentage of no-sales. (Pennsylvania)
- Low vehicle count today with lots of higher-mileage units. Prices were down on most. (Washington)
KAR Auction Services has acquired Flint Auto Auction, which will now operate as ADESA Flint.
“Fortifying KAR’s presence in the epicenter of the U.S. automotive industry has been a long-term strategic priority,” KAR chief executive officer Jim Hallett said in a news release. “ADESA Flint enhances KAR’s end-to-end remarketing platform in Detroit and positions us to accelerate growth in the very dynamic Midwest marketplace.”
This marks the sixth KAR location in the Detroit area.
“Flint Auto Auction has a successful 63-year history serving customers in Michigan, Ohio, Indiana, Illinois and beyond,” ADESA CEO and president Stéphane St-Hilaire said in a news release. “By integrating ADESA’s technology solutions and complementary online, digital and mobile capabilities, we will empower those buyers and sellers and simplify their auction experience.”
Flint AA is an eight-lane facility located on 60 acres. Lawrence Cubitt will remain general manager.
“ADESA is a leading brand in the industry, and Flint Auto Auction is very pleased to join their international network of auctions,” Bill Williams Jr., president of Flint Auto Auction, said in the release. “Both companies share a culture of innovation and a strong commitment to customer service. Joining the KAR platform will help us meet the demands of our increasingly sophisticated buyers and sellers, many of whom have been with us for generations.”
You will see a “more holistic, enterprise approach” in a few areas at KAR Auction Services.
The company announced Monday morning that it has created new enterprise functions and leadership roles in product development, data analytics and strategy to help drive innovation in the auction business.
“Our industry is rapidly evolving, with emerging new markets and increasing customer demand for better technology, transparency and service,” KAR chief executive officer Jim Hallett said in a news release.
“KAR’s unique end-to-end remarketing platform and integrated technology solutions position us well to lead change in this dynamic environment,” Hallett said. “Taking a more holistic, enterprise approach to these functions will help KAR better serve our customers and accelerate opportunities for growth.”
Developing these enterprise KAR functions and corresponding leadership roles will help the company leverage “the broad expertise, innovation and entrepreneurial talent across the KAR family of companies,” KAR said in the release.
The company said taking a more aligned approach to product development, data analytics and strategy will enable KAR to launch new products, services and capabilities more effectively and quickly.
“We’ve been quietly building the foundation, strengthening the foundation of that end-to-end platform,” KAR chief operating officer Don Gottwald said in a phone interview with Auto Remarketing, referring to the various companies and products that KAR offers the remarketing industry.
“And we’re in a position where that collection of assets truly provides a unique set of solutions for our customers,” he said.
“But our customers are asking and increasingly using multiple touch-points within the organization, so the series of announcements (made Monday) are around how we’re resourcing a new set of leaders, a new set of capabilities that really span the collection of KAR as opposed to one of our business units … what we’re really talking about is how, at the parent company, we’re spanning those to bring a unique set of solutions to both the sellers and the buyers at our automotive marketplaces, auctions, and their online and digital counterparts.”
In a news release, Gottwald added: “At KAR, we have a very simple and singular focus — to help our customers succeed. Our integrated platform streamlines the auction experience and delivers actionable insights that help sellers and buyers make the most informed decisions possible.
“We have hired and promoted a proven team of industry pioneers to further empower our customers and anticipate unmet needs in the market,” he said. “Our goal is to radically expand both the scope and impact of our mobile, digital, and physical and online auction capabilities.”
Below is how that new leadership structure shakes out:
- Senior vice president of product development: Pat Walsh, who has been with KAR for almost 30 years, including senior roles with Insurance Auto Auctions and ADESA. In the interview, Gottwald said that Walsh will “collaborate across our business units, so that the customers get the full benefit of doing business with the KAR group of companies, as opposed to a unique part of the company.”
- Vice president of market development: Chris Adams, who is responsible for finding opportunities to broaden KAR’s technology and capabilities portfolio to new channels, markets and geographies.
An example of that a few years ago, Gottwald said, would have been TradeRev.
Adams’ background includes two decades of experience in the industry, including roles with startups and companies like Pep Boys and Enterprise Rent-A-Car.
- Tom Kontos has been promoted to chief economist for KAR, where previously he was the chief economist for ADESA Analytical Services. Kontos will continue doing the work he has being doing for many years at ADESA and for its customers, Gottwald said, but this work will essentially expand across the entire organization.
- Vice president of data as a service: Terrence Wynne, who will work closely with Kontos and the Data Science Solutions group at KAR. By doing so, his role will be to help “translate data into clear, actionable insights for sellers and buyers,” the company said. His background includes roles in data science application with companies like Audi, NADA Used Car Guide and ALG.
- Vice president of strategy: Joe Bannon, who will focus on aligning and prioritizing KAR investment and business decisions that expand KAR’s footprint and help customers. Bannon has been in the automotive advertising and media industries for more than 30 years, including account management, business development, operations, product, sales and strategy roles.
Lastly, when asked if this new enterprise approach would change things from a marketing or branding perspective on a public-facing basis — i.e., branding as KAR rather than individual entities — Gottwald said: “I would tell you that at this point, we’re still evaluating what makes the most sense there for our customers. We have tremendous equity in these legacy brands, so that’s a question we’re asking ourselves.”
ServNet added another facility to its roster of independent auction locations.
The group’s president Kevin Brown on Friday introduced the group’s newest member: Houston Auto Auction.
Founded in 1964 by James Bowers, the auction continues under the second-generation ownership and operation led by brothers Tim Bowers, James “Chip” Bowers II and Mark Bowers. During the five decades since its founding, the auction has emerged as one of the leaders in its market area selling vehicles, large commercial trucks and heavy equipment for corporations, leasing companies, banks, credit union, municipalities and other government agencies.
“Shaped by the Bowers family, the Houston Auto Auction has made a tremendous impact on the marketplace over the past 52 years, and we are delighted to welcome Houston Auto Auction to ServNet,” Brown said.
“With a long-established focus on customer service and a commitment to excellence, Houston Auto Auction is well-suited to represent the ServNet brand in the Lone Star State,” Brown continued.
Tim Bowers highlighted that his auction’s alliance with ServNet part of a number of exciting changes taking place at Houston Auto Auction with a major facility expansion planned for early 2017. Targeting a start date of February or March, the auction will add 6,000 square feet of office space, another building consisting of 5,000 square feet to house a new mechanical shop and recon center as well as 10 acres for vehicle parking and an expanded transport lot.
“The future of the auction industry is exciting, and we are delighted to join with some of the most successful and respected independent auctions in the country as a member of ServNet,” said Bowers, who is Houston Auto Auction’s president and chief executive officer.
“The knowledge, insight and years of combined business experience that the ServNet auction owner s share is a powerful force in the industry, and I know that our collaboration with them will prove a tremendous benefit to Houston Auto Auction,” Bowers went on to say.
Located on 24 acres in north Houston, Houston Auto Auction’s Tuesday sale begins at 1 p.m. with a selection of heavy equipment, followed by fleet, lease and dealer vehicles at 1:30. More than 500 vehicles run on four auction lanes, with featured consignment from ARI, Element, Fleet/Lease Disposal, Fleet Street Remarketing, Flexco, Leasing Associates, Merchants Fleet, Security First Credit Union and numerous regional financial institutions and municipalities.
The auction also holds a monthly sale for GSA.
On Thursday, ADESA announced the promotion of Kevin Rhoads to general manager of ADESA Kansas City.
“Kevin has been a vital part of the growth at ADESA Kansas City in recent years, bringing a positive focus to building lasting customer relationships,” said Paul Lips, chief operating officer at ADESA. “Our consignors, dealers and staff will benefit from his effective approach to sales and operations.”
Since May 2014, Rhoads has served as dealer sales and services manager at ADESA Kansas City. Under his leadership, ADESA Kansas City was named dealer auction of the year for 2015.
Rhoads brings more than 20 years of management experience, in addition to 15-plus years in the automotive industry.
Prior to joining ADESA, Rhoads served as the sales and marketing specialist at Naked Lime.
Between 2007 and 2013 he held a series of positions related to increasing responsibility in sales management within the auto auction industry.
During his tenure as director of internet sales for a three-store dealership outside Kansas City, he developed an internet sales department from the ground up.
Rhoads' predecessor, Harold Chapman, now leads ADESA Nashville.
Copart has announced the expansion of its location in Indianapolis.
“We are excited to expand in Indianapolis and enhance the member experience by making more inventory even more accessible to Copart members in the area,” said chief executive officer Jay Adair.
Copart also has Indiana facilities in Hammond and Fort Wayne.
Copart’s patented VB3 technology links sellers to more than 750,000 members worldwide through its multichannel online platform. Members can participate in multiple online auctions simultaneously via mobile, tablet and desktop.
As part of its community efforts, Copart offers law enforcement, fire departments and similar government agencies a safe training environment. Copart recently hosted the Indianapolis Fire Department’s three-day training event, for which it donated two vehicles so that department personnel could test the Jaws of Life.
Copart locations are also used by agencies as a controlled environment to train K-9s to track narcotics and explosive devices. Additionally, Copart supports numerous local, regional and national charities. To learn more, visit TeamCopart.com.
Greg Thibault and Todd August met while working at the Alamo Rent A Car location at the Los Angeles International Airport in 1984.
Some 30-plus years later, the pair is front-and-center of the national remarketing organization at Avis Budget Group, a company they each have called home for two decades.
Thibault, who joined Avis Budget in 1997, is the company's vice president of fleet disposal, and August (who joined the previous year) is director of wholesale operations.
And this year, they can each add another title: National Remarketing Executive of the Year.
Auto Remarketing is proud to honor August and Thibault with this award — now in its fourth year and sponsored by ServNet — at the National Remarketing Conference as part of Used Car Week, scheduled for Nov. 14-18 at the Red Rock Casino, Resort and Spa in Las Vegas.
They will be presented the award at 4:30 p.m. (PT) on Nov. 16.
Auto Remarketing caught up with Thibault and August in October to learn more about their backgrounds and what they enjoy about the auction business, and to discuss industry trends and more.
A ‘fun,’ fast-moving business
August has never been a stranger to the industry. A “legacy of the automobile industry,” his father worked at Southern Auto Auction. August went to auctioneering school and eventually joined the auction business, working first with Manheim and then Alamo. He has been with Avis for slightly more than 20 years.
Thibault, meanwhile, was hired as one of Alamo's first employees at its Denver location in 1982, then met August in 1984 at the LAX location. Thibault has been with Avis for more than 19 years.
“Every day is a new day and it's an ever-changing market,” Thibault said when asked what he enjoys most about the business.
There is excitement and challenges each day and, they said, a lot of great people.
“A lot of it is the people,” August said.
In fact, August mentioned that many of the folks he works with now are the sons and daughters of the people he worked with years ago.
“That's kind of fun,” he said.
So, too, is the fast pace of an auction, they say. After all, when deals are being made in less than a minute, it's hard to get bored.
Change & balance
Just as cars change hands as they move down the auction lane, the industry changes paths as it moves through new eras.
When asked about the big changes in the remarketing business that they've seen since they joined the industry, the Avis Budget executives first pointed to the “pendulum” of OEM strategy on rental risk versus program cars.
As Thibault explained, automakers temporarily stopped selling risk vehicles and went to program cars back in the 1990s. That “pendulum” has since swung back, he said.
Additionally, they point out the major changes in technology that have impacted the remarketing industry. Thibault noted that over the past few years online has become a “big piece of the remarketing strategy for us.”
A challenge associated with that is the redistribution, Thibault said, as remarketers have to balance their consignors in the various channels, including online, in-lane, direct-to-dealer and so forth.
In other words, make sure the car is in the right channel or location and at the right time.
And that may include the digital environment.
“In 2016, if you’re not participating in the digital world, you’re going to fall behind,” Thibault said.
In July, Avis Budget Group and TrueCar signed a multi-year partnership agreement in which retail used-vehicle shoppers can access Avis Budget Group’s inventory of high-quality, well-maintained off-rental vehicles through TrueCar.com. When asked if there was potential for additional innovation like this in the rental remarketing space, Thibault said he sees “more of that coming” in the near term.
Another example of digital innovation would be Avis Direct, where dealers have a dedicated website to buy late-model, off-rental vehicles from the company. More than 5,000 have signed up.
But again, in remarketing strategy, it's always a balance.
