After a spate of no-sales two weeks ago, lane watchers from Black Book reported more robust conditions at auctions throughout the U.S. last week.
“Sales were better today than last week, with units $12,000 and under selling the best,” said one in Tennessee.
Also in this week’s Market Insights report, a Black Book rep in Pennsylvania reported a “steady market” with domestic trucks selling the best, and one in Illinois said activity and prices were up over the prior week.
An auction spotter in Washington said that “there was more available volume today, but the market has gotten softer here.”
And in Texas, a rep did report “lots of no sales today in the dealer lanes, but the lease lanes performed well.”
Depreciation ramps up
Heading into the fourth quarter, both cars and trucks saw steeper price declines last week compared to the previous four weeks.
Volume-weighted, overall car segment values decreased by 0.80 percent, higher than the depreciation rate of 0.69 percent seen in the previous four weeks.
Truck values, meanwhile, decreased by 0.76 percent, which was higher than the depreciation rate of 0.57 percent seen in the previous four weeks.
Among the former category, midsize cars and sporty cars declined the most, by 1.20 percent and 0.88 percent, respectively.
Among trucks, most crossover SUV segments declined in value, with full-size crossover values dropping the most by 1.12 percent.
“Typical seasonality trend of the higher depreciation in the fourth quarter continues,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book. “Crossover/SUV values, which have been strong all year, are also starting to see steeper declines.”
Past seasonality trends show that vehicle depreciation tends to be highest during the fourth quarter. This year appears consistent with that trend, except that the retention values for 2-year-old vehicles are lower this year than the trends in the previous four years.
Auction Edge has announced significant upgrades to its Edge Simulcast platform — and the newly upgraded platform has a familiar name, with a familiar partner.
Edge Simulcast — powered by Velocicast — is the result of decades of collaboration between Auction Edge and Auction Frontier, the original architects of the Edge Pipeline system.
“I am excited to continue the partnership between Auction Edge and the designers of Velocicast,” said Dan Diedrich, president of Auction Edge. “The teams at Auction Frontier and Auction Edge have a long history of working together. This relationship only solidifies that history, benefitting buyers, sellers and the industry as a whole.”
The existing Edge Simulcast platform is scheduled to be phased out within 12 months, according to Auction Edge. “We have carefully planned the execution of upgrades across the entire 230-plus Auction Edge locations,” said Seth Corrigan, lead pipeline support and installation coordinator. “The new system should roll out very smoothly.”
“After battle hardening the Velocicast system at several of the leading auctions in the West, it made sense to find a partner with the footprint, reputation, and solid support infrastructure of Auction Edge”, said Scott Suchomel, president of Auction Frontier. “The fact that we have been working closely with Auction Edge on other initiatives for the last 10 years makes this a natural fit.”
A number of independent auctions have participated in a limited rollout of Edge Simulcast — Powered by Velocicast. Trent Long, co-owner of Airport AA in Alcoa, Tenn., recently switched to Velocicast from another simulcast vendor.
“The functionality and ease of use of Velocicast has been a welcomed change to our auction. It has significantly improved the user experience for each of our employees that help manage and administer our simulcasts,” he said.
Auction Edge offers a suite of products and services for auction management and an online marketplace representing more than 230 independent auctions.
When it comes to maintaining auction values, the story during the third quarter was pickups, pickups, pickups.
According to the latest Blue Book Market Report from Kelley Blue Book, the segment of 1- to 3-year-old vehicles with the best performing auction value was the full-size pickup, whose prices softened just 0.6 percent. Second was the midsize pickup truck (down 0.9 percent).
On a brand level, RAM was the only one that showed growth in auction value during the quarter, climbing 3.1 percent.
And on the list of 10 best-performing models, pickups claimed the top three spots: GMC Canyon Crew Cab (up 3.2 percent) in first, followed by the GMC Sierra 1500 Extended Cab (up 2.8 percent) and the Chevrolet Silverado 1500 Extended Cab (up 2.8 percent).
So why have pickup truck values been so strong? KBB analyst Sean Foyil pointed to several reasons in comments emailed to Auto Remarketing.
“First and foremost, fuel prices are still relatively low, coupled with the fact that trucks are becoming more efficient (for example: Ford F-150’s EcoBoost motor or GMC/Chevrolet’s 2.8L 4 cylinder turbo diesel),” Foyil said.
“Also, the midsize truck segment is full of all-new and new generation vehicles which are helping to keep values up for the segment. Demand is also definitely a factor,” he said. “We’ve consistently received feedback from our field analysts that demand for trucks in the auction lane has been very strong.”
Manheim Darlington and Manheim Atlanta recently partnered with BMW Group Financial Services to host a “monster” of a mobile sale in Greenville, S.C.
But it wasn’t BMW’s 94 percent conversion rate that made the sale unique — it was the venue: Fluor Field.
Home to Red Sox affiliate the Greenville Drive, Fluor Field features a replica of the famed Green Monster from Boston’s Fenway Park.
With that in the background, several of BMW’s largest dealers had the opportunity to view and bid on top-quality inventory via a closed Simulcast sale conducted on the stadium’s giant video scoreboard.
Dealers were treated to stadium fare and had the option of participating in batting practice on the field before the sale.
With more than 45 sales across 20 states (including two in Canada), Manheim’s mobile auctions offer dealers options for extending their market reach in unique venues with all of the traditional services offered by physical auction locations.
AutoNation not only is strengthening its new used-vehicle retail strategy, but the dealer group also is broadening its footprint in the wholesale space, too.
On Friday, AutoNation announced the next phase of what the company classified as its comprehensive brand extension rollout, which includes what’s being called AutoNation USA — standalone pre-owned vehicle sales and service centers. Those locations also will offer AutoNation branded parts and accessories.
And along with an expansion of AutoNation branded standalone collision centers, the company also is adding more AutoNation Auto Auction locations.
The company insisted this branding effort has been successfully extended to AutoNation Express and AutoNation Customer Financial Service products, and now the company is well positioned to further leverage its retail and wholesale brands.
“We are pleased to announce the next phase of our comprehensive brand extension strategy, which will provide long-term growth opportunities for the company," AutoNation chairman, chief executive officer and president Mike Jackson said in a news release.
“We expect that our investments in this next phase of the company's brand extension rollout, which may exceed $500 million in the aggregate, will continue for the next several years,” Jackson continued.
“We have built an industry-leading brand, and we remain committed to achieving and sustaining operational excellence, while creating a peerless customer experience and enhanced services throughout the automotive retail sector,” he went on to say.
AutoNation broke down plans for the various components of this used-vehicle initiative.
1. One Price
The company highlighted that One Price, an AutoNation brand element, was launched in several markets in the third quarter and is a foundational attribute of AutoNation USA.
AutoNation explained One Price allows the company to leverage centralized capabilities, such as centralized pricing and appraisals, and offers consumers a “transparent and stress-free buying experience.”
AutoNation plans to fully implement One Price in all existing locations by the end of the second quarter of 2017.
2. AutoNation USA
The company reiterated that AutoNation USA stores are standalone pre-owned vehicle sales and service centers. A key driver of AutoNation USA is AutoNation Express, the company's digital platform, which can allow customers to dramatically reduce their transaction time by offering a seamless end-to-end experience.
Through AutoNation Express, a customer can search inventory online, select and reserve a vehicle, value their trade, see payment options and apply for financing.
Beyond the vehicle-buying experience, the company mentioned AutoNation USA sales and service centers will offer express service and scheduled maintenance and repair work.
“AutoNation USA stores will offer a customer-friendly end-to-end digital experience for service, including communications and payment options,” officials said. “The company believes AutoNation USA sales and service centers will improve retention with customers who have vehicles that are out of warranty and traditionally service with independent repair shops.
AutoNation added that the company has identified 25 AutoNation USA potential sites in its existing markets, of which five are expected to open in 2017.
3. AutoNation Auto Auctions
AutoNation owns and operates a successful wholesale auto auction in southern California, which processes more than 25,000 vehicles annually. With an opportunity to leverage its expertise and expand in an attractive growth market, the company plans to open four additional AutoNation branded auto auctions over the next two years, starting in Orlando, Fla., and Houston during the first half of 2017.
Executives noted that these new auctions will be centrally located in select, high-volume markets and will primarily feature AutoNation vehicle inventory.
“The AutoNation Auto Auctions will provide buyers and sellers with a great opportunity to dispose of and acquire highly desirable used vehicles as well as provide an array of other on-site support services,” officials said.
4. AutoNation Precision Parts and AutoNation Auto Gear
The company emphasized AutoNation Precision Parts is a high quality, competitively priced line of maintenance and repair parts.
The new product line will be integrated into the company's reconditioning operations, as well as enable improved customer retention for retail service, wholesale parts and collision repair business units, including AutoNation USA.
AutoNation Precision Parts was launched in the third quarter of this year in the company's existing stores, with the introduction of AutoNation-branded batteries that feature an industry-leading free lifetime replacement guarantee.
AutoNation Auto Gear, the company’s branded automotive accessory line, will offer auto accessories for lifestyle, appearance, protection, and vehicle security. AutoNation Auto Gear was also launched in the third quarter in the company's existing stores and will be available at each AutoNation USA store.
The company will be expanding both AutoNation Precision Parts and AutoNation Auto Gear product lines in phases as their product portfolios are developed.
5. AutoNation Collision Centers
AutoNation currently owns and operates 70 collision and repair centers across the country, and is expanding its collision center footprint to reach more customers and leverage relationships with insurance carriers.
“AutoNation has the largest collision center network among automotive retailers, with expertise and certifications with multiple manufacturers, and is the preferred repair provider for many of the major insurance carriers,” officials said.
New locations are planned for key markets where AutoNation has store density, but does not have an existing collision presence or capacity limitations. The company recently opened a new collision center in Sarasota, Fla., and on Friday announced the acquisition of Westmont Body Werks in Westmont, Ill., a suburb of Chicago.
During the next two years, the company said it plans to open or acquire at least 18 new AutoNation branded collision centers across the country.
After a $40 million investment from parent company KAR Auction Services, ADESA is officially opening its Chicago auction.
The company called ADESA Chicago, which will hold its first sale today, its “most integrated, customer-centric and technologically advanced physical auction location to date.”
In a news release, ADESA chief executive officer and president Stéphane St-Hilaire said: “As one of the largest car markets in the United States, Chicago is a top priority in our strategic growth initiatives. There are nearly 1,100 car dealers within a 100-mile radius of our centrally located Hoffman Estates auction facility. Our goal is to provide our services to the majority — if not all — of those customers.”
Among the amenities at the new auction are mobile iOS applications that allow dealers to pay for cars, request post-sale inspections and get gate passes emailed to their phone.
Also available at ADESA Chicago is technology that can enable streamlined checkout through an iOS app. The app scans the driver’s license, gate pass and vehicle bar code for checkout. Additionally, employees are stationed at mobile printers so dealers can print bid badges from their phones prior to sale.
“More than 200,000 vehicles were sold at auction last year in Illinois. We are committed to expanding our market share and facilitating the exchange of many of these vehicles. We are filling an unmet need in the market with our end-to-end remarketing services and unmatched technology,” St-Hilaire added.
With the Insurance Auto Auctions and Automotive Finance Corp. locations also in the area, KAR Auction Services now has seven locations within 40 miles of Chicago.
The auction is now hiring for 100 jobs, as well.
The facility is 167,000 square feet and is on 65 acres.
Vehicles in recent years have become better equipped and often contain more advanced technology, but while these upgrades might lead to higher MSRPs, they aren’t lifting prices in the auction lanes as late-model pre-owned units.
The reason?
Largely, there are so many of them.
According to the latest Blue Book Market Report from Kelley Blue Book, third-quarter auction prices on 1- to 3-year-old vehicles were down 4.6 percent.
Meanwhile, the average retention on these cars (which KBB measures as auction value as a percent of MSRP) was 56.4 percent in the third quarter. That’s down from 58.8 percent in Q3 of 2015 and 59.4 percent in the same period of 2014.
Driven by lease returns, auction volume was up 11 percent from the third quarter of 2015.
“Despite the average cost of a 1- to 3-year-old vehicle at auction remaining relatively unchanged over the past several years, the average retention value of these vehicles fell by roughly 4 percent in the third quarter,” KBB analyst Sean Foyil said in a news release.
“These vehicles have higher initial costs and may be better-equipped than those in previous years, so this may indicate that buyers at auction are not willing to pay a premium for these vehicles due to the saturation of vehicles available in the market,” he said. “With such a large supply of used vehicles, many of which may contain added packages and technology upgrades, there is not enough incentive to pay more at auction.”
And the off-lease volume is likely to only increase going forward.
In his quarterly conference call earlier this month, Cox Automotive chief economist Tom Webb said the 3.1 million off-lease units expected to come down the lanes this year “is not that big of a deal in the grand scheme of things.”
But next year’s expectation is for off-lease volume to hit 3.6 million units, which “is a much more problematic number,” he said.
“And then an excess of 4 million in 2018, the numbers get real big so you would expect some downward pressure (on wholesale prices),” Webb said.
Staff Writer Nick Zulovich contributed to this report.
Several auction sites throughout the U.S. had a tough week last week, according to Black Book’s weekly Market Insights report.
A Black Book auction spotter in Texas bemoaned sluggish conditions in that market. “Even trucks were slow today, which is uncommon here,” he said.
In Florida, a Black Book rep reported lots of no sales in the rental and lease lanes, with sellers struggling to get the prices they wanted.
Things were much the same in Tennessee, where “a lot of no sales” made for a tough day for dealers.
Elsewhere in that state, a lane watcher observed “a lot of no-sales in the high line lanes today but the overall market trend is still good.”
Things were sunnier in California, where there was “plenty of consignment … with pickups and SUVs leading demand.”
As far as used-vehicle values, car segments depreciated at a slower rate (0.57 percent) last week than the rate of 0.72 percent seen in the previous four weeks (volume-weighted).
Compact cars, sporty cars and subcompact cars declined the most at 1.22 percent, 1.06 percent and 0.86 percent, respectively.
“Small cars continue to experience higher depreciation levels. Sporty cars have shown high declines in the last four weeks, in line with the seasonal trend,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.
Volume-weighted, truck segments declined by 0.36 percent, lower than the depreciation rate of 0.58 percent seen in the previous four weeks.
Compact vans and compact luxury crossovers/SUVs declined the most by 1.65 percent and 1.32 percent, respectively.
The report noted the gas prices have remained stable during the past six months at around $2.30. Prices during the past 12 months, meanwhile, have been lower than during the previous year.
Southeastern Auto Auction and its dealer customers made donations and participated in a 50/50 drawing to benefit those affected by Hurricane Matthew.
The amount raised was matched by the auction and given to the American Red Cross.
Some victims of the hurricane in Haiti will also benefit from this fundraising effort. The winner of the 50/50 drawing, Les Brooks of Coastal Auto, used his winnings to purchase baby formula that will be personally delivered to Haiti by Terri DeLoach — wife of Wayne DeLoach, president of Southeastern Auto Auction — when she travels there with her church this month.
“We ended up being able to offer some support to those affected in the U.S. and abroad,” said Bill McCready, vice president of operations for the auction. “While many of our dealers and employees were affected by the hurricane, most are grateful knowing that it could have been much worse. Our prayers go out to all who have suffered from this event.”
Southeastern Auto Auction holds a dealer-only sale at 10 a.m. on Wednesdays and a public sale at 7 p.m. on Thursdays.
ADESA, a business unit of KAR Auction Services, announced that Harold Chapman will lead ADESA Nashville as general manager, effective immediately.
He had served as general manager of ADESA Kansas City since 2003.
“During his time at ADESA Kansas City, Harold has proven to be a strong leader who motivates his staff to provide the highest levels of service,” said Paul Lips, chief operating officer at ADESA. “We’re pleased to have someone with Harold’s industry knowledge, skill set and successful track record join the team in Nashville.”
Chapman has more than two decades of auto auction experience, including 17 years with ADESA. As general manager of ADESA Kansas City, he oversaw the auction’s move to a newly built facility in 2009.
Under his leadership, the auction was named the General Motors Auction of the Year for both 2011 and 2012, and 2010 Most Improved Auction of the Year from Wells Fargo Auto Finance.
Chapman got his start in the auto auction industry as general sales manager with the Frankenthal Group/Louisville Auto and Cincinnati Auto Auction. He joined ADESA Indianapolis in 2000 in outside sales.
“I’m very proud of everyone at ADESA Kansas City and their many industry recognitions,” said Chapman. “I am excited to now work with the team at ADESA Nashville to further build relationships and enhance their reputation for service excellence in the local market.”
![ADESA Chicago sign[3]](https://www.autoremarketing.com/wp-content/uploads/2016/10/ADESA-Chicago-sign3.jpg)
