Auction Management Solutions continued to add to its roster of clients as the firm announced it has partnered with Dealers Auto Auction of Idaho, in Nampa, Idaho, for business development consulting.
Adding this location brings the group to 12 total clients, who also include:
—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
—166 Auto Auction
“We have been experiencing a lot of growth over the last 12 months in our dealer consignment business, and working with a firm like AMS will help us continue to grow our national account business as well," Dealers Auto Auction of Idaho owner Russ Smith said.
“We recently added an additional seven acres to our facility, as well as broke ground on a new reconditioning shop,” Smith continued. “We expect the new reconditioning shop to be completed by the end of 2016.
“Tom (Stewart) and Richard (Curtis) will work closely with Britney Smith-Egbert, our fleet lease manager, and Alex Bunn, our assistant fleet lease manager, to identify new business opportunities as well as continuing to solidify existing relationships with our current consignors,” Smith went on to say.
Dealers Auto Auction of Idaho started back in 2001, hosting five auction lanes on over 40 acres of land offering more than 500 units weekly. The facility is located just outside of Boise. Major accounts include Westlake Financial, Lobel Financial, Mike Albert Leasing, Go Financial, ARI, GSA, SRG, LeasePlan, U-Haul, United Auto Credit plus many more.
“We are very excited to be working with Dealers Auto Auction of Idaho,” said Stewart, who along with Curtis formed AMS this summer. “Russ and his team have built a very strong auction in the Northwest.
“Now with less independent auction options for consignors in that part of the country, there is real opportunity for them to become a real powerhouse in that market,” Stewart continued. “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.”
If a shopper brings a truck in on trade, chances are likely — especially this year — that he or she will buy another truck.
According to Edmunds.com, 74 percent of truck trade-ins through three quarters of 2016 have resulted in the customer buying another truck.
Edmunds began tracking trade-in data in 2005 and said this year represents the strongest loyalty rate it has seen for trucks.
And loyalty to other segments isn’t even close. Vans had the second-highest loyalty rate through nine months (52 percent) and compact SUVs (47.3 percent) were third.
Toyota pickup owners — particularly those who own a Tacoma — are the most brand-loyal, with Chevrolet and Ram nipping at their heels.
Edmunds estimates that roughly 70 percent of Toyota pickup trade-ins going toward another truck ended up spurring another Toyota purchase, while 69.5 percent of Chevrolet truck owners bought another Chevy and 68.1 percent of Ram owners stuck with the brand.
Edmunds said about three-quarters of folks trading in Tacomas bought another Tacoma.
“Truck owners are especially passionate about their vehicles, most likely because trucks offer hauling and cargo capabilities that you just cannot find in any other vehicle segment,” Edmunds senior analyst Ivan Drury in a news release.
“Today’s trucks are particularly appealing because manufacturers pack them with more luxury and technology features than ever before,” he said. “These options just weren’t available on trucks in years past. It also doesn’t hurt that today’s low gas prices make truck ownership much more economical than just a few years ago.”
Of course, the actual price of the trucks can be somewhat steep.
On the new-vehicle side, Edmunds puts their average transaction price at $43,277 this year, which is a 46-percent increase from 2006.
Meanwhile, transaction prices for the entire auto industry have only gone up 23 percent.
That hasn't curtailed truck popularity, which Edmunds said is hitting a near-decade high. Year-to-date new-vehicle market share for pickups is at 15.1 percent; the last time it was that high was 2007, when it reached 17 percent.
In the used-vehicle market, pickup prices have been strong this year, though they have softened in recent weeks.
“The truck segments, particularly SUVs and pickups, are beginning to see larger declines after experiencing strong retention so far this year,” Anil Goyal, Black Book's senior vice president of automotive valuation and analytics, said in an analysis from the company.
That said, small pickups had the strongest year-over-year retention of any segment for the month of September (down just 8.9 percent), according to Black Book, while full-size pickups were second (down 12.4 percent).
Month-over-month, small pickups were third (down 1.6 percent) behind subcompact luxury CUVs and subcompact crossovers, while full-size pickups were middle-of-the-pack (down 1.9 percent).
Black Book shared a graph detailing quarterly depreciation in truck segments (i.e. pickups, SUVs, CUVs) for Q3. Full-size pickups (down 3.22 percent) had the strongest retention and small pickups (down 3.83 percent) were second.
A decade-and-a-half ago, some folks were averse to using the Internet in the auction business, Pierre Pons said during an Auction Academy event in September.
But the industry has come around by leaps and bounds. After all, the Internet isn’t going to disappear.
And, frankly, neither is the importance of compliance in the auction business.
“The Internet part of selling vehicles is not going away,” said Pons, who is Auction Academy’s founder and the chief executive officer of ServNet and TPC Management. “Compliance is not going away.”
If anything, it’s only ramping up — and impacting auctions and the wholesale business more than it has previously.
That was one of the big areas of focus here at Auction Academy’s Fleet/Lease Managers Seminar in the Nashville, Tenn., suburbs.
Where auctions are responsible
When someone says the word “compliance,” the first thing that likely comes up for many is the Consumer Financial Protection Bureau (though the world of compliance for auctions is certainly not limited to the CFPB).
While it’s largely been dealers and lenders who have felt the impact of the CFPB, here’s a question that was posed at the seminar: Do auctions have to answer to the bureau?
Bob Sullivan, vice president of operations and best practices at the XLerate Group, said during a presentation that the lender is held responsible to the CFPB, but any party providing a material service to that lender is held accountable.
How so? Through third-party risk assessments.
If a bank gets audited, they will turn to their service providers, which include the auction, he said. And that means auctions should hold any of their third-party providers accountable as well.
In other words, auctions are responsible for themselves and anyone they hire, like subcontractors.
Importance of Training
When it comes to compliance at an auction, mishaps may be more likely to happen at the ground level, so to speak. For instance, it might just be a mistake by a condition report writer or title clerk, Carolina Auto Auction national remarketing manager Joe LeMonds said during his presentation at the seminar.
Or as Sullivan put it, “It’s going to be someone who doesn’t know that’s going to cause a problem.”
Which is why compliance training is so important.
As an auction, when you’re bringing a new employee on board, emphasize compliance, LeMonds said.
But again, compliance isn’t limited to the CFPB. It certainly extends to labor laws, OSHA, personal information, state regulations and so forth.
And one of the major components to compliance is the handling of personal property when it comes to repossessed vehicles, as LeMonds discussed in his talk.
That’s something that Dan Diedrich, president of Auction Edge, would also touch on during his presentation the next day.
If there is personally identifiable information (also referred to as PII) in a repossessed vehicle that ends up at your auction, “You need to guard it very, very carefully,” he said.
It’s important to secure any non-secure areas of the auction.
The United States General Services Administration explains what the Office of Management and Budget consider PII.
It is, GSA said, “information which can be used to distinguish or trace an individual’s identity, such as their name, Social Security number, biometric records, etc., alone or when combined with other personal or identifying information which is linked or linkable to a specific individual, such as date and place of birth, mother’s maiden name, etc.”
Diedrich went over a few best practices to prevent PII violations during his presentation, including being vigilant for any breaches.
“If you don’t know about a breach, that doesn’t give you an excuse,” he said.
To paraphrase Diedrich, you might not have “CSI” agents busting into your auctions with black lights, but it’s paramount to have a policy, take it seriously and have someone dedicated to enforcing it.
There were 3.48 million vehicles (up to 8 years of age) sold at auction in the first three quarters of the year, according to the latest Guidelines report from NADA Used Car Guide.
That’s a 7-percent increase from 2015, and one group that has seen a particularly significant volume spike has been 2013 model-year vehicles.
NADA Used Car Guide said in the report that sales volume for these vehicles has climbed 31.4 percent year-to-date, driven largely by off-lease volume.
Late-model auction sales volume, in general, is up 11 percent, with truck and utility segments dominating the increases.
There have been 2.04 million auction sales of units up to 3 years old.
Late-model growth patterns
Looking at the late-model class in more detail, compact utility and large pickup volumes are each up 33 percent through September, with midsize utility close behind (up 32 percent).
In fact, the top eight segments for late-model volume growth are either trucks or utility vehicles.
Luxury compact utility auction sales volume has climbed 29 percent, with midsize pickups and luxury large utilities each up 27 percent. Also increasing more than 20 percent were luxury midsize utilities (up 23 percent). Meanwhile, large utility vehicle volume is up 14 percent.
Leading the car segments has been the subcompact (up 12 percent).
The segments with the largest decline in auction volume have been the large car (down 26 percent) and the luxury large car (down 25 percent).
ServNet has a new member.
Joining the independent auction group is Louisiana’s 1st Choice Auto Auction, which opened back in 2002.
“We welcome Louisiana’s 1st Choice Auto Auction as the newest member of the ServNet Auction group,” ServNet president Kevin Brown said in a news release. “The auction is highly regarded in the industry, and has long been recognized for innovation, creativity and dedication to customer satisfaction.
“LFCAA’s efforts produce excellent results for their customers, and we’re pleased that the auction will carry the ServNet brand in their region,” he said. “ServNet’s auction owners and executive team look forward to a rewarding collaboration with John Poteet and his auction team.”
LFCAA managing partner John Poteet said: “We have long admired ServNet for its professionalism and comprehensive approach to the marketplace.
“As a ServNet auction, we join ranks with the most successful, innovative and service-centered independent auctions in the country, and we look forward to working with them in sharing ideas, refining best business practices and contributing to a cohesive strategy to best serve both our commercial and dealer customers,” Poteet said.
LFCAA holds a six-lane sale every Tuesday, including consignment from ARI, Consumer Portfolio Services, Credit Acceptance/VRS, Emkay, Hancock Bank, National Auto Acceptance and dealers.
The auction completed a $3 million expansion project last year that included 4.5 acres of parking, two additional auction lanes and an operations center. The latter features a photo booth, detail/mechanic shop and a vehicle registration building.
LFCAA earned ARI’s Auction of the Year Award in 2011 and 2014. This year, it earned the inaugural Southern Chapter Auction of the Year Award from the National Auto Auction Association and was one of Auto Remarketing’s Best Auctions to Work For.
ServNet said in its news release that LFCAA was the only auction to earn both awards.
“We like to say that superior service is our auction’s signature 'lagniappe' — a Louisiana tradition that means a little something ‘extra’ that is not expected or demanded,” Poteet said. “Our affiliation with ServNet is sure to enhance that lagniappe, as we expand the scope of our service to the industry.”
Manheim is amid a three-year, $4.6 million investment in its three Chicago-area auctions, the company said Thursday.
The upgrades to the auctions — Manheim Chicago, Manheim Arena Illinois and Manheim Milwaukee, which are located within 100 miles of one another — run the gamut from a new Retail Advantage facility and increased lane capacity, to adding pavement, parking and LED lighting.
“We are looking at everything from our physical space, to our marketing programs, to innovative end-to-end inventory solutions services and tools to help our clients sell and source inventory faster, gain efficiency and drive success,” Mike Cesta, general manager of Manheim Chicago, said in a news release. “In less than a 90-minute drive, clients can easily tap our many services and inventory.”
Physical auctions play ‘vital role’
Auto Remarketing caught up with Grace Huang, senior vice president of inventory services for Manheim, to learn more about the investments.
“For us, it’s about serving our clients better,” she said in a phone interview. “And so there were several building improvements we wanted to make, including better lighting — which also was in line with our sustainability efforts — and just general improvements of our facilities, updating and so forth.”
The biggest part of the investment was the Manheim Chicago expansion, Huang said. Last year, the auction opened a location to pilot Retail Advantage (the new name for the Retail Solutions program), which now includes eight more locations.
Manheim Chicago also increased lane capacity from 14 to 23 through double-blocking, added another Thursday sale as well as a Total Resource Auction sale.
The auction is also adding 30 acres of blacktop to its paved space to allow for more vehicles.
Additionally, Manheim Milwaukee is building a four-acre property to accommodate additional parking. That auction — along with Manheim Arena Illinois — also invested in new arena floors.
Manheim Arena Illinois also installed LED lights under its canopy to save power and give additional visibility to vehicles staged to go on the block.
Manheim Milwaukee was chosen to pilot the company’s design of the future and will be remodeled next year, part of Manheim North America’s $300 million investment into the auction network.
These investments certainly underscore the importance of the physical auction.
“The physical location will always, in my mind, play a very, very vital role, regardless of how the vehicle is transacted,” she said. “The vehicle has to sit somewhere. So we always will have physical space to help inspect, recondition, detail, image those vehicles. So, no matter how the digital market expands, there’s still a car, which we like.”
Why Chicago?
When asked what prompted the move years ago, Huang pointed to the fact that Chicago is Manheim’s third biggest market and third largest auto market in the U.S. Not to mention, 70 percent of vehicles in the market are used, she said.
“It felt like it was a great place to, first, put Retail Advantage,” she said. “And then as the market has been picking up, the additional lane capacity and lanes and adding enhancements to our facilities for our new clients that are coming through.”
Asked whether it was a strategic competitive move with ADESA launching its Chicago auction this year, Huang said that it was more coincidental than anything. Much of the investment had been planned prior to ADESA making the announcement, Huang said.
Soon, Doug Hadden says, the wholesale vehicle market will transition from the majority of cars being sold in the auction to most being sold online.
Hadden, who is the director of strategic dealer sales and services at ADESA, was speaking to dealers at a breakout session during the DealerSocket User Summit in early October.
It should be noted that Hadden believes there won’t ever be a time when there’s not physical auctions. However, online buying and selling in the wholesale market is ramping up.
It used to be that 10 percent of wholesale car sales were online, he said. Now, it’s between 20 percent and 30 percent.
And it “won’t be long,” Hadden said, before that number is between 40 percent and 60 percent.
“The beauty of it is, it’s getting easier,” he said to the dealer attendees. “But you have to quit fighting it.”
Those dealers that refuse to buy online are likely to be left behind, he said.
Hadden suggested that the best car a dealer can buy online is a low-mileage, off-lease car. And there could be plenty of options in that group next year: Hadden said there will likely be an estimated 4.3 million lease returns in 2017.
“And it’s not slowing down,” he said.
Nor are various providers in the online wholesale market. For instance, ACV Auctions — a mobile platform that can enable dealers to view, bid and purchase inventory online from selling franchised dealers — announced in late September it had raised $5 million in venture funding, led by Tribeca Venture Partners, with participation from SoftBank Capital NY, Armory Square Ventures and Rand Capital.
In a news release, new chief executive officer George Chamoun said: “In just one year, more than 800 dealerships registered for our mobile service, proving the value of our highly innovative service. These are the same reasons we also attracted top venture capital firms to fuel our growth.
“We are proving the case that dealers prefer to purchase wholesale inventory on ACV, because we enable transparency, trust and faster access to fresh trades,” he continued.
Beepi, a peer-to-peer online car sales marketplace on the consumer-facing side, has also moved toward the wholesale market.
In September, the company launched Beepi Blue, a new service aimed at making it easier to sell a used vehicle online or via mobile phone.
With Beepi Blue, Beepi will make an offer on all vehicles, even ones that don't meet Beepi's stringent requirements or don't pass the 240-point inspection, and sell them at a wholesale auction.
BSC America has named Paul Weekes as the transportation manager of its Bel Air Auto Auction.
Before his time with BSC, Weekes was branch manager at Insurance Auto Auction in Baltimore, spending eight years with IAA. He worked at Bel Air Auto Auction from 2001 to 2004.
“Paul comes to us with over 20 years of top-performing transportation and logistics experience,” BSC president R. Charles Nichols said in a news release. “He will be instrumental in establishing the infrastructure and managing the team we will need for servicing the influx of clients at our new facility.”
Weekes said: “Coming in to Bel Air Auto Auction as they prepare to launch their new site is an honor. Bel Air has such a tremendous potential for growth at their new location, and I look forward to the very exciting challenges and victories to come. I am proud to be a part of this historic company’s growth.”
Raymond Nichols, CEO of BSC, added: “I am confident that Paul Weekes will lead our transportation team to the next level of technology and service, and we are proud to welcome him to our family of auctions.”
Greenville Auto Auction
In more auction news, Greenville Auto Auction announced that Kevin Stallings is being promoted to the assistant general manager position.
Stallings has been with the auction since 2012, where he started off as a sale day driver.
He has since held roles in lot registration and served as fleet lease manager. Before becoming assistant GM, his most recent post was auction relationship manager.
In an email, general manager Billy Willis said: “We are very excited for Kevin and the entire team at Greenville Auto Auction.”
Indiana Auto Auction
Over at Indiana Auto Auction, the auction held a third-quarter promotion with Fiserv on Sept. 29, where any dealer purchasing a car from Fiserv from July to September was entered into a drawing for the “Firserv/Indianapolis Colts Getaway Giveaway.”
Winning the prize was Dave Destefano of Engle Road Auto in Fort Wayne, Ind. He received two tickets to the Colts-Chicago Bears game in Indy this past Sunday and a package that included a $50 gas card, $100 restaurant gift card and a hotel room in Indianapolis the night before.
Jeff Aisel, the auciton’s national accounts manager, said: “We are grateful for Fiserv’s commitment to Indiana Auto Auction, and dedicated to provide them with a high level of service each week.”
Janet Barnard, president of Cox Automotive Inventory Solutions, received the 2016 Leadership Character Award in the CEO/President/Managing Partner — Large Company category.
The company said Barnard was recognized for her integrity; her commitment to treating clients, suppliers, co-workers and others with respect; and for maintaining a culture in which everyone takes responsibility for achieving results while upholding the organization’s core values.
“We are proud Janet has been recognized as a bold leader guided by foundational values and a belief that every decision should be grounded in service to others,” said Rock Anderson, senior vice president and chief human resources officer for Cox Automotive. “Her approach has helped this company thrive, well served our clients and supported the communities where our team members live and work.” Anderson nominated her for the award.
Barnard has helped to transform the 72-year-old wholesale auction operation into a dynamic organization that’s re-imagining the used car marketplace.
She’s worked to redefine business scope and structure, adapt new technologies and refine processes, tools and systems to to enhance client engagement and employee satisfaction. Barnard had to secure a multimillion dollar investment, overcome skepticism about an initiative that had been attempted previously without success, and manage expectations associated with a multi-year timeline.
“I’m deeply touched by this award, especially as it reflects values and beliefs that drive me every day as a business leader, community member and person,” said Barnard.
Barnard was honored during the 12th annual award event, a luncheon held Oct. 4 at the Georgia Aquarium hosted by Turknett Leadership Group and Greenleaf Center for Servant Leadership. Cox Automotive was one of the event’s silver sponsors.
Cox Automotive announced Friday it has appointed Joe George senior vice president of Manheim Vehicle Solutions, replacing Shane O’Dell, who recently was named president of Cox Automotive Financial Services.
George will move into the position on Oct. 17 and report to Janet Barnard, president of Cox Automotive Inventory Solutions.
“Joe is a proven leader with in-depth knowledge of the changing wholesale and retail marketplaces,” said Barnard. “With Joe’s support, we will move closer to our strategic vision of becoming a holistic inventory services provider, expanding our reach beyond the lanes and providing value-added, end-to-end services for our clients.”
George has been with Cox Automotive and its brands for more than 27 years. His new post is a return to the remarketing side where he began his career with the company. George started as an auction employee, eventually becoming marketing manager, general sales manager and assistant general manager at Manheim locations. He went on to become senior vice president of product development and group vice president of Manheim Digital on the corporate side.
His background also includes time with Autotrader.
His most recent post was as senior vice president and chief strategy officer for Cox Automotive.
“I’m excited to help shape Cox Automotive’s remarketing strategy, especially at a time when the company is focused on reimagining the used car marketplace and improving the client experience,” said George. “My goal is to help broaden our services and deliver added value to our clients and our company.”
