Few names in the remarketing industry are as resoundingly familiar as Ricky Beggs, the recently retired editor, expert and all-around good guy who reached thousands of people through his writings and weekly video blog for Black Book, a leading provider of used-vehicle values and market research.
Ricky is a good friend of mine and, now that he has a little more time on his hands, I thought I would reach out and ask him to reflect on his storied, 34-year career with Black Book and to let us know how he’s enjoying retirement — and maybe a little insight into exactly how used cars get their prices.
Tim: What were you doing before you went to work for Black Book, and how did you get the job?
Ricky: Out of college, I worked in municipal recreation administration for a few years. During college and for 20 years, I also refereed high school basketball and umpired high school and college baseball and softball.
A fellow referee was a key person with Black Book and one night, after a basketball game, the conversation turned to Black Book and the company and type of work they do. There became an interest in that field and company and, not much later, an opportunity arose. I began within the editorial department and spent my entire career working with the market values and analysis and residual forecasting.
Tim: Could you have guessed when you started that you would remain at the company for the next 34 years?
Ricky: The interest in vehicles and their values and what drove those values became very intriguing, almost overnight. What was even more inviting was the wholesale auction portion of the market. Going to the auctions, talking with dealers who were buying and selling and trying to see how all of this would come together to establish the market values, just kept me interested.
As to working there 34 years, I am not sure how many 25-year-olds can picture working for one company and group of people for that long. But when the job becomes a passion and is always unique, and the market is changing along with the great people you get to work with, the time just flies by.
Tim: How did the tools and methods you used to assign values change over the course of your career at Black Book?
Ricky: Technology and the amount of information is what really changed over time. That includes the systems to compile and sort the data, how to find or access the data and also how to share or distribute the finished product to the users of this information within the industry.
The methods and foundation of the market when Black Book was established in 1955 is still pretty much the foundation today. It is based on the wholesale dealer-only auction data as the starting point. Those wholesale auctions today are not just physical brick-and-mortar locations but online auctions and transactions.
From the beginning, Black Book actually attended the physical auctions, which we continue to do that today. But now much of the data is acquired through electronic data feeds from auctions and remarketers. With the volume of information so large today, even more analytical tools are necessary to complete the analysis and to report the market values. Timeliness is even more critical today and, even though Black Book was a weekly update from the beginning, we turned to even more frequent updates on April 28, 2008, with Black Book Daily updates to the market values.
Tim: What should the average car owner understand about the value of his/her car?
Ricky: In most cases, the car is a depreciating asset, so as you drive the car or as time passes, the value is declining. At the same time, not every vehicle will depreciate at the same rate. This rate of depreciation is a major factor in the monthly payment for everyone who finances their vehicle as a lease.
For traditional finance, the overall price of cars has pushed the length of finance to longer terms in order to make the monthly payment more affordable. Fortunately, as this occurs, interest rates have remained very low and funding is currently widely available.
Tim: What steps would you recommend the average car owner take to evaluate the value of his/her car?
Ricky: In today’s industry, there is so much information and easy access to that information. The lender selected can help provide this information as well as companies that provide trade-in type information who are providing leads for selling dealers. Just using the technology to dig for public information will get you tons of market insight.
Tim: Tell us about the origins of the video blog and what it was like to film the first few entries.
Ricky: Tom Cross, Black Book’s current president, felt that a video blog giving insight into the market would be of value to our subscribers and users of our data. He suggested a monthly update with a simple, conversational-type presentation.
We wanted it to be about the market insight, not a super professional presentation. As I mentioned, Tom suggested monthly updates, but in maybe not so much of a smart move on my part, I said the videos needed to be weekly as that was more how the industry was looking at the market movement.
As I was working on the final few videos, I went back and looked at some of those original blogs. I don’t know if they would be classified as embarrassing or comical. It was a learning process for sure.
One thing I am proud of is that we never missed a week in delivering this insight. Also, the interest from the industry that it created surprised me. It showed how the industry respected the Black Book information and insight. I just happened to be the person who delivered the message. Today, the Black Book market insight continues each week in a written reporting format with even more analytical insight from Anil Goyal and the editorial team.
Tim: What do you miss most about working at Black Book?
Ricky: I think, without a doubt, it is the people I worked with — both industry personnel and the whole Black Book team and those I communicated with about the market and industry. This would be the manufacturers, the lenders, the remarketers, the dealers and, of course, the auction industry and personnel.
It was always interesting at the auctions and of course the excitement of trying to determine how the market was changing each day, and the “why” behind those changes always kept me engaged. The insight and early access to new models will also be missed as we used that for residual projections.
Tim: Were there any times you would prefer to forget?
Ricky: The first few months after 9/11 were a real challenge. Seeing how the rapid drop in vehicle values and even less market activity affected the dealer body was tough. Their entrepreneurial spirit sure pulled them through, but seeing how it affected their businesses was tough. The other thing I am glad is not a part of my life now are the number of red-eye flights from the West Coast and from Vegas. There were too many of them over the years to count.
Tim: When did you decide the time was right to retire?
Ricky: My wife, Vicki, and I had talked about how fortunate I had been to be with Black Book and the part of the industry that we were part of, while also thinking that I just needed to slow down and enjoy life. It was also the time for me to help look after my dad instead of that being handled by my wife. I was actually in Tucson, Ariz., to speak at a conference. It was a good trip and something just said the time was right. I looked ahead about one year and just knew that would be a good time.
I can honestly say no one has been more blessed and fortunate within their career and life than I have been, plus to be around the people I have been fortunate enough to become friends with is hard to comprehend. Now, about four months into retirement, I still know the decision was the right one.
Tim: Did you worry that you might be irreplaceable?
Ricky: Never was that a concern. We have such a strong group of editors who understand the market and the industry and there are great processes in place. They have not skipped a beat in gathering the information, doing the analysis and reporting the market.
Tim: How is your retirement going and what has been your highlight over the past few months?
Ricky: The transition was much smoother than I expected or had been told by others that it would be. I think this is primarily due to when Vicki and I made the decision, we knew it was the right thing to do and the right time, so there were no lingering doubts. We have been so busy just trying to enjoy life and getting a few long overdue things done.
The highlight was a trip to Idaho and Wyoming to do a little fly fishing. It was an amazing trip of a lifetime and my older son, who many know is a professional guide, got to join us for part of the trip and then we joined him in Casper, Wyo., for a couple of days. Vicki didn’t just tolerate the fishing, but actually enjoyed the fishing and the trip.
Tim Janssen is president of Innovative Funding Services (IFS).
With franchised dealers having so many choices of providers for a customer relationship management system, NADA University Online is now offering guidance for National Automobile Dealers Association members to help them make the best decision for their store.
Because the CRM can connect the revenue-critical business functions of marketing, sales and fixed operations in your dealership, officials said, the new Dealer Guide to Automotive CRM contains basic information for use during vendor selection, system installation, training and maintenance.
The association added that the guide discusses the goals and driving forces in the automotive CRM market, as well as CRM core functionality and some future CRM applications.
Intended for dealers and general managers, this guide is complimentary to members.
To obtain a copy, dealers have to sign in to www.nadauniversity.com and search for CR8.
The American International Automobile Dealers Association, along with affinity partner Bass Sox Mercer, will host a free AutoTalk webinar on Aug. 18 to discuss how manufacturers measure dealership sales performance.
According to AIADA, the webinar will discuss the “hidden factors” contained within a manufacturer’s sales performance formula that have the largest impact on its measurements.
The webinar, titled “Understanding Your Manufacturer’s Sales Performance Measurement – Important Factors of Which You May Not Be Aware,” will also discuss sales performance compliance requirements.
The first iteration of the webinar will be hosted on Aug. 18 at 10 a.m. EST. To register, click here. To register for the second webinar at 4 p.m. EST on the same day, click here.
If you’re looking to market your high-tech vehicles, the customers most interested consume three key forms of media at considerably strong rates.
According to a recent J.D. Power report, those media — Internet, television and magazines — are consumed at very high rates by consumers shopping with in-vehicle technology in mind.
The J.D. Power 2015 U.S. Automotive Media and Marketing Report – Summer, fueled by a nationwide survey of 28,983 principal drivers of recently purchased or leased new vehicles (acquired between November 2013 and October 2014), takes a look at where shoppers interested most by technology in their cars consume their media and discovered the following statistics:
- 43 percent of new premium brand drivers and 28 percent of new non-premium brand drivers attributed their vehicle’s technology as one of the reasons they bought it.
- Of the new-vehicle drivers that bought their ride based on its technology, 69 percent access the Internet via smartphone and 54 percent via tablet – vs. 63 percent and 46 percent, respectively, who did not cite in-car technology as a reason for their car choice.
- New-vehicle drivers that chose their vehicle based on technology spend more time on the Internet for personal use, watch more television and read more magazines than those not seeking a vehicle based on its technology. Tech-savvy drivers are more likely to read a magazine via an app than those who chose their vehicle for other reasons (33 percent vs. 27 percent, respectively).
Arianne Walker, the senior director of automotive media and marketing at J.D. Power, points to tech-based advertising as the best way to attract tech-savvy shoppers.
“It’s important that auto manufacturers promote the technological virtues of their vehicles to consumers via the media they consume,” Walker said. “Targeting these technology seekers with the right messaging is critical to using marketing dollars efficiently to reach consumers who will actually buy new vehicles because of new technology.”
So what does the average tech-savvy shopping demographic tend to look like? As it turns out, there really isn’t a specific age bracket that outweighs the others in the area of primary tech interest — roughly a third of all new-car shoppers chose their vehicle based on its technology offerings. Here are J.D. Power’s findings in the report:
- 31 percent of men and 28 percent of women said one of the reasons they bought their new vehicle was due to it having the latest technology features.
- Looking at specific age groups, the following percentages of people chose their vehicle based on its tech features: 34 years and younger (31 percent), 35 to 54 years of age (28 percent), and 55 years or older (31 percent).
Here are a few more interesting findings about tech-savvy shoppers from the report:
- Brands with the most tech-focused shoppers include both premium brands (Lincoln, Infiniti, Cadillac and Audi) and non-premium brands (Mazda, Buick and Chrysler).
- They watch an average of 33 hours of television each week. Their favorite shows? “The Walking Dead,” “The Big Bang Theory” and “The Voice.”
- Tech-seeking drivers read an average of nine magazines, with a high rate of focus on topics such as wealth, science/technology and travel.
Even though not everyone cited technology as a primary reason for their purchase, new-car buyers, in general, are also increasing their levels of media consumption, albeit not quite to the extent of the tech-focused group.
- New-vehicle buyers read an average of eight magazines, with the biggest increased in the last year focusing on topics such as business/personal finance, wealth, men’s lifestyle/fitness/outdoor, travel, and women’s lifestyle.
- Younger new-vehicle drivers watch less television per week than older drivers: 34 years and younger (20 hours), 35 to 54 years old (24 hours) and 55 years and older (35 hours).
- Nearly 70 percent of new-car drivers utilize social media via websites or applications; Facebook was the most popular, followed by LinkedIn and Pinterest.
Those interested in sharpening their auction skills can look forward to an upcoming National Auto Auction Association standards training event in Michigan next month.
The upcoming NAAA Auction Standards Training Program will feature two days of classroom and hands-on training for vehicle inspectors, operations managers, account coordinators, arbitration managers or anyone else interested in enhancing their knowledge on vehicle inspections and arbitration trends.
The upcoming event will be hosted by the Grand Rapids Auto Auction in Jenison, Mich. on Aug. 19 and Aug. 20.
Auto Remarketing recently attended an Auction Standards Training event near our home office at ADESA Charlotte. Check out the full story here.
Here’s a breakdown of what you can expect to learn about during the upcoming event, according to the NAAA:
Day 1
- Condition reports
- Estimates for reconditioning
- Inspection and mechanical basics
- Prior repairs
- Vehicle sections
- Interiors
- Flood and hail damage
- Restraints
- Vehicle grading
- Collision estimating guidelines
Day 2
- Structural damage policy
- Identify correct structure type
- Prior structural repairs
- Collision dynamics
- What is considered structural damage?
- What is not structural damage?
Sound interesting to you? You can find more information and register here.
In findings that should catch the attention of used-vehicle departments, too, a monthly analysis developed jointly by J.D. Power and DealerRater showed a majority of new-vehicle buyers in the United States indicate that it should take no more than two hours to complete a vehicle purchase from the time they walk into the dealer showroom.
But J.D. Power and DealerRater pointed out in the June 2015 PowerRater Consumer Pulse that industry data pinpoints the median amount of time actually spent completing a new-vehicle transaction is four hours.
PowerRater Consumer Pulse derived from an alliance between J.D. Power and DealerRater that integrates each company's capabilities to gather comprehensive vehicle shopper feedback based on J.D. Power’s customer satisfaction research and DealerRater's customer ratings and reviews of dealerships.
The latest trends are based on a survey conducted between May 5 and May 19 of 8,810 consumers who wrote a review on DealerRater.com after recently purchasing a new vehicle
Analysts pointed out a trio of other key findings, including:
— More than two-thirds (67 percent) of luxury and 62 percent of mass market buyers indicate it should take no more than two hours to complete a vehicle purchase from the time they enter the showroom. Half of buyers from each segment indicate the ideal duration is somewhere between one and two hours.
— Slightly more luxury vehicle buyers than mass market vehicle buyers prefer to spend less than an hour in the dealership (18 percent versus 13 percent, respectively).
— According to the J.D. Power 2014 U.S. Sales Satisfaction Index (SSI) Study, buyers who use the Internet to shop for their new vehicle prior to visiting the dealership spend more time overall completing their purchase than those who do not research online. In addition, buyers that used the internet are more than twice as likely to have compared prices from different dealers, and are more likely to know the expected price before they visit the dealer, than those that didn't.
"Many retailers are expending enormous amounts of energy and capital to achieve a one-hour transaction time frame for their sales process,” DealerRater chief executive officer Gary Tucker said.
“While this quest is noble ― and customers do want to spend less time than they are currently ― buyers tell us that one to two hours is a very reasonable time window," Tucker continued.
According to the J.D. Power 2014 SSI Study, most of a vehicle buyer's in-dealership experience is currently spent on selecting a vehicle for purchase and negotiating the deal (60 minutes each, on average). This is followed by an average of 30 minutes to discuss and sign the necessary paperwork and an additional 30 minutes to take delivery of the vehicle.
This process leaves the remainder of the overall time spent waiting both before and after the paperwork process, a key area to focus on in terms of creating a more seamless and efficient process flow.
"From a generational standpoint, Gen Y buyers spend more time negotiating than other generational groups, as they are more likely than the other generations to conduct research online prior to purchase and to have concerns regarding affordability, which emphasizes the importance of the negotiation phase for Gen Y," said Chris Sutton, vice president of the U.S. automotive retail practice at J.D. Power.
“Both Gen Y and Gen X buyers spend less time taking delivery, likely because they need less instruction on the features and functionality of their new vehicles,” Sutton continued.
The 2014 SSI Study data found that time spent in the dealership has a significant impact on overall customer satisfaction. While satisfaction among new-vehicle buyers who spend less than two hours in the dealership averages 861 on a 1,000-point scale, satisfaction declines to 844 among those who spend between two and three hours in-dealership and drops to 807 among those spending four to five hours to complete the purchase process.
To improve customer satisfaction with the buying process, Sutton suggested that dealers should develop more efficient processes during the different phases of the buying process (vehicle selection, negotiation, paperwork and vehicle delivery). Reducing the amount of time a customer has to wait when purchasing a new vehicle is a key opportunity for dealers, according to the J.D. Power executive.
“It’s important for dealers to be efficient with customers’ time,” Sutton said. “Customers will value specific parts of the process, such as finding the right vehicle, understanding features and controls and understanding how much and for what they're paying.
“The dealer needs to strike an effective balance between educating the customer and efficiency,” Sutton added.
The National Automobile Dealers Association announced today its fierce opposition of an amendment potentially headed for the Senate floor this week that would prohibit the retail sale of used vehicles with an open recall.
The NADA as well as the American International Automobile Dealers Association and the National Association of Minority Automobile Dealers sent a joint letter to their senators on Monday to urge them to vote against the proposed amendment.
According to the NADA, the amendment in question was officially filed by Sen. Richard Blumenthal (D-Conn.) and may come to the Senate floor for a vote as part of the transportation bill being voted on this Thursday.
In the letter, the three organizations argued that the proposed legislation would “instantly diminish the value of millions of customer trade-ins while not guaranteeing that a single recalled vehicle gets fixed.”
The organizations speculate that dealers would be less likely to accept trade-in offers due to the knowledge that they would have to sit around until a recall remedy could be found, thus causing many trade-ins to be declined and forcing consumers to sell their vehicles in the private market and further perpetuate the putting off of recall repairs.
The organizations estimate that between 250,000 and 500,000 sales of new vehicles would be lost per year due to consumers being unable to trade in their vehicle.
In a previous discussion with Auto Remarketing, vAuto founder Dale Pollak echoed this opinion.
“The responsibility of checking and remedying open recalls for all used vehicles prior to sale is an excessive and unreasonable burden to dealers,” Pollak said. “This is because dealers frequently do not possess the resources, expertise and/or parts to make the necessary repairs. Moreover, this situation is exacerbated in light of the fact that dealers cannot practically refuse trade-ins on the purchase of new vehicles.
“These trades represent a significant portion of the customer’s payment, and therefore, the receiving dealer must have the ability to turn the trade quickly in order to convert the asset to cash,” Pollak continued. “The inability to do so as a result of the proposed legislation will likely deny all dealers the necessary capital to sustain operations.”
To check out the full letter submitted by NADA, AIADA and NAMAD to their senators, click here. To check out commentary on the topic from NADA Chairman Bill Fox, click here.
Imagine what would happen if dealers could only offer a fraction for their customer's trade-ins, or could not even send the trade-in vehicle to auction. This could be a dark reality if the Sen. Richard Blumenthal (D-Conn.) used car amendment, which would ground all recalled vehicles at dealerships until remedied, is passed.
When a food recall is issued, the product under recall is immediately removed from commerce and tossed from retail shelves. This is not the way it works for a recall involving automobiles. When a particular vehicle is under open recall, that doesn't necessarily mean it requires the drastic step of grounding the vehicle. While there are at least 46 million vehicles currently under open recall, the truth is many recalls don't require the vehicle being taken out of service. Furthermore, recall notices are often issued even though there is nothing an owner or dealer can do to resolve the problem because of a lack of auto parts.
And some recalls are due to minor causes, such as a printing error in the owner's manual.
The Blumenthal amendment to the highway bill (H.R. 22) currently being considered by the Senate proposes to ground all used vehicles sold at a dealership under open recall. (Private sales would remain unregulated.) The amendment would effectively slash the trade-in value of some recalled vehicles while removing cars from the road needlessly, and the reason could be for something as minor as a warning sticker that may peel off the sun visor. This amendment would cripple the used-car market, leaving consumers with diminished trade-in values or fewer options because cars would be grounded indefinitely until parts became available. This would be devastating for consumers, dealers and automakers.
Franchised auto dealers play a critical role in ensuring that recalled vehicles are repaired.
Proposals that ground all vehicles under open recall at a dealership miss the mark: they don't differentiate between recalls involving a serious defect and those with a negligible impact on safety. Time and time again, they prove to be overly broad measures that do not require the drastic step of grounding cars. A recent survey of 2,100 vehicle recalls revealed that 80 percent of them do not come with any recommendation from the manufacturer or the National Highway Traffic Safety Administration to stop operating the vehicle.
NADA is advocating for a better solution. A more viable approach would be to improve the recall process by differentiating between truly dangerous defects in which vehicles should be immediately taken off the road versus trivial issues where there is no harm to driver safety or the public good.
Policies should be tailored to boost consumer recall response and completion rates. The average vehicle recall completion rate is 75 percent. America's dealers support a 100 percent completion rate and we urge NHTSA to improve the recall process by designing a database that handles multiple VIN requests as a single inquiry.
Dealers should call their Senators today at 202.224.3121 and tell them to vote “No” on Sen. Blumenthal's ill-conceived amendment. This amendment would diminish in an instant the trade-in value of millions of vehicles, while not guaranteeing one recalled vehicle gets fixed.
Bill Fox is 2015 NADA chairman and a multi-franchise dealer in upstate New York.
As part of the NADA University Online Webinar Series, the National Automobile Dealers Association announced recently it will be hosting a webinar on Wednesday to help dealers learn how to enhance the customer experience during the online retail process.
The webinar, entitled “Why Online Retailing Will Keep You in Control,” will be presented by Mike Burgiss, the founder of MakeMyDeal and the vice president of eCommerce at Cox Automotive.
According to NADA, the webinar will show dealers how to offer online shopping experiences that customers want while maintaining control of the deal process.
Burgiss will also discuss the needs of the various generations of shoppers to help aid dealers with marketing and sales strategies.
The event will begin at 1 p.m. EST this Wednesday and is expected to last 30 minutes. To register, click here.
Say your dealership has new salespeople who are still learning the unique attributes about certified pre-owned vehicles that can make them so appealing to the “ups” who arrive at the showroom or through the business development center.
An advice column Autotrader compiled for shoppers on its site also could serve as a great checklist so those “green peas” can answer some of the questions about that CPO model that’s ripe to be turned. Here’s the rundown Autotrader’s Jason Fogelson shared in a blog post that contains a series of questions salespeople might encounter when working with customers:
— Bumper-to-bumper warranty: Does the certified pre-owned program extend the vehicle's basic new-car warranty with factory support?
— Powertrain warranty: Does the certified pre-owned program extend the vehicle's powertrain warranty with factory support?
— Roadside assistance: Is this included with the certified pre-owned program? For how many months and/or miles?
— Routine maintenance: Is this included with the certified pre-owned program? For how many months and/or miles?
— Vehicle inspection: What was inspected, and is a report available for the results of the inspection?
— Deductible/limit: Does the certified pre-owned program include a deductible or limit on warranty claims, repairs and/or roadside assistance?
— Transferability: Are the features of the certified pre-owned program transferable to the next owner if the vehicle is sold within the warranty/benefit period?
And with experts such as ADESA’s Tom Kontos and Tom Webb of Cox Automotive continuing to project that off-lease volume will grow in the wholesale market, the supply of potential CPO units is likely to continue to expand, potential pushing certified sales to more new heights.
