Auto Remarketing has launched a new series this year called “Consignor Connection,” in which we catch up with a leading remarketing executive at a different consignor each month.
In a Q&A format, we talk about best practices, auction industry trends and more. The latest in this series features Darrin Aiken, assistant vice president of vehicle remarketing at Wheels Inc.
Auto Remarketing: On an industry-wide level, how has the increase in volume, particularly for off-lease units, impacted the auction industry in 2015?
Darrin Aiken: Supply will definitely increase in 2015. However, there isn’t a significant impact on prices or auction volumes. In 2015, we expect returns around 2.5 million, which is higher than previous years, but still under the record returns of 2001-02. There will not be many returned units until 2016-17, as 2014 new-lease originations hit 3.6 million.
The good news is that the industry is better equipped to handle an increase in inventory due to the rise in financing options, Internet and internationals sales, as well as CPO programs. These alternative programs assist the auction industry in distributing an increase in supply, not only for lease returns, but for rental units and other consignors’ vehicles. These capabilities have also enabled us to handle an increase in supply.
AR: How does Wheels strike a balance when it comes to choosing how your cars are sold, be it auction sales, online sales, open/closed sales, etc.?
DA: Wheels offers a multi-channel selling strategy for our vehicles. Often our first step to that strategy, which is different than most, includes offering vehicles to the drivers/employees on our proprietary website called WheelsDirect. Most of our customers use this program because it gives them an opportunity to gain higher returns and lower their days to sell. Our customers also see this as an employee benefit at no cost to their company.
If a vehicle is not sold through WheelsDirect, we then offer the used vehicle directly to the franchise dealer; this is the dealer who will complete the delivery of the new vehicle to our driver. Franchise dealers are a great way to maximize resale value on the used-vehicle sale.
This allows the dealers to review a vehicle in good condition and sell them on their retail lots. Once the vehicles have been offered for sale multiple times before it is officially turned-in, we send them to both online and in-lane auctions to ensure maximum exposure for our vehicles. This model ensures that we reach all buyers whether in person or online.
AR: What are some dynamics of the auction world and remarketing that are unique to fleet/lease consignors?
DA: For Wheels, there are a number of different factors that make our vehicles desirable for purchase. A key differentiator is our corporate maintenance program, which was active throughout the vehicle’s life. This assures buyers that the vehicle was well maintained. In addition, we provide Silver Certification, titles at the time of sale, and the peace of mind that there was only one owner. Although we have higher than average mileage vehicles based on age, we are able to effectively communicate the benefits to our buyers.
AR: What are some of the biggest challenges (and opportunities) in the auction market for consignors like Wheels in 2015? Are there any CFPB- or regulatory-related challenges that would extend to the remarketing world?
DA: There are no CFPB related challenges, as we are only involved with commercial leases. One specific challenge for us is fluctuations in transportation logistics throughout the years. Auction companies and transportation vendors have not developed a cost-effective model to secure units for fleet management companies consistently and efficiently.
AR: What are some ways that OEMs, consignors, dealers and auctions can work together to keep residuals strong?
DA: The auction industry should continue to focus on expanding the grading system for assessing vehicle conditions developing an international online presence, and getting MPS completed for the industry. This will make it easy for dealers and consignors to offer vehicles on any website, which helps facilitate a more competitive bidding environment. Dealers should remain focused on creating tools that assist them in efficiently selling vehicles while managing their inventory.
The OEMs should continue to build quality products and keep incentives stable. This will guarantee that the value remains strong when it comes time to sell.
Auto Remarketing has launched a new series this year called “Consignor Connection,” in which we catch up with a leading remarketing executive at a different consignor each month.
In a Q&A format, we talk about best practices, auction industry trends and more. The latest in this series features Levi McCoy, who is the director of remarketing at LeasePlan USA:
Auto Remarketing: How does LeasePlan strike a balance when it comes to choosing how your cars are sold, be it auction sales, online sales, open/closed sales, etc.?
Levi McCoy: LeasePlan is open-minded and progressive in our remarketing strategy. By that I mean, if opportunities present themselves in ways we haven’t viewed before we will take a close look.
We remain loyal to our core buyers who buy in the "live" auction lanes. Many, many buyers continue to like to touch and feel vehicles they intend to purchase.
With that being the case, we all know online sales are expanding rapidly. LeasePlan wants a presence there, as well. As more buyers utilize and become more comfortable with online sales, we want to be there for them, too! We continue to experience year-over-year growth in the percentage of our vehicles sold online.
AR: Looking at multiplatform buying and selling in the wholesale space, what are some of the benefits you see as a consignor, and what are the challenges?
LM: The immediate and most recognizable benefit to a multiplatform solution is more potential buyers bidding on your inventory from not just North America, but other international locations. Multiplatform is an ongoing natural growth opportunity with the accuracy and speed of evolving Web-based technologies.
Multiplatform is forward thinking with “built-in” efficiencies — i.e., more eyes on vehicles and cost savings. I would like to see it move more and more into the mainstream. As far as challenges with multiplatform, those have lessened over the years. The technology is in place to support it. Challenges may boil down to confidence and the elusive time it takes to "fully" implement.
AR: What have been some of the biggest challenges (and opportunities) in the fleet/lease segment of the auction market for consignors in 2015?
LM: It’s still early, but the normal opportunities that come with first quarter volumes come to mind. Our clients mostly control when they decide to de-fleet, so business needs of our clients play a major role in this opportunity.
LeasePlan is here to serve our many client needs, and their needs do vary. Accurate floor pricing is an opportunity we consistently try to manage, and the availability of timely sales data has dramatically improved vehicle valuation tools to support pricing. We try to look at challenges as opportunities, so there aren’t many challenges that aren’t viewed as opportunities.
AR: What are some ways that OEMs, consignors, dealers and auctions can work together to keep residuals strong?
LM: I think the big picture is everyone looking out for the best interest of the overall industry. In the highly competitive industry we all enjoy, that can be challenging or an opportunity.
Also having good product to offer and support of those products. Maintaining and ultimately enhancing the trust in the industry is paramount to all. Everyone likes doing business with those they like and trust.
On Tuesday, ARI launched what the company dubbed ARI SustainableWorks, a consulting service designed to help organizations configure best-in-class fleets supported by clean, efficient and cost-effective fleet solutions.
The company highlighted ARI SustainableWorks is designed to help clients develop and implement forward-thinking sustainable strategies that are tailored to each fleet’s unique objectives, needs and operating characteristics. ARI noted a team of industry-leading consultants is at the core of this new service, which is dedicated to helping fleets to optimize operations by reducing total cost of ownership and enhancing environmental performance.
Brian Matuszewski, manager of sustainable strategies at ARI, explained a key approach for the ARI SustainableWorks consulting team is to examine the entire life cycle of a vehicle fleet in order to determine how best to customize their recommendations and solutions. This method includes:
— Evaluating fleet utilization
— Determining how best to strategically implement clean technology vehicles
— Developing more efficient driver behavior strategies
— Conducting comprehensive fleet emissions reporting
Matuszewski pointed out ARI’s consultants also use advanced geospatial mapping systems to strategically identify optimal locations in the fleet where the latest technologies are both logistically feasible and cost-effective to implement.
“Major advancements in vehicle technology, communication systems and analytics capabilities give fleet managers more opportunities than ever before to optimize their fleet operations in a clean and cost-effective manner,” he said.
“ARI SustainableWorks has been created to simplify this process by providing fleet managers with a single point of contact to define fleet objectives, conduct a comprehensive analysis and deliver a customized solution that includes a complete strategy for successful implementation,” Matuszewski continued.
Matuszewski went on to mention ARI SustainableWorks will serve as a core component of ARI’s corporate sustainability program, fulfilling its commitment to driving clean, efficient and cost-effective transportation solutions for its customers while conducting business as stewards of the environment and champions of employee and community development.
For more information about ARI and the ARI SustainableWorks program, visit www.arifleet.com.
Donlen announced the debut of a new remarketing channel called Donlen Dealer Direct on Tuesday that aims to connect the company with a national array of “fleet-focused dealers” looking to buy vehicles.
There are more than 100 salespeople with Donlen Dealer Direct promoting the company’s cars directly to these dealers, Donlen said in its announcement. The program is a partnership with parent company Hertz, and targets a quicker transaction time and greater return on vehicle sales for Donlen customers.
“We are excited to announce this new channel that will benefit all of our clients. Our customers can now access a dealer network that consists of thousands of locations that will buy fleet vehicles,” said Dan Powers, director of vehicle remarketing.
“The efficiency of our new remarketing channel to dealerships is unparalleled in the fleet industry,” Powers added. “We expect this new solution will be well received by our customers.”
FLD Inc. announced recently the release of an update to its free condition reporting smartphone app, OnceOVR.
The extension, OnceOVR Pro, includes multiple inspection templates for medium- and heavy-duty trucks, which gives users the ability to select critical data points from an index containing more than 3,000 configurations of engines, transmissions and gear reductions, according to the company.
FLD also reports that the added features will assist fleet managers, strategic sourcing and procurement professionals who work with these types of vehicles in their fleets by giving them the tools to instantly capture critical data value points in the field, providing more accurate, understandable and hastened information about their assets’ real-time conditions.
Gary Mott, FLD’s vice president, believes the extension should become another tool in the arsenal that fleet managers use to improve their business.
“OnceOVR Pro now allows for inventory management and fleet audit process on a larger number of fleets while helping fleet managers reduce their exposure to risk and refine their fleet strategy,” Mott said. “OnceOVR Pro, in conjunction with FLD’s suite of fleet management and remarketing tools, can better serve the needs of the fleet industry, streamlining processes.”
For more information about OnceOVR Pro or FLD’s family of products, visit the company’s website or download the free application here.
Donlen recently released its next-generation mobile apps for fleet managers and fleet drivers. The company said that FleetWeb Mobile and DonlenDriver Mobile are compatible across most hardware and mobile operating systems.
“Fleet customers will now have a seamless experience when using our mobile apps. They will see a redesigned home screen that will provide easy access to important fleet functions,” said Jeff Pursell, vice president FleetWeb Products.
“In addition, users will have one-touch access to our new world-class contact center giving them quicker assistance for all of their fleet needs,” Pursell continued.
Donlen explained that the apps can seamlessly exchange data in real-time with FleetWeb, the fleet management platform, and DonlenDriver, their driver portal. Users can leverage the same online functionality when they need it — in the office or on the road.
“Donlen collaborated with two well-known technology brands, and by capturing the voice of our customer base, we created mobile tools that will meet fleet needs for years to come,” Pursell said. “Our customers expect agile technology, and our scalable platform will grow as we continue to release new functionality.”
With the recent release of Donlen’s New Driver Management System, DonlenDriver Mobile will be available to all drivers, meaning users can access maintenance and fuel maps, maintenance history as well as driver policies.
FleetWeb Mobile and DonlenDriver Mobile are now available in the Apple App Store as well as Google Play.
Leasing levels dropped significantly during the recession, and though rates have ramped back up as of late, so has the number of long-term auto loans.
This trend has many dealers worried about lengthening sales cycles, and it turns out, the trend might prove to be detrimental to consumers — a recent study from Donlen shows after 36 months, vehicle ownership costs rise significantly.
And the same is true for fleet managers who may be keeping vehicles around a bit longer this year due to supply issues exasperated by the plethora of recalls announced this year and the promise of lower rental payments.
Donlen's “Lifecycle Cost Management: 36-Month Versus 60-Month Sedan Lifecycle Cost Analysis” study shows that having a vehicle longer can correspond with some pretty significant costs.
In fact, judging by the results, Donlen is warning fleets that holding a vehicle longer to take advantage of declining rental payments and full depreciation might not be as cost-effective as it once was.
"This analysis compares real data based on our Donlen portfolio and the findings identify how costs are impacted the longer you hold on to a vehicle. Our consulting team has published this analysis to help fleets understand the implications of extending their vehicle lifecycles,” said Amy Blaine, vice president of consulting, analytics and sustainability.
“Holding a vehicle longer to take advantage of declining lease payments and full depreciation may be viewed as a cost effective strategy, but the findings show that between the maintenance costs and missing the opportunity of higher resale values, along with lower fuel spend, the shorter cycle is actually more cost effective,” she added.
The analysis took a look at lifecycle costs associated with extending the cycle times for a typical sedan.
Taking a look at the overall annual cash flow comparison of the two timeframes provided, using rental, fuel, maintenance and resale data, and looking at a 15-year period, fleet managers choosing a 36-month cycle for the intermediate sedan results saved $5,504 or $460 per vehicle every year.
Let’s take a look at the numbers on a larger scale. For a fleet of 100 vehicles, this equates to annual savings of more than $550,000. Ramp that up to 500 fleet vehicles, and you could be saving up to $2.7 million every year.
Fuel cost is contributing to these savings, as well, due to the rapid developments in alternative fuel vehicles.
According to the study, due to advancements in fuel efficiency as well as CAFE Standards and regulations, cycling fleet vehicles more frequently will result in increased MPG throughout the fleet.
Donlen offered the following example to illustrate this point: Assuming an increase of one mile-per-gallon within the fleet and a fuel cost of $3.61 per gallon, a fleet of 500 vehicles driving 25,000 miles a year could expect to save up to $69,000 per year.
“Cycling not only puts units on the road, but it can also significantly reduce fuel spend,” the report stated.
Looking beyond fuel, maintenance also plays a significant role in fleet costs.
And, of course, older vehicles are often equated with higher costs and more frequent repairs. The report encourages fleet managers to not keep vehicles beyond four years or the 100,000-mile mark, as these milestones are seen as “the tipping point at which non-preventative maintenance and failures began to increase.”
On top of the obvious higher maintenance costs of an older fleet, Donlen contends “soft” savings will be noticed, as well, in the long-term, such as decreased vehicle and employee downtime and improved driver safety.
The only statistic analyzed by Donlen that showed sedans with a 60-month term proving to be cheaper was rental cost — but the paper explained any benefit here is offset by higher fuel and maintenance expense, as well as lower resale value.
That said, the study showed that lower interest payments from depreciation will push total rental payments down until the vehicle is fully depreciated.
This means that over the course of 15 years, a vehicle with a 60-month lifecycle will spend approximately $18,800 less in rental expense compared to a vehicle on a 36-month cycle.
That said, resale proceeds take a huge hit when fleet managers keep vehicles around a bit too long.
For an average sedan, a 60-month lifecycle results in the vehicle being sent to auction with approximately 125,000 miles versus 75,000 miles with the shorter lifecycle.
And, of course, lower mileage vehicles reap much higher rewards in the lanes.
“Keeping a vehicle on the road longer may seem like a more cost effective option. However, it is important to consider the total cost of ownership when comparing cycling parameters, as this can help illustrate that components of operating costs such as fuel, maintenance, and lost resale proceeds will quickly offset lower lease payments,” the white paper stated. “Ultimately, this will result in a more proactive fleet approach, keep your assets operation and your employees safe, and significantly lower your total fleet costs.”
Consultants for the study used the following assumptions in their analysis:
- CAP Cost: $20,025
- Annual Mileage: 25,000
- Lease: 2.16 percent depreciation
- Resale sources include Donlen’s National Auction Index and Guidebook averages
- Average fuel cost per gallon: $3.61
Gary Mott likens the vendor management capabilities of his company’s Fleet Guru product partially to the concept behind the cross-platform car buying and selling in the remarketing industry.
Mott, who is vice president at FLD Inc., talked with Auto Remarketing earlier this summer about the Fleet Guru vendor management system as well as the company’s OnceOVR electronic condition reporting app — both of which have major implications on the remarketing business.
Basically, Fleet Guru is an enterprise-level, cloud based fleet management software that aims to help fleets boost their efficiency. Stemming from the data of fleet operations, it can be utilized from any Web-enabled device, and its interface gives fleet managers real-time visibility of their assets, providing them a platform to manage both assets and multi-vendor relationships.
“The Fleet Guru is a derivative of our enterprise resource system,” Mott said. “We’re taking the experience that we have in upselling, or the cross-platform selling that everyone has been talking about, to where you can be on OVE and OPENLANE, all at the same time. But what we’re doing with the Fleet Guru is totally separated from that.”
Mott said that the company is taking what it has learned from the vendors it has used in remarketing cars, “and we’re creating the Fleet Guru to be a championing software to allow you to measure your vendors based on SLA (service level agreement) & KPI (key performance indicators).
“So what we’re seeing is strategic sourcing becoming more entrenched into the fleet business. And when they’re going out to RFP – whether it’s for fuel, maintenance, subrogation, leasing itself and also remarketing – you have multiple vendors that you’re going to elect the services to. We feel the days are gone where you’re aligning yourself with one sole source vendor, especially in the remarketing industry.”
By using KPI based off the company’s enterprise system, FLD’s Fleet Guru allows fleets to essentially weight all the vendors that are providing them services.
Mott added: “So, it’s more of an overall, encompassing multi-vendor management tool, but what we’re bringing to the market first is the inventory management and remarketing piece of it. And that’s based off of solely what we’ve learned operating our own portfolio.”
Playing into that remarketing piece of Fleet Guru is the FLD’s OnceOVR app.
The company upgraded the tool this winter, giving it specialized inventory management and fleet audit features that give managers better visibility of their collateral. This is proving to be hugely beneficial to clients that are growing through mergers and acquisitions.
Fleet managers can use OnceOVR to instantly capture critical data points while they are out in the field, leading to more accurate, legible and timely data collection, and fostering greater visibility of all the assets in a given fleet.
In other words, fleets can collect data points while cars are still in operation, giving them firm control of the inventory inspection process and the overall vitality of their fleet.
And the tool gives users a way to collect data and then use it for decision making regarding their fleet — for example, is it an optimal time to sell a vehicle and FMV (fair market value) trending?
When Auto Remarketing talked with Mott in July, the company was currently “writing the second generation” of the OnceOVR app. The first iteration was one for passenger and light duty vehicles within fleets; the next two scheduled releases targeted for late summer and early fall is for heavy-duty vehicles and material handling equipment.
“The importance of the OnceOVR app is all being driven off of data portability. If you take current practices, as far as when it comes time to know what your vehicle fleet is worth in your portfolio, you’re doing it off of a static spreadsheet. You have VIN numbers, VIN decoders, year/make/miles and location of where the vehicle is at,” Mott explained.
“What we’re doing with the OnceOVR is then allowing the driver or the region manager — whoever is enlisted with that piece of property — to do a OnceOVR on the asset and then from there, based on real market assessment of touching and feeling that vehicle, you can make the decisions on whether you want to keep that vehicle in the fleet, you want to pull that vehicle from the fleet or you want to redeploy that vehicle,” he added.
“And it’s having that information of that specific vehicle: you’ve got the photos; you get the condition report; you get the statement from the driver or manager of what that asset’s condition really is, instead of having it just a static (description of year/make/miles),” Mott continued. “You’re really getting to see what the vehicle looks and feels like. And from there you’re making a more knowledgeable decision as far as when to remarket that vehicle.”
Mott would explain the tie-in to the Fleet Guru system: After using OnceOVR to capture the data on the vehicle, its photos, condition report and so forth, the data is portable, he said.
At that point, it can be distributed to multiple platforms – including such portals as websites for employee sale. Or as Mott put, “wherever they want to go with that data.”
So, say you’re a fleet manager and you’ve decided a vehicle is at the end of its lifecycle and needs to be redeployed, based on data you find via OnceOVR. The Fleet Guru can also aid in decision making for remarketing distribution and channel management.
“That’s where the Fleet Guru comes back in. In the remarketing portion of it, you have multiple vendors that are handling remarketing,” Mott said. “So, whether you go back to your FMC, if you have a vendor like FLD, or if you’re going right to in-lane or online — whatever those are — you can measure the results based on each vehicle that’s being remarketed through each channel.
While ensuring driver safety still is the biggest priority of fleet managers, they’re also quite interested in having a sound plan to remarket vehicles, according to a survey conducted at the 2014 NAFA Institute and Expo by GE Capital Fleet Services.
After safety, 27 percent of survey participants pointed to enhancing productivity. The two biggest areas of focus for enhancing fleet productivity were defining a comprehensive vehicle replacement/cycling plan (30 percent) and specifying the appropriate vehicle for the job (27 percent).
Meanwhile, more than a third of respondents — 35 percent to be exact — identified safety as their main concern for the second year in a row.
In addition, 62 percent of survey respondents said that the main focus of their company’s executive leadership is achieving cost savings.
With this goal in mind, GE Capital Fleet Services noted fleet managers are using a number of tactics to manage costs. A total of 43 percent of respondents cited vehicle purchasing decisions as the greatest opportunity for savings, followed by managing maintenance expenses (32 percent) and activating telematics and analytics solutions (22 percent).
“As fleet managers continue to focus first and foremost on driver safety, they must also concentrate on finding ways to take more cost out of fleet operations,” said Mark Hayes, chief marketing officer for GE Capital Fleet Services.
“Increasingly, fleets are utilizing technology tools that address the dual challenges of cost and safety,” Hayes continued. “These include telematics solutions that alert drivers to potential accidents, intelligent collision alert systems and data analytics that helps predict and manage maintenance costs.”
Additional findings from the survey included:
— Analytics is improving efficiency and saving costs. When asked how analytics have most helped their fleet, 46 percent of fleet managers cited improved operational efficiency, with an additional 22 percent citing cost savings through analytics.
— Alternative fuels are in use at 32 percent of fleets. Results showed 32 percent of fleet managers surveyed stated that alternative fuel vehicles were already in their fleet, with an additional 33 percent planning to incorporate them within the next two years.
“Fleet managers increasingly are analyzing data to make cost savings, safety and productivity decisions based on fleet performance and operations,” said Doug Peters, analytics leader at GE Capital Fleet Services.
“Recently, our team at GE Capital Fleet Services launched MyFleetOffice2, an advanced fleet management and analytics platform, to help decision-makers access deeper and more insightful data and analytics to meet their bottom line and boardroom goals,” Peters went on to say.
For more information about GE Capital, Fleet Services, visit www.gefleet.com.
This week, GE Capital Fleet Services launched MyFleetOffice2, what the company described as an advanced online fleet management platform that can give fleet managers the ability to do more powerful analytics and to complete a wide range of administrative tasks more easily and entirely online.
The company stressed it incorporated extensive input from GE Fleet customers. As a result, officials highlighted the MyFleetOffice2 platform is designed to provide fleets with increased flexibility and functionality, and the ability to access deeper and more insightful data and analytics.
The updated MyFleetOffice2 platform can enable users to:
— Provide ongoing visibility into performance through powerful analytical tools. New reporting features simplify information sharing across the organization to communicate success and drive continuous improvement.
— Access all core fleet administration and decision-making tools online via an updated user interface.
— One-click access to view transactions performed on an asset and locate vehicle-specific expense details.
— Expedite processes, using a new factory ordering experience.
— Maximize productivity and enhance compliance by sending email notices directly out of the system.
“Fleet managers are demanding both greater understanding of fleet performance, and insights into how that understanding can turn into greater cost efficiency, safety and compliance,” said Kristi Webb, chief executive officer of GE Capital Fleet Services. “The MyFleetOffice2 platform will help our customers take advantage of information to drive these valuable business insights.”
In addition to new functionality, the company pointed out MyFleetOffice2 is designed to incorporate its ongoing investments in information security, providing fleet owners with access to 256-bit encryption and multi-factor authentication to ensure that fleet data is protected against unauthorized use.
“MyFleetOffice2 will give fleet decision-makers a complete data picture on a single, integrated platform. Fleets of all sizes and shapes will have the ability to continuously identify insights and proactively create solutions,” said Darrin Hebert, chief information officer of GE Capital Fleet Services.
MyFleetOffice2 is available immediately to new and current GE Fleet customers. Current customers can login at gefleet.com to navigate to the new MyFleetOffice2 platform.
“The launch of MyFleetOffice2 follows a number of technology enhancements designed to improve fleet managers’ access to information and data surrounding their fleets,” company officials said.
“These include telematics tools designed to help customers track powered and non-powered assets, optimize fleet performance via real-time benchmarking, and rationalize cargo decisions to effectively right-size their fleets,” they went on to say.
