CRM and BDC solution provider ELEAD1ONE announced the appointment of a former Asbury Automotive Group manager as its new director of digital marketing.
Tapped for the position is Aaron Baldwin, who will be responsible for the daily operations, product strategy and performance of ELEAD Digital.
The company recapped that ELEAD Digital develops, supports and implements key digital marketing products for their dealer clients, including responsive websites, custom email marketing campaigns, SEO and strategic business development with market leaders.
Baldwin has 12 years of automotive experience and has held numerous positions with Asbury, including Internet manager, regional ecommerce manager, national digital marketing manager, and most recently as director of dealership marketing.
Furthermore, Baldwin has also participated in various advisory roles to Cars.com, AutoTrader.com, Edmunds.com, KBB.com and more.
“Aaron has been a fantastic addition to our team,” said Bill Wittenmyer, partner of ELEAD1ONE, a division of Data Software Services. “His knowledge of the industry, his digital marketing expertise and his commitment to ELEAD1ONE and to our dealer clients are remarkable assets to us. He brings many things to the table as we continue to grow our business.”
Baldwin added that “ELEAD1ONE’s continued improvement, growth and commitment to their customers has thoroughly impressed me over the last decade. They continue to yield products that drive high ROI for our dealer clients.
“Through this passion, ELEAD1ONE has been a driving force in molding today's car business and what it will become in the future. I am excited to be a part of the winning team at ELEAD1ONE,” Baldwin went on to say.
It was announced this afternoon that Mitch Golub, president of Cars.com, is retiring from the company after nearly two decades with the vehicle-listing website.
Dan Jauernig, chief executive officer of Cars.com, will also assume the role of president.
Jauernig is a veteran of Classified Ventures, LLC., the former ownership company of Cars.com. This past August, Auto Remarketing reported on Gannett Co.’s acquisition of Cars.com, a purchase that cost the publishing giant $1.8 billion in cash.
The company reported Golub will stay with the company through March 1 to ensure a smooth leadership transition.
Alex Vetter, current senior vice president, will be taking on a new leadership role as executive vice president and chief operating officer.
Commenting on the news, Golub said, “Working at Cars.com for the past 18 years has been an incredible journey.
“I’ve witnessed the maturation of not only our company but the automotive digital space as a whole. It has been the most rewarding experience of my career, but now is the right time for me to move on. As the leader of Cars.com, my job was to not only help build the business but to ensure the company would flourish long after I left. I am confident that with new owners, the terrific workforce we have and with Dan Jauernig and Alex Vetter at the helm, Cars.com will prosper for many, many years to come,” he continued.
Jauernig added, “I’ve worked with Mitch for over a decade, and I want to thank him for his leadership and the extensive contributions he’s made to Cars.com. He will be deeply missed and I wish him nothing but the best in his future endeavors. Looking forward, we are excited about what’s ahead for this industry and our business.”
The company shared Vetter has helped steer the company’s growth strategy from concept into a multi-faceted sales and distribution model that spans all aspects of Internet marketing, including local, mobile and social media.
Over the years he has operated in nearly every capacity at Cars.com, including product development, customer service, training, operations and currently oversees all revenue-generating activities.
Golub, a highly respected member of the automotive community, has been with Cars.com since its inception in 1997.
As the first employee and founding executive, he has played a pivotal role in the rapid growth of the company, management said.
From a startup with 21 employees, 50,000 vehicle listings and fewer than 1,000 dealer customers in its first year, Cars.com has grown to a more-than 1,300 employee company with more than 4 million vehicle listings serving 20,000 dealers across the country and every U.S. automaker.
During Golub’s tenure, he was responsible for the development of Cars.com’s strategic direction, and ensuring the company’s sales, finance, marketing, product development, media and business development areas were all closely aligned with the company's vision and positioned for sustainable growth.
Today’s news was originally reported by Cliff Banks of The Bank Report, as the announcement revealed earlier today to employees through Cars.com internal communication.
The National Auto Auction Association announced this week that it has increased funding for its Warren Young, Sr. Scholastic Foundation, to be used for its annual merit scholarships, by $1,000. The new total funding amount, $52,000, will continue to help allow the nonprofit organization to give scholarships for both full-time and part-time students pursuing education at four-year, two-year, and vocational-technical schools.
The increase was voted and approved by the organization’s board of directors following the success of the Black Book Pedal Car Auction, the fundraiser held during the 2014 NAAA Convention, which raised $576,300 for the NAAA’s scholarship program, over ten times the original fundraising goal.
“It didn’t take long after seeing the results of the pedal car auction for the board to meet and reach its decision to increase the amounts,” Jack Neshe, 2013-2014 NAAA president, said. “We were extremely gratified by the support that far exceeded our expectations and felt such generosity required a gesture in the same spirit on our part.”
Starting next year, the program will offer eight $5,000 scholarships for full-time study at four-year institutions and four $3,000 scholarships for study at two-year colleges or vocational-technical schools. The association has previously provided 120 scholarships for students since it established the program in 2004.
In other auction industry news, KAR Auction Services announced this week changes in its IT Shared Services department. Changes include the promotion of Chris Seitz to vice president, a newly created position, while George Shaughnessy, the director of ITSS, assumes responsibility for infrastructure services. The organization also welcomes Ryan Kreag, who assumes the role of director of platform services. Mary Kineatz has been promoted to Shaughnessy’s former position and takes on the role of director of ITSS.
“I’m very excited about these changes,” Gary Watkins, the chief information officer of ITSS, said. “Our new service delivery model streamlines responsibility for all aspects of IT Shared Services while reacting additional leadership positions, supporting career growth and allowing IT Shared Services to scale in size.”
Manheim announced this week the new job titles adopted by three of its leadership staff. Dianne Earley is now vice president, sales operations; Matt Trapp takes on the role of market vice president for the Mid-Atlantic Region; and JD Daniels now serves as general manager at Manheim Phoenix.
Earley, formerly the market vice president for the Mid-Atlantic Region, started her new position in August and now reports to Tim McKinley, the senior vice president of sales for Manheim North America.
“Dianne provides leadership and direction for a team of sales operations managers and directors responsible for strategy analytics, sales effectiveness, customer relations and inside sales,” McKinley said. “She enables us to be more effective in our daily interactions and will help us increase both customer volume and revenue.”
Trapp, moving from his former position as senior director of adjacent growth, will fill Earley’s past position, where he will report to Mike McKinney, regional vice president, east region operations.
“A key part of motivating talent and providing solid customer experience is to have the right leaders in place,” McKinney said. “Matt’s innovative thinking and cross-functional business sense make him an ideal fit for this key role.”
Daniels takes on the role of general manager at Manheim Phoenix after spending several years as general manager of Manheim Detroit.
“JD has built very strong relationships with customers,” McKinney said, “and Manheim Phoenix will benefit from his leadership and experience.”
One of the presenting sponsors of the Re3 Conference, Digital Recognition Network, announced three major personnel moves on Tuesday, including the return of the company founder.
After departing from Recovery Database Network about a week ago, Todd Hodnett is returning to DRN as executive chairman.
In this role, Hodnett will focus on the overall strategy of the company with particular focus on continuing DRN's success in ensuring positive results around DRN's legislative and government affair initiatives. Additionally, to meet DRN's needs for new innovations, Hodnett is spearheading the company's efforts incubating new technologies and ecosystems on an international basis.
Hodnett will also continue his role as the chairman of DRN's board of directors.
Meanwhile, DRN chief executive officer Chris Metaxas indicated Alex Young is joining the company as vice president of risk solutions. Metaxas noted Young has formidable background in the insurance industry working for many of the leading risk and underwriting platform providers.
In this role, DRN said Young is building a new business unit for DRN focused on the insurance industry.
“DRN's ability to provide actionable insights for the insurance industry represents a significant addressable market,” Metaxas said. “The insurance strategy provides for creating new, license plate recognition (LPR) based, analytics solutions as well as building out new channels of distribution.”
Young is currently building out the team and the partnerships to fast track DRN’s success in the insurance industry.
Worldwide markets represent another area of growth for DRN. In a joint partnership with Vigilant Solutions, Stuart Mallory, vice president of international markets, now heads up the efforts in building out a worldwide marketplace for DRN's solutions. This includes creating new channels of distribution in high propensity markets such as the Europe, Middle East, Asia Pacific and Latin America with a focus on both commercial, governmental and security applications.
The company indicated Mallory will actively develop partnerships with "in country" providers to replicate DRN and Vigilant Solutions success in new worldwide markets.
"DRN's growth comes on the heels of an exciting year for us. We have seen the shift of providing LPR-based data and analytics take hold with our customers in a big way," Metaxas said.
The developments include the release and adoption of SmartRecovery, DRN's subscription based LPR solution and the release and customer adoption of DRN's Smart Collections Platform. Smart Collections can provide actionable insights for organizations to quickly and easily pinpoint their consumer using data derived from DRN's extensive database of LPR data.
“I am very excited to see the traction we have with major clients taking advantage of our solutions and partnering with DRN to look at new strategies for mitigating risk and realizing improved returns to their operations,” Metaxas said.
At the Re3 Conference, Metaxas will explain how — for some — focusing your efforts on the “old” Re3: recovery, repossession and remarketing, is like driving on empty.
Metaxas will teach audiences about the “new” Re3: revenue, risk reduction and returns, and will help fill your tank with the insights and solutions that put the focus on what lenders really want. Get the details on how to address client needs at each stage of the loan’s lifecycle for increased revenue.
Join Metaxas at 11:15 a.m. on Wednesday, Nov. 12 for his session, titled “Stop Driving on Empty with the New Re3.”
Attendees must make hotel reservations at the Red Rock Casino, Resort and Spa before Oct. 17 to secure accommodations at the exclusive conference rate of $195/night.
For more information about the conference or for a complete agenda, visit http://re3.autoremarketing.com.
TrueCar announced today the addition of four new members to its National Dealer Council. The 20-member advisory panel of retail automotive experts collaborates via meetings several times per year with TrueCar executives to improve the car-buying and trade-in experiences for both dealers and consumers.
Gary Marcotte, the council’s chairman and senior vice president of marketing and ecommerce at AutoNation, believes in TrueCar’s mission to incorporate dealer opinions in its offerings.
“What makes this council unique from the others I have been on is that it truly partners with TrueCar,” Marcotte said. “The level of respect and access that TrueCar affords the dealers and their views is unprecedented.”
The new council members include:
- Todd Berkowitz, owner of Manchester and Ocean Subaru in New Hampshire
- Herm Brocksmith, president and general manager of Kuni Honda in the Denver area
- Jessica Germain, the director of customer experience and employee engagement for the Germain Motor Company
- Brian McMaster, the director of e-commerce for Hendrick Automotive Group.
“This council has already helped reshape the car-buying experience for our network of 8,000-plus TrueCar Certified Dealers,” John Krafcik, TrueCar’s president, said. “We look forward to working with this expanded council, now representing all major automakers, as we work together to transform the trade-in process in a way that delivers empowered and delighted consumers and dealers.”
For those of our readers who participated in the remarketing of off-lease vehicles in the late 1980s and early 1990s, you will remember the scenario.
Vehicle manufacturers, through their captive finance companies, in a effort to keep the factories running at full capacity, and with a goal of maintaining and gaining market share, offered aggressive incentives, in the forms of cash-back, enhanced lease residuals and rate subvention. Each of these tools translated into lower monthly lease payments, with the goal of attracting additional conquest sales. It was a zero-sum game.
Demand was finite. Some manufacturers won at the expense of others. That fact simply impelled those who were losing market share to further enhance their product offering. It created a vortex that resulted in the balance sheets of most manufactures and their captives to bleed from the gills.
At that time, predicated on union contracts, from a bottom line perspective, it was cheaper to keep the production lines humming and squeeze margins, than it was to close down lines and continue to pay idle workers. Whatever the rationale, however, the results were the same — catastrophic losses.
Let us also remember that the banks also participated in vehicle leasing. Based on the aggressive programs of the captive finance companies, banks felt compelled to follow suit.
Most banks incented their teams so that they could line their pockets if they generated new lease contracts. And guess what? The teams followed the money. Higher residuals translated to more bank and independent finance company paper being purchased by the dealers.
Since the lease profitability model front-end loads the balance sheets, senior executives were smiling. At lease termination, senior management was twisting in the wind.
The Lesson at Lease Termination
The flood of off-lease vehicles was dumped on their doorsteps. The market could not absorb the volume. Under normal market conditions, the funding sources would have been challenged, upon sale, to recapture the aggressive residual values.
That fact, exacerbated by the increased volume of off-lease vehicles led to billions of dollars of losses.
The manufacturer losses were somewhat mitigated by the fact that they had the potential for two sources of profitability — the spread between manufacturing cost and dealer invoice, and on the financing. However, the gains on sale to the dealers did not offset the residual losses. Most manufacturers lost more on the gap between lease residual and sale of the off-lease vehicle that they initially gained on the sale of the vehicle to the dealer.
Banks and independents, on the other hand, had only one source of potential profitability: finance income. On a portfolio basis, the losses on the sale of the off-lease vehicle far exceeded the income from the lease contract.
Unless a bank had created a private-label program with the manufacturer to fund contracts with the manufacturer providing some level of financial support to cover the predicted loss that the bank would incur on the sale of the off-lease vehicle, the bank experienced significant economic pain. Even the ones that did have a private-label program experienced losses, for the manufacturer did not entirely close the gap between lease residual and sale price — net of remarketing expense.
Today
The past is prologue. Those who do not learn from history are doomed to repeat it. In our industry we seem to suffer from amnesia. Vehicle financing is a fairly simple product.
We, the enemy, feel compelled to tweak the product in an effort to build a better mouse trap. Those who currently craft the leasing product were most probably not involved in the automotive finance industry 25 years ago; If they were, their voices have been silent.
Let’s examine the state of the union. From the data collected by CNW Research, the average discount across all make/models on new-vehicle sales is 8.74 percent, or neatly $4,000. Ford F-150, in its quest to remain the No. 1 selling vehicle, leads the way with 14.33 percent in incentives off MSRP.
For the economy car sector, incentives reduce transaction price by almost 12 percent of MSRP. When transaction prices fall, they put enhanced pressure on same make used-vehicle sales. Moreover, coupled with these discounts are programs such as zero percent financing or subvented interest rate financing. These two factors, introduced into the equation, add another layer to lower monthly payments.
This dynamic has a negative impact on used-vehicle pricing. The following example clearly demonstrates the inexorable link between new- and used-vehicle pricing.
New Vehicle
- MSRP: $30,000
- Transaction Price/Capitalized Cost (including factory and dealer incentives): $27,000
- Money Factor: .00125 or approximately 3 percent APR
- Lease Term: 36 months
- Residual Value: 50 percent or $15,000
- Monthly Payment: $385
3-Year-Old Used Vehicle (same make/model)
- Transaction Price – same make/model: $15,000
- Loan APR: 3 percent
- Term: 36 months
- Payment: $436
The consumer/borrower would have to finance for approximately 42 months to reduce the payment to reflect the lease payment on the new vehicle — and when the loan was paid off, he/she would be driving a 7-year-old vehicle.
This example also assumes “A” credit/ FICO score. If the APR were increased, obviously the gap between the monthly payments would widen. Will there be a compelling reason that drives used-car drivers to off-lease units?
Will the market support the $15,000 price of the used vehicle — will the market make adjustments based on the supply/demand curve and the implicit transaction price of the new vehicle?
Remember that lease residuals are calculated as a percentage of MSRP, not of transaction price. The vehicle in our example, in effect, has a lease residual of ~55.6 percent ($27,000 x 55.6 percent = $15,000). Will the market support this level of retention value? If we look to history, the answer is “doubtful.”
In short:
- Used-car monthly payments are bumping their heads against new-vehicle lease payments.
- Since markets are rational, used-vehicle values will weaken, and there will be a negative gap created between residuals at lease termination and market values.
- Exacerbating the challenge are four other factors:
- The economy is not yet robust. Indicative of this reality is the fact that in Tampa, Fla., the “affordable” purchase price for a vehicle is $14,209, with 20 percent down (Interest.com)
- Average amount financed for new-vehicle transaction: $27,430
- 72-plus month loans approximate 33 percent of all new-vehicle loans, and all loans have an average duration of 66 months (J.D. Power)
- Leasing represents +/-26 percent of new-vehicle sales
The salient question: Will the supply of off-lease vehicles overwhelm the marketplace in an environment of challenged credit scores — and at a time when a third of the market is locked into long-term loans which effectively push them off dealer lots for a protracted period?
Storm clouds are already on the horizon. The fundamentals inherent in the linkage of new- and used-vehicle values are already rearing their ugly heads.
Once more, Art Spinella, president of CNW Research, in a recent article demonstrates how this linkage has already manifested itself. CNW conducted a study of lease contract residual values and compared them with projected vehicle values at lease termination. The results should be discomforting for portfolio managers. On an industry-wide basis, the analysis indicated that the average recapture percentage will be 85.88 percent.
Specifically, for a vehicle with a $15,000 residual value, the projected recapture would be $12,882 minus the termination fee, it applicable, plus expenses incurred in the remarketing process. For the premium sector, the percentage translates to thousands of dollars in potential losses on each vehicle. Parenthetically, CPO may cushion the blow, but will only modify the losses.
So, if the data proves to be predictive of future values, then the stars are aligned, history will repeat itself, and the automotive finance industry will be in for a bumpy ride. Hold on to your seats. We may be in for a blood bath. Look to the past as a valid indicator of the future.
Editor's Note: Stuart Angert was the chief executive officer of Remarketing Services of America from 1991 through 2006.
A former Dominion Dealer Solutions executive joined the team at The Next Up as vice president of sales on Tuesday.
Bringing to the company more than 14 years of experience in the automotive industry is Mark Stringfellow, who most recently served as the national sales manager of key accounts for Dominion Dealer Solutions.
In his new role, the company indicated Stringfellow will be responsible for business development and the creation of key partnerships to drive aggressive growth for The Next Up, a retail sales process (RSP) that is geared to make sales teams more effective and increase test drives, write-ups and sales.
The Next Up highlighted Stringfellow comes to the position with a wealth of knowledge on both automotive industry processes and inventory management from his time spent at Dominion. During his 14 years with the company, Stringfellow held numerous roles including: operations manager, marketing director and national sales director of key accounts working with automotive groups like Asbury, AutoNation, Lithia, Larry H. Miller, Sonic and Van Tuyl, among others.
“I’ve worked with enough management teams and stood in enough dealership showrooms to see missed opportunities across the board. Missed opportunities are driven by all the moving parts in a store that must be managed by sales managers,” Stringfellow said.
“With The Next Up, we bring true transparency to the management team based on what’s happening on the dealerships lot and the showroom in real-time,” he continued. “Sales managers can now see where the fall off is during the sales process and make immediate adjustments in order to sell more vehicles.
The Next Up is the first technology I’ve seen that takes the known entity of digital traffic and combines it with the unknown entity of walk-in traffic and outputs a true traffic number,” Stringfellow went on to say. “From there, management is able to coach and condition their team on how to grab those missed opportunities, improve in areas in which they’re weak, and increase their sales each month.”
The Next Up founder and chief executive officer Clint Burns added, “We’re looking at a year of tremendous growth and obviously Mark’s work during his time at Dominion and the relationships he established while there will help propel us to the next level.
“Mark immediately understood the value of having transparency across the sales team and the invaluable knowledge our back end data provides. We’re thrilled to have him on the team,” Burns said.
For more information about The Next Up’s retail selling process, visit www.thenextup.com.
On Tuesday, ADESA promoted Zach Hallowell to president of its subsidiary, Recovery Database Network (RDN).
The company indicated Todd Hodnett, who most recently served as RDN’s president, is leaving RDN to pursue another business venture. However, Hodnett will remain in an advisory capacity for RDN through the end of the year.
Hallowell joined RDN as chief operating officer in January 2013. In this role, he worked closely with the company’s chief executive officer on all aspects of RDN’s daily operations.
Prior to RDN, Hallowell served for five years as business line director for OPENLANE, which KAR Auctions Services acquired in late 2011. The company highlighted Hallowell has extensive experience developing and managing online marketplace systems, especially in the wholesale automotive space.
“Zach has played an integral part in delivering innovative technology solutions for our customers and our industry,” ADESA CEO and president Stéphane St-Hilaire said. “He is a skilled professional, and I look forward to him leading our team at RDN.”
ADESA also mentioned other management changes at RDN.
The latest moves include the addition of a new director of sales, John Houston, who has 15 years of experience in the auto loan industry, in areas ranging from recovery and collections to auto finance. Most recently, he served as a consultant in the industry, developing new auto finance products.
RDN has also appointed Holly Balogh to senior director of operations and Kathy Toal to senior director of client services.
Balogh previously served as senior product manager for RDN and has more than 20 years of business experience in product management and technical development.
Toal previously served as management director for RDN. She began her career in loss mitigation management in 1982 and has worked in retail and banking situations in addition to auto finance.
Capital Automotive Reconditioning Services announced the appointment of a new chief operating officer. Kay Hudson, formerly the senior vice president of operations, took the role of COO effective Sept. 1 after more than five years with the company, which she joined in 2008 as the human resources director.
Ron Hope, CARS Recon’s president and chief executive officer, announced the new appointment as part of a realignment of responsibilities within the company.
“Kay’s extraordinary leadership ability and her previous assignments at CARS make her ideally suited for her new role of chief operating officer,” Hope said.
As the COO, Hudson will be manage auction operations, training, employee development, human resources and new product initiatives for the company.
“I am looking forward to this new chapter in my professional life,” Hudson said. “We have an outstanding field staff of managers and employees at CARS, whose support will be invaluable to me as I assume these new responsibilities as company COO. I am eager to work with all of them as we refine our operations and expand the company’s presence in the marketplace.”
