November 2012

CarMax Opens Denver-Area Store with Another on the Way


CarMax recently opened its first dealership in the Denver market, and the company said on its website that a second store in the area is “coming soon.”

The newest addition is located at 2600 West 104th Avenue in Federal Heights, Colo. The store consists of more than 27,000 square feet, employing more than 65 associates and stocking about 300 used vehicles of nearly every make and model.

“We continue to grow and expand into new markets, with the opening of our first store in the Denver area,” said Tom Folliard, president and chief executive officer of CarMax.

“Our 104th Avenue store combines new technology and design with our unique brand of superior customer service featuring wireless technology, videos and digital displays and tablets,” Folliard said. “We are excited to bring our unique car buying experience to Denver area residents.”

CarMax’s other store near Denver is planned to be unveiled at 5858 South Broadway in Littleton.

The company also has one other store in the state at 4010 Tutt Boulevard in Colorado Springs.

Officials highlighted that more than 200 local dignitaries and CarMax associates attended a grand opening event at the Federal Heights location. The event included a “Road Rally” for charity featuring local television personalities competing in contests, which included parallel-parking and pack-the-trunk events.

CarMax donated $1,000 to each participant’s charity, and the winner’s charity received an additional $1,000.

The CarMax Road Rally participants included KDVR-TV traffic reporter Ken Clark, KUSA-TV traffic reporter Amelia Earhart, KCNC-TV traffic reporter Joel Hillan, and KWGN-TV traffic reporter Jackie Jing.

Organizations that received the donations were the Salvation Army Intermountain Division, 9 News Lights the Lights and The Action Center.

Online Vehicle Classifieds Site Adds Carfax Reports


Auto classifieds site announced this week that it is linking Carfax Vehicle History Reports purchased by dealers to their listings on the website.  With dealers now able to offer car shoppers free Carfax reports, they can help foster trust and convert shoppers into buyers, officials noted.

“ is one of the most trusted websites for consumers to shop for used cars,” said Eric Bright, vice president of e-commerce at “With over 45,000 visitors per month and growing, we’re constantly looking for new ways to provide the best shopping experience possible.

“Carfax Reports are what online shoppers want and trust for their purchase decision – integrating Carfax Reports helps ensure delivers buyers and sellers an accurate and trustworthy shopping experience,” he continued.

Carfax reports can be accessed by consumers directly from the KSL search results page as well as the vehicle details page. Providing Carfax report links from dealer listings can boost shopper confidence and turn rates, officials noted. They point out that that the turn rate for a vehicle online with a Carfax report is 15 days shorter, on average, than the rate for one that doesn’t have a report.

“Consumers want to see important information reported to Carfax, like a detailed service history and mileage readings, before they buy,” said Larry Gamache, communications director at Carfax. “Providing this information up front builds trust between the buyer and seller. Carfax and are giving dealers the tools they need to help online shoppers find the car they want.”

Minnesota GM Credits Culture of ‘Guest’ Service and Trend-Tracking Marketing Efforts for CPO Success


To Lenny Checheris and company, it’s all about the “guests.”

As general manager of Luther Bloomington Hyundai in Bloomington, Minn., Checheris says customer service is at the forefront of everything the dealership does, from its complimentary showroom snacks to text-message service appointments to its instant-answers live chat.

“We all really work hard at the same goal — to meet guests’ needs,” Checheris told Auto Remarketing  earlier this month. “It’s such an efficient market today, and customers have so much at their fingertips when buying a car. They want to be sure they’re buying from someone who knows what they’re selling, and we recognize that.

“It’s truly understanding their needs, doing a lot more listening than talking. We don’t want to waste their time on horsepower if their ultimate concern is safety for their family. Ultimately, we want to put them in a vehicle that fits their family’s needs.”

The auto group was founded in 1946 by Rudy Luther, with one Pontiac dealership that he grew to eight stores by the time of his retirement.

His son, David Luther, is now president of Luther Automotive Group which has grown to 28 stores spanning Minnesota, Wisconsin and North Dakota. That count will soon rise to 30 as the group adds a Volkswagen and another Hyundai rooftop in Minnesota.

Checheris credits David Luther for the growth of the company, and for instilling a culture of customer service throughout. Luther often reminds the team that shoppers are indeed invited guests at the dealership, Checheris said.

The idea apparently works: Checheris’ store, which opened in the Twin Cities as a Hyundai-exclusive dealership in January of this year following a partnership with Kia and Mitsubishi, has seen its service department honored the past two quarters with the Hyundai banner for having the highest CSI (Customer Satisfaction Inedex) for a rolling three-month average among dealerships in the district.

Unit sales for Luther Bloomington Hyundai’s pre-owned operations have increased more than 30 percent year-over-year, Checheris said, as has service gross. And growth in parts and operations has been “exponential.”

Luther Bloomington Hyundai’s goal for used-car sales is 110 units per month; Checheris says to date, they’re “knocking on the door of 100 units most months.”

He credits its location on American Boulevard, one of Minnesota’s busiest stretches of highway, for the growth of his store. More importantly, he credits staff for embracing CPO, which Checheris has said offers F&I gross profit about 20 percent higher than non-certified vehicles.

“We’re really trying to get traction on CPO,” Checheris said. “It ultimately creates an awareness of, one, Hyundai, and two, opportunities to get units in operation for us in the service department.

“Very few of our cars aren’t certified,” he said. “That gives customers peace-of-mind, and the sales staff the sense that their customer is being taken care of. It also creates awareness. A lot of independent competitors certainly recognize the value of Hyundai products, and certified sets us apart from them.”

Hyundai won the Best Popular CPO Program Award in's 2013 Certified Pre-Owned Awards, which were announced at Used Car Week on Wednesday. Hyundai has now won this honor two years in a row.

While inventory has been tight for pre-owned vehicles this year, Checheris said his store procures the majority of its used vehicles through trade-ins, the service department and Hyundai-focused auctions.

He expects used sales numbers to rise for 2013, thanks to a good incoming flow of lease returns as Hyundai embraces leasing.

A warranty is offered for every vehicle on the Luther Bloomington Hyundai lot, whether a Hyundai or not, Checheris said, and the company offers a five-day return or exchange policy on all vehicles, both new and used.

“We spend an impressive amount of money on reconditioning. Whether a guest spends $5,000 or $50,000, they get the same peace of mind,” he said. “We want good cars on the road; that brings customers back.”

A veteran of the auto industry, Checheris began his career at a Chevrolet store in 1984 while a student at the University of Minnesota, studying business and marketing. He’s been with the Luther group for 22 years.

“I thought it was a cool thing,” he said of his start. “I had a flexible schedule, and I knew the owner, an old veteran who said, ‘This is your own business; build referrals and make it what you can.’

“It’s fun and challenging every month, always something new. I love this business and consider myself blessed, because I’ve never had a career change.”

On Advertising

Checheris also shared his thoughts with Auto Remarketing on the marketing and advertising of used vehicles in today’s fast-paced, mobile climate.

“Being part of a large organization, we do a lot of branding and a pretty good job of driving people to the corporate website, That way, they could be thinking of one car (make) then see another within the Luther family,” he said.

Each Luther dealership manages its own advertising dollars. Though Checheris declined to provide a dollar amount for his store, he said it is “within the guidelines of other dealerships.”

While new-car advertising efforts by the Luther group include television, radio and digital avenues, pre-owned vehicle advertising is focused strictly on digital, Checheris said.

That’s because used-car shoppers generally tend to go straight to the Internet for auto research, he says, especially those he calls “low funnel guests,” who have already focused their buying intentions on Hyundai.

“We promote the dealership website to drive traffic. Everyone’s talking about Hyundai, with rapid growth the last few years, and we want Luther Bloomington to be top of mind when they want to buy,” Checheris said.

Luther’s centralized IT department keeps specials — from new and used cars to parts, service and incentives — posted on the dealerships’ websites, which also offer trade values, instant quotes and pre-approvals, but the efforts go much further.

While industry research from J.D. Power and Associates, and others shows ongoing growth in the use of mobile devices by both new and used auto shoppers, Luther’s approach to mobile demand continues to strategically evolve, Checheris said, from texting, which works “extremely well” for service customers to following the latest technology trends.

“Our IT department realizes that timing is of the essence,” in today’s business climate, Checheris said. “Brian Kenny is the IT director for the Luther Automotive Group, and is one of the best. He stays ahead of the curve ball, and he’s all about the guest experience, to help and engage them. He’s always asking the GMs, ‘How does this help our guests?’ That frame of reference slows us down to think.

“He does his due diligence on the pros and cons of new solutions and puts them to the test. He’s been instrumental in developing our mobile website, that’s user friendly and allows guests to make service appointments, look at our inventory and chat with us instantly.”

Live chat solutions are greatly impacting the Luther group, with much of the contact coming via third-party auto search sites.

 “We’re having tremendous success with chat,” Checheris said. “People are seeking information, wondering if a vehicle is available, or asking about condition. We try to establish relationships before they even get to the dealership.

“Call, chat, any way they want to communicate — you have to modify your sales approach to the coming buyers,” he said. “With chat people expect an immediate reply. Every one of our salespeople are watching their monitors to address our chat solution and you can’t be ambiguous, you have to really answer the questions. Chat is gaining momentum over email; people want answers and if we do that in a good way, they’ll keep us in mind.”

With the cost of advertising, especially digital, at a premium, Checheris says he believes results come from “the sum of all the advertising we do. We hopefully become top of mind, so that whenever people think Hyundai, they think Luther Bloomington Hyundai. We’re looking for market domination in new cars, and our fair share of used in this market.”

Checheris also knows that his allocation of advertising funds can be altered with each new solution to arrive on the market.  

“We have to be nimble, be alert to better ways to attract guests,” he said. “You just have to keep your eyes wide open, because the industry changes at speeds we have to keep up with. With scrutiny, look at ideas and trends that come across in our industry, make sure you do due diligence, and see what will work for you.”

Wholesale Market Seeing Effects of Hurricane Sandy Vehicle Replacement Sales


After seeing considerable dips in prices in the past few months, adjustment rates in the lanes are slowing down, says Black Book’s  Ricky Beggs, and Hurricane Sandy may be behind the change.

Beggs told Auto Remarketing, “We didn’t have any more adjustments this week over last week that were increases, but we had fewer overall adjustments, and it is all being driven by a little more interest in vehicles out there … and the need to replace vehicles damaged by Hurricane Sandy.”

Specifically, according to the latest “Beggs on the Used Car Market” video report, the average segment change within the car models was a downward adjustment of $43, the smallest change since the $37 decline the week ending July 6.

And four car segment types declined $30 or less: entry midsize cars, compact cars, full-size cars and the entry-level cars.

Furthermore, for the first time since August, no car segment type saw a level of decline of -$100 or more, Beggs added.

The truck segments saw an average change of -$65 this past week, which is a slight improvement in depreciation and the smallest declining amount over the past three weeks.

And overall demand for vehicles seems to be picking up due to vehicle replacement activity in the wake of Hurricane Sandy.

In his video report, Beggs said there are a “couple of scenarios” that will work to replace vehicles with physical damage from the recent superstorm.

The Replacement Process & Tight Supply

First, there will be an increase in used values of many, but not all type vehicles, as a result of the increased demand, as used supply is still tight.

Interestingly, this replacement process may tell a very different story than what took place in 2005 after Hurricane Katrina. 

“Tight supply is going to be the biggest issue now versus what we saw during Katrina back in 2005,” said Beggs.

He encouraged dealers to look at new-car sales volumes before these two storms: In the case of Hurricane sandy, the average number falls at about 12 million; for Katrina that number was a solid  16.5 million to 17 million, Beggs said.

What does this mean for dealers?

Beggs explained it means stores are going to have to “reach out a little bit further” when looking for replacement units.

“It isn’t going to just be felt along the Eastern half of the country – dealers will have to look for these units at auctions all over the country,” Beggs explained.

He also noted that today's “mature” online auction environment will make this process a lot easier than it was for dealers recovering from Hurricane Katrina.

“One thing that makes this possible and feasible to happen in the online auctions. You go back to 2005 (during Hurricane Katrina), we had some online business then, but the online business is much more mature and usable now than in 2005.  It is easier to reach out and find specific vehicles now,” Beggs said.

Interestingly, Beggs also shared that with the “sophistication” of the current transportation market, dealers will find it easier to shop around the country than in recent years.

Also, the transportation companies are helping dealers remove damaged vehicles, as well.

But the question on the minds of many is how long will this surge in business from the vehicle replacement process last? Will it carry over into 2013?

“We are thinking it will last through all of December. And once we turn the calendar into January, we are looking to see that normal spring market that always gets a little more aggressive. But it may just be a smooth transition from December into January and February with those levels. But we may not see the traditional kick in January because of current high levels,” Beggs told Auto Remarketing.

Industry to ‘Police’ Flood-damaged Vehicles

Another “scenario” cited by Beggs that will work to replace vehicles with physical damage from the recent superstorm, is the industry's effort to “self- police” to protect consumers from purchasing a vehicle that has been adversely affected by flooding and other damage from the storm.

Beggs reiterated that no dealer wants to get caught with one of these cars and that the industry will “police” this issue to help ensure that this doesn’t happen.

But, of course, Beggs said, “Sure, there are going to be a few damaged units that fall through.”

To cut down on these cases, many vehicle history reporting companies are already reporting on vehicles that may have flood-related damage since they were in areas affected by the storm.

“It doesn’t mean they were damaged; it just means, ‘Hey, look a little closer at these cars,” Beggs said.  


KAR Auction Services Looking to Amend Credit Agreement

CARMEL, Ind. - 

KAR Auction Services said Monday that it is seeking amendments to its credit agreement, dated as of May 19 of last year.

The company explained that amendments to the credit agreement would provide KAR with greater flexibility, including modifications to increase the amount of restricted payments that are, among other things, dividends, stock buybacks and other payments made in respect of the company’s equity securities.

KAR indicated obtaining the proposed amendments requires the consent of a majority of the lenders under the credit agreement.

“We cannot assure that we will receive the requisite lender consent to approve the proposed amendments,” company officials said. “Moreover, if the proposed amendments are obtained, there are no assurances as to the amount, timing or whether the company will in fact make any restricted payments in the future.”

When KAR reported its third-quarter financial statement earlier this month, chief financial officer Eric Loughmiller noted the company’s available cash as of Sept. 30 was $130.5 million. The company’s consolidated net leverage ratio stood at 3.5 times.

“And we have generated $203 million of free cash flow in the first nine months of 2012. We are very proud of this performance,” Loughmiller said. “We continue to be pleased with our cash generation, which has been consistently improving over the last several years.”

TrueCar Introduces New Ad Campaign, Says Corporate ‘Evolution’ Continues


In what the company president and chief executive officer Scott Painter says came as a result of “listening and learning” from customers and the industry, TrueCar Inc., revealed Monday a new print and TV ad campaign as well as some newly designed offerings to create a "no-hassle" environment for consumers and dealers.

The TV spots for the  company’s new “Smart Consumer” ad campaign, developed by DW+H in Santa Monica, Calif.,  are designed to reflect TrueCar’s “institutional obligation to provide the most accurate, comprehensive and insightful data ever published about automotive transactions,” says Painter.

 “It’s about fairness for both buyers and sellers,” says Painter. “TrueCar delivers clear data for auto dealers to supply a fair deal, and consumers receive similar pricing data that empowers and educates. The result creates a balanced process and a trust-based buying experience, between the consumer and dealer, which is precisely the message relayed by our new ads and our website.”

The company is stressing the positive relationship between consumer and dealer in part because the industry expressed concern that the company’s first TV ads released this same time last year focused too heavily on discounted prices.

Commenting on this issue, Painter said, “We never intended for TrueCar Certified Dealers to become associated with heavy discounting. TrueCar does not sell cars nor do we set prices; we provide market based information that helps buyers and sellers to recognize a fair price.”

New Tools for Dealers & Manufacturers

On top of the new ad campaign, the company also recently announced a new suite of market-based analytical tools that it says “will provide dealers and manufacturers the ability to leverage the power of transactional data as they tap into the science of pricing to gain customer trust while retaining margin.”

Painter went on to call the new tools a “fundamental shift in how dealers set prices.”

 “Everybody intuitively understands how powerful this information can be, and as a result of consumer relevance, we had to invest heavily in making TrueCar more balanced,” says Painter. “The idea of ‘leveling the playing field’ must be sustainable for both parties and TrueCar had to learn that lesson the hard way over the past year. The industry demanded balance, we listened and the new TrueCar results in fairness for everyone and confidence that nobody will be making a mistake on such an important decision.”

Some of these new company features announced over the span of the last year, include a modified dealer agreement, an overhauled dealer portal and reduced sales reporting data from dealers, to name a few

For more information, see