Greenlight Remarketing - Inside Lane

GREENLIGHT
DRIVING GROWTH FOR THE REMARKETING PROFESSIONAL
DIGITAL LIFE
How new technology has shifted
buyer expectations and
seller strategies
P4
INNOVATIONS SPEED
UP THE AUCTION
PROCESS P9
DO MOBILE APPS
IMPROVE CONDITION
REPORTING - OR
COMPLICATE IT? P10
ISSUE 25
WHAT DO
YOU THINK?
YES. We really want to know your opinion of
GREENLIGHT REMARKETING magazine.
We welcome your ideas, suggestions or other comments at:
http://bit.do/Greenlight-survey
As a thank you, the first 50 readers to respond will receive a limited-edition
Santander Consumer USA baseball cap just in time for spring training.
Quality • Price • Value
Selection • Performance
Service • Satisfaction
IN FRONT
LEADERSHIP
Showing the Way
We’re gearing up for a big year at Santander
Consumer USA remarketing.
3
CONTENTS
9
But before we look ahead, we will take a look
back for the fourth straight year at those auction
partners who were among the strongest in 2014,
through our Santander Auction Partner Awards.
The awards, which go out at the annual Conference
of Automotive Remarketing, scheduled March
17-20 in Las Vegas, NV, recognize auto remarketing
professionals who are showing the way in the
industry. This includes our Auction Representative of the Year award to a
top Santander employee.
Otherwise, we’ll be naming an Auction Partner of the Year, Overall
Auction of the Year, E-Commerce Auction of the Year, Operational
Auction of the Year, and best performing auctions in four regions.
We also will recognize those winners in this column in next quarter’s
edition of GreenLight Remarketing.
THROUGH THE LOOKING GLASS:
Consumers get a window into wholesale auctions
***
Meanwhile, we’re anticipating big things from our new Chrysler Capital
off-lease program as vehicles begin to hit the auction lanes. We expect
to start with around 1,000 vehicles in March, increasing to 3,000 by May
and settling in around 2,000-3,000 monthly the rest of 2015.
Active Auctions
Buy Santander Consumer USA vehicles
at auctions nationwide
We’re excited about the opportunity to get this program, more than a
year in the making, up and running with Chrysler Certified products
that meet the same standards to which auction participants have
become accustomed through Santander Consumer USA’s Santander 7
certification program.
Into the Fast Lane
Wholesale auctions poised for innovations
in speed and convenience
***
We also are eager to get your feedback on GreenLight Remarketing
magazine. Take a look at the facing ad for more details, and then take
a few minutes to reply – and possibly receive one of 50 limited edition
Santander Consumer USA baseball caps just in time for spring training.
***
4
6
8
10
11
Digital Life
What does growing digital adoption mean
for the auction industry?
Condition Reports on the Fly
Mobile apps and smartphone cameras
allow for fast and detailed condition reporting
Lease Returns Don’t Dent Residuals
Three-year leases keep rolling in,
but wholesale values hang tough
Finally, we hope you find this edition of the magazine informative, and,
again, thank you for your business.
Brent Huisman
SVP, Asset Remarketing
Santander Consumer USA Inc.
GreenLight Remarketing is published by Royal Media on behalf of Santander
Consumer USA Inc. For more information about Santander Consumer USA or
RoadLoans™ call 888.540.5626 or visit www.santanderconsumerusa.com.
Royal Media can be found at www.royalmedia.com.
©2015 Santander Consumer USA Inc.
4
AUCTION STRATEGY
DIGITAL LIFE
How new technology has shifted buyer
expectations and seller strategies
BY KAREN JONES
T
HE PERVASIVE GROWTH OF DIGITAL
technologies has been a game changer for
auto auctions, both in-lane and online. In
less than 20 years, buyer and seller adoption of technology has gone from curiosity or caution to “I need this,” according to Mike Williams,
vice president of mobile and direct sales at Black
Book. From data compilation and distribution to
live streaming, online bidding and mobile apps,
digital technology today “is an integral, intertwined part of the business,” says Williams. “It is
no different than having a parking lot.”
Marketshare is trending up for online/simulcast-only auction sales, but has yet to dominate,
according to 2013 NAAA data, the most recent
available at press time. Figures for 2013 are at
17.4% of total volume, up from 14% in 2009. This
signals a slow but steady adoption of online auctions by dealers from the days of the first industry
simulcast in 2002 to now, says Larry Dixon, senior
manager of market intelligence at NADA Used Car
Guide.
The tipping point was establishing trust in
technology, adds Dixon. “Trust is critical for a deal-
er, especially online.” He emphasizes that instead
of kicking the tires at live auctions, dealers had to
develop confidence in digital delivery systems of
vehicle data to influence their bids and participation online.
“Condition dictates, to a degree, what dealers
will pay for a vehicle, and if they guess wrong then
profits may be squeezed, or there may be no profits at all,” says Dixon. He adds that in an industry where net profit for dealerships in 2014 before
taxes averaged approximately 2.5% of total sales,
today’s dealer must be techno-savvy.
AUCTION STRATEGY
THE WORLD SPEEDS UP
Jeff Hart, senior director of digital administration at Manheim, agrees with Williams. “What
used to take days now can be done in hours or
minutes.” Instead of doing research by physically
attending an auction several days ahead to “walk
the inventory,” dealers can use online condition
reports and digital imaging of presale inventory
“to refine what they are looking for, review the vehicle details, wholesale values through Manheim
Market Report, (look at) vehicle history reports
and create a list to buy, all without leaving the office” he says.
Also gone are the days when buying and selling
was confined to specific auction dates or times.
If buyers need a vehicle immediately, “with a few
simple clicks they can search, compare and buy
the vehicle they need,” says Hart. He adds that last
year, dealers purchased 400,000 vehicles through
Manheim online channels, noting that this figure
does not include in-lane/online simulcast sales. A
byproduct of inventory moving through alternative
channels is that “it allows auctions to provide better placement for sellers who want to sell in-lane,”
observes Peter Kelly, president and CTO of KAR
Auction Services.
“There is a whole spectrum of activities and
choices available today,” says Kelly, who is also
a co-founder of Openlane, acquired by KAR unit
ADESA in 2011. The company has invested heavily
in technology infrastructures, online and mobile
tools for auctions and upstream programs.
TradeRev, for example, is an online tool with
mobile capabilities, allowing a franchise dealer
who has a trade-in to do a quick appraisal and
launch that vehicle into an immediate one-hour
auction where other dealers can bid. “He can sell
that vehicle in real time before it leaves the dealership,” says Kelly.
With an eye on continuing to refresh dealer
confidence, newly launched ADESA Assurance
offers a 30-day $30 return guarantee for selected
off-lease vehicles sold on ADESA DealerBlock, the
company’s 24/7 online marketplace. “$30 is a very
low price for peace of mind,” says Kelly, and peace
of mind is translating into sales. Kelly confirms
that today “close to 40% of cars sold through
ADESA are sold through an online bidder.” That
figure includes cars at a physical auction or upstream.
Upstream is the name of the game at SmartAuction, Ally Financial Inc.’s wholesale internet
auction platform for remarketing vehicles for consignors that include OEMs, financial institutions,
rental agencies and fleet companies. Founded
in 2000, it has sold 4.7 million cars to date, says
Steve Kapusta, vice president of dealership online
services at Ally. He adds, “We expect to hit 5 million in 2015.” Kapusta says the impetus for success in this platform “is to describe accurately and
stand behind the purchase.”
Photo: Art Kanovalov
The good news, says Dixon, is the industry as
a whole has recovered and is nearing the volume
of 2000 to 2006 with 16.4 million new cars sold in
2014. He adds that both new and used markets are
doing “incredibly well.” Used car-sales hit 42 million units in 2014, with prices up 18% since 2007
“due to strong demand and declining supply.”
Even more telling, used-car gross profit margins
were at 12.7% as opposed to 3.7% for new. “That
is why some of the larger dealer groups are placing
more emphasis on used cars, which makes digital
technology even more critical,” says Dixon.
Today’s techno-savvy dealer is a multi-screen
multitasker, who can utilize digital technologies to
keep used-car inventory flowing in and out of lots
very quickly, says Williams. “It’s all about maximizing efficiency of information right now. Fifteen
years ago, a dealer might have one audio/video
screen open.” That has evolved to numerous digital screens — desktops, laptops, smartphones,
iPads — delivering information simultaneously.
“He could be looking at a wholesale site, retail
site, bidding online or checking pricing information” he says. “Dealers are juggling more information than before and doing more with it. They are
the centralized person directing their businesses
and making sure everything is moving fluidly.”
FOCUSED CONSUMERS
Technology has also created a much more
savvy consumer who “flows back up the channel,”
says Dixon. “Dealers recognize that consumers
today have so much access to pricing data, and
that influences what they are willing to spend.”
Data that can be mined from consumer emails
and other online sources will influence the types
5
TradeRev’s full suite of information is easily
accessed on mobile devices, facilitating far
more rapid trading and selling cycles.
of vehicles dealers will purchase. With a greater
understanding of what today’s used-car buyers
want, dealers are better able “to tap into technology to find where those vehicles are anywhere in the
country, and have them shipped directly to them,”
says Dixon.
Though the availability of digital information
means that many consumers now enter a dealership knowing what vehicle they want to buy and
what they will spend, making traditional negotiating more challenging, it confirms regional preferences, which is key for inventory.
Kelly senses that dealers today “are much more
focused on the exact type of inventory they are
seeking to buy. They are coming into the auction,
online or in person, with a defined purchase list.
They are focused on getting the right inventory mix
into the dealership to meet the retail needs of the
community.”
He also sees no downside to technology from
the dealer point of view. “Nothing has been taken
away from the buyer,” he says. “If they have a preference to come and participate in-lane, that is still
available, and we welcome that.” Kelly adds that
with digital technologies there are more choices
than ever. “Technology is driving efficiency and,
from our perspective, we just need to be in tune
with the trends and the opportunities they create.
We need to make sure we make the investments to
stay current and ahead of the game.”
“Trust is critical for a dealer, especially
online ... Condition dictates, to a degree, what
dealers will pay for a vehicle, and if they
guess wrong then profits may be squeezed,
or there may be no profits at all.”
— L arry Dixon, senior manager of market intelligence, NADA Used Car Guide
6
AUCTIONS
ACTIVE AUCTIONS
Manheim Seattle
Wednesdays
Brasher’s
Northwest
Brasher’s Idaho
Thursdays
Dealers get a close-up look at vehicles rolling through the
Santander Consumer USA (Santander) auction lane at ABC’s
recently renovated Bowling Green location.
Brasher’s
Sacramento
Brasher’s
Salt Lake City
Tuesdays
Brasher’s Reno
Wednesdays
ADESA Golden Gate
Tuesdays
ADESA Las Vegas
Manheim Southern California
Thursdays
ADESA Los Angeles
Fridays
ADESA Phoenix
Wednesday
Manheim Tucson
Manheim Hawaii
Wednesdays*
Ringman Tommy Knight, left, manages a Santander Consumer
USA (Santander) auction lane at Manheim’s Southwest Atlanta
location along with Nick Coney, top left, auctioneer Tommy
Echols and Marcia Bennett.
Auto Auction
RV Auction (please contact auction for dates)
Boat Auction (please contact auction for dates)
Dealers AA
of Alaska
Wednesdays
AUCTIONS
Manheim NorthStar
Minnesota
Thursdays
Manheim
Minneapolis
Manheim Detroit
Thursdays
ADESA Colorado Springs
Manheim
Kansas City
Wednesdays
DAA
Oklahoma City
Thursdays
ADESA Dallas
Thursdays
ABC Bowling
Green
Fridays
Manheim
Louisville
Thursdays
Manheim New York
Wednesdays
ADESA New Jersey
Thursdays
Manheim New Jersey
Wednesdays
Bel Air Auto Auction
Tuesday specialty; Thursday Auto
ADESA Cincinnati
Tuesdays
ABC St. Louis
Thursdays
Manheim Denver
ABC Lancaster
Wednesdays
Americas Auto
Auction - Chicago Manheim Ohio
Wednesdays
Tuesdays
Manheim
Arena
Tuesdays
ADESA Concord
Wednesdays
Capital City AA
Fridays
Manheim Balt-Wash
Tuesday
Manheim North Carolina
Mondays
ADESA Charlotte
Thursdays
Carolina Auto Auction
Wednesdays
Manheim Nashville
Tuesdays
ABC Birmingham
Wednesday specialty
Manheim Dallas
Wednesdays
Manheim
Mississippi
Manheim DFW Thursdays
ADESA
Birmingham
Wednesdays
ADESA Atlanta
Wednesdays
Manheim Georgia
Tuesdays
Americas AA - Greenville
Americas Auto Auction
Tuesdays
Manheim
San Antonio
Wednesdays
ADESA Houston
Wednesdays
Manheim Lakeland
ABC Baton
Rouge
Thursdays
Manheim Central Florida
Wednesdays
Manheim Tampa
Thursdays
ADESA Tampa
Mondays
Weekly weekend online events are available through OVE and ADESA Dealer Block. Contact your favorite auction or go online to ADESA.com, Manheim.
com or OVE.com for listings. Copart and IAAI auction sites are available across the country. Please visit www.copart.com and www.iaai.com for details.
*Contact auction for exact sale date
7
8
TECHNOLOGY
LIFE IN THE FAST LANE
Digital advances bring online auctions up to speed
BY PHIL RYAN
It’s about time.
Cars have been sold at wholesale auctions online for more than 10 years, and familiarity with
the idea is now firmly established in the industry.
The next speed bump is, well, speed. Major initiatives are now underway by industry players to
make digital buying and selling faster and more
efficient, more like the flashy apps that young
people are beginning to consider the norm.
“There’s definitely an increasing level of comfort with digital in the industry,” says Joseph
Miller, head of marketing for AutoIMS.
Miller points to several initiatives to increase
efficiency around the edges of transactions. “Efficiency continues to improve with each of the
online processes,” he says. For one thing, the
wall between digital and physical is coming
down, and processes can move between the
two with minimal friction. “Data is improving
the handoff process between the digital and the
physical.” Data is now available, from transport
companies that can “trigger when a car goes up
for sale on a certain platform”, Miller says. In
other words, periods when vehicles are in transit
are shrinking, leading to more time for selling.
Inspections are also becoming more efficient,
thanks to the proliferation of mobile devices.
“We’re seeing more and more third-party inspec-
Consumers go online almost exclusively to track
down vehicles they want, and compare prices.
ADESA and Manheim provide dealers with the
same type of access to wholesale selling.
tions, and handheld inspections” Miller says.
Data is tying these various reports together and
rapidly providing buyers with more accurate pictures of vehicles.
Manheim is also using data to improve the
user experience within digital auctions. In October 2014, the company began requiring sellers
on its sites to set starting bids just three bids
below their floor price. The idea is to make sure
“the prices are real. In the past, the gap could
be so wide — thousands of dollars away — that
buyers would put in bid increments, and it could
take so long to get there, or never get there, to a
realistic floor price.”
MOBILE ADVANCES
ADESA says that buyers want vehicles to be
easy to find online and to be properly priced. To
this end, the company released a new app in the
fall of 2014 called ADESA Marketplace that allows users to quickly find, research, and accurately price vehicles. The app is a companion to
ADESA’s older app, Liveblock, which allows buyers to participate in physical auctions via mobile
devices.
“The Marketplace app basically offers all of
the other functionality available on our website,”
says Peter Kelly, president and CTO of KAR Auction Services, ADESA’s parent company. “It also
lets customers find vehicles on the auction lot
faster with the app’s GPS function. And customers can instantly access the vehicle information
by using the app to scan the VIN. These apps
definitely speed up the process for customers.”
Eggert sees the situation as not just the advancement of technology, or even growth in the
comfort of industry players, as much as it is retail
innovations carrying over to the wholesale side.
Getting opening bids closer to floor prices is
just the start of the greater efficiencies that are
possible, she says. “If we consider all the Cox
Automotive assets,” she says, “sites like AutoTrader, Manheim, and Kelley Blue Book, there are
better decisioning tools we are able to provide to
our buyers. Specifically, there are retail innova-
tions we can bring to wholesale data.” Manheim
is increasingly able, she says, “to better leverage
the data to help wholesale initiatives.”
Not every retail initiative translates precisely
to wholesale, however. (Eggert’s previous work
at AutoTrader, from which she transferred in August 2014, gives her some perspective on both
sides of the equation.) “If a car has more demand on the retail side, we have a better idea
of what it is going to sell for” she says. “On the
retail side, you negotiate one-on-one, versus
wholesale, which is based on bidding, and there
is a long tradition of bidding the price up.” Data
modeling in wholesale is advancing to allow for
better predictions of a vehicle’s ultimate sale
price, Eggert says.
“We’re in a space on
the wholesale side,
where retail on the
digital side was five
or 10 years ago.”
– Jenifer Eggert, vice president of digital
services, Manheim Auctions
Data and the computing power lent by mobile
devices have empowered dealers to find the cars
they want faster and more accurately. Simply
put, wholesale buyers now know more without
being anywhere near the vehicle.
“There was a time on the retail side where consumers moved past listings to online and now
it seems like, culturally, dealers and customers
are asking for this on the wholesale side too,”
Eggert says. “We’re in a space on the wholesale
side, where retail on the digital side was five or
10 years ago.”
CHANNELS
THROUGH THE
LOOKING GLASS
How introducing consumers to wholesale
auctions could revolutionize remarketing
BY LARISSA PADDEN
No matter how profitable and prosperous the
wholesale auction market is for used-car dealers, there are always risks - floorplan limits that
cut down capacity for vehicles, leveraging credit
to fund used inventory, and, of course, taking on
the risk that a car may not be sold even after
incurring reconditioning costs.
These risks are just some of the reasons that
Cheryl Munce, chief executive consultant at Alteso, a company that develops digital solutions
for auto remarketing programs, began working
on a concept that blends together aspects of the
retail auction model and traditional wholesale
auctions, or what she calls “whole-tail.”
“Whole-tail” allows consumers access to
wholesale auctions, while keeping the dealer at
the center of the process.
“The used-car remarketing industry has been
moving toward the blurring of the lines between
wholesale and retail for a few years,” Munce
says. “In fact, in the U.K., there are no longer
just wholesale auctions but rather all auctions
are open to dealers and the public.”
In the U.K., many auctions are open to the public.
MyDealerOnline’s data stream aims to mirror this
online in the United States.
Munce’s product is MyDealerOnline, an online platform that connects wholesale inventory
directly with dealer websites for consumers to
purchase.
“How many customers are dealers not seeing
in their showrooms because the online shopper
simply didn’t find what they wanted from their
stock of 30 cars?” Munce asks.
The difference in the whole-tail concept is
that consumers will be able to see what cars
will be available at auction before they go up on
the block. Consumers would not be able to see
the wholesale prices through MyDealerOnline,
Munce says, nor would they be able to place
bids or attend auctions themselves, but they can
alert the dealer to their interest.
Munce’s business is designed to alleviate
some of the guesswork for dealers when creating that inventory, because they will already
know exactly what the consumer wants to buy,
and how much they are willing to pay, according
to Munce.
Alec Gutierrez, senior analyst at Kelley Blue
Book, said that this does happen in some capacity today — where dealers will allow consumers
to view what will be up for auction, but it is only
in a small part of the market.
“There are smaller dealers out there that will
offer their services to a consumer where the
consumer can come to them and say, ‘I’m looking for a three-year-old BMW 3 series with so
many miles,’” Gutierrez says. “And that dealer
might make available to them the presale inventory for that auction. The dealer will basically act
on their behalf.”
There are also a few key reasons why consumers are kept out of the wholesale auction experience today, Gutierrez says, including auction
fees, transportation costs to move the vehicles
9
back to the lot, and, of course, reconditioning
needs — not retail-ready, in other words.
“Most of these vehicles that are running
through auction have yet to be reconditioned,”
Gutierrez says. “There might be some work that
needs to be done. There might be some dings
and dents. Maybe it needs some new tires, new
brakes. And, ultimately, if you’re Enterprise
Rent-A-Car and you just want to liquidate a
couple hundred cars over the next few months,
you don’t necessarily want to invest the $500,
$1,000 per vehicle to get it up to a point that
would make sense to retail to a consumer.”
Through the blended model, Munce explains,
the consumer would have access to general
condition and disclosures, as well as year, make,
model and photos. They can have the option to
purchase a vehicle history report before contacting the dealer.
“Often the retail price is listed, but sometimes
the vehicles won’t have a price,” Munce says.
“The product is designed to have the dealer in
the middle so the consumer will have to get
more info from the dealer before making a final
decision anyway.”
Munce hopes the platform will not just improve
inventory for the dealer, but also transparency to
consumers, by putting the decision “squarely in
the hands of the end user, the consumer.”
Gutierrez said that there was a time when
dealers preferred to keep information — such
as how they conduct business and price inventory — closer to their vests, but that is changing.
“Today, a lot of progressive dealers have embraced transparency,” Gutierrez says. “Let’s say
I’m a dealer and I have a website where consumers could go to me and say, ‘I’ve looked at your
inventory, but I’m looking for X, Y, Z,’ and provide a forum for them to browse upcoming auction inventory or guide them. Personally, I could
see that as a program that some dealers and
wholesalers could potentially embrace.”
Munce and the MyDealerOnline team began
to develop the concept in 2012, and are currently prospecting both small and large dealers, as
well as potential distribution and sales channel
partners, she says.
“While we do have upwards of 50,000 vehicles
in inventory on any given day, the vast majority
are salvage — insurance write-offs — and not
the right product for the used-car dealerships,”
Munce says. “Our hope is to have some critical
mass of clean used cars within the next six months
and begin to distribute it to paying dealers.”
10
AUCTIONS
INSPECTIONS
ON THE GO
Mobile apps can provide clean condition reports –
but are they just adding confusion?
BY MONICA LINK
Condition reporting is a thorny subject in remarketing. A lack of industrywide standards can
leave buyers and sellers with a lot of guesswork,
which means that two different reports on a single vehicle may conflict.
Several industry players including NADA and
NAAA have spoken out about this issue, and even
proposed standards for electronic condition reporting (ECR), but nothing has taken hold across
the industry.
In the absence of such standards, mobile apps
such as OnceOVR and Inspect2go have arisen,
and use their own approaches to electronically
reporting the condition of vehicles.
Inspect2go offers a number of apps for inspecting vehicles of all types. The company says it is
able to create custom reporting apps upon request, and got its start reporting environmental
issues in workplaces and restaurants.
Currently available only for the Apple iPad and
first released in April 2012, Inspect2go for vehicles walks users through several sections: Body,
Engine, Electrical, Under Vehicle, and Tires and
Brakes. In each section, it allows users to mark
items as OK, Replacement Recommended, or
High Priority (replacement required.) There is
“The app is designed
for layman users with
little or no automotive
knowledge.”
– Gary Mott, vice president, FLD
also a question mark function to request help
or more information on a topic. Notes and photos can be attached for problem areas, and the
whole report, once the inspection is complete,
is dropped into an email as a PDF attachment,
ready to send.
Launched in June 2013 but significantly updated in February 2015, OnceOVR is available
for iOS and Android devices of all types, including smartphones with their tiny screens. The app
allows users to conduct multiple inspections,
save inspections in process, and sync up different inspections that may belong to the same vehicle. Symptomatic of the lack of CR standards,
it delivers a report that differs from Inspect2go’s.
First, the vehicle’s VIN and odometer are photographed. It takes users through the exterior of a
vehicle, noting the condition of the following: left
side, right side, front, back, top, paint, glass, hail
and collision damage. Photos are taken throughout. The user moves similarly through the vehicle’s interior and mechanical sections.
OnceOVR is a product of FLD, a remarketing
firm specializing in fleets since 1979. FLD notes
on its website that it created the industry’s first
ECR in 1995.
Gary Mott, vice president of FLD, says the app
initially saw usage from commercial fleets, but
is increasingly gaining traction with dealers and
consumers. “The app is designed for layman users with little or no automotive knowledge,” Mott
says, but adds that in a dealer’s hands, it can be
a valuable tool. “The OnceOVR app gives dealers
the power to gauge the initial trade-in value for
a vehicle before the customer steps on the lot.”
To further dealer adoption, the company plans to
launch a new version of the app in late 2015 with
special features tailored for buying and selling at
auction, as well as inspecting trade-ins.
OnceOVR is a product of remarketing firm FLD,
and features a clean interface designed for
consumers, which is shown here.
For Jonathan Banks, executive automotive analyst for NADA, codition reporting apps are welcome additions to the marketplace, especially as
online auto sales have increased. This increase underlines the need for condition reporting standards
and guidelines. In the case of CPOs, Banks says,
where strict standards, prevail, this is not an issue,
but it remains one in the general market.
“Using a condition reporting app is better than
using nothing,” Banks says. “At least the apps ask
a list of standardized questions. If the consumer
reporting the condition follows the process in the
app, it is better than just guessing.”
This observation makes sense, but it is not
clear that the apps will move the industry closer
to a solution of this problem, since each uses
its own idiosyncratic approach. In the search for
standards and guidelines, it appears the auction
industry has a ways to go to find the solution in
mobile devices.
TRENDS 11
LEASE RETURNS ROLL IN
Wholesale prices rise, but the details show off-rental units face weakness
BY TOM KONTOS
Average wholesale usedvehicle prices rose significantly in January on both a
month-over-month and yearover-year basis. One would
be quick to conclude that
the market seems to be admirably absorbing the highly
Tom Kontos
anticipated growth in supply,
and that would be true. Still, it is important to disaggregate averages and indexes in order to look at
the underlying impact the supply of off-rental and
off-lease vehicles is having on current-to-one-yearold models and three-year-old models, respectively. A somewhat different picture emerges here in
that prices for these age segments did indeed take
a hit in January, as:
1. Auction “factory” sales were resumed for
large inventories of off-rental program units
that had been curtailed at yearend 2014, and
2.Growing numbers of vehicles leased approximately 36 months ago continue to reach ma-
turity and enter online and in-lane remarketing channels.
Strong retail demand, especially for CPO units,
as well as moderate incentives, have partially offset these impacts for these age segments and
the used-vehicle market as a whole.
According to ADESA Analytical Services’ monthly analysis of Wholesale Used-Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices
in January averaged $10,220 — up 3.6% compared
with December and up 2.4% relative to January
2014. Much of the month-over-month and yearover-year price variance by model class segment
is driven by higher off-rental program vehicle sales
this January compared with December and January 2014. (Program vehicles are typically currentmodel-year or one-year-old models that sell for
higher average prices than other types.) Thus, not
a lot should be read into the double-digit increases
in average prices seen in some model class segments. However, even after stripping off the impact
of higher program vehicle sales, prices for midsize
SUVs and full-size pickups still showed strength.
Prices for used vehicles remarketed by manufacturers were down 10.8% month-over-month
and down 11.5% year-over-year. As anticipated in
this report last month, the tailwind to prices that
might have been provided by the absence of program units due to sale curtailments in December,
turned into a headwind as these units are being
released in early 2015.
Prices for fleet/lease consignors were up 5.2%
sequentially and up 1.3% annually. This indicates
healthy demand for older repo and commercial fleet
vehicles, even as off-rental risk and off-lease prices
face downward pressure from higher supply.
Dealer consignors registered a 2.2% increase
versus December and a 3.7% increase relative to
January 2014, indicating that independent dealers
are readily absorbing the excess franchised dealer
trades generated from strong new-vehicle sales.
Retail used-vehicle sales in January were up
1.4% year-over-year, based on data from CNW
Marketing/Research. CPO sales were particularly
strong in January, rising 17.2% year-over-year, according to figures from Autodata.
WHOLESALE USED-VEHICLE PRICE TRENDS
AVERAGE PRICES ($/UNIT)
Jan. 15
Dec. 14
Jan. 14
AVERAGE PRICES ($/UNIT)
LAST MONTH Vs.
Prior Mo. Prior Yr.
Jan. 15
Dec. 14
Jan. 14
LAST MONTH Vs.
Prior Mo. Prior Yr.
Total All Vehicles $10,220 $9,864 $9,983 3.6%
2.4%
Total Trucks
$11,015 $10,851 $10,438 1.5%
5.5%
Total Cars
$9,134 $8,620 $8,869 6.0%
3.0%
Mini Van
$7,663 0.1%
2.9%
Compact Car
$7,377 $6,654 $7,010 10.9%
5.2%
Fullsize Van
$11,331 $10,198 $10,341 11.1%
9.6%
Midsize Car
$8,004 $7,712 $8,258 3.8%
-3.1%
Mini SUV
$13,002 $12,748 $11,987 2.0%
8.5%
Fullsize Car
$8,546 $6,075
$6,771 40.7%
26.2%
Midsize SUV
$8,246 6.2%
9.9%
Luxury Car
$12,593 $12,466 $12,209 1.0%
3.1%
Fullsize SUV
$10,893 $11,569 $10,981 -5.8%
-0.8%
Sporty Car
$13,050 $12,950 $12,343 0.8%
5.7%
Luxury SUV
$18,243 $19,109 $18,941 -4.5%
-3.7%
$12,768 2.5%
-4.2%
Compact Pickup $7,559 $10,965 $10,565 $11,553 3.8%
-5.1%
Fullsize Pickup
Mid/Fullsize CUV$13,157 $12,875 $13,999 2.2%
-6.0%
Total Crossovers $12,233 $11,931 Compact CUV
$7,658 $7,763 $7,441 $7,448 $7,503 $7,362 $13,550 $13,027 $12,632 1.6%
2.7%
4.0%
7.3%
Source: ADESA Analytical Services
The analysis is based on over six million annual sales transactions from over 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA
Analytical Services segregates these transactions to study trends by vehicle model class.
1
The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR
Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with
this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”,
“promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially
from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities
and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.
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