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Tuesday, 25 July 2017 13:00

Shoppers Search for Subcompact SUVs

Jumpstart Automotive Media released its monthly share of shopper interest data and it shows that subcompact SUVs and CUVs saw a 37 percent increase in interest across Jumpstart’s portfolio of sites in the first half of 2017.
The subcompact SUV/CUV segment ranked as the 11th most-shopped vehicle category in the first half, jumping from 22nd in the first half of 2016. No other vehicle segment saw that much of a lift in this timeframe.
Toyota, Kia, and Tesla were the top brands shopped on Jumpstart sites during the first half.

Published in Breaking News

Huntington Bancshares Inc., reports that auto finance continued to perform well in the second quarter.
Net charge-offs were down 16 basis points quarter-over-quarter to 0.29 percent.
The bank also reported improvement in the indirect auto portfolio compared to the prior quarter mostly due to seasonality.

Published in Latest News

The Consumer Finance Protection Bureau created a rule banning mandatory arbitration agreements in contracts used by the entities it oversees, which includes auto creditors and buy-here, pay-here dealers.

The move opens up these firms to class-action lawsuits. The existing agreements specified that consumers must settle disputes via arbitration and were barred from joining class-action suits.

"These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up,” said CFPB Director Richard Cordray. “Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together."

Supporters of the bill consider it a blow to big banks. Some point to the recent Wells Fargo credit card scandal as reason to ban arbitration.

“We fought for this rule because it provides a valuable check against corporate misconduct and are pleased that the CFPB has adopted it to protect the public interest,” said Massachusetts Attorney General Maura Healey.

However, the rule covers all firm overseen by the CFPB, regardless of size.

"This rule will force small businesses to bear additional costs in defending class-action litigation, particularly meritless suits," said Steve Jordan, CEO of the National Independent Automobile Dealers Association. "Those costs will ultimately be borne by consumers, and in the case of those who are credit-challenged, it could prove to be too much."

 Industry insiders have been waiting for this rule since Congress passed the Dodd-Frank Act that created the CFPB. The Act specifically called for a study into the impact of arbitration on consumers.

The CFPB released the findings of that study in 2015 and a rule has been expected ever since.

But many thought that might change with the election of Donald Trump and an anti-regulatory climate in Washington.

The Republicans in Congress can still squelch the rule before it takes effect in three months by invoking its Congressional Review Act authority.

This would kill the rule and bar the CFPB from creating a replacement.

Attorney Michael Benoit said dealers should start contacting their Senators and Congressmen to push for the CRA.

Benoit said affected parties could also take the CFPB to court, arguing that it lacks the authority to interfere in private contractual agreements.

Until the matter is settled one way or another, Benoit recommends continuing with business as usual.

“It’s a little early for dealers and finance companies to take any action other than exploratory actions into what they might do,” he said.

Published in Legal
Thursday, 20 July 2017 21:50

Carvana Moves into Detroit

Carvana Co. is opening a location in metropolitan Detroit.
This increases Carvana’s reach to 32 markets.
To celebrate its arrival in Detroit, Carvana is hosting an event at Hart Plaza on the Detroit Riverfront on July 22. Visitors can enjoy cool treats, music from Bluewater Kings Band and giveaways, all courtesy of Carvana.

Published in buy here

LAS VEGAS –Changes in the market – from vehicle supply to increased competition to credit availability – offer independent dealers both challenges and opportunities.

Tom Kontos, chief economist for KAR Auction Services, partnered with Joe Keadle, CEO for Automotive Finance Corp., to present an analysis of the market at the recent National Independent Automobile dealers Association conference.

“In the U.S., the retail market for used cars is about 30 million,” Kontos said. “It’s roughly split evenly between independent dealers and franchise dealers.

Independent dealers sold 574,000 more used cars in 2016 than in 2015, a 4.3 percent increase.”

Year-to-date, used-car sales still favor franchise dealers. New-car stores use more inventory management tools to seek out the higher grosses that come from the used-car side of the business, Kontos said.

They benefit form the trades they take in new-car sales. About 50 percent of all new-car sales involve a trade-in.

“They are increasingly trying to hold on to those trades,” Kontos said.

Keadle said those are cars that independents used to buy at auction, presenting a challenge for independents to find alternate sources, like upstream wholesale channels.

Independent dealers should explore upstream opportunities, Keadle said.

“So much of the inventory liquidation from the manufacturers off-lease vehicles are in that upstream channel,” he said. “You do have access to upstream, but you have to make sure you can dig it out.”

There are more off-lease vehicles coming back than franchise dealers can handle, Kontos said.

“Prices are going to be softening,” he said.

One threat independents face is that, despite so many cars coming into the wholesale stream, they may not be the ones in demand.

Kontos said during the last cycle’s leasing boom, many of those vehicles were cars and smaller vehicles because of the concerns over gas prices.

That trend will eventually reverse itself a few years from now as new-vehicles sales today are falling mainly within the truck classes.

Repossessions are another big source of inventory for independents Kontos said.

“Typically, the repos we get at the auctions are vehicles that were financed as used vehicles to begin with,” he said. “They were maybe sold as a three-year old vehicle, now they are four- or five-year old vehicle brought back as a repo.”

Kontos is seeing more of those vehicles showing up in the Southeast.

In terms of repos, he doesn’t see a steep rise in delinquency and default rates, but even that can be misleading if dealers look at supply.

But there are over $1 trillion of outstanding auto loans and leases –the highest it’s ever been.

“So a 1-percent default rate results in more repos (because of the larger number of outstanding loans),” Kontos said.

Keadle said the used-car business is coming out of a period where inventory was scarce and independents had to fight for it. It caused some poor habits, he said. A dealer could keep that car for a longer time on the lot, knowing that he could always wholesale out of it and get a good price.

“That’s about to change,” Keadle said. “That vehicle you have on the lot now? There’s about 500 more coming down the pipeline.”

Dealers can afford to be more selective to find a car with leather, navigation and a sunroof, instead of buying one without those features.

“We just encourage you to be dialed into the market,” Keadle said, “so that you know what you should be stocking and how long you should be keeping it.”

The credit market also poses both threats and opportunities for independents.

In the fourth quarter of 2016, the non-prime, subprime and deep subprime numbers dropped compared to the prior year, Kontos said.

“That’s an indication that lenders are backing away from the subprime tiers,” Kontos said. “I think they identified that they were a little overexposed in those areas.”

Of course, this creates an opportunity for buy-here, pay-here dealers to actually get a better buyer, Keadle said.

 

Published in Auctions
Wednesday, 19 July 2017 16:22

Auto Leasing Declines

Auto leasing dropped for the first time in four years, according to new study by Edmunds.

Leasing made up 31.1 percent of retail new-vehicle sales in the first half of 2017, down from a record high of 31.9 percent set in 2016.

The number of vehicles that were leased in the first half the year fell 4.4 percent. That is twice the rate of decline for overall sales, which are down 2.2 percent year over year.

Declining residual values are also forcing automakers to inflate incentives to keep lease deals attractive. Lease incentives averaged $4,445 for the first six months of the year, up from $3,722 for the same period in 2016. 

 

Published in Finance
Wednesday, 19 July 2017 16:22

Small Pickups Show Lowest Depreciation

The average price of a used vehicle for model years 2012-16 decreased in value 1.3 percent in June, slightly more than the 1.2 percent change in May, Black Book reports.

Cars overall dropped 1.8 percent and trucks dropped 0.8 percent in value during June. All vehicles are averaging a 12-month depreciation of 16.7 percent.

In June, small pickups had the lowest monthly depreciation at 0.1 percent. Vehicles in this segment finished June with an average price of $21,328.

Subcompact cars saw the largest depreciation during the month at 2.8 percent. Vehicles in this segment finished June with an average price of $6,554.

Published in Dealers
Wednesday, 19 July 2017 16:22

GWC Upgrades Online Resources

GWC Warranty has released Dealer Portal 2.1, the latest batch of enhancements to GWC's online dealer resource center.

Dealer Portal 2.1 features a brand new dealership dashboard provides quick access to claims paid and sales reporting, giving dealers instant, on-demand insight into how vehicle service contracts protect their reputations and their profits.

The Elite Dealer Page is a new section of the Dealer Portal that allows dealers to easily see their Elite Dealer status, stay up to date on how to earn or maintain Elite status and learn more about exclusive benefits.

The revamped Elite Lead Generator Report now includes more useful customer information and is optimized for easy printing to help dealers capitalize on lead opportunities from expired contracts.

Online claims, an Elite-exclusive feature, has undergone a complete rebuild to now accept attached documents and upfront submission of parts and labor details. These updates will further enhance the expedited claims experience available for GWC's top-producing dealers and their customers.

 

Published in Tech News

Average wholesale prices in June were down versus May but up on a year-over-year basis.  
According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in June averaged $11,067. That is down 0.7 percent compared to May and up 4.7 percent relative to June 2016.  
Compact and full-size pick-up trucks and minivans showed significant average price gains for the month, while most other model classes registered month-over-month declines or modest increases.  
Average wholesale prices for used vehicles remarketed by manufacturers were down 1 percent month-over-month and down 1.9 percent year-over-year.  Prices for fleet-lease consignors were down 1.1 percent month-over-month and up 3.2 percent year-over-year.
Average prices for dealer consignors were up 0.9 percent month-over-month and up 7.7 percent year-over-year.

Published in Auctions
Tuesday, 18 July 2017 17:57

InstaVIN Unveils New Website

KAR Auction Services, Inc. announced the launch of a new website for its instaVIN business unit.
The redesigned website delivers near real-time title, salvage and insurance total loss events.
Dealer and commercial customers can now order instaVIN reports in batches up to 100 VINs. There are new filter options to deliver condensed reports, and additional HTML functionality to embed links from web ads, allowing for easier visibility for online shoppers.
InstaVIN car history reports now include an optional original factory window sticker with build data for an additional charge. The window sticker includes VIN-specific standard and factory installed options and packages, original MSRP, EPA mileage and safety ratings, warranties, code guide information, and engine and transmission specifications.

Published in Tech News
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Florida Dealer Takes Home Top Prize

Florida Dealer Takes Home Top Prize

LAS VEGAS – Florida buy-here, pay-here dealer Scott Lanier was named the 2016 National Quality Dealer during the recent 70th annual National Independent Automobile Dealers Association Convention and Expo here....

Sale marks our Decades

Sale marks our Decades

The Greater Kalamazoo Auto Auction, an XLerate Group auction, recently celebrated its 40th anniversary with more than $15,000 in cash and prizes awarded to dealer customers who attended the sale....