IAA expands for severe weather season

CARY, N.C. - 

Insurance Auto Auctions, a business unit of KAR Auction Services, announced Wednesday it has expanded locations in six states to both address clients’ increased inventory needs due to more claims being deemed total losses and to plan for a projected rise in salvage volume following the upcoming weather event season.

The company’s new land additions total 50 acres. Together, the six expanded locations now cover more than 200 acres of land, an increase of more than 30 percent, according to IAA.

This follows IAA's Aug. 7 announcement that it also recently secured 22 real estate locations in 10 states to prepare for potential catastrophic events this year.

The 22 expansions include branches in California, Florida, Georgia, Louisiana, Minnesota, Mississippi, New Jersey, New York, South Carolina and Texas.

IAA said the newly acquired land across the several states amounts to over 500 acres.

'Proactive approach' 

Shortly after that Aug. 7 news was announced, AuSM caught up with IAA chief executive officer and president John Kett.  

"We are taking a very proactive approach to obtaining land in areas that are prone to weather related events, rather than waiting on the event to occur and then having to go out to find additional property," Kett said during a phone interview with AuSM.

In the South, Kett explained, there have recently been storms that have produced modest levels of flood damaged vehicles this year but "so far there’s nothing brewing that we can see right now," he said.

"We are just entering what is referred to as hurricane season, I think technically it starts in June but it’s rare to see anything. August, September and October is the typical time when you would see a hurricane, which is the most prominent manifestation of a catastrophe that we would help deal with," he said.

Following strategic preparation and coordination, IAA acquired the expanded locations to ensure that IAA's catastrophe (CAT) response services team will have the appropriate resources to help clients with weather associated losses, according to the company.

"Strategically expanding our presence helps meet demands for CAT services in areas where our customers will most urgently need it," Kett said in the Aug. 7 news release. 

The CAT team has been in operation for over 30 years, according to IAA.

Last year, the IAA CAT response team was notably active due to a high number of weather related events, according to Kett.

"There were several significant hail storms in Texas, there was a really significant rain storm in Baton Rouge just about a year ago," Kett said in the phone interview. "In early August, 28 inches of rain fell within a very short period of time. There were thousands and thousands of vehicles that were underwater and therefore declared a total loss."

Kett added that Hurricane Matthew, which hit land up in the mid-Atlantic, was specifically memorable because it reached 4 or 5 states.

"It was nowhere near the size or scale of Sandy. 2016 was by far the most active year we saw in terms of weather related events," he said.

KAR Auction Services chief executive officer Jim Hallett said in 2013 that Superstorm Sandy was the most catastrophic event in IAA's history.

The company reported a total-loss of more than 50,000 vehicles following the United States’ second most costly hurricane.

In addition to preparedness, technology is vital to IAA's ability to effectively assist clients on short notice, Kett said.

"We need to do all the things that we do to help when we do process a vehicle for one of our customers," he explained.

The initial step of the processing process includes tracking damaged vehicles, recording them, and taking pictures of them.

"As part of our overall technology investment, we have a view towards making sure that the technology that we do deploy is flexible so that we can implement it in a way that we can use it very quickly because of the time sensitivity of responding to these things," Kett said.

Technology can make delivering support faster, easier and more efficient if it’s properly deployed, according to Kett.

"The combination of our broad physical presence and integrated technology solutions also helps us serve and expand our buyer-base and provide them with greater choice and convenience," added Kett.

Wednesday's addition

Going back to the most recent news, IAA's six expanded facilities announced on Wednesday include IAA Indianapolis (Ind.); IAA Kansas City (Kan.); IAA Salt Lake City (Utah); IAA Minneapolis/St. Paul (Minn.); IAA Fredericksburg-South (Va.); and IAA Dothan (Ala.).

"The forecast for salvage volumes combined with the challenges of supporting our insurance customers during catastrophic events is driving the expansion activities in various Insurance Auto Auction markets," Hallett said during the company’s latest earnings call last week.

For more information about the expanded branches’ hours and locations, visit .

Manheim kicks off its auction week celebration


Manheim locations across the county are currently celebrating National Auto Auction Week.

Throughout the week, the company said it will use Facebook and Twitter to showcase local auction activities.

The week of celebration wraps up on Friday.

“National Auto Auction Week is a great time to reflect on the commitment that our team members and loyal clients exhibit every day in driving this industry forward,” Cox Automotive Inventory Solutions president Janet Barnard said in a news release.

“Our industry continues to thrive, and at Manheim, we’re excited to play a key role in furthering its growth and transformation by delivering an easier and faster experience for our clients.”

In addition to promoting upcoming local auction activities, Manheim’s Facebook and Twitter pages will also feature messages of thanks to Manheim team members and clients, according to the company.

“National Auto Auction Week is a terrific opportunity to recognize the strength of our industry and the immense value auto auctions provide,” added Grace Huang, senior vice president of Inventory Services for Manheim.

“I want to sincerely thank our team members who keep the show running smoothly at Manheim and our clients who enable us to succeed in an industry we truly love.”

National Auto Auction Week is sponsored by the National Auto Auction Association.

for more information about National Auto Auction Week.

Overall wholesale prices sag as truck supply tightens


While it appears dealers are having trouble fulfilling one specific segment on their inventory shopping lists, Black Book’s latest price update indicated dealers aren’t paying quite as much when they do find the units they want.

The newest Black Book Market Insights report showed an increase in wholesale vehicle depreciation, especially in the car segments. Although cars had a higher depreciation percentage overall, editors noticed the compact van category for trucks saw the highest depreciation out of all vehicle categories with a 1.74 percent decline in value.

“The wholesale vehicle market experienced broad declines last week across most vehicle segments,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics, one of the many experts set to be a part of this year’s , which runs from Nov. 13 through 17 in Palm Springs, Calif.

According to volume-weighted data, editors determined overall car segment values decreased by 0.58 percent last week, higher than the average weekly decrease of 0.43 percent in values spotted during the previous four weeks.

Black Book found that the prestige luxury car, sporty car and sub-compact car segments declined the most by 1.03 percent, 0.89 percent and 0.78 percent, respectively.

Again considering volume-weighted information, editors reported that overall truck segment values — including pickups, SUVs and vans — softened by 0.40 percent last week; a figure more than than the average weekly decrease of 0.28 percent in values registered in the previous four weeks.

As previously noted, compact vans declined the most at 1.74 percent, while the small pickup segment wasn’t far off with a drop of 1.46 percent.

So now that we know the movements associated with what dealers are paying, what about what they’re seeing coming down the lanes and how they want to stock their lots? The anecdotes Black Book’s representatives at the auctions provided gave a pretty clear picture of what’s happening nowadays.

Starting in Tennessee, Black Book’s observer said, “Used-vehicle retail remains OK, but dealers are struggling to get nice trades. They are all in need of quality used pickup trucks, which are especially difficult to find.”

Down in Florida, the truck story continued with the lane watcher saying, “We had a good auction this week. There were more no-sales on trucks as consignors were holding out for ‘home run’ money due to the low supply.”

While not specifically mentioning trucks, Black Book’s personnel stationed in Colorado reported, “Inventory is low at the auctions so, in turn, the conversion percentages are good.”

Continuing out West, the story in California was, “The no-sales here were mostly due to over-valued higher mileage units.”

Wrapping up in Michigan, lane observers heard from dealers about another segment in the sales calendar as the recap indicated, “We are starting to see the annual back-to-school activity in the lower-priced units. This typically lasts for three or four weeks here.”

Role of auctions in Penske’s standalone store strategy


The method Penske Automotive Group plans to continue using to fill inventories at CarSense — its standalone used-vehicle retail locations primarily in the Northeast with intensions on expanding — should delight auction general managers who see buyers for this dealer group mingle in their lanes.

Chairman Roger Penske said during the company’s latest conference call that about 80 percent of the vehicles CarSense stocks comes from auctions.

Penske also pointed to expected lifts in off-lease volume coming in 2018, 2019 and 2020 to help these CarSense locations that depend on Penske buyers with specific instructions on how to procure inventory, which currently sits at about 45 days’ supply.

“Well, I think we have to say that auction prices on a daily basis demonstrate the real value of the vehicles,” Penske told conference call participants. “So, we have a number of buyers and they’re out there looking at the marketplace.

“They have metrics that they’re looking at certain models, certain colors and markets that have been selling. So they have a past history. So they’re prepared to pay a particular price for these vehicles, and I think that we only buy the car if we want to fill in certain types of cars,” he said.

“In fact, I looked at some metrics during the week and it showed certain models that they were long on and certain models they were short,” Penske continued.

“So, they actually just don’t buy just cars. They buy specific models, and obviously we have a mix of SUVs and trucks along with cars,” he said. “Our customer is looking for a vehicle that’s probably 1 to 4 years old. The average selling price in the U.S. is $20,000. So we have a pretty good mix of vehicles. To me, we’re in a position to purchase many of these off-lease vehicles that come in, and the auctions today are ones that they offer this opportunity.

“There are some closed auctions for dealerships, and then obviously after that, we have the open auction opportunity to buy those vehicles, and then this helps us as we go forward. We manage our variable costs associated with these purchases,” he added.

The company reported that CarSense locations and CarShop operations — a similar standalone concept in the United Kingdom — retailed 11,125 vehicles during the second quarter, generating $193 million in revenue and $33 million in gross profit for Penske.

“We believe these used-vehicle supercenters further diversify Penske Automotive Group’s business and provide an opportunity to capitalize on the highly fragmented used-vehicle market,” the chairman said.

“We also believe these businesses provide an unlimited white space for scalable expansion. We have plans to expand into several new markets and continue to expect to double the number of locations within 24 months,” Penske added.

Penske also addressed a question about whether the company would establish its own finance company to serve as a captive-like provider for CarSense and CarShop locations; similar to what CarMax has in place.

“Well, I think if you look at CarMax, bottom line, they have a big impact with their financing,” Penske said. “They’ve done a terrific job. Right now, we’re using third-party financing and third party for the products that we sell.

“I don't know that at the moment that we have the capital available to start a finance company,” he continued. “It’s something we can look at once we have a history and maybe we get a partner to do something like that. But the good news is it’s an opportunity because we’ve seen the success that CarMax has.

“We just have to assess the risk on that if we go into that area, but I wouldn’t say that’s top of the list right now,” Penske added.

Online sales activities

With consumer trends pointing to more potential buyers wanting to complete deliveries mostly or even completely online, Penske shared an update about the company’s platform designed to do that. For the past 12 months, Penske has developed what it has been dubbed Preferred Purchase.  

Penske highlighted Preferred Purchase is now available at all of the dealer group’s stores.

“We think that this is an opportunity to reduce the cycle time for customers to buy a vehicle,” he told conference call participants. “I think that the closing rate as we look at this probably is three times higher than a normal purchase.

“And you, as a customer, can pick the vehicle, you can also supply your trade information, we'll give you a purchase price on your trade, you can look at a lease, you can look at a finance transaction and then you can call us obviously to complete it,” Penske continued.

Penske also highlighted that the closing rate for group customers using Preferred Purchase hit 24 percent in June. The chairman assured investors that Preferred Purchase can give the company the tool to compete with new industry participants such as Carvana and Shift.

“So when we look at it overall, this is the same thing that people are talking about, and we have it in place for every one of our dealerships,” Penske said. “I think that this will give us the ability to do this across all of our businesses and there’s no question that we continue to enhance this to make it quicker and more transparent to the customer.”

Cox Automotive confirms workforce reduction

CARY, N.C. - 

AuSM confirmed multiple online reports from Atlanta-area media outlets that Cox Automotive is reducing its global workforce by nearly 1,000 employees, but the company said it does not “anticipate any additional large-scale reductions.”

The reports first surfaced late on Friday afternoon, and Cox Automotive corporate spokesperson Lou Laste replied to a Monday morning inquiry that the company would cut its staff by approximately 950 team members, which is about 3 percent of Cox Automotive’s total workforce. 

“These changes, while difficult, will help us fuel more innovation, drive more growth and deliver the elegant, connected experience we’ve promised to our clients and the industry,” Laste said in the message. “We do not take these decisions about job impacts lightly and will remain true to our values, treating everyone with dignity, fairness and respect throughout this process. 

“We are committed to moving quickly to build a stronger and more agile organization that gives us the best chance to succeed well into the future,” he continued.

As was the case in reports published by the — part of Cox Media — as well as the , Cox Automotive did not specify which segments of its businesses will endure reductions. Cox Automotive’s global presence includes:

—Alliance Inspection Management (AIM)
—Cars Guide
—HomeNet Automotive
—Kelley Blue Book
—Mahindra First Choice
—NextGear Capital
—Ready Logistics
—RMS Automotive

“We have been very thoughtful and strategic in identifying the roles across all departments that need to be reduced along while making sure we have the capabilities to best serve our clients for the future,” Laste said.

“At this time, we do not anticipate any additional large-scale reductions. That said, our business and the market continue to evolve, and therefore we are never able to guarantee that a role will not change or be eliminated in the future,” he went on to say.

How recon growth makes everyone a winner at KAR

CARMEL, Ind. - 

Each time a fender scratch is buffed out or a new set of tires is installed, KAR Auction Services chairman and chief executive officer Jim Hallett sees those reconditioning activities as wins for two of the company’s most important customer bases — dealerships and commercial consignors.

And the victories appear to be increasing, significantly boosting KAR’s recent performance as well as its outlook to compete successfully for the remainder of 2017 and as long as three years into the future.

During an exclusive, wide-ranging conversation with AuSM, Hallett described how the company’s reconditioning business is making significant strides.

That trend helped ADESA’s incremental operating profit jump by 32 percent during the second quarter.

“Being a former dealer, I’ll put my dealer hat on and tell you that the back from dealers has been very positive, because No. 1, there is a fluctuation in prices. Prices can change from week to week throughout the course of a month,” Hallett said. “They don’t want to get caught holding a lot of inventory in case there is a downturn in pricing that they have to take back and wholesale. They want to avoid losses.

“What they want is just in time inventory as we call it. They can drive that car right from the auction and park right in the front row, put a for sale sign on it, get it sold today and take the money and go back tomorrow and buy another one,” he continued.

“Rather than going to the auction and speculating on additional volumes, they’re more going to auctions specifically buying inventory that they need just to fill their inventory requirements. From that standpoint, it’s very attractive for dealers and efficient as well as profitable because it takes a lot of days out of their turn cycle not having to do the work themselves,” Hallett went on to say.

KAR executive vice president and chief financial officer Eric Loughmiller joined the conversation, too, reflecting back on 2011 when wholesale volume was at a low point and reconditioning services at the auction weren’t being leveraged like nowadays.

“They were taking that car directly to the lane because there was such a shortage that the dealer would pay top dollar no matter what the condition of the car, within reason,” Loughmiller said. “Today, there’s such a supply that they know there are more cars coming. They’re willing to take the time with the reason being they can create more value using the services Jim described than they’re going to touch in depreciation by taking an extra week or two.

“The truth is there is a lot of choice for the dealers. You’ve got to work hard to be the one they choose. That’s what great for our business model is we have the ability to provide those high-value services at a lower cost and faster than any other source they have because of the nature of our facilities,” Loughmiller continued.

ADESA auctions sold 830,000 vehicles during Q2, up from 750,000 in the year-ago quarter. The conversion rate also improved year-over-year, rising to 61.1 percent from 59.1 percent. Hallett touched on the possible reason.

“You’ve got a dealer standing in the lanes or buying online and they’re looking at a car. If it’s not completely retail ready and it’s going to take time to turn that car, they just turn to the right or left and look at the other lane and there is a car coming through that’s fully reconditioned. It just might be a different brand. For the most part, it’s really giving them choice,” Hallett said.

And as a result, commercial consignors are using KAR’s services so dealers trigger the hammer coming down instead of the vehicle circling back for another sale day.

“The commercial sellers recognize there’s a lot of cars in the marketplace and they recognize that for them to get the top dollar for their car, they have to do more to enhance the car,” Hallett said. “What we’re seeing is them use a lot more of our ancillary services.

“You think about the reconditioning, you think about the mechanical, you think about the paint and body work, you think about all of those ancillary services that we call end-to-end remarketing, our commercial customers are basically saying, ‘Hey, we’re going to fix whatever that car needs.’ Maybe in the past where they might not have changed the tires, they might now. Or they might not have fixed the little scratch here, or little dent here, they’re doing all of that work,” he continued.

“It’s good for our sellers. It’s good for our buyers. And it’s very good for KAR because it’s driving our revenue and margins,” Hallett went on to say.

View of KAR Remarketing Services

AuSM also asked Hallett and Loughmiller about the recently launched KAR Remarketing Services, which is designed to align the company’s AutoVIN, Dent Demon, High Tech Locksmiths and PAR North America businesses.

Hallett explained much of the action’s premise stemmed from the idea of streamlining KAR’s internal workings to improve on being an “end-to-end remarketing services provider.” He reviewed the basics of what happens throughout the wholesale market, including:

— Transportation
— Condition reports
— Reconditioning
— Putting the vehicle through the sales lane
— Getting the vehicle sold
— Post-sale inspection
— Transferring funds and titles

“One phone call, you get all of that taken care of,” Hallett said of what happens when a current or potential customer s KAR.

“Over the years, we’ve acquired a number of smaller companies that really complement our core businesses, which if you think of it is whole car, salvage and finance,” he continued. “They tend to be smaller in nature, but in total they’re important services our customers need in this end-to-end cycle. There’s an opportunity to grow by offering these services.

Picked to serve as president of KAR Remarketing Services was David Vignes.

“David actually was involved with the entities that were acquired. He has great knowledge of those businesses. He’s just a natural person to coordinate the efforts amongst those services,” Loughmiller said.

Salvage on the rise

Over at Insurance Auto Auctions, revenue rose 13 percent year-over-year in the second quarter as gross profit climbed to $117.2 million. IAA sold 580,000 units in Q2, representing an 11-percent volume lift year-over-year.

Hallett explained insurance companies are declaring more units as total losses in part because of the complexity of vehicles nowadays as well as the cost to have them repaired. Furthermore, IAA enjoys what Hallett deems a “strong” international buyer market.

“All of the drivers we look at with IAA are all tailwinds. They’re all in our favor right now,” Hallett said. “We don’t see this changing any time soon.”

Overall expectations

The combination of growing business opportunities along with people and technology in place to handle the work, Hallett is quite bullish about KAR’s future fortunes.

“Our outlook for the balance of the year is extremely positive. We think the market is going to be really good not only for the rest of 2017 but we think we have very clear visibility into the next three years in terms of how our businesses are going to perform,” he told AuSM.

“I know there has been a lot of conversation in the industry that I would call ‘noise’ in terms of some of our competitors making major changes to the way they’re going about managing their business,” Hallett continued. “I would say to you that we’re very focused on continuing to add the resources, continuing to add the people, and continuing to acquire the things that we need to be able to support this business because we feel the visibility that we have we feel these volumes are going to be continuing to come as far as we can see for the next three years.”

The classic story behind these classic cars

CARY, N.C. - 

A classic car auction set for Aug. 26 at Dealers Auto Auction of Idaho will feature 60- cars from a personal collection of classics ranging from the years 1919 to 1982.

And the story of the man behind those cars has even more depth. 

“The last 20 years he’s been buying beat-up classics and restoring them because he really enjoyed their restoration,” said Britney Egbert, business development manager Dealers Auto Auction of Idaho, during a phone interview with AuSM.

“He has them from every decade, every make and model. He’s sort of all over the place, which is pretty neat. I think there’s a car for every kind of collector in here,” she said.

The eclectic collection belonged to the late Callan Phillips, an Idaho native, Word War II veteran and farmer who found joy in repairing classic cars of all kind following retirement.

“It just became kind of a passion of his up until his death in 2013,” Phillips’ daughter Sherri Anderson said by phone. “My father was a very successful farmer. In 1994, he started dwindling down and not farming anymore.”

Phillips decided he wanted to start buying cars and fixing them up.

“His whole intent was to sell them after he fixed them up. Unfortunately, the very first car that he fixed which was a pickup truck — he fixed it up, sold it and cried,” Anderson said. “After that, he no longer wanted to sell the cars if he could help it. He started buying more and fixing them up.”

As his collection grew, Phillips had to add new buildings to his property just to house his cars.

He built a few out-buildings and had a main shop where he worked on vehicles, according to Anderson.

“Seldom did he ever send them away to have anything done to them; usually anything that was done to them was done on-site at my parents’ property,” she said.

Phillips had a full-time employee for body work who lived on-site in a mobile home, as well as a mechanic who would also come help with projects.

“Dad oversaw everything and would also work on them with them and try to get [cars] back to the original state that they once were when they were brand new, Anderson said. “He was trying his hardest to get the parts to restore these cars; it didn’t always happen and sometimes he’d just have to kind of slide by the seat of his pants to try to do whatever he could to get it as close as he could.”

It wasn’t unusual for some family members and close personal friends of Phillips to drive his cars, according to Anderson.

“One thing that was kind of neat was the grandkids got to drive these, too. Some of the grandkids and great-grandkids learned how to drive in these classic cars. So there wasn’t hardly any family member at one point in time or another who didn’t either ride or drive one of these cars or several of them,” she said.

“We’re all very familiar with them and as much as we hate to sell them, we don’t have the bandwidth to keep 65, 70 cars in out buildings.”

The most expensive car up for sale is a 1928 Rolls-Royce that Anderson said was not in good shape before her father restored it.

“He literally rebuilt it, even down to the upholstery and it’s now a beautiful car,” she added.

Phillips also collected a few old tractors which will be sold at a different auction.

Phillips was shot while serving in World War II and received a Purple Heart medal, Anderson said. He was born and raised on a farm in Idaho and started farming on his own after the war, she said.

“Even at the time that he was at the hospital, I remember visiting and he was still looking for parts for this car that he was working on,” said Anderson. “He was in an acute care center trying to find the parts for this particular car to fit. He wasn’t going to give up.” 

At its height, Phillips’ collection reached about 80 cars, according to Anderson.

“His passion was these cars and when he’d get them fixed he’d love to show them off to people,” she added.

“It was his love and just something that he loved to do.”

, for a complete list of the vehicles available for the Aug. 26 sale. Interested buyers can also find pictures of several cars on Dealers Auto Auction of Idaho's  page.

4 pieces of new operating division: KAR Remarketing Services

CARMEL, Ind. - 

As the company released its second quarter financial statement, KAR Auction Services also announced on Thursday the creation of a new operating segment — KAR Remarketing Services.

KAR Remarketing Services is designed to align the company’s AutoVIN, Dent Demon, High Tech Locksmiths and PAR North America businesses. Picked to serve as president of this new operating division is David Vignes.

“KAR’s goal is to provide a simplified, seamless experience across its end-to-end remarketing platform,” Vignes said. “The alignment of these businesses allows us to deliver the full range of inspection, recovery, reconditioning and repair services both in the lanes and on the road.

“We look forward to building on our successful foundation and expanding our integrated offerings to serve our diverse whole car, salvage and buyer and seller customers,” he continued.

Vignes previously served as KAR’s executive vice president of enterprise optimization, and has been promoted to the role of president, KAR Remarketing Services. In addition to his new responsibilities, Vignes will continue to oversee KAR’s enterprise safety efforts. Vignes also led the development of KAR’s “Safe T. Sam” program, which is available to all National Auto Auction Association (NAAA) members.

As part of this organizational alignment, Lisa Scott has been named president of PAR North America reporting to Vignes. PAR North America is a U.S. provider of vehicle transition services with coast-to-coast solutions for recovery management, skip-tracing, remarketing and title services.

“It’s an exciting time to be part of KAR, and I am thrilled to take the lead at PAR North America,” Scott said. “I worked very closely with our customers at ADESA Canada, and I’ve seen and heard their needs firsthand. I look forward to collaborating with my colleagues to develop the next generation of integrated remarketing solutions.”

Prior to this role, Scott held a variety of positions at ADESA Canada, including senior vice president of sales, marketing and operations, general manager, and, most recently, chief client officer. She has also served on several industry boards, including chair of the Canadian committee of the National Auto Auction Association (NAAA) and co-chair of the Canadian chapter of the International Automotive Remarketers Alliance (IARA).

“Lisa was a visionary leader for ADESA Canada with a strong track record of creating deep customer relationships. Her 25 years of experience, broad understanding of the marketplace, and her passion for our industry will continue to benefit our company and our customers,” Vignes said.

Scott takes the place at the top of PAR North America in place of Jerry Kroshus, who departed the company after nine years to become president and chief executive officer of Auto Approve, a refinance company that specializes in helping consumers find the best possible vehicle interest rates through its national network of credit unions, banks and finance companies.

Top-line quarterly results

In other company news this week, KAR also reported its second quarter financial results for the period that ended June 30.

The company’s total revenue jumped 9 percent year-over-year from $788.5 million to $858.0 million.

However, KAR reported a 7-percent softening in net income, landing at $57.2 million, or $0.41 per diluted share, as compared with net income of $61.8 million, or $0.44 per diluted share, in the second quarter of 2016. Management explained Q2 net income was negatively impacted by $17.3 million, net of tax ($0.13 per diluted share, net of tax) resulting from the company's refinancing activities.

Looking at figures through the first six months of the year, KAR highlighted an 11-percent gain in revenue to $1.7246 billion as net income rose 3 percent to $126.4 million, or $0.91 per diluted share.

“KAR continues to execute well on the fundamentals of our business,” KAR chairman and chief executive officer Jim Hallett said in a statement. “Our second quarter results reflect the level of performance we expect, our ability to generate cash, and the strength of our diversified business model.”

KAR also announced a cash dividend of $0.32 per share on the company’s common stock. The dividend is payable on Oct. 3 to stockholders of record as of the close of business on Sept. 20.

New patent could change shape of auto auction arenas

CARY, N.C. - 

If there is a groundswell of momentum for Bob Wolfsen’s Auto Auction In The Round concept — which — auctions could physically look much differently than they do today.

Walk into most auto auctions today and the arena where the sales happen has a familiar appearance: rectangular with long lanes that extend from one side to the other.

Wolfsen’s design shakes that up, making the arena — as the name would imply — round.

Each selling arena in Wolfsen’s design is a circular pod that includes anywhere from eight to 12 lanes, he said in a recent interview with AuSM.

The vehicles enter and exit behind each auction block. They come into the pod, go around to the front of the block, going 180 degrees before exiting out behind the block.

To get to the pods, attendees can walk from the office down a “tube” hallway and then select one of the pods to enter, he explained.

The patent was approved on March 23,   and the official patent number is 9,691,100. 

Inspiration for idea

Wolfsen, whose company is based Chandler, Ariz., is the transportation manager at Metro Auto Auction in Phoenix.  

Asked what prompted the idea, he said: “It started when I helped put another auction together here in Phoenix — Dealers (Auto Auction of the Southwest),” he said.

Wolfsen and the team there shaped the auction blocks into a V-shape, he said, “so that the dealers could see all the cars at all the blocks from any position.

“I wish I could take credit for that but I can’t,” he said. “But it started me thinking about, ‘How do I close the V to make a circular pattern?’”

But closing the V would result in bunched-up traffic, he said: “It would be six lanes ing into a three-lane area. So that’s when I started thinking about the circle, and coming in from the outside of the circle, around the front of the blocks, and then back out behind the block.

“And I actually laid it out over there — this was, gosh, almost 14 years ago now — in paper and drawing it out on the floor. It was an empty building. It made sense. So that started the thought process”

The design was based on what dealers had told him over the years.

“And it boils down to, ‘I missed some opportunities. I wish I had the ability to be in that other lane at a point because I really needed that car,’” Wolfsen said. “I hear this more and more. I hear it every week here. On the seller’s side, (they’re) never happy with the lanes. ‘Oh it’s too far away from the door. It’s too close to the end of the building.’

“There’s always a reason. And the third item is that, ‘I’m not happy with my numbers. I want to run in prime time and I want to run in the meat of the sale, and I want to run in 30 to 60,’ or whatever that might be,” he continued. “This addresses all those issues, where the buyer will be in a position where he can bid on any car that comes through the building.

“That’s unheard of in this industry. Where the seller can (choose to) not be concerned about lane preference, because it doesn’t matter anymore. Every car has the same exposure, availability.”

When it comes to “good numbers” to get on sale day, Wolfsen believes the new design can change that as well, based on what he expects will be a shift in the “attendance curve” typical for an auction.

Usually, Wolfsen said, dealers might arrive at the auction, get everything done within an hour or so and then leave. 

He argues that the new design, by giving dealers continued exposure to inventory throughout the sale, will entice dealers to stay longer.

Wolfsen also said he believes the design will lead to a significant reduction in accidents, “because we’re taking the majority of the traffic away from them” by moving the vehicles in behind the blocks, circling in the blocks and exiting.

“They won’t have that what I affectionately refer to as ‘running across the freeway’ — cars running north to south, dealers going back and forth, east to west,” he said. “And your liability there is certainly extensive in that type of environment.”

He estimates that new system is likely to cut around 90 percent of situations where someone can be injured

What is next?

As far as what the next steps are, Wolfsen said there are three options he is considering.

One is to sell patent license agreements to other parties to build the facilities, with the stipulation that no others are built in that specific market. It would be protected territory, he said.

Another is to look for financial backers and construct the facilities himself.

Lastly, there is the option to sell the patent outright. Which he does not favor, as he wants to stay involved in the process.

Manheim's Cadigan to retire Aug. 31


Manheim vice president of industry relations Jay Cadigan is retiring at the end of the month after a 40-year career in the auto industry, the auction company announced Tuesday.

Cadigan has been with Manheim since 1993 and held the VP of industry relations position since 2012, following his time as Manheim’s market vice president for Florida and Puerto Rico; president of sales and operations for the General Motors and Avis Budget Group accounts; and Skyline Auto Exchange’s general manager (the auction is now Manheim NY Metro Skyline)

His career has also included stops at Golden Gate Auto Auction and time with US Fleet Leasing, Avis Car Leasing and Hertz.
“There’s no question Jay has been a driving force at Manheim and within the remarketing industry for some 40 years,” Janet Barnard, president of Cox Automotive Inventory Solutions, said in a news release.

“He’s been instrumental in helping Manheim maintain its leadership position and worked tirelessly to shape the industry,” she said. “We can’t thank Jay enough for all he’s done for our company, our clients and the industry.”

Cadigan was inducted into the National Auto Auction Association’s Hall of Fame in 2015 and is NAAA’s current executive vice president. He serves on its executive committee and board of directors and is a past president of both NAAA and the Eastern Auto Auction Association.

Cadigan earned Ring of Honor recognition from the National Independent Automobile Dealers Association in 2016 and was named the Remarketer of the Year in 2015 at the Conference of Automotive Remarketing.

“Jay’s dedication and commitment to advancing the automotive remarketing profession has been invaluable,” NAAA chief executive Frank Hackett said in a news release. “His leadership encouraged the development of our association members and the organization alike.”
As for his retirement plans, Cadigan has his sights set on golfing, boating, traveling and volunteering, the company said.

“One of my most rewarding career experiences has been watching Manheim and the remarketing industry’s growth and innovation over the years,” said Cadigan. “And, I’ve been fortunate to work alongside some of remarketing’s finest pros, and my years at Manheim are no exception.

“It’s been an amazing journey, and I’ll forever cherish the relationships I’ve forged over the years.”

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