4 Questions with Patrick Dudash of XLerate Group

CARY, N.C. - 
In the latest installment of the annual , we go behind the scenes with some of the leading companies in the used-car space and their top executives with a few Q&A features.

Next up in this series is Patrick Dudash, senior vice president of sales at XLerate Group.

The emailed Q&A is below:

AuSM: With Pennsylvania just added to your list of markets this year, how much has the recent growth impacted your business, and where might your footprint extend next? 

Patrick Dudash: Our growth in both physical and digital footprint over the last three years has opened a number of markets to us, which were previously untapped. Our expanded geographic coverage obviously positions us with additional dealer groups and, in many cases, new institutional consignors. XLerate’s explosive digital growth opens even more markets for us where we do not have a traditional brick-and-mortar or a mobile sale presence. 

We will continue to expand both our traditional geographic and digital footprints when the right opportunities present themselves. We will do this while continually focusing on our current core group of 10 auctions that operate 16 different sales, which includes our mobile sales in Texas, Florida and California.

AR: How is your auction adapting to an increasingly digital auction environment? 

PD: Culturally, our senior management team now fully embraces the digital environment and the new, incremental opportunities a properly executed digital strategy enables for both our customers and our company. We can now “speak” both digital and brick-and-mortar to our current and potential customers and simultaneously execute well in both environments. To get to this point, we have invested heavily in market-based digital reps as well as in our own, growing digital marketplace. 

In 2015, we moved Kelly McAllister from a more traditional auction role supporting our auctions digital process to director of online business development, a role designed to push digital growth at our auctions.  To support this, Kelly has developed digital sales representative hiring profiles and compensation plans to assist our physical auctions in finding and hiring candidates to drive online sales volume. 

AR: What do you enjoy the most about being in the remarketing industry?

PD: What I enjoy the most about being in the remarketing industry is the ever-changing landscape of consignor volume and the challenges it brings our auctions. On the institutional side, it's the opportunity to promote our auctions’ high-level touch in customer service and operational expertise when volumes are rising. While at the same time, on the dealer side, helping them find the right mix to meet their inventory needs. 

We are doing this through our new XL-online Marketplace where we continue to grow consignment and sales for our dealer network, and have a dealer wish list available for us to push the inventory they need.

Additionally, we’ve recently added XLFunding (, a dealer floor plan service available at all of our physical and mobile auctions. We see this as a key to support our buying dealers’ increased appetite for inventory.

AR: What do you see as the biggest challenge for your company, and what is its primary focus to maintain and/or grow its influence on the automotive industry? 

PD: Investment capital is not an issue for XLerate. As we grow, we need to continue to recruit to-notch talent for both the “traditional” auction world as well as the digital/technology spaces — and then meld/integrate both groups of talent into one high-performing, client-centric culture.

As we see the overall economy continue to improve, we also see a correlating fall in unemployment. As we try and grow our business, it becomes more difficult to recruit, hire and retain key employees.

We continue to combat that with a safe and fun work environment, and aggressive and rewarding compensation programs. We also need to make sure that we are aligned with the right technology partners/providers who can facilitate our growth strategy is one of the most critical decisions on the near-term horizon for XLerate. This has to become our primary focus to maintain and/or grow within the automotive industry.

Manheim Index sets record for 3rd straight month


The record-setting streak for the Manheim Used Vehicle Value Index reached three months in a row when Cox Automotive shared the new reading on Monday.

The report indicated wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 0.75 percent month-over-month in July. This rise brought the index reading to 130.3, which was a record high for the third consecutive month and a 2.6-percent increase from a year ago.

The new high mark is more than 30 points above the index’s low point of 98.0 registered in December 2008.

On a year-over-year basis, analysts noticed prices for mid-size cars produced the largest decline in July, softening by 0.9 percent.

Each of the other five vehicle categories analysts track for the index registered price gains, with pickups leading the way at 7.8 percent and vans not far off at 5.5 percent.

Prices for CUV and SUVs along with luxury cars ticked up by nearly similar rates at 1.9 percent and 1.8 percent, respectively. Even compact cars edge slightly higher as prices for those units ticked up 0.2 percent year-over-year.

“Wholesale market values continue to show strength despite concerns that increasing off-lease maturities would result in a used vehicle supply glut and rapidly declining used-car values,” Cox Automotive chief economist Jonathan Smoke said in his commentary associated with the latest index update.

“Instead, used-vehicle sales are growing, driven by double-digit year-over-year growth in sales of vehicles less than 4 years old.  Increased demand is absorbing the higher supply of newer vehicles.”

Analysts also mentioned that rental risk pricing improved as volumes dropped.

Cox Automotive determined that the average price for rental risk units sold at auction in July decreased by 2 percent year-over-year in July, which was a significant improvement over June.  Rental risk prices were up 3 percent compared to June.

Average mileage for rental risk units in July (at 41,400 miles) was 2 percent below a year ago, according to analysts.

Smoke closed his commentary by emphasizing the U.S. economy “remains strong.”

 According to the first estimate from the Bureau of Economic Analysis, the U.S. economy grew 2.6 percent in the second quarter. 

“Consumer spending on both durable and nondurable goods drove most of the growth in the second quarter,” Smoke said. “Consumer confidence strengthened to the second-highest level in 16 years in July (only higher month was March).”

Philly investment firm sends resources to MyDealerOnline


MyDealerOnline, whose software lets dealers take wholesale vehicles and places them on the dealership websites, recently announced that Ben Franklin Technology Partners of Southeastern Pennsylvania has invested in the company to bring more exposure to its multi-faceted dealership solution platform.

Executives highlighted the late seed round will make it possible for auctions on to get more exposure, while individuals will be able to access a wider selection of vehicle  at competitive prices through trusted local dealers. The investment makes MyDealerOnline part of Ben Franklin’s portfolio of greater Philadelphia-based high-growth technology companies.

Meanwhile, MyDealerOnline is still offering an opportunity to investors to add to the current round of investment.

“We are pleased to partner with Ben Franklin and their dedication to helping early stage companies,” MyDealerOnline founder and chief executive officer Yury Kaganov said. “Their due diligence and subsequent investment continue to validate MyDealerOnline's business model and value to our marketplace.”

MyDealerOnline’s multi-faceted solution can help dealerships drive sales, increase marketing effectiveness and gain intelligent customer insights by giving them the ability to offer wholesale inventory directly to customers through their current dealership websites. The Inventory-as-a-Service platform does not require additional funds or floor-plan costs typically involved with physical inventory for a dealership. The platform also improves the acquisition process, revenue potential, and customer satisfaction rates with one solution. 

For more information about the investment deal, . 

4 Questions with John Kett of Insurance Auto Auctions

CARY, N.C. - 

In the latest installment of the annual , we go behind the scenes with some of the leading companies in the used-car space and their top executives with a few Q&A features.

Next up in this series is John Kett, chief executive officer and president of Insurance Auto Auctions. The emailed Q&A is below:

AuSM: A lot of talk this year about off-lease and wholesale volume this year. What’s the volume picture looking like on the salvage side of the business?

John Kett: Salvage industry volumes, which have grown at a double-digit rate recently, are driven by a combination of accident frequency and severity of damage. These aggressive growth volumes have been largely driven by rising miles driven, an average older vehicle on the road, increasing driver distractions and higher repair rates, which all result in insurance companies totaling more vehicles versus repairing them.

AR: Good bit of expansion this year for Insurance Auto Auctions. What is driving that need/demand for additional IAA locations?

JK: IAA has maintained a consistent and aggressive growth strategy by expanding or opening over 25 IAA facilities and increasing capacity by over 20 percent since 2016. Our strategy for expansion focuses on where it makes business sense and benefits our vehicle buyers and sellers. In addition, at the same time, we focus on expansion, we focus on the efficiency of our auction model. We know that our customers benefit greatly from innovation that makes the auction platform more efficient. Therefore, we invest heavily in technology that will support the best economic value to the buyer and seller.

AR: I understand that tech-related launches have played a big part of Insurance Auto Auctions’ strategy this year. What are some of those launches you’re particularly proud of?

JK: I’m most proud of how we lead the industry in developing technology to add tremendous value to our customers.  We utilize our customers’ back and needs to drive the design of our products and services. Recently, we launched two products for our buyers, IAA Fast Search and IAA Enhanced Vehicle Details. Both products are examples of innovation aimed improving the shopping, bidding and buyer experience at IAA. Buyers have told us they want to be able to make fast and informed buying decisions. Both of these products enable buying customers to maximize their search time and more efficiently identify those vehicles on which they may want to bid. 

AR: Looking at first-quarter results reported in May, I see that Insurance Auto Auctions revenue grew from $269.6 million to $297.4 million for the quarter. What is driving that kind of growth?

JK: We were very pleased with our results. IAA is a strong business and being part of the KAR Auction Services family of companies only strengthens what we deliver to the market today and beyond. Higher total loss volumes and increased vehicles offered for sale were the primary drivers of our double-digit volume growth and revenue growth in the first quarter.  


Auction unit sales volume expected to top 10 million in 2017


The auto auction industry will set a new sales record of more than 10 million vehicles this year, auction experts predict. That’s up from 9.8 million in 2016.

Ira Silver, National Auto Auction Association chief economist, believes 10 million sales for the industry is on target. He attributes the growth to an increase in the commercial consignment segment, which is made up of off-lease vehicles and retired rental and fleet vehicles.

Conversely, sales of dealer consignment vehicles are down, he noted.

“We’re seeing strong growth in the order of around 10 percent in commercial consignment, while dealer consignment is declining somewhat,” Silver said. “Dealer consignment is closely related to current new (vehicle) sales and new sales for the first half of the year are down slightly from last year.

“When someone buys a new car they typically trade-in an older car and some portion of those cars will go through the auction. Until this year, dealer consignment had been growing since the end of the recession.”

Tom Kontos, KAR Auction Services Inc. chief economist, said his analysis of AuctionNet data pegs auction sales up 2 percent for the first half of 2017 compared to the same period last year.

But sales would have been higher had some vehicles not been sidelined because of manufacturer recalls, he opined.

“They are sitting in inventory at auctions but they are not being sold,” Kontos said. “It’s enough cars that the percentage would have been higher than 2 percent.’’

He also believes the industry is tracking to sell “more than 10 million” units this year.

More cars, but just barely

Industrywide, more cars than trucks have been sold at auction so far this year, but just barely, Kontos said.

Through June, cars represent 50.8 percent of vehicles sold at auction versus 53.9 percent for the year in 2015.

When combined, compact and midsize cars represented 66.4 percent of the cars sold in the first half of 2017 versus a combined total of 63.0 percent for the year in 2015.

Grace Huang, senior vice president of inventory services at Manheim, said cars were about 51.5 percent of the vehicles being sold at Manheim. Midsize cars at 20 percent of the vehicles sold and SUVs at 31.6 percent were the two largest vehicle segments, Huang said.

“For us, the most popular (model) year is 2014 because that was the peak of leasing after the downturn,” she added.

Jonathan Smoke, Cox Automotive chief economist, said the company’s analysis of industrywide auction data indicates that much of the 500,000 to 600,000 off-lease unit volume increase expected this year occurred in late 2016 and early 2017 as a result of manufacturer and dealer pull-ahead programs and efforts.

When cars “like the Nissan Altima and Hyundai Sonata are depreciating at lower than what is considered to be normal, it’s because earlier in the year they were depreciating more significantly,” said Smoke during Cox Automotive’s quarterly conference call on July 10.

Same industry, different view

Just as the nation’s largest auction companies offer a big-picture look at the auction industry, smaller auction companies and independent auctions offer a different view.

“In Texas, we’re pickup and SUV country, so predominantly, that’s what you’re going to see at auction, especially around Austin, San Antonio and places like that,” said John Swofford, vice president at America’s Auto Auction which owns 21 auction locations around the country.

Dealer consignment vehicles make up 75 percent to 80 percent of the sales at the company’s four Texas locations under Swofford’s watch. He is also in charge of America’s Auto Auction locations in Tulsa, Okla., and Baton Rouge, La.

“In Dallas, it may be a little bit different because of the population base and the amount of highline vehicles there. We’re simply dealing with what was retailed five to seven years ago. Compact cars aren’t a big retail item in Texas.”

George Pero, general manager at Corry Auto Dealers Exchange, which was acquired by the XLerate Group in March, said he is seeing an increase in off-lease and commercial fleet vehicle volumes at the Corry, Pa., location.

“We’re seeing an influx of SUVs from the off-rental market,” too, Pero said.

CADE sold about 10,500 vehicles at auction in 2016 and expects an eight to 10 percent sales increase this year, Pero said. XLerate owns 14 physical and mobile auctions in eight states.

More repos coming

In the first six months, sales of both fleet-lease and dealer consignment units were down “a little bit” and dealer consignment units were in “rougher” condition, at Carolina Auto Auction, in Williamston, S.C., said the site’s general manager, Eric Autenrieth.

Autenrieth said he has also seen a downturn in sales of repossessed vehicles because consumers “got caught up” with their car payments during income tax refund season.

He said there is typically a three-month lag between loan default and vehicles making their way to auction. “I think it’s following the normal trends we’ll see (repo sales) climb as we hit the fall months,” he said.

Carolina Auto Auction specializes in sales of fleet-lease vehicles, retired rental vehicles, repossessed vehicles and dealer consignment units.

About 1,000 to 1,200 vehicles roll through its lanes each week, Autenrieth said.

Depreciation accelerates as July concludes


As dealers looked to accelerate sales to close July, Black Book noticed vehicle depreciation moved in a similar way to finish the month.

The latest Black Book Market Insights report indicated most vehicle segments increased in depreciation during late July. Out of all car and truck segments, editors determined full-size pickups retained their value the best, only decreasing in value by 0.06 percent.

“Car values dropped sharply in the last week of July. It was the highest depreciation in car segments in 20 weeks,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.

Editors offered more details after looking at the volume-weighted data where they found that overall car segment values decreased by 0.54 percent last week. That figure is higher than the average weekly decrease of 0.30 percent in values spotted during the previous four weeks.

Black Book reported the midsize car, sporty car, full-size car and prestige luxury car segments declined the most — each one by about 0.65 percent.

Reviewing volume-weighted information, editors discovered overall truck segment values (including pickups, SUVs and vans) softened by 0.32 percent last week, higher than the average weekly decrease of 0.15 percent in values registered during the previous four weeks.

Editors added small pickup and compact crossover/SUV values declined the most among truck segments by 0.64 percent and 0.54 percent, respectively.

Turning next to cover what lane observers relayed back to Black Book headquarters, one of the highlights likely stemmed from DAA Northwest’s Rock & Roll Sale.

While not mentioning the annual event by name, the Black Book representative from Washington reported, “I attended a huge event sale that had over 5,000 vehicles consigned over two consecutive days with a concert sandwiched in between. They sold around 70 percent of the vehicles and an average sale price of $18,000, both of which were amazing numbers.”

Elsewhere around the country, some auction reports weren’t quite as rosy, beginning in Tennessee.

“Not much speculating happening here as a lot of dealers are buying only the vehicles that they have retail orders for,” Black Book’s representative in the Volunteer State said.

Up in Michigan, it still might be summertime, but, “Dealers are already preparing for fall as the four wheel drive trucks are receiving most of the attention.”

Down in Florida, the hammer didn’t fall as much as it sometimes does. Black Book’s personnel noticed, “It was a tough auction here because the corporate reps were holding tight on their floor prices. The result was a lot of no-sales.”

And finally from Pennsylvania, the action was a bit busier, at least in one part of the facility.

“I watched a dealer lane sell almost everything that came through with most fetching good values. In-lane attendance was sparse, but there were consistently around 115 online buyers for the entire run in that particular lane,” Black Book’s observer said.

Black Book Index maintains steady track


Black Book editors could have broken out a thesaurus on Tuesday when releasing their Used Vehicle Retention Index for July. Upon looking for the right adjective to summarize the latest reading, they could have picked among steady, stable, firm, fixed, unchanged or unwavering.

The reason why is the July index reading came in the same as it was in June, resting at 113.0. Black Book’s index has now moved slightly positive or remained unchanged during three of the last four months.

The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles, as percent of original typically-equipped MSRP.

Editors noticed full-size cars, full-size pickups, luxury cars, and near-luxury cars all saw noticeable gains in their respective segment Indexes during July. Black Book added that pickups remain popular because of the price of gas and overall supply in the market, while each of these car segments offer decent value currently, resulting from several months of sharp valuation declines over the last few years.

“What we’re experiencing over the last few months are signs of a resilient used-vehicle market, where the bottom is not dropping out as some had expected this year,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book.

“We’re paying close attention to several car segments, in particular, compact car and midsize car, which continue to weaken as demand remains soft and used supplies build,” Goyal continued. “In addition, the overall economy and credit availability conditions will influence the retention strength moving forward.”

The index dates back to January 2005 when Black Book published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1 percent while during 2016, the index fell by just 6.4 percent.

During 2011, the index rose strongly from 113.3 to 123.0 by the end of the year as the economy picked up steam and used-vehicle values rose higher. It continued to remain relatively stable, rising slightly until May of 2014 when it hit a peak of 128.1.

To obtain a copy of the latest Black Book Wholesale Value Index, .  

Manheim broadens Peluso's role & responsibilities


To strengthen and grow its digital offerings, Manheim announced on Monday that Nick Peluso will lead the company’s digital strategy as president of Manheim Digital Marketplace, while continuing as president of RMS Automotive.

In his dual role, the company indicated Peluso is responsible for Manheim’s digital channels, including OVE, and Simulcast, in addition to RMS Automotive’s global business.

“By aligning our digital resources under one proven leader, we can better ensure our clients benefit from the advantages delivered by our market-leading digital platforms,” said Grace Huang, senior vice president of inventory services for Manheim. “Nick’s deep knowledge of the ever-evolving digital marketplace makes him the ideal executive to direct our next-generation digital future.”

Reporting to Huang, Manheim highlighted Peluso will leverage his more than 30 years of automotive experience and tap the synergies between the two companies’ diverse portfolio of leading digital solutions to drive transaction velocity and efficiency. His efforts will focus on setting the industry standard by making the client experience faster, simpler and more convenient.

“I’m eager to help shape the next phase of our digital remarketing strategy, especially at a time when dealers and commercial clients increasingly rely on digital channels to conduct business anytime, anywhere,” Peluso said. “My goal is to broaden our services and deliver a suite of digital tools that advance our clients’ speed to market.”

Peluso joined Cox Automotive in 2000 as president of remarketing solutions for Manheim and soon became senior vice president of customer management for Manheim before being named president of RMS Automotive in 2014.

Prior to 2000, Peluso spent 12 years in leadership positions with ADT Automotive, including vice president of sales and marketing.

Auction roundup: Locations beat the heat with special events

CARY, N.C. - 

Auctions across the country are finding ways to have fun this summer.

A few include a Louisiana auction, an Illinois auction and 20 southeastern Manheim locations.

Manheim’s southeastern locations participated in the company’s fourth annual Cargaritaville sales event this month.

The sales day featured beach-themed prize giveaways, live entertainment and steel drummers.

NextGear Capital partnered with each participating location to offer special promotional terms and Margarita Machine giveaways.

A 2016 Kawaski Jet Ski, the grand prize, was given away at Manheim Orlando to Ed Burgess with Mazda of Roswell, Ga.

The 20 locations offered more than 30,000 participating dealers a total of roughly 40,000 vehicles.

“Each year Cargaritaville grows and grows,” said Mark Ford, Manheim's regional vice president for the Southeast. “Our clients here in the Southeast truly look forward to and plan in advance for this annual event. We can’t thank them enough for their participation and the excitement they bring to make it such a huge success.”

Additionally, Manheim team members also made time for costume contests and photo booth opportunities during the sale.

Cargaritaville began in 2013 at 11 Manheim locations in Florida. In 2016, the event expanded to Alabama, Georgia, North Carolina, South Carolina and Tennessee locations.

Manheim locations in the Southeast weren't the only ones within the company to have summertime fun.

Manheim Baltimore-Washington helped clients knock sales out of the park at the third annual ‘Summer Slam’ sale on July 18. This year's event featured more inventory, more buyers and more transactions than last year. Some 3,000 units were available at the baseball-themed event which brought more than 2,000 buyers contributing to an overall sales rate of more than 60 percent.

“Our spirited sale is a great opportunity for dealers to refresh their inventory for the summer,” general manager John Eriksen said. “We love all the dealer engagement, both in our lanes and online. This sale is one of the ways we offer value to our consignors and show our clients how much we appreciate them.”

Meanwhile, Greater Rockford Auto Auction in Illinois recently celebrated 43 years with a special sales event featuring $15,000 in prizes and giveaways on July 19.

Prizes included off-road dune buggies, Cub Cadet lawn mowers, patio furniture sets and electric smokers.

Louisiana's 1st Choice Auction’s (LAFCAA) 2017 Lagniappe Sale was also this month.

“It was a great day at the auction, with a terrific lineup of cars and trucks, and lots of prizes to go around,” LAFCAA owner and managing partner John Poteet said in a news release.

“Dealers received free shirts, free 28-day floats and free root beer floats. One lucky dealer won $500 as another won a 2-night vacation package.”

LAFCAA's annual football-themed Tailgate Event is set for Aug. 22.

The sale will feature 900 units from ARI, CPS and several large dealer groups.

This year's sale will also include a special visit from 2003 NCAA and 2009 Super Bowl champion wide receiver Devery Henderson.

Henderson will mingle with buyers attending the event and provide opportunities for photos and autographs.

Themed prizes valued at an estimated $10,000 will also be awarded during the sale, according to LAFCAA.

Visit for more details.

Fla. car buying company's 'fresh' used inventory attracts dealers nationally

CARY, N.C. - 

AutoBuy, a Florida-based car buying company supplying dealers across the country with often desired, non-advertised used inventory, recently celebrated 100,000 private car sellers served.  

With more than $1 billion dollars in inventory appraised in eight years of business, AutoBuy founder Anthony Maida says his used-car inventory rivals that of other auction consignors because the vehicles from his private sellers haven’t been previously marketed.

“Our inventory is fresh, non-advertised or remarketed to consumers,” Maida said during a phone interview with AuSM. “We‘ve been able to establish an inventory that is of the hottest premium automobiles that are being looked for in the used-car market.”

Gabriel PeerDrake, a dealer who’s just been in business for over year, said he stumbled across AutoBuy by accident, before becoming a fan of the company’s unique supply of inventory.

“The one thing that set them apart is, when I got to an auction and I’m buying in a normal lane, I’m buying cars from other dealers that have their vehicles down there for a myriad of reasons,” said PeerDrake, owner and operator of CARite of Cocoa.

PeerDrake said eight times out of 10, vehicles at auctions have been advertised online by another dealer and carries a digital footprint.

“AutoBuy cars don’t have a digital footprint. There’s no digital history to them. They're buying direct from consumer and selling direct to dealer. There’s no middle retail step involved. So when I offer a vehicle for sale that I get from them, my competitor and my consumer hasn’t seen that car in the marketplace,” he explained.

AutoBuy has also become consumer friendly because it can offer private car seller appraisals that rival those of local markets as well, according to Maida.

Looking at the markets across the U.S., AutoBuy makes purchases on a national basis. So it can offer consumers appraisals not limited to the local market.

“We’ve brought to the table something that is beneficial to the consumer, as well as the dealer industry,” Maida said. “We’re able to provide that premium inventory that all dealers are looking for to supply in their dealer market for retail.”

As AuSM reported in May, when it's time to trade-in, U.S. consumers have been found to be often disappointed with their vehicle’s appraisals.  Maida said much of this disfavor stems from dealers just strictly evaluating and making offers based on local market values.

“A lot of it has to do with dealers evaluating cars on the local market, compared to us evaluating cars on the national market value,” he explained.

Private car sellers can either bring a vehicle to one of AutoBuy’s seven locations or they can visit the company’s website, to arrange for a certified buyer to come by their home of office to make an appraisal.

Most of AutoBuy’s vehicles are ready for auction within seven days of a purchase, boasts Maida.

“Our average vehicles lifetime in the possession of AutoBuy is seven and a half days from the time that we acquire it, to the time that we buy it and sell it,” he said.

This summer, following its continued growth, Madia said AutoBuy plans to add two locations in central Florida.

“Our goal is to continue to grow this rapid market, and since we are somewhat competitors with CarMax, that we can grow this as we continue to on a national basis,” he added.

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