Truck and SUV demand heats up as spring selling season nears


Black Book’s latest wholesale price data and anecdotes from the lanes offered vivid details about what’s happening when clean trucks and SUVs roll over the block.

This week’s Black Book Market Insights report also indicated overall values are holding up well as the industry approaches the spring selling season.

“Lower mileage trucks and SUVs continue to be in demand. We are seeing consignors holding out for more money on their units to drive up prices," said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.

Black Book’s volume-weighted data showed overall car segment values decreased by 0.58 percent last week, better than the average weekly decrease of 0.69 percent in values over the previous four weeks.

Editors determined the midsize car segment performed the best, decreasing the least in value; just $10 or 0.13 percent. Meanwhile on the opposite end of the spectrum, they spotted sizeable declines for luxury cars ($163 or 0.93 percent), prestige luxury cars ($172 or 0.54 percent) and premium sporty cars ($247 or 0.63 percent).

Turning next to volume-weighted truck data, Black Book reported that overall truck segment values — including pickups, SUVs, and vans — decreased by 0.46 percent last week, slightly better than the average weekly decrease of 0.52 percent in values noticed during the previous four weeks.

Editors found that compact van segment performed the worst, decreasing the most in value among all the truck segments at $152 or 1.89 percent.

As Goyal references, the talk in the lanes is about how dealers are craning their necks at the sale if a gently used truck or SUV is being consigned.

Beginning in Massachusetts, Black Book’s observer said, “Overall the money was pretty good. Trucks, crossovers, and full-size SUVs all sold well.”

Over in Pennsylvania, the grip of winter is leaving a mark as the Black Book lane watcher shared, “New-car sales are still slow with the bad weather being a factor. Improving weather and a robust tax season will be welcome.”

In another cold-weather location — Michigan — sale activity seemed to be much warmer than the temperature outside as Black Book’s representative stated, “Michigan dealers are stocking up on inventory but out of state buyers are making a lot of the on-line purchases due to the high demand in their market.”

Sliding South to the Sunshine State, Black Book’s report out of Florida indicated, “Buyers at the auction are purchasing only what they need. They are mainly looking for trucks and SUVs with good miles."

Finally, like the price of fuel, the higher costs when the hammer fell in California took more out of dealers’ pockets and floor plan as Black Book noted, “Not enough quality vehicles available to meet the demand, so prices remain high.”

GM Financial expands national footprint to spread off-lease inventory

CARY, N.C. - 

This year, GM Financial is expanding its volume footprint nationwide — recently opening distribution centers in the Detroit area, Maryland and New York — to help move more vehicles across Southeast and Midwest markets that wouldn't normally get as many off-lease returns, says GM Financial vice president of remarketing, auction operations John Sullivan.

“So pretty much every one of our auction partners in 2018 will see an increase,” Sullivan explained during a late-January phone interview with AuSM.

In regards to the number of vehicles that are expected to show up at auction, he said “we will have a pretty good increase, probably in the 50-percent range for 2018 that is actually sold at physical auction, depending on how much the retail customer purchases and what we’re able to sell on the GMF DealerSource, which is our online platform.

“As far as volume goes, we haven't finalized the numbers for 2017 yet, but they should come out shortly,” he added.

GM Financial will release its 2017 operating results on Feb. 6, according to GM Financial spokesperson Nikki Hall-Branch.

In early January, Cox Automotive’s Jonathan Smoke explained that off-lease units will provide growth in units at auction and that the composition is changing this year.

There will be nearly 300,000 more off-lease cars and trucks that will return to the market this year compared to 2017 for a grand total of 3.89 million off-lease units.  

“Off-lease maturities are the source of off-lease vehicles at auction; we are past the peak growth in off lease but we have at least two more years left of growth in the volumes that will be coming to auction. In 2018, an additional 290,000 vehicles would theoretically reach the end of their lease,” Smoke said.

“That number will likely be influenced by lease pull-ahead programs, which were ramped in the fourth quarter; and remember, a substantial number never end up consigned as an off-lease as they are either purchased by the consumer or grounded by the dealer,” he explained.

On a localized level, Columbus Fair Auto Auction in Ohio said GM Financial began expanding their lane presence earlier this month due to increased off-lease volume.

Along with adding two simultaneous lanes that will run in lanes 7 and 8 every week, the auction said GM Financial has started running bi-weekly closed factory sales on Tuesdays and will also continue to offer a bi-weekly repo sale this year.

“CFAA has proven to us in the past that they are capable of handling large volume sales," GM Financial’s Chris Watkins said in a news release announcing the recent expansion. “Opening up an additional lane will help provide dealers in the central Ohio area with a wider variety of off-lease inventory.

IAA presents latest auction channel platform, opens new Wisconsin location


Insurance Auto Auctions announced Thursday the launch of its newest auction channel for targeted buying and selling — Ignite Auction — in conjunction with the grand opening of its IAA Ignite Auction location in Portage, Wis.

Via IAA Ignite, sellers can consign vehicles utilizing the platforms suite of auction channels, IAA Live and Online, IAA Timed Auctions and IAA Buy Now.

“We wanted to create an efficient marketplace for independent dealers and rebuilders with access to the clear title, run and drive, higher mileage segment of inventory they desire,” IAA chief executive officer and president John Kett said in a news release. “By leveraging our multi-channel auction model, we can match the right buyer to the right seller. Our new location in Portage, Wisconsin will serve as the launching point for the IAA Ignite brand.”

The company’s new Portage IAA Ignite Auction, previously ADESA Wisconsin, will operate much like an IAA Auction, aside from the specific inventory that the location will offer. 

This news follows IAA’s early January announcement that it has relocated its Jackson, Miss., branch and expanded its Grenada facility in the same state to boost the company’s inventory capacity.

2 limited edition 65th anniversary Corvette Carbons go to auction

CARY, N.C. - 

A 2018 Chevrolet Corvette Carbon 65 from GM Financial, one of only 650 limited edition vehicles produced to commemorate the Corvette’s 1953 debut., was auctioned off at ADESA Los Angeles on Jan. 25.

GM Financial said Wednesday that the amount the special vehicle sold for is currently undisclosed, however, Chevrolet's first retail production model of the 2018 Corvette Carbon 65 was auctioned off to benefit military veterans on Jan. 20 for $1.4 million at Barrett-Jackson in Scottsdale, Ariz.

The Carbon 65 that was sold last week at ADESA Los Angeles is an early production number of the commemorative model, according John Sullivan, GM Financial vice president of remarketing, auction operations.

“It’s an early production number, the first one was actually sold this past week at Barrett-Jackson,” Sullivan explained during a late-January phone interview with AuSM.

“General Motors donated the vehicle, and another first 2019 Corvette; but this one, the Carbon Fiber, was signed by President George [W.] Bush, and it was auctioned off for charity, and it brought $1.4 million at Barrett-Jackson last week,” he said, referring to the vehicle sold Jan. 20.

Atlantic Automotive Group owner John Staluppi bought the signed Corvette sold at Barrett-Jackson, according to a Chevrolet news release, and proceeds from the sale went to the Bush Center’s Military Service Initiative.

The track-inspired Carbon Edition 65 package is offered on 2018 Grand Sport and Z06 models.

According to Sullivan, the package is approximately $15,000.

Some of the Carbon 65 package’s unique features include:

  • Ceramic matrix gray exterior (blue top on convertibles)
  • Carbon flash badges and outside mirrors
  • Jet black suede-wrapped interior with blue stitching
  • Carbon-fiber steering wheel rim and gloss carbon-fiber interior trim
  • Competition sport seats
  • Carbon Edition sill plates


Editor's Note: Updated and corrected for clarity regarding models and sales.

ADESA names new president

CARMEL, Ind.  - 

ADESA will have a new president on Feb. 26.

Parent company KAR Auction Services said late Thursday afternoon that Stéphane St-Hilaire, who has been ADESA’s president since early 2014, is resigning.

Taking on the role is John Hammer, who had been chief executive of KAR’s Automotive Finance Corp. business until 2016. Hammer was most recently CEO of U.S. Auto Sales, Inc.  

St-Hilaire will remain with the company until the end of February to aid in the transition; Hammer will rejoin KAR on Feb. 26.

“John has a 25-year track record of delivering successful results. He knows our industry, he knows our company and above all, he knows our culture,” KAR chairman and CEO Jim Hallett said in a news release.

“ADESA is well positioned for the future, and John’s expertise and entrepreneurial drive will positively impact our customers at every level. He’s a seasoned leader who is committed to employee engagement and collaboration — so I am eager to see what we can accomplish together.”

Hammer’s responsibilities include the operations of ADESA and 75 auction locations throughout North America. He will report directly to Hallett and serve on KAR’s senior leadership team.

“I am thrilled to lead ADESA and rejoin the incredible KAR management team that Jim Hallett has strategically assembled,” Hammer said in the release. “KAR and ADESA have made meaningful investments in people, technology and data analytics that will help us rapidly deploy new, innovative customer solutions. I look forward to leveraging KAR’s diverse capabilities, and getting out to the field to hear from our customers and our employees.”

St-Hilaire became ADESA Canada’s chief financial officer in 1998 and held various senior positions with the company during the last two decades. 

“Over the past 20 years, Stéphane St-Hilaire has remained a dedicated and committed member of the KAR team and we wish him the best in his next chapter,” said Hallett. 

Auto auctions see rise in digital transactions

CARY, N.C. - 

One discussion topic that often comes up at used-car industry conferences is this: the increased digitalization of the wholesale vehicle market, be it through third-party platforms or the online offerings of auction players.

Well, a few statistics released Tuesday show some concrete proof of how far that digitalization has come.

Saying the company saw “unprecedented growth of its offsite channels,” Manheim said 40 percent of cars sold through the auction company last year were bought on digital screens.

In fact, Manheim reported 2 million purchases via digital transactions in 2017. Of that total, 630,000 were done through “pure digital platforms” — i.e. on the, OVE and RMS platforms. The latter figure is an increase of 15 percent.

The 2 million figure includes Simulcast sales. And interestingly enough, Simulcast users represented more than half of Manheim’s physical auction attendance last year, the company said.

Going beyond the brick-and-mortar, there was a 30-percent hike in offsite transactions (what Manheim describes as purchases outside physical auction).

“Our goal is to enable clients to conduct transactions in the office, on the lot or on the go — helping them operate their business in the way that best suits their needs,” said Derek Hansen, vice president of Offsite Solutions at Manheim, in a news release.

“Using Manheim’s digital and mobile channels, we deliver efficiency, cost savings and convenience for dealers buying and selling used vehicles,” he said. 

Manheim has three upgrades in its offsite business expected to launch shortly: new search capabilities on OVE; mobile app upgrades; and seller tool enhancements that are designed to “link Marketplace channels, putting comprehensive options at sellers’ fingertips, including the ability to easily list inventory on multiple digital channels to obtain greater vehicle value before consigning it to a physical auction,” the company said. 

“Also in 2018, capitalizing on the flexibility provided by a digital channel, Manheim will launch customizable storefronts that address unique seller, buyer or inventory needs,” said Zach Hallowell, vice president, Manheim Digital Marketplace and RMS Automotive, in the news release. “We will enhance clients’ Manheim Marketplace experience and efficiencies to make it much easier to locate and manage inventory across all our channels.”

‘Reaches across the entire nation’

The response to digital demand has been similar among Manheim’s peers. 

Shortly after the company released its third-quarter earnings in the fall, KAR Auction Services chief executive officer Jim Hallett pointed out how active the ADESA auction company’s OPENLANE online platform had been in the wake of Hurricane Harvey.

“Because that platform reaches across the entire nation,” Hallett said in a phone interview, “and you don’t have to wait until sale day to buy a car. You can buy a car 24/7, any day of the week. So, those sites were very, very active. They sold a lot of vehicles online. Our online sales were up 34 percent in the quarter, and our physical sales were down 1 percent.”

The 34-percent spike in online volume was “not totally, but heavily impacted” by the storms, Hallett said.

It also was the highest growth rate they had experienced since the first half of 2014, which was early stages of the cyclical recovery, KAR chief financial officer Eric Loughmiller said during the same call.

And not only does this illustrate just how much online buying there was, it also speaks to KAR’s strategy of offering “all the venues” wherever dealers want to buy the vehicles, Loughmiller said.

So what else drove such a massive spike?  Loughmiller points out, “that’s where the supply starts (at) what we call the top of the funnel … I don’t know that it was demand-driven.

“If you read what the dealers are saying, they’re actually selling the cars now,” Loughmiller said. “Those dealers in Texas knew they had to start accumulating inventory for when the buyer came to their lot.”

Since the inventory was showing up online first, dealers thought it prudent to buy there because there was a “good chance” it would have been sold before the dealer could have bought it in his or her market.

Loughmiller later added, “And we experienced this when there was a shortage of vehicles; you get the inventory when you can.”

Likewise, for Auction Edge — a technology and software provider for the independent auction market — its auction customers were turning to its Edge Pipeline platform to expand the viewing area of the inventory listings.

So, auctions in Indiana were attracting Texas dealers, in need of an inventory boost following the storms, via simulcast, Auction Edge CEO Dan Diedrich said in an interview late last year.

In short, auctions were generating activity from areas they might not have otherwise had exposure, Diedrich said.

“If you just take a market event like that, where you have hundreds of thousands of vehicles being taken out of the market, when there’s a void there, auctions that aren’t necessarily local can expose their inventory and be there to service the needs of buyers in a scenario like that,” he said.

Hence, the beauty — and sometimes necessity — of the online capability for auctions, independent and corporately owned.  

Signs of spring market starting to appear in the lanes


While more than a week remains in January, dealers might already be venturing into the wholesale market with spring on their minds, hoping retail sales increases bloom nicely.

What managers are going to have to pay for inventory varies based on the latest analysis from Black Book and RVI Group.

The December figures from RVI Group showed five vehicle segments generating year-over-year value upticks of at least 1.7 percent. Multiple segments were connected with units more popular when weather is more favorable. The rundown included:

—Sports car: up 2.3 percent
—Luxury small sedan: up 2.1 percent
—Full-size pickup: 1.9 percent
—Luxury full-size sedan: up 1.9 percent
—Sporty coupe: up 1.7 percent.

However, RVI Group also found that there were six vehicle segments that saw their values soften by at least 1 percent. Should these units turn in your market, RVI Group mentioned these segments as possibilities for lower acquisition costs for possible higher margins:

—Luxury coupe: down 4.2 percent
—Sub-compact: down 3.3 percent
—Small pickup: down 2.7 percent
—Small sedan: down 2.0 percent
—Full-size sedan: down 1.3 percent
—Compact: down 1.0 percent

Meanwhile the editorial team that compiled this week’s Black Book Market Insights report illustrated where cars saw larger-than-normal depreciation, especially with the spring selling season right around the corner.

The report also highlighted that within the 2015 model year segment retention, small pickups are holding 72.9 percent of their value; the strongest of any vehicle segment.

"The depreciation rate on car segments increased while strong sales volumes with more supply were reported at the auto auctions," said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics.

Volume-weighted, Black Book determined overall car segment values decreased by 0.76 percent last week, higher than the average weekly decrease of 0.60 percent in values editors noticed during the previous four weeks.

Editors added that the compact car, mid-size car and near luxury car segments decreased in value the most among all the car segments.

Again considering volume-weighted data, Black Book found that overall truck segment values — including pickups, SUVs and vans softened by 0.48 percent last week, better than the average weekly decrease of 0.57 percent in values editors tallied during the previous four weeks.

Editors also mentioned sub-compact crossover, minivan and mid-size crossover/SUV segments decreased in value the most among all the truck segments.

Closing this report with what Black Book’s representatives gathering in the lanes, dealers seem to be somewhat upbeat as 2018 moves along.

Beginning in California, Black Book’s lane watcher mentioned, “Fairly strong sale today with good action in the auction arena as well as the online buying.”

In nearby Nevada, what’s happened on Capitol Hill is pushing dealers to make moves as Black Book found, “Dealers are optimistic that the new tax plan will stimulate many anxious buyers who have been on the sidelines for a while.”

Continuing to move East, Black Book’s representative in Colorado reported, “A pretty good sale here as the market is picking up after the holiday season. Attendance and sales were both up.”

Finally in Georgia, Black Book’s representative noticed, “A lot of vehicles were in good condition and sellers were dropping their floors in order to sell as many as possible. The in-lane attendance was up as well.”

IARA announces Spring Roundtable sessions


The International Automotive Remarketers Alliance announced the sessions that will follow its Spring Roundtable at Caesars Palace on March 5.

Different IARA sessions held concurrent with the Conference of Automotive Remarketers will be hosted on March 6 and March 7.

Session moderators and participants include representatives from ARI, ADESA, America’s Auto Auction, Avis Budget, Element and the RVI Group.

In addition to Paul Seger, vice president of asset remarketing for Element, who will moderate a consignor-only session addressing issues that matter to consignors, industry leaders Doug Turner of America’s Auto Auction and Kurt Madvig of ADESA will discuss justifying reconditioning investments in an open to all attendees session.

IARA said the discussion will look at the key factors in optimizing reconditioning budgets to increase return on investment and defend the initial dollars invested.

During a panel discussion moderated by Rene Abdalah, senior vice president at RVI Group, participants will assess how it is more crucial for remarketers to monitor the market for changing residual values.

Additionally, IARA said co-presenters Andrea Amico, president of Jack Cooper Logistics, and Faye Francy, executive director at Auto-ISAC, will examine industry best practices to safeguard vehicles’ data and information in a session.

A full conference pass is $895 before Feb. 2. Following that day passes will be an additional $100.

More information .

ServNet grows scholarship program; Greater Rockford AA completes safety project

FRANKLIN, Tenn. - 

ServNet recently announced that it has expanded its scholarship program and will hand out up to 10 awards this year.

The program which was launched in 2016, exists to financially help ServNet auction employees and their families pursue higher education.

Five $2,500 awards are for students attending a four-year college or university, and five awards of $1,500 are for students who will enroll in a two-year college or vocational-technical school, according to ServNet.

This year’s application deadline for ServNet scholarship awards is March 30.

The scholarship program can assist full-time ServNet auction employees, their children, stepchildren and grandchildren.

Greater Rockford AA completes project to improve safety

Additionally, in other news, Greater Rockford Auto Auction has completed a large bollard installation project, according to ServNet.

To protect people from vehicles, the auction had a total of 161 total bollards installed in its six-lane facility.

New bollards were installed on both the sale apron approach and inside the sale lanes. The planning and design stages of the project began in June of 2017, and the project was finally completed in December.

The bollard initiative stems from GRAA's Customer Care Project, which includes a full and comprehensive plan for the safety of auction customers, employees and vendors.

"We are excited to complete our bollard installation as a piece of our Customer Care Project," GRAA auction general manager Chad Anderson said in a news release. "The safety of our customers and employees is a top priority and the response from everyone has been nothing short of outstanding. We continue to work on new and improved safety initiatives daily as we move forward."

Hurricane impact on wholesale prices dissipates in December

CARMEL, Ind. - 

While there likely are households and businesses still trying to recover from Hurricanes Harvey and Irma, KAR Auction Services chief economist Tom Kontos thinks the impact from those storms is no longer strongly influencing wholesale vehicle prices.

According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, wholesale used-vehicle prices in December averaged $10,804, which represented a 0.1 percent uptick compared to November and a 1.5-percent rise relative to December 2016.

However, Kontos pointed out that car prices were down both month-over-month and year-over-year, while the opposite was true for truck prices.

“With the impacts of Hurricanes Harvey and Irma having lasted primarily from late-August through mid-November, wholesale prices in December returned to patterns seen prior to those events,” Kontos said in his latest edition of the Kontos Kommentary.

“Namely, prices for cars continue to soften while prices for trucks were up,” he continued.

As he does now on a regular basis, Kontos took a closer look at 3-year old vehicles with 36,000 to 45,000 miles. For midsize cars, prices averaged $10,438 in December, marking a $299 softening year-over-year. For midsize SUV/CUVs, prices averaged $17,512 in December, edging $51 above the year-ago reading.

“Although midsize SUV/CUV prices were up in December in this analysis, the increase was modest compared to September through November,” Kontos said about those figures that came when holding constant for sale type, model-year age, mileage and model class segment.

“This may be indicative of a cessation in truck demand growth in Texas after Hurricane Harvey,” he added.

Looking back at the overall December data, Kontos mentioned average wholesale prices for used vehicles remarketed by manufacturers dropped 3.3 percent month-over-month but climbed 8.3 percent year-over-year. 

He indicated prices for fleet/lease consignors were down 1.9 percent sequentially but up 0.4 percent annually. 

Finally, Kontos said average prices for dealer consignors were down 0.1 percent versus November and up 3.6 percent relative to December 2016.

Kontos closed his regular update by mentioning some data from the National Automobile Dealers Association that indicated December retail used-vehicle sales by franchised and independent dealers were down a combined 3.4 percent year-over-year, after being down in October and November, as well.  

ADESA Wholesale Used-Vehicle Price Trends

   Average  Price  ($/Unit)  Latest  Month Versus
   December 2017  November 2017  December 2016  Prior Month  Prior Year
 Total All Vehicles  $10,804  $10,797  $10,642  0.1%  1.5%
 Total Cars  $8,502  $8,546  $8,576  -0.5%  -0.9%
 Compact Car  $6,452  $6,565  $6,413  -1.7%  0.6%
 Midsize Car  $7,651  $7,794  $7,773  -1.8%  -1.6%
 Full-size Car  $7,551  $7,190  $7,971  5.0%  -5.3%
 Luxury Car  $12,959  $13,223  $13,049  -2.0%  -0.7%
 Sporty Car  $13,846  $13,739  $12,748  0.8%  8.6%
 Total Trucks  $12,966  $12,950  $12,645  0.1%  2.5%
 Minivan  $8,891  $8,554  $8,897  3.9%  -0.1%
 Full-size Van  $12,619  $12,940  $11,317  -2.5%  11.5%
 Compact SUV/CUV  $10,508  $10,599  $10,481  -0.9%  0.3%
 Midsize SUV/CUV  $11,148  $11,133  $11,336  0.1%  -1.7%
 Full-size SUV/CUV  $14,856  $14,208  $14,379  4.6%  3.3%
 Luxury SUV/CUV  $18,711  $18,844  $18,141  -0.7%  3.1%
 Compact Pickup  $9,209  $9,102  $8,757  1.2%  5.2%
 Full-size Pickup  $16,189  $16,419  $15,624  -1.4%  3.6%

Source: ADESA Analytical Services.