Auctions

NAAA: 8.2M Cars Sold at N. American Auctions in 2013

FREDERICK, Md.  - 

There were 8.2 million used cars sold at the National Auto Auction Association’s North American member locations in 2013, according to NAAA’s 17th annual survey, conducted by CliftonLarsonAllen LLP.  Sales of these vehicles were worth a grand total of $75.7 billion.

The survey also found there were 15.2 million cars entering these auctions last year, which marked a 4.3-percent increase. There was a 4.2-percent increase in the percentage of cars sold.

“The 2013 results are encouraging,” said NAAA chief executive officer Frank Hackett. “The survey results show the strength and depth of a mature industry that has demonstrated its resiliency.

“I’m confident we’ll continue to be a vital and growing part of our nation’s economy in the decades to come.”

Among all units sold at NAAA’s North American auctions, dealer consignment cars represented the biggest slice of the pie (58.8 percent). Next up was finance and fleet (lease, fleet and repo) at 34.3 percent.

Manufacturer (factory) cars had a 5.7-percent share, while 1.2 percent of cars sold were from other sources, NAAA indicated.

The study also uncovered some overall attributes of an NAAA auction. The average member has a seven-lane facility on 65 acres. Auctions, on average, have a $3.7 million payroll with 142 employees, and contribute $16,000 to charity each year.

NAAA indicated that there was an 81-percent response rate to the survey, noting that the “reported total vehicles entered and sold and the related gross values are projected to estimate the totals for all 325 NAAA member auctions.”



Mid-South Auction Punches Back After Tornado

PEARL, Miss - 

Around 5 p.m. Central Time on April 28, everyone had left Mid-South Auction with the exception of Bob Sullivan and a nighttime security guard.

Throughout that afternoon, Sullivan — the vice president and general manager of the Pearl, Miss. auction— had been receiving tornado warnings on his phone.

But just before 7 p.m., the tone of those weather messages would change sharply and suddenly — that is, it was no longer a tornado warning. It was now an emergency alert.

“So, I ran and got the guard, and I told him, ‘Hey, look, you need to leave the guard station. Come on inside,’” Sullivan said in a recent interview with AuSM.

The two of them made it to the e-commerce manager’s office, which is in the middle of the building and has no windows.  Less than five minutes later, a dangerous tornado approached from the south.

And as Sullivan put it, it ripped the auction arena and the check-in building “all to hell.”

As it turns out, there were an estimated 66 tornadoes on that Monday alone in the South, according to from May 7 on The Weather Channel's website. As for Mid-South, fortunately, both Sullivan and the security guard were unharmed, as the main office was damaged only minimally compared to what happened elsewhere at the auction, where a nightmarish mess awaited.

With fire lines busted, water sprayed all over the auction arena, whose roof was clipped off. And all that was inside was destroyed, Sullivan said.

“It looks like we’re going to have to rebuild … the adjuster is still working on it,” he said. “They’ve had their forensic engineer come up to check the red metal. That’s your steel beams. They said all that is OK, but probably, most of the other stuff is all going to have to be tore down and rebuilt.

“Basically, we just started rebuilding. Obviously, with that being Monday night (that the Tornado came through) and us being a Tuesday sale, Tuesday’s sale was cancelled because there was nothing working. We didn’t even have power or anything,” Sullivan said. “We had a gas leak. The power was off.”

Not to mention, there was vehicle damage as well.

Given the pressure changes that come with a tornado, he said, most cars had one or more windows blown out, some with all windows destroyed.

Additionally, the tornado wrought physical damage upon some of the cars.

“We have 250 acres of woods that border the south side of the auto auction. And that’s where the tornado came from,” Sullivan said. “It was just snapping off the top of trees and throwing the top half of pine trees like javelins all over the parking lot.”

In fact, a 15- to 16-inch piece of wood that slivered away from a tree went through the brake drum of a vehicle.  An air conditioning unit was tore off the roof of the men’s restroom, tossed across the parking lot, landing on and smashing the roof of a car, before bouncing off and landing between two other vehicles.

All told, an estimated 300 to 350 vehicles belonging to dealers or national accounts were damaged.

(The auction notified all the customers whose vehicles had been damaged and offered to do the repairs, be it glass or body work, at Mid-South’s pricing. Some accepted to varying degrees, others were still waiting for insurance companies to come out.)

Strong Comeback

However, Sullivan and his team were determined to bounce back. They began the cleanup the week of the tornado and managed to have a sale that following Tuesday, May 6, at the regularly scheduled time. The auction ran two lanes outdoors, implementing its mobile auction set-up (or private-label, as Mid-South calls them) on site.

The auction has a trailer that is fully stocked with all the technology one would find at a traditional auction arena.  It sister facility, Charleston Auto Auction, has another trailer that it brought down to Mississippi for the May 6 event.

 “We positioned them facing each other, ran two lanes with about 360 or 370 vehicles,” Sullivan said of the sale, which ended up having a sale rate of a little more than 50 percent.

Continuity Plan Pays Off

Coincidentally, Mid-South was hit by a hail storm almost exactly a year earlier.

But two or so years ago, Sullivan was asked by corporate headquarters at American Auto Auction Group (of which Mid-South is a member) to put together a business continuity plan and share it with the other members of AAAG.

And this ended up being a life saver for the auction.

“As soon as that sale was over with the mobile trailers, the following Thursday, Friday and Saturday, we erected what they call a mega structure with Mahaffey (Fabric) Structures out of Memphis. The contractor had four auction blocks built. We moved all the electric, all of the data lines into the tent and we run four auction lanes just like any other auction,” he said. “As a matter of fact, it’s kind of neat, especially in the summertime. We set it up like a carnival atmosphere. We’ve got snow cones and popcorn; we cook out hotdogs and hamburgers during the sale, and we operate out of the tent.

“The dealers locally have been extremely supportive of it. I think everyone was probably surprised at how fast we reacted and we really didn’t lose a step on sales,” Sullivan added.

Later, Sullivan said this of the plan: “I think the business continuity plan helps when you know who to go to. How do you get all of these people pulled in and ready to go? Well, No. 1, I already knew who to call. As a matter of fact, this thing actually help me update it. But I specifically addressed tornadoes and hurricanes in the business continuity plan, so everybody knew, pretty much, what to do and what the information was.

“That night, you figure, myself and the security guard were the only ones here. We had a gas leak, we had water blowing and going everywhere. I already knew who we had to call,” Sullivan said.

He simply took the binder containing the plan, called the gas company for the leak and informed the utilities that they were a commercial business that took a hit from the tornado, and enacted the plan as outlined.

Sullivan also called another , Michael De la Mora at Stellar Restoration, who had 22 roofing employees come to Mid-South to assist in emergency clean-up tasks like repairing gas leaks, picking up debris and cutting/removing dumpsters filled with torn metal.

Sullivan recommends other auctions take a similar route and develop a plan of their own.

“I think the reason we recovered so fast, No. 1, we went through the hail storm so I already had a recent list of people and s,” he added.  The employee call list, he said, was similar to call lists from his experience in the military, where it is broken down by sections and everyone has a primary and alternate number.

Sullivan stressed the need for such a continuity plan, “especially in an area that you know you’re going to have some severe weather, whether it’s a hurricane or tornado or whatever.”

He added: “Everybody says, ‘I won’t ever need it’ … (but) yeah, actually, it makes the process a lot easier. So, rather being nervous and worried about what am I going to do, you go to your three-ring binder, take it out and just start going through” the plan.

Support from Consignors, Dealers

When the tornado came through, it wasn’t their own cars that dealers and consignors were asking about. No, they were more concerned with the well-being of the auction employees and asking if they could help.

“The first thing out of both the national accounts and the dealer body, they all asked, ‘Is everybody OK? Was anybody hurt?’” Sullivan said, noting that “everybody was more concerned about the folks at the auto auction … I thought it was very nice.

“I’m like, ‘Geez, they’re worrying about the people more so than their property,’” he added. “And the dealers, like I said, they have been very supportive of the auction as have the national accounts that we have.

“Everybody understands, hey, it was an act of God, but no one got hurt and everybody was happy about that.”

 



Mid-State AA of Minn. to Kick Off 2014 GSA Sales

NEW YORK MILLS, Minn.  - 

Mid-State Auto Auction of Minnesota is entering into its third year of serving the General Service Administration through fleet vehicles sales.

The auction’s first GSA sale this year is scheduled for Friday, and company management pointed out some of these vehicles are the most popular with dealers.  

"Our relationship with GSA has been extremely positive one," said auction owner Rob Thompson. "Their vehicles are relatively late model/low mileages units that are hard to find, and as a result are aggressively bid on and purchased by our dealers. The GSA/Mid-State Auto Auction match has really been a win-win for everyone." 

"Although we had a very successful year in 2013, 2014 looks to be even stronger in the way of having more vehicles to sell, according to our GSA representative," Thompson said. "As a rule, we will hold about one auction a month from May until approximately November."

Mid-State AA, a ServNet member, holds weekly Friday sales and is located approximately 150 miles northwest of Minneapolis/St. Paul.



Plaza Auto Auction Adds 3 to Team

MOUNT VERNON, Iowa  - 

Preparing for a busy summer market, Plaza Auto Auction recently expanded its team, adding members to its fleet/lease, title and outside sales departments.

First up is Barb Dearborn, the new addition to the company’s fleet/lease department.

Dearborn began her tenure at Plaza AA last October, after working in the insurance industry. Now, she handles the flow of fleet and lease vehicles through the auction, coordinating the many details involving titles, pricing, recon and transport with the auction's corporate consignors. 

"The auction is a whole new world for me, and one that's completely different from my work in the insurance industry," says Dearborn. "I was dazzled by the activity on sale day when I first arrived and fascinated by the auction process, with the auctioneers' chants and the way the dealers in the lane bid with winks and nods. But I love working with everyone here, and I am privileged to work with a great team who knows the importance of building strong relationships with our customers." 

New to the auction in March was Rebecca McDonald, who works in the auction's title department.

McDonald spends most of her time following up on title attached work, communicating with the auction's many customers on the phone and in the office on sale day, the auction shared.

"It's a great family here at Plaza Auto Auction, and that applies to both the employees and the customers we serve. It can be a whirlwind on sale night, and there's a lot of work to be done 'behind the scenes' to track down titles and get everything right for our customers buy and sell. But we all work well together, and are focused on providing the best service to every dealer who visits the auction." 

Lastly, Frank Yanda also joined the company in March as an outside salesperson, who has spent his career in sales in other various industries, before joining the automotive world.

"I love the auction business, and Plaza Auto Auction is a great company," says Yanda. "Mark Greb is devoted to his employees and his customers, and always makes decisions that are good for the company. In the two months that I've been working as an outside salesman for Plaza Auto Auction, I've already learned so much from Mark, as I've watched him work with the customers. We have a great team here at Plaza Auto Auction of Iowa, and it's a pleasure for me to be associated with them." 

 



AANE Celebrates 19 Years with Dealer Appreciation Sale

FRANKLIN, Tenn.  - 

To celebrate nearly two decades of partnership between the auction and dealers, Auto Auction of New England will host the Buck Dynasty event on June 5.    

Featuring plenty of fleet/lease and consignment vehicles, Buck Dynasty will also include AANE’s annual Specialty Car Sale featuring classic, antique and unique vehicles.

"We are looking forward to giving back to the partners who have supported and encouraged us for the last 19 years," said Steven DeLuca, general manager at AANE.

"The auction is always such a busy place, and we don't always have the chance to shake the dealers’ hands and show our appreciation for their decision to do business here year after year,” he said. “This event gives us that opportunity." 

The event theme will carry throughout the day with food, games and “bucks” giveaways.  

"If history tells us anything, we can be sure that the consignment and attendance at our annual Dealer Appreciation sale will be stellar," said Michele Pierog, director of sales and marketing.

"Our customers' enthusiasm for this event shows us that our dealers enjoy being appreciated. That's not a surprise. Everyone wants to be valued, and this event is all about making sure each and every dealer feels like they are the reason we are here," she said. 

DeLuca added, "The best part of watching the auction grow over the past 19 years is witnessing the partnerships that have developed and being part of the growth of our partners’ success.

"The auction is a service industry. Our goal is to help our partners liquidate and acquire inventory in the most effective and profitable manner possible,” he said. “Their success is our success; there is just no other way to look at this business." 



Auction Roundup: News from Manheim, DAA Group, Flint AA

MEMPHIS, Tenn., and RIVERSIDE, Calif.  - 

Dealer’s Auto Auction Group is sending 15 of its employees to the International Automotive Remarketers Alliance's Certified Automotive Remarketer Program.

The IARA CAR Program offers a 20-course curriculum scheduled within a five-unit series covering all aspects of the vehicle remarketing profession.   

“The IARA provides us with a number of valuable education forums and initiatives that benefit auctions and remarketers alike.  I believe that it is our responsibility as owners and operators to take advantage of this opportunity to educate those within our fields, and that this certification will ultimately strengthen our industry,” said David Andrews, chief executive officer of City Enterprises LLC, parent company of Dealer's Auto Auction group.

Mark Hopkins, national fleet lease manager with Dealer’s Auto Auctions, will be supervising the IARA certification process for the DAA attendees that include: David Andrews, Steven McCarter, Amanda Hutchens (DAA Corporate); Al Praitano, Rob Brooks, Lauren Taylor (DAA Mobile); Missy McCormack, Rusty Rowan (DAA Huntsville); Nicki McCoy (DAA Murfreesboro); Christi Willis, Susan Perkins, Melisha Melton (DAA Memphis); Donna Phillips, Casey Tuggle, Brittney Thigpen, Karen McKinney (DAA Chattanooga).

To sign up for the curriculum modules offered in the CAR program (Remarketing Channels, Pre-Sale Activities, Actual Sale Activities, Post-Sale Activities and Legal, Ethics and Terminology), candidates must have a minimum of three consecutive years experience in the vehicle remarketing industry.  

IARA executive director Tony Long said, “The IARA certification program provides its’ candidates the opportunity to achieve higher levels of industry knowledge through a comprehensive program that encompasses all aspects of the remarketing industry.” 

Manheim Calif. Stores Give Back

In other auction news, Manheim’s California auctions have been hard at work giving back to the community this spring.

More than 80 employees from three Manheim operating locations in California and their family members took part in the Make-A-Wish “Walk for Wishes” fundraising event at Castle Park in Riverside, Calif., on April 12.

“There is something deeply rewarding about connecting with Make-A-Wish,” Manheim Riverside general manager Christopher Brown said. “You feel good about being able to help children and their families who are going through difficult times.”

 The groups from Manheim California (Anaheim), Manheim Riverside and Manheim Southern California (Fontana) participated in the walk and raised $8,520, the second-highest amount raised among sponsors of the Make-A-Wish Orange County and the Inland Empire event, the company shared.
 
“As an organization, we count on businesses like Manheim to provide financial support that is necessary for us to grant the wishes of children in our local community,” said Stephanie McCormick, president and CEO of Make-A-Wish Orange County and the Inland Empire. “We are grateful for the support from Manheim, its employees and customers that will help make a difference in the lives of many children and their families.”

All three auctions also held bake sales and raffles.

“Supporting Make-A-Wish is very easy and rewarding when you see the direct impact on these wonderful kids,” Manheim California General Manager Tom Wemhoff said. “The overwhelming level of support from both Manheim’s employees and our customers is very impressive.”
 
Manheim Southern California General Manager Chad Ruffin chimed in, noting, “As a newer employee at Manheim, it is very heart-warming to see how our company supports the community. Our employees and our customers care about the community and helping those in need.”

Flint Auto Auction Honored by US Bank

Flint Auction announced this week is has received a nod as a top auction for US Bank.

US Bank honored the auction with is Director’s Award for 2013, but this is not an annual recognition.

In fact, US Bank has only presented this award three times before, and singled out Flint Auto Auction last year “as the US Bank's most outstanding auction in the nation,” the auction shared.

"We are so pleased to receive this singular honor from US Bank," said Lawrence Cubitt, general manager at Flint Auto Auction. "We work hard to provide superior service to our customers and are thrilled to have those efforts recognized with the US Bank Director's Award." 

"It takes a team to win an award of this caliber, and we recognize the extraordinary efforts put forth by everyone at Flint Auto Auction," Cubitt explains.

Cubitt went on to recognize all employees as contributors to the auction receiving the award: “The US Bank Director's Award is a confirmation of the hard work put forth by every member of our staff who goes above and beyond the call of duty to serve our customer. Staying late, working in the cold and snow, getting last minute repairs completed, and processing reruns, are just a few of the special touches that distinguish Flint Auto Auction as an award-winning facility!

"We're grateful for our partnership with US Bank and pledge to redouble our efforts to remain their top auction in the nation,” he concluded.



Insurance Auto Auctions Expands in Central US

WESTCHESTER, Ill.  - 

Insurance Auto Auctions has announced the opening of a new branch, a facility the company says is essential to its continued growth across North America.

With an official grand opening held on May 6, IAA's new state-of-the-art, 32-acre auction facility is located in Tulsa, Okla.

The facility includes a 10,000-square-foot building and will utilize 17 acres, with additional room for expansion including a second run and drive lane.

In keeping with IAA's culture of environmental responsibility, recycled asphalt was used for the top surface of the outside vehicle storage area.

The facility supports growing demand in Oklahoma, the company said, and gives IAA the additional capacity to service customers in the Tulsa market, which accounts for a large percent of all sales in the state. 

"IAA continues to focus on providing the best selection and inventory in markets across North America and we now have more than 165 locations," said John Kett, chief executive officer and president of IAA.

"The opening in Tulsa supports our business growth in the region,” he said, “improves resources across our facilities and offers buyers and sellers greater inventory and more convenience to experience our auctions."



Manheim Index Climbs for 5th Straight Month

ATLANTA - 

Dealers had to dig deeper into their floor plan dollars yet again last month. Manheim reported that wholesale prices (on a mix-, mileage- and seasonally adjusted basis) climbed in January, February, March and now April, too, extending a streak that dates back to December of last year.

This movement resulted in the Manheim Used Vehicle Value Index coming in at 124.9 in April, which represented a 4.8-percent increase from a year ago. Chief economist Tom Webb tried to explain why wholesale prices haven’t softened much like they usually do by the time federal income tax filing deadline hits in mid-April.

“Most market participants had been expecting to see some easing in used-vehicle values due to rising wholesale supplies by this point in the year. As an explanation of why it hasn’t happened, we can only beat the same old drum — the strength of the retail market is preventing any meaningful decline in prices,” Webb said.

“The competitive nature of the wholesale market means that dealers keep on bidding until their expected grosses become insufficient to cover the risk. Today, gross margins have stabilized, and net profits have soared as a result of higher throughput and increased operating efficiencies,” he continued.

All six vehicle segments Manheim tracks to compile the index rose in April. Leading the way was pickup prices, which was the only segment to climb by double digits (11.1 percent).

Four other segments posted strong price increases, as well, including:

— Compact cars: up 3.3 percent
— Midsize cars: up 8.5 percent
— SUVs and crossovers: up 5.0 percent
— Vans: up 6.3 percent.

“The increase for luxury cars is, however, insignificant,” Webb said about the price movement for that segment, which ticked up by just 0.3 percent.

“Although wholesale pricing in the luxury segment has suffered for more than a year, luxury vehicles outperformed the overall market in April. Most of that was due to easy year-over-year comps,” he continued.

Webb made one other general observation about April’s wholesale price movements.

“An analysis of average mileage by price tiers indicates the sweet spot in the wholesale market has moved up in price,” he said. “In April, the strongest pricing (and lowest relative supply) was in the $12,000 to $14,000 price range. In 2013 and early 2014, the strongest pricing was often found in the $8,000 to $10,000 price range.”

Update on Rental Risk Units

Manheim reported that unadjusted for mileage and mix shifts, auction prices for rental risk units continued to rise in April.  But adjusted for mileage and mix, prices softened marginally from March, however, they still jumped nearly 7 percent from a year ago.

The latest index report also mentioned average mileage slipped below 40,000 for the first time this year, but was still 9 percent higher than a year ago.

“Volumes sold at auction remained on the low side, and industry sources indicate new units sold into rental fleets declined 7 percent in the first four months of 2014 compared to a year ago. The bulk of that decline was accounted for by domestic manufacturers,” Webb said.

Retail Sales Observations

As he always does as a part of the index release, Webb recapped the month’s activity in the retail market.

First on the used side, Webb highlighted strong sales and even stronger profits. He referenced CNW Research data that showed total dealer sales of used vehicles rose 4 percent in April, resulting in a year-to-date increase of 2 percent.

Webb also pointed out that retail used unit sales by the seven publicly traded dealership groups increased more than 10 percent in the first quarter, climbing 7 percent on a same-store basis.

“And more important, net profits were at record levels due to greater throughput, increased operating efficiencies and strong F&I income,” Webb said. “Likewise, CPO sales increased 9.5 percent in April and 10.5 percent year-to-date.”

In the new-model space, Webb recapped the April activity by pointing to higher volumes and transaction prices, producing a seasonally adjusted annual rate of 16.1 million in April.

“Retail deliveries and lease originations were strong,” Webb said. “Total new-vehicle fleet sales were up in April, but only because of significant increases from a year ago in both commercial fleet and government purchases.

“New vehicle sales into rental were down more than 3 percent in April, and off 7 percent for the first four months of the year,” he continued.

“Stronger retail new-vehicle demand and reasonable production schedules left dealer inventories in much better shape than they were a couple of months ago,” Webb went on to say. “That suggests manufacturers might continue to enjoy higher average transaction prices and flat incentive spending. Both of which, of course, support used-vehicle values.”



Revenue Up, But Refinancing Activities Pinch KAR Net Income

CARMEL, Ind. - 

While revenue and gross profit at each of its three largest subsidiaries improved year-over-year, KAR Auction Services reported that its net income decreased 29 percent as a result of refinancing activities during the first quarter.

KAR generated $583.8 million in revenue during the first quarter that ended March 31, representing a 5-percent increase from the $557.6 million in revenue the company posted a year earlier. The company’s adjusted EBITDA for the quarter increased 8 percent to $147.1 million, as compared with adjusted EBITDA of $136.2 million recorded in Q1 of last year.

But as noted, because of the refinancing of debt KAR conducted, the company’s first quarter net income came in at $20.7 million, or $0.15 per diluted share, down from $29.1 million, or $0.21 per diluted share, a year earlier.

However, KAR said its adjusted net income per diluted share for the quarter increased 32 percent to $0.41 versus last year’s level of $0.31.

The company also announced a cash dividend of $0.25 per share on the company’s common stock. The dividend is payable on July 3 to stockholders of record as of the close of business on June 25.

ADESA Q1 Performance

Officials indicated ADESA’s Q1 revenue increased $14.5 million or 5 percent to $298.1 million, up from $283.6 million a year earlier. They attributed the revenue rise primarily as a result of a 7-percent increase in the number of vehicles sold, partially offset by a 2-percent decrease in revenue per vehicle sold.

In addition, the company pointed out High Tech Locksmiths provided $8.2 million of revenue in the quarter, while fluctuations in the Canadian exchange rate resulted in a decrease in revenue of $4.8 million.

“The increase in volume sold was primarily attributable to an increase in institutional volume, including vehicles sold on our online only platform, as well as a 4- percent increase in dealer consignment units sold,” KAR said.

ADESA sold approximately 128,000 and 93,000 vehicles through its online only offerings in the first quarter of 2014 and 2013, respectively.

During the first quarter, the company determined dealer consignment vehicles represented approximately 50 percent of used vehicles sold at ADESA physical auction locations, compared with approximately 48 percent during the year-ago period. Vehicles sold at physical auction locations increased 1 percent year-over-year.

Meanwhile, ADESA’s used-vehicle conversion percentage at physical auction locations — calculated as the number of vehicles sold as a percentage of the number of vehicles entered for sale at ADESA auctions — improved to 63.6 percent, up from 60.5 percent a year earlier.

Officials also calculated that their total revenue per vehicle sold decreased 2 percent year-over-year to approximately $535, down from approximately $550 in the first quarter of last year. However, physical auction revenue per vehicle sold improved by $22, or 3 percent, to $663.

“The increase in physical auction revenue per vehicle sold was primarily attributable to an increase in ancillary and other related services revenue,” the company said.

ADESA shared that online-only auction revenue per vehicle sold decreased $8 to $114.

“The decrease in online-only auction revenue per vehicle sold was attributable to an increased number of cars sold in closed private-label sales. The revenue per vehicle sold in a closed private-label sale is lower than the revenue per vehicle sold in an open online-only auction,” ADESA said.

With all of those figures in mind, ADESA reported that its first-quarter gross profit increased $5.9 million, or 5 percent, to $127.9 million, as gross profit constituted 42.9 percent of revenue, a percentage down slightly year-over-year.

“The decrease in gross profit percentage was primarily the result of the 5-percent increase in cost of services,” ADESA said. “The increase in cost of services was primarily attributable to the inclusion of $5.2 million in costs associated with High Tech Locksmiths, an increase in lower margin non-auction services, increased utilities and snow removal, partially offset by fluctuations in the Canadian exchange rate.”

Insurance Auto Auctions Results

Insurance Auto Auctions officials are still seeing some impact of Superstorm Sandy on their financial results since the year-over-year comparisons include metrics from the division’s work following the natural disaster.

During the first quarter, IAA’s revenue rose $3.4 million, or 2 percent, to $225.0 million as the company reported a 3-percent increase in the amount of vehicles sold.

“Volumes and revenue for the first quarter of 2013 included the impact of Superstorm Sandy. Excluding the impact of Superstorm Sandy, IAA’s revenue and volumes increased 15 percent and 14 percent, respectively, IAA officials said, adding that the company’s total loss vehicle inventory has increased more than 15 percent year-over-year.

Elsewhere, Insurance Auto Auctions noted that vehicles sold under purchase agreements were approximately 6 percent of total salvage vehicles sold in the first quarter, down from 7 percent a year earlier. IAA also indicated online sales volumes represented more than half of the total vehicles sold by the division.

IAA highlighted that its Q1 gross profit increased to $87.1 million, or 38.7 percent of revenue, compared with $62.7 million, or 28.3 percent of revenue, during the same quarter a year ago. Officials explained the gross profit increase was primarily the result of a 13-percent decrease in cost of services relating to Superstorm Sandy as well as a 2-percent increase in revenue.

“The increase in gross profit as a percentage of revenue was mainly attributable to expenses associated with processing total loss vehicles related to Superstorm Sandy for the three months ended March 31, 2013,” IAA said.

“A decrease in the revenue and cost of vehicles sold under purchase agreements also contributed to the increase in gross profit as a percentage of revenue, as the entire selling price of the vehicle is recorded as revenue and cost of services,” the company added.

AFC Update

Over at Automotive Finance Corp., first-quarter revenue increased $8.3 million, or 16 percent, to $60.7 million.

Officials explained the revenue increase came as the result of a 9-percent jump increase in loan transactions and $5.6 million of “other service revenue” generated by PWI, a service contract business that was acquired in June of last year.

AFC determined that its managed receivables increased to $1.1079 billion as of March 31, up from $1.0035 billion a year earlier.

The company noted that revenue per loan transaction, which includes both loans paid off and loans curtailed, decreased $5, or 3 percent. Officials said the movement came primarily as a result of an increase in the provision for credit losses and a decrease in floor plan and other fee income, as well as fluctuations in the Canadian exchange rate, partially offset by an increase in average loan values and average portfolio duration.

Nonetheless, AFC watched its gross profit climb 7 percent year-over-year to $44.3 million or 73.0 percent of revenue.

2014 Outlook

KAR also updated its guidance to reflect the recent refinancing of its credit agreement.

The company expects this year’s adjusted EBITDA to come in between $580 and $600 million. The company also expects net income per share to $0.95 to $1.05 and adjusted net income per share to be $1.35 to $1.45.

Officials projected their 2014 effective tax rate to be approximately 40 percent.

“Adjusted net income per share for 2014 represents GAAP net income per diluted share excluding excess depreciation and amortization and stock-based compensation, both resulting from the 2007 merger, and the loss on extinguishment of debt, all net of taxes,” KAR said.

Additionally, the company expects 2014 cash taxes of approximately $105 to $115 million, cash interest on corporate debt of approximately $61 million and capital expenditures of approximately $105 million. This level would result in free cash flow before dividend payments of approximately $309 to $319 million or $2.17 to $2.24 per share, according to KAR.

Editor’s Note: Look for a report in Thursday’s edition of AuSM Today recapping executive comments shared during KAR’s conference call with investment analysts.



Manheim & Hendrick Launch On-Site Auction Lane

CHARLESTON, S.C.  - 

Hendrick Automotive Group needed a way to find more used cars for its dealers while also employing a more efficient way to remarket the trade-ins that arrive on their lots. So, the retailer teamed up with Manheim and rolled out Hendrick’s first onsite auction lane in Charleston, S.C.

Before today, there had been four sales at the one-lane, retrofitted operation at Hendrick’s dealership facility in Charleston since the lane opened on March 11 — and the events have had a sale rate of 95 percent and 140 dealers, on average, have attended each sale.

They take in wholesale trade-ins from Hendrick’s 11 stores in the Charleston area and puts them up for sale. Much like any other Manheim auction, the sale features technology like Simulcast and uses an auctioneer and an auction block. Manheim employees also work the sale.

The sales are open to all registered dealers and are held Tuesdays at 10 a.m. (EST). Manheim Darlington employees staff the sale.

“This collaboration between Hendrick and Manheim has been a great solution for our needs,” says Chris Little, Hendrick Automotive Group’s vice president of variable operations. “The entire Manheim team worked with us to help create a solution that has helped us save time and money, and sell more vehicles.”

Susie Heins, who is Manheim’s vice president of dealer sales, added: “Manheim and Hendrick Automotive Group make a great team because we are always looking to try new and different ways to better meet our customers’ changing needs.

“This new auction lane, that takes advantage of Manheim’s remarketing expertise, technology and staff to drive increased sales, is another example of how collaboration is delivering better business results for Hendrick Automotive Group,” she continued.



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