ADESA Income Up 3.7% in 1st Q; Revenue up 17.7%

1. ADESA reports 1st Q results
2. Income of $36.3M up 3.7% over 1st Q 2005
3. Revenue of $285.6M up 17.7% over same time 2005
4. ADESA notes company strengthened senior management during quarter
5. Named A R Sales as president/COO; Ron Beaver as EVP/chief information officer
6. Also acquired NE Penn salvage, Sarasota used vehicle auctions

1. Officials say favorable Canadian currency exchange impacted revenue by $3.3M
2. Auction and Related Services (ARS) revenue up 17.2%
3. Revenue per vehicle sold in ARS segment at $471, up from $415 in 1st Q 2005
4. More institutional vehicles drove revenue; require more ancillary services
5. Dealer financing (AFC) revenue up 21.4%; revenue per loan transaction up 20%
6. AFC operating profit up 25.9%


"I am particularly pleased with the growth of AFC and with the signs of improving volumes that we are seeing in our ARS operations and across the industry." -- David Gartzke, chairman and
CEO, ADESA

"In addition, during the quarter we have taken significant actions to strengthen our management team by adding A. R. Sales and Ron Beaver, which will enable us to more effectively implement our key strategic initiatives." -- Gartzke

"These actions, together with numerous other actions that are being implemented across the company, position us well to take advantage of the improving industry trends." -- Gartzke

Sourced From: ADESA.com, May 1, 2006

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Upside Down Deals Tougher To Complete

Situation
1. JD Power says 1/3 of US car buyers were upside w/ trade-ins in 2005
2. Mitsubishi, Isuzu, Suzuki, Kia see about 1/2 of buyers w/ negative equity trade-ins
3. Upside-down buyers lean toward those brands; looking for inexpensive vehicles
4. Suzuki had lowest average transaction price of any company at $16,390
5. Low residuals also hurt; Kia, Isuzu, Suzuki hold 34% or less of value after 3 years
6. Typical value of all brands in 2005 was 44%

Significant Points

1. Reasons for negative equity include no money down, trade-ins w/ poor resale value
2. Customers w/ highest negative equity generally own most expensive vehicles
3. Negative equity doesn't necessarily reflect customer's credit worthiness
4. Dealers, finance companies also suffer when customers are upside down
5. Dealers see customers applying rebates to reduce negative equity

Click Here for Full Digest and Source Article:
http://www.automotivedigest.com/view_art.asp?articlesID=18935
Sourced From: Automotive News, April 17, 2006

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