JMN Logistics Adds International Shipping Service

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February 21, 2012 | ST. LOUIS By Auto Remarketing Staff Cindy Darnell, JMN Logistics

Because international vehicle shipping has become quite popular during the past decade, JMN Logistics expanded its transportation services on Monday to include international shipping.

When chief operating officer Cindy Darnell learned the company could make international shipping easier and less complicated for customers, she insisted that it became a top priority to gain partnership with quality affiliates all across the country and around the world.   
 
JMN owner Jon Nuckolls contends the company now offers fares reasonable enough to justify bringing a vehicle overseas.  

“People who have strong attachments to their vehicles can take comfort in knowing that if they need to move their vehicles to another country they can do so reasonably,” Nuckolls declared.

Darnell highlighted, "JMN ships to all 50 states so it only seemed natural that the next step would be to grow an international department as well.

“We will uphold the same standard for our international moves that we do for our domestic ones, which means all equipment and drivers are filtered through the most stringent standards in the industry. All our auto haulers are fully licensed and insured as required by FMCSA,” she continued.

Denise Jarvis, who is heading up JMN’s international shipping department, added, “JMN takes dedicated attitude to assigning drivers that are dependable, consistent and prompt. We do our best to price realistically, in an constantly changing market, to provide the most efficient service.”

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Will leasing's rise spell sleepless nights?

February 8, 2012 - 12:01 am ET

Jim Henry is a special correspondent for Automotive News

There can be too much of a good thing, and that includes leasing.

Several dealers at last week's American Financial Services Association Vehicle Finance Conference in Las Vegas said they would like a bigger comeback for leases.

But some lenders at the same conference said they're leery of leasing and don't want to see the factories drive lease penetration too high with incentives.

"As a car dealer, I would rather see people lease a car than buy," said Bill Underriner -- president of Underriner Motors (Honda, Hyundai, Volvo, Buick) in Billings, Mont., and the new NADA chairman -- in a Feb. 2 panel discussion. "Generally in 24 to 36 months, you're going to have that customer back into your dealership, and they're going to have to decide what to do with that car."

Lease penetration has more than doubled since it bottomed out at around 10 percent of new-car volume in the third quarter of 2009, according to the Power Information Network.

Tom Gilman, CEO of TD Auto Finance, said during another panel discussion on Feb. 3 that the idea of leasing approaching its heyday of 30 percent of new-vehicle volume again scares him. Gilman said he was forced to pull the plug on leasing at then-Chrysler Financial in 2008 because the captive couldn't borrow enough money. At the same time, resale values back then were falling for lease returns, especially for big pickups and SUVs.

"You learn a lot of lessons when you liquidate a portfolio," Gilman said. "When I hear 30 percent leasing, I get nervous. That makes me lose sleep at night. I haven't seen the numbers for January, but it was 26 percent leasing in December. We're starting to do all the things we did before."

Maybe it's too much to ask in a cyclical industry, but isn't there something in between?

You can reach Jim Henry at autonews@crain.com.

Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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What about low interest rates for high mpg?

Jamie LaReau covers auto dealers for Automotive News.

LAS VEGAS -- Imagine if buying a vehicle that gets extremely good fuel economy meant getting a lower interest rate on a loan.

Lenders consider a lot of factors when granting consumers retail vehicle loans. But might lenders smile on buyers of highly fuel efficient vehicles, such as the Chevrolet Volt or Toyota Prius sedans?

The thought is that a consumer of a high-MPG vehicle would, theoretically, be spending considerably less on gasoline. Therefore that consumer could repay a car loan faster or even afford a slightly higher loan amount than they might otherwise.

It’s an idea that some dealers are asking and some in the lending community are pondering at the National Automobile Dealers Association convention.

“We’re not seeing it happen quite yet,” said Melinda Zabritski, director of Automotive Credit at Experian Automotive. “It’s certainly going to be one of the topics I’m going to talk to lenders about it though -- if they’ll take mileage into account when writing their rate cards.”

The answer might depend on federal regulations. The government could say no.

And there are the unpredictable variables to consider such as the risk that gasoline prices would fluctuate. According to a report by ABC News, Patrick DeHaan, senior petroleum analyst for GasBuddy, which tracks fuel prices, projects that by Memorial Day the national average will be $3.86 to $4.13 per gallon. DeHaan said prices in 2012 could set records. That means drivers could spend $200 to $300 more for gasoline this year -- unless they buy an extremely fuel efficient vehicle.

I ran into Ally Financial President Bill Muir here and asked his thoughts on the idea of lending at more favorable rates for those who buy vehicles with high MPG ratings.

Muir says it’s unlikely Ally would start considering a vehicle’s fuel economy in its retail loan interest rates. Muir says fuel efficiency is already inadvertently rolled into the equation through residual values.

He noted that in 2008 gasoline prices hit $4 a gallon. Large SUVs became harder for people to afford. Thus, the residual values on many large SUVs plummeted because the used vehicle buyer wanted to pay less for them.

“Mileage per gallon factors into affordability and factors into the residual of the vehicles,” Muir said. “We tend to look at it as, what do we think is the residual value that makes it desirable or not as a loan. So it all factors into it already.”

Fair enough. But lenders are always looking for creative ways to market to new business, and this might be one of them.

You can reach Jamie LaReau at jlareau@crain.com.
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Hyundai's 'huge' rise in residuals may spur leases

Jim Henry
Automotive News -- January 18, 2012 - 12:01 am ET

The Hyundai brand made a big jump in predicted residual values for calendar 2012, according to ALG Inc., a widely used benchmark for residual values on leases.

Hyundai's residual values have risen as the brand's quality has improved and as Hyundai Motor America has rolled out new models, ALG said.

In the long run, that should make it easier for Hyundai to do more lease business, said Eric Lyman, director of residual solutions for ALG, in an interview last week.

"We don't usually see that much movement in only a year," he said. "That's a huge improvement."

Specifically, the Hyundai brand ranked No. 3 in ALG's 2012 Residual Value Awards, based on ALG's forecast for January 2012 through December 2012. It was No. 7 a year earlier. ALG made its 2012 forecast late last year.

Subaru and the Honda brand were No. 1 and No. 2, respectively, the same as a year ago.

A higher residual value implies lower monthly payments. In leasing, the customer in effect borrows the difference between the upfront cost of a vehicle and its predicted residual value at the end of the lease.

Lease penetration for the Hyundai brand averaged 17 percent for 2011, up from 12 percent in 2010, Hyundai spokesman Dan Lienert said. According to the Power Information Network, industry average lease penetration was 19 percent in the third quarter.

The Hyundai Elantra won ALG's compact car segment for the highest residual value. Meanwhile, the Elantra was also named North American Car of the Year this month at the North American International Auto Show in Detroit. Separately, the Elantra also won a 2012 Polk Automotive Loyalty Award with a customer-retention rate of 27 percent.

Despite favorable residual values, Subaru's lease penetration is below average. ALG said Subaru's lease penetration was only around 12 percent. Honda brand lease penetration was about 28 percent, ALG said.

Lyman said Subaru leasing is probably low because on average Subaru owners keep their cars a long time, so they're probably not that interested in leasing. The Subaru Outback won the Polk Automotive Loyalty Award for mid-/full-sized cars earlier this month, with a customer retention rate of 35.8 percent.

Said Lyman: "Subaru is getting to be kind of a cult brand."

You can reach Jim Henry at autonews@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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Why the pool of repos is skimpy, too

Arlena Sawyers covers remarketing for Automotive News.

LAS VEGAS -- Just about anybody who cares about used vehicles knows that off-lease volume will be tight again this year as a result of fewer vehicles being leased during the recession.

What you may not know is that the pool of repossessed vehicles, another source of used-car inventory, will be skimpy, too, at least for now.

That's according to the Manheim 2012 Used Car Market Report, released here at the convention.

Here's why. People are putting more emphasis on making their monthly car payments and strong used-car prices means borrowers have more equity in their vehicles.

These factors make for fewer loan delinquencies and defaults. In fact, repossessions in 2011 dropped 32 percent to 1.3 million units compared with 2009.

As vehicle sales pick up and lenders ease lending standards, the number of repossessed vehicles will likely grow in the future, the report says. But volumes won't return to the 2009 peak of 1.9 million anytime soon.

You can reach Arlena Sawyers at asawyers@crain.com.

Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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Leasing rebounds, accounts for 1 in 5 sales

LAS VEGAS -- Leasing's share of U.S. retail sales rose by a point last year to 20 percent, according to the Manheim 2012 Used Car Market Report.

The report credits the industry for getting leasing right, at least "for the most part," by targeting lease consumers with good credit who trade their vehicles on a regular cycle. The industry also got praise for projecting end-of-lease residual values that were not overly inflated.

Despite what it calls an industrywide "conservative approach" to leasing, Manheim said leases rose 17 percent to 2.1 million units in 2011. That was 85 percent higher than the 1.14 million leases written in 2009, when large banks and finance companies had virtually abandoned leasing in the midst of the downturn. The figures exclude sales and leases to fleets.

The report, released Saturday at the National Automobile Dealers Association convention here, also notes that because fewer vehicles were leased during the recession, off-lease volumes will continue to decline this year. That decline is expected to contribute to tight supplies of fairly new, low-mileage used vehicles, which in turn should bolster used-vehicle prices.

You can reach Arlena Sawyers at asawyers@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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Financing vehicles 'that others won't touch' pays off for subprime lender Westlake

Jim Henry
Automotive News -- January 18, 2012 - 10:40 am ET
UPDATED: 1/18/12 3:00 p.m. ET Dietrich: "At the right LTV (loan-to-value) and the right structure, you can lend to customers with challenges."

Editor's note: An earlier version of this story gave an incorrect former title for Kyle Dietrich, assistant vice president of sales and marketing for Westlake Financial Services. He is a former vice president for WFS Financial Services.

Subprime auto loans are on the upswing and so is Westlake Financial Services, a subprime auto lender owned by Hankey Group in Los Angeles.

Westlake got its start in 1978 as the buy-here, pay-here division of Hankey Automotive Group. Today Westlake buys contracts from more than 13,000 new- and used-car dealerships in 49 states, says Kyle Dietrich, assistant vice president of sales and marketing.

Dietrich, who joined Westlake in 2009, says the lender grew most notably by sticking to what it does best -- servicing credit-challenged customers.

He spoke with Special Correspondent Jim Henry last week.

Your Web site notes that business grew 30 percent last year. How did you do it?

Actually, it was 32.19 percent growth. It was significant growth.

What did you do differently?

I was a vice president at WFS Financial and I was a vice president at Triad. I've seen rapid growth and I've seen rapid declines. In the haze of 2005, 2006, 2007, it was hand-to-hand combat for the banks for every deal. I saw rates drop and deals getting done that probably shouldn't have got done. Everyone was fighting for the same customer.

Meanwhile, Westlake stayed very consistent. At the right LTV (loan-to-value) and the right structure, you can lend to customers with challenges.

What happened to everybody else?

My old company shut down. [Triad Financial Holdings LLC was acquired by Santander Consumer USA in October 2009.] WFS Financial ran up the credit-risk scale. Everyone else basically ran from the segment, but Westlake hung in there. ... They were unwavering through all that.

Was demand for subprime still there, even though the supply of credit wasn't?

As the credit crisis hit, dealers who had been doing 300 cars a month all of a sudden were doing 180 cars a month. The subprime subset became the fastest growing subset.

I've heard lenders warn each other about a stampede in subprime that will lead to lower pricing. Dealers say, "What stampede?"

We have not aggressively changed pricing. We are a little more aggressive for franchised [dealers] because of how well they perform.

We charge high rates to consumers, but we will finance consumers, we will finance vehicles that others won't touch -- that other lenders aren't comfortable financing.

Where does the growth come from?

We now have about 285 sales staff. That's about 80 people -- closer to 100 salespeople -- which we added in 2011. We are north of 13,000 dealers. Not too long ago, it was about 9,000 dealers.

How many franchised, new-car dealers as opposed to independent, used-car dealers?

We are about 30 percent franchised and about 70 percent independent. There has been a very dramatic increase in franchised. A few years ago, it was about 15 percent franchised.

The franchised segment has been doing well. Car dealers are selling more used cars. Business overall basically has been flat, but used cars have grown.

Are you doing more "nonprime," or "near-prime"?

We consider ourselves to be a full-spectrum lender. We can handle from a zero FICO score to 850. Our rate and our fees are not going to be as competitive for those near-prime customers as Capital One or Wells Fargo. But we'll take vehicles those guys won't touch.

What's your average FICO score?

Our FICO average is 565. We are a true subprime lender. Other entities may say "near-prime" or "nonprime" and avoid the term, but we make no bones about it. Our goal is to provide a way to go for a lot of customers.

How much volume do you do?

We are on a pace for about 10,000 loans a month right now. That's for the fourth quarter and through the first quarter, I would say. In 2005 to 2006, it was around 3,000.

We're not an overnight sensation. We're growing through new markets, we're growing by adding to our dealer base, we're growing by adding to our sales force. But basically we're sticking to the same thing.

You can reach Jim Henry at autonews@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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Auto/Mate Launches Solution to Protect DMS Information

This week, Auto/Mate Dealership Systems unveiled Guard/Mate, what the company contends is the industry’s first data protection service for dealerships.

In response to the growing concerns of many dealers about third-party vendors’ access to dealership data, Auto/Mate insisted it is taking a proactive approach to help dealers manage vendor access.

The company explained Guard/Mate can provide dealers with the information they need to regain control of their data. Guard/Mate can audit the vendors that have access to Auto/Mate’s dealership management system.

On a monthly basis, every dealer can receive a list of all the vendors who have access to the dealer’s data, as well as when they access it and from which part of the system the data was pulled.

With a list of previously authorized vendors from Auto/Mate as a starting point, dealers can first notify Auto/Mate if any vendors are pulling data that shouldn’t be.

Often when dealers cancel an agreement with a third-party vendor, the company pointed out they fail to notify their DMS provider. Without notification, the DMS provider could unwittingly allow continued access to that vendor.

Jim Ziegler, president and chief executive officer of Ziegler SuperSystems, said he encountered this situation in his practice.

“A large Chrysler dealer I do business with recently audited their DMS,” Ziegler recapped.

“We found 87 different vendors extracting data from his DMS. Some of these vendors he wasn’t even doing business with anymore,” Ziegler continued.

Upon notification from the dealer of unauthorized access, Auto/Mate can immediately shut off that vendor’s access.

For the vendors who are allowed to access the dealer’s DMS, Auto/Mate can recommend that dealers review their contracts and demand the removal of any language that grants the vendors any rights or license to share or re-sell their data in any way.

Guard/Mate will be rolled out to Auto/Mate customers beginning in February.

“Everyone in the industry agrees that dealers own their data and should have the right to grant access to any company they choose and that the DMS vendor should not sell, share or trade the dealers’ data,” stated Auto/Mate president and CEO Mike Esposito.

“However, the problem is that dealers change third-party vendors and may not know who is actually accessing their data nor do they know what type of data a vendor is mining from the dealer database,” Esposito continued.

“At Auto/Mate we feel that this issue is of paramount importance to our dealers and want to ensure that all of our dealers have Guard/Mate so for that reason Auto/Mate is not charging its dealers for Guard/Mate,” Esposito went on to say.

To learn more about Guard/Mate, stop by booth No. 320 during the upcoming National Automobile Dealers Association Convention and Expo in Las Vegas or set an appointment at www.automate.com/nada.html.

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eBay Motors App Lets Shoppers Begin Vehicle Searches by Taking Photos

A potential car buyer is walking around town and spots a car, without even knowing the make, model or year of the car, that shopper can now be instantly connected to sellers of similar vehicles — including dealers — simply by taking a picture on the iPhone.

Thanks to upgrades eBay Motors has made to its iPhone app, this apparently is possible.

Through the new Vehicle Finder function (one of the aforementioned enhancements), when someone snaps a photo on their iPhone of a vehicle, the app can pull make/model/year information and show which similar vehicles are available on eBay Motors, officials explained.

The app’s upgrades also include a streaming feature, which shows eBay Motors-exclusive live broadcasts from auto events and races. The company was scheduled to launch that feature this past weekend at the 50th Anniversary Rolex 24 race at Daytona International Speedway, where former Le Mans winner Justin Bell was hosting behind-the-scenes coverage.

Moving along, other enhancements include:

—Notifications for when a shopper has been outbid, when sales are ending and updates on the current “Best Offer."
—Stock images of vehicles to allow  a user to quickly and easily update his or her profile in the personal eBay Motors "Garage."
—Feature for users to share via Twitter the parts and vehicles they are buying or selling (currently only avaialbe on the  iOS 5)

“Car lovers have embraced mobile shopping with 127,000 parts and 2,800 cars sold each week worldwide through eBay mobile applications alone," said Steve Yankovich, eBay’s vice president of mobile.

“We are enhancing this experience with entertaining original content and Vehicle Finder image search. The eBay Motors app is a one-stop destination for auto fans, from their next purchase to behind the scenes footage of a raceway event, whether they are at home or on the go,” he added.

eBay Hosts Charity Auction

Additionally, after the aforementioned race this past weekend, eBay Motors was hosting an auction of the “Rennsport Edition” Porsche Cayman S, the proceeds of which were going to Children’s Tumor Foundation. The vehicle was a special commission from the organizers of the Cayman Interseries racing during the Rennsport Reunion in October at the Mazda Raceway Laguna Seca in Salinas, Calif.

Officials said the vehicle includes the autographs of the “dozens of legendary drivers” who were attending. Also inscribed on the Porsche is the name of every racing Porsche and where it raced.

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Carfax Chosen for Subaru CPO Program

Carfax revealed Tuesday that it has been tapped by Subaru of America to be the official vehicle history report provider under the automaker’s certified pre-owned program, which has required dealers to run a Carfax report on every CPO vehicle since 2005.

Every certified Subaru comes with a Carfax report. The automaker is one of 32 which use Carfax to provide vehicle history in CPO.

Offering a dealer’s perspective, Subaru Superstore of Chandler owner Richard Cvijanovich said: “Subaru and Carfax are two strong brands that consumers trust.

“When a customer drives by our dealership, they know we are a Carfax Advantage Dealer. This helps further increase credibility to our clients, especially with our Certified Subaru vehicles,” added the Arizona dealer.

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KBB Sets Expectations for Top Auto Commercials of Super Bowl XLVI

The editors at Kelley Blue Book didn’t offer any predictions on whether they think it will be the New York Giants or the New England Patriots lifting the Lombardi Trophy after Super Bowl XLVI this weekend.

However, the firm did predict which automakers will likely be celebrating come Sunday night.

KBB is forecasting that the two models likely to see the strongest traffic uptick on the company’s website are the 2012 Chevrolet Sonic and the 2012 Honda CR-V.

More specifically, Kbb.com traffic share for the Sonic is expected to climb almost 250 percent on game day, officials said. They attribute this to the fact that the model is relatively new, so receiving national exposure like a Super Bowl ad is prone to push interest in the vehicle. Moreover, demand is currently strong for subcompact sedans due to their fuel economy and affordability.

Meanwhile, CR-V won’t see the same kind of uptick on Super Sunday, but is likely to benefit further down the road. KBB predicts consumer research in the CR-V will hit a “higher plateau” and continue at that level for quite some time.

Week-over-week, KBB believes traffic for the CR-V will jump 100 percent on Super Bowl Sunday.

“The images of the new CR-V have been available for several months, but this affordable model, currently available for purchase, has been high in demand even before the redesign," said Arthur Henry, manager of market intelligence for Kbb.com.

“The national exposure will only further interest in the model, as advertisements that resonate most with consumers are those that are model specific,” he added.

Interestingly enough, this year's game will be shown on the Web, and this could prove beneficial to automakers.

Analysts said the game being on the Web makes it “even easier for consumers to research the advertised models and brands.

“Manufacturers that advertise during the online stream have the opportunity to garner a tremendous amount of Internet traffic, especially if the ad unit allows consumers to click through to the automaker's site,” they explained .

Sharing some more advertising trends, KBB noted that in the last two Super Bowls, each of the advertisements that focused specifically on the model led to “immediate” traffic hikes for the respective vehicles.

Conversely, the brand-focused spots “hardly moved the needle for online research,” KBB noted.

During 2011, the Chrysler 200 was the top traffic gainer during the Super Bowl, as its traffic share climbed 1,013 percent. The Hyundai Elantra gained the most ground over the long term, improving its rank on the list of most-researched cars from No. 37 to No. 7.

"In addition to being model-focused, commercials with pop culture references tend to outperform other campaigns," said Henry. "Last year, Volkswagen saw a lot of success with its Star Wars ad, and Chrysler also benefited from their 'Imported from Detroit' commercial starring Detroit-native Eminem."

Other factors seen as influential are games or call-to-actions to go online as well as ad frequency.

KBB has found that model availability, model age and consumer demand factors are the three factors most likely to drive new-vehicle research during the Super Bowl.

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'Take the time to listen to customer complaints'

Jim Henry
Automotive News -- December 21, 2011 - 7:47 am ET
Heckler: "Deal with problems now. Don't let them fester."

Scandals at a few companies that sold extended-service contracts directly to consumers potentially reflect badly on the whole industry, including dealerships that sell the contracts.

Larry Hecker, an industry certification specialist, is campaigning to repair whatever damage may have been done to the reputation of the service contract industry.

Hecker is executive director of the Vehicle Protection Association, a trade group in Selbyville, Del. The group was founded in 2008 specifically to introduce industry standards of conduct and a certification program for companies that sell extended-service contracts, especially those that sell directly to the public.

Hecker says his group's efforts are paying off. Consumer complaints related to extended-service contracts are down, at least in the state of Missouri, he says. The 2010 bankruptcy case of a Missouri company, U.S. Fidelis, brought notoriety to extended-service contracts and direct-to-consumer marketing. The Vehicle Protection Association has said it supports criminal charges against the founders of U.S. Fidelis. The founders were indicted earlier this year.

Before his involvement with the VPA, Hecker was president of the Motorist Assurance Program, a group that advocated a certification approach for independent auto-repair shops.

Special Correspondent Jim Henry spoke with Hecker by phone last week.

The Vehicle Protection Association's Web site, vpanet.org, says consumer complaints about service contracts are down. On what do you base that?

That's based on Missouri figures. Service contracts were the No. 1 complaint category, but now they no longer are. [The Missouri attorney general reported extended-service contracts were the No. 1 complaint category in 2009. Last year they dropped to No. 10. The top complaint category in 2010 was debt collectors.]

What specifically do people complain about?

A lot of complaints are over the methods of marketing. Sometimes they say, "We're getting more calls after we asked them not to call us anymore" or "Why are they calling me?" It's frustrating for consumers not to have a response.

That has started to change, as more companies have gotten certified and adopted the standards of conduct.

Do people call your organization?

We get inquiries from individuals asking how they can buy service contracts. Those have grown. People see the name of the organization and they figure that's who they should call.

You get complaints, too, right?

Questions come up concerning claims. "Should this be covered? Shouldn't this be covered?"

Do you tell them to call their administrator?

Usually I ask if they have contacted their administrator. A lot of people have never read their contract and don't know who their administrator is.

Are you set up to handle consumer complaints?

When I get a complaint, usually I will contact the company. I tell them their customer contacted me and would they please contact their customer and follow up with me. That's what I do for companies that are members.

How many calls do you get?

There's probably five to eight per week. Most people find us through our Web site.

How did you get started at this?

That's what I do. I start and run organizations whose industry needs certification. Previously, I was with Motorist Assurance Program. They have a Web site, Motorist.org. You could check it out. It's pretty substantial; there have been almost 8,000 stores involved.

Managers can learn a lot if they take the time to listen to customer complaints.

When it comes to customer mediation, I have always kept telling the stores to deal with problems now. Don't let them fester.

You can reach Jim Henry at autonews@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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Well-traveled used cars merit lower-priced products

Jamie LaReau covers auto dealers for Automotive News

In today's economic slump many practical folks see value in high-mileage used vehicles. Vehicles with 80,000 miles or more account for about a fifth of franchised dealers' monthly used-vehicle sales. Some dealers expect that pace to continue in 2012.

That's why finance and insurance providers need to keep up with the changing mix of dealers' used inventory by offering lower priced aftermarket products for those who buy well-traveled used vehicles.

If insurance providers "have taken a wait-and-see attitude thinking that the mix will return to the old normal, then it's time to be proactive and sit down with their data and redesign some of their offerings to fit the new normal," says Tom Wilson, managing director of Front Range Dealer Services in Castle Rock, Colo.

"Most buyers of inexpensive high-mileage vehicles expect that they're not going to get a prime piece devoid of any issues," Wilson says. "If there are reasonably priced protection options available, then F&I will have a running shot at sharing in the profits."

But what's reasonable?

F&I managers say the retail prices of tire-and-wheel plans range from $400 to $800, windshield treatments cost $300 to $400, and paint and fabric protection is $300 to $800.

Some finance managers say such prices are reasonable to protect a high-mileage used car when a person is spending several thousand for it.

You can reach Jamie LaReau at jlareau@crain.com.
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Subprime rivalry bodes well for dealers

Jim Henry
Automotive News -- January 18, 2012 - 12:01 am ET
Experian Automotive's Zabritski: "We're approaching where we were in the 2008 prerecession time period."

Photo credit: EXPERIAN AUTOMOTIVE

Subprime auto lending should continue to grow in 2012. But the big percentage gains that several major subprime lenders saw in 2011 aren't likely to be repeated, and that suggests competition will heat up in the segment.

It could be good news for dealers if lenders are competing harder for their business. Dealers have fretted as the comeback in subprime has lagged the comeback in auto sales overall.

"We're approaching where we were in the 2008 prerecession time period," said Melinda Zabritski, director of automotive credit for Experian Automotive, in an interview this week. "We are certainly seeing expansion, but we're not repeating back to where it was."

In the third quarter of 2011, the last period for which detailed statistics are available, subprime auto loans made up 39.9 percent of originations, according to Experian Automotive. That was about 3.2 percentage points higher than a year earlier and just about even with the third quarter of 2008, when subprime was at 40.2 percent.

Subprime accounted for 43.4 percent of originations in the third quarter of 2007. That fell to only 34 percent in the third quarter of 2009, Experian Automotive says.

Rebounding from those lows has helped drive big percentage increases in subprime.

Used-car originations almost doubled for Ally Financial in the United States in the third quarter to $2.3 billion, up from $1.2 billion a year earlier. Those include prime and subprime borrowers.

Birch: "The cost of funds is good. Access to capital is good and expanding. Most people expect our space to be expanding."

Photo credit:
GM FINANCIAL

At GM Financial, third-quarter loan originations were up 41.6 percent from the year-ago quarter, to about $1.4 billion. GM bought the former AmeriCredit in 2010 to create an in-house source that specialized in subprime loans and a leasing source for both prime and subprime customers.

With close to 12,000 new- and used-car dealerships as of Sept. 30, 2011, GM Financial had almost 2,700 more dealerships than it did a year ago and three times as many dealerships as it had in June 2009.

Kyle Birch, executive vice president of dealer services for GM Financial, said this week that GM Financial probably won't add many dealerships in 2012.

"We're pretty set," he said. Birch said the outlook for 2012 is positive. "The cost of funds is good. Access to capital is good and expanding. Most people expect our space to be expanding," he said.

Growth already has flattened out for subprime specialist Santander Consumer USA, which more than doubled in size from 2009 to 2010, largely though acquisitions.

Santander had $14.8 billion in loans outstanding at the end of 2010. That was up from $6.9 billion a year earlier. As of Sept. 30, 2011, however, it still had $14.8 billion outstanding. That was down from $15.4 billion a year earlier, according to a company report.

Experian's Zabritski said subprime lenders can expect a more competitive environment in 2012. According to Experian Automotive, interest rates already have ticked downward in all risk categories to an average of 8.6 percent for used cars in the third quarter, down from 8.8 percent a year earlier, and to about 4.6 percent for new cars, down from 5 percent.

Said Zabritski: "It's going to be more competitive."

You can reach Jim Henry at autonews@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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Kia Recalls Certain Optima & Rondo Models

While brand officials highlighted their upcoming Super Bowl commercial, the National Highway Traffic Administration revealed a recall Kia Motors America is orchestrating.

NHTSA indicated Kia is recalling the Optima from the 2006 through 2008 model years and the Rondo from the 2007 and 2008 model years for a problem associated with the front air bags.

Federal officials indicated a total of 145,755 vehicles contain a clock spring contact assembly for the driver’s air bag supplemental restraint system that may become damaged through usage over time.

NHTSA fears if the clock spring assembly becomes damaged, the driver’s air bag electrical circuit will experience a high resistance condition potentially causing the driver’s air bag to not deploy.

If the clock spring develops high resistance, officials indicated that in the event of a crash the driver’s air bag will not deploy and will not be able to properly protect the driver, increasing the risk of injuries.

Kia told NHTSA it will begin to notify owners and commence a repair campaign at franchised dealers beginning in March. Dealer service departments have been told to replace the vehicle’s air bag clock spring assembly as necessary for free.

Brand officials noted the Optimas originally were manufactured between Sept. 25, 2005 and Jan. 29, 2009. The Rondos were made between Sept. 13, 2006 and March 21, 2008.

Potentially effected owners also can contact Kia at (800) 333-4542.

Kia Discusses Super Bowl Commercial

In other brand news, Kia believes it is tapping into the idea of dreams revealing true desires in a new 60-second commercial set to air during the fourth quarter of Super Bowl XLVI. 

In the spot, titled “Drive the Dream,” officials highlighted the new 2012 Optima Limited races through a Gen X couple’s wildest thoughts as they sleep, including Victoria's Secret Angel Adriana Lima waving the checkered flag at a speedway, an in-your-face Motley Crue concert, mixed martial arts legend Chuck Liddell battling in the ring, a heroine and hunk on horseback in a romance novel setting champion bull rider Judd Leffew taming a bucking rhinoceros and a fairy tale ending.

Kia is returning to the big game for the third straight year with a fully integrated marketing campaign incorporating TV, cinema, digital, print, social media and in-dealership components.

In a Super Bowl advertising first, Kia pointed out the complete “Drive the Dream” ad will premiere on Feb. 2 on more than 18,000 movie screens nationwide in National CineMedia’s FirstLook pre-show program before airing in the game.

Kia said it also will run 15-second teaser ads featuring Adriana Lima on TV and in cinema beginning today while also leveraging the Twitter and Facebook channels of the spot’s celebrity cast.

A special expanded version of the ad will be available at YouTube.com/Kia beginning on Feb. 2.

Furthermore as part of the “Drive the Dream” campaign, consumers can download a $25 pre-paid test drive voucher at Kia.com beginning on Feb. 2 that is redeemable after eligible consumers visit a Kia dealership and complete a test drive of any Optima model.

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Women-Drivers.com Releases List of Top Automakers for Service

Auto Remarketing | Women-Drivers.com Releases List of Top Automakers for Service

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January 26, 2012 | PITTSBURGH By Auto Remarketing Staff

For dealers, service visits serve as a way to interact and check in with current customers — a convenient way to foster customer loyalty. And Women-drivers.com has just released a list that shows which dealers are succeeding in providing superior service after purchase, according to female customers' ratings.

Topping the list of highest ranked servicing car brands by women are two luxury nameplates, Mercedes-Benz (4.71) and Acura (4.67).

Moreover, Mercedes-Benz also recently topped a list released by the site that showed the overall top car brands as rated by women. 

After tracking thousands of consumer reviews with regards to womens' purchasing and browsing experiences at dealerships, the site found that the luxury nameplate took the highest score in both categories.

Mercedes-Benz scored a 4.89 for purchasing experience and a 4.59 for browsing at a dealership experience.

On the site, dealerships’ scores range from 1.0 to 5.0 on the its Women Satisfaction Index (WSI).

Honda and BMW followed the two leaders closely behind in the servicing department with scores of 4.62 and 4.57, respectively.

Why are these numbers so important? The site stressed that with “women accounting for about two-thirds of all dealership service visits,” it is important for dealers to research what practices best suit their female customers.

Further explaining this logic, Anne Fleming, president of the site, noted, “The average customer buys a new car every 40 months, according to NADA (National Automobile Dealers Association). However, during the same time duration, those customers make an estimated ten visits to a dealer's service lane. These interactions are crucial to a dealership for several reasons.

“There is a higher rate of net income that is derived from the service department, for starters; and if a she has a good experience, there is a much higher probability she will be returning to this dealership to buy, especially if she is staying with that brand,” she continued.  “Brands that maintain very strong WSI servicing scores are continuously meeting women’s expectations.

“It's all about trust and treatment,” she concluded.

And just what were these brands’ dealers scored on? Site officials cited the following:

—Ease of scheduling service appointment.

—Receiving an estimate prior to work being completed.

—Being kept informed of the progress or any changes and the financial implications of those changes.

—Being treated respectfully.

—Work being completed to satisfaction.

—Car being cleaned.

—Plans to have service work done there in the future.

And with the average rating for all brands coming in at a 4.04, a few brands on the list hit below the desired mark.

Volkswagen and Chevrolet sat at the bottom of the list of the rated 15, with scores of 3.87 and 3.85 respectively.

Here is the complete list of the 15 brands with the highest servicing WSI scores at new car dealerships, according to Women-drivers.com: 

1. Mercedes-Benz: 4.71

2. Acura: 4.67

3. Honda: 4.62

4. BMW: 4.57

5. Lexus: 4.42

6. Buick: 4.23

7. Toyota: 4.18

8. GMC: 4.16

9. Jeep: 4.12

10. Subaru: 4.03

11. Chrysler: 3.97

12. Dodge and Nissan: 3.93

13. Hyundai: 3.91

14. Volkswagen: 3.87

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J.D. Power: 'Pre-Conceived Notions' Highly Influential in Brand Avoidance

When a shopper avoids a model because of quality or reliability concerns, it may not always stem from tangible proof or some specific experience. 

"Pre-conceived notions” can often be heavy influencers when shoppers form a certain perception about a brand’s quality/reliability,  according to J.D. Power and Associates. As such, the firm urged automakers who have improved their quality to get the word out and emphasize these changes to consumers.

Consider what J.D. Power found during its 2012 Avoider Study, where it surveyed consumers about why they avoid certain models.

More than two-fifths (43 percent) of consumers who cited quality/reliability concerns as the reason for steering clear of a model said their rationale was that “the brand’s vehicles, in general, are known to have poor quality/reliability.”

Comparatively, 38 percent cited ratings and reviews as the reason for having quality/reliability concerns about a vehicle. Meanwhile, just 14 percent said prior ownership led them to their viewpoint.

“The fact that so many new-vehicle buyers may be basing their opinions about quality and reliability on pre-conceived notions, rather than concrete information or data, demonstrates how important it is for automakers to promote the quality and reliability of their models,” said Jon Osborn, research director at J.D. Power.

“For some brands, namely those that have created marked improvements in their quality and reliability in recent years, it’s even more vital to tell their improvement story, rather than just waiting for perceptions to change over time,” he added.

Looking at some other reasons cited for brand avoidance, 14 percent of those staying away from import models said it was the brand’s origin that led them to the decision. That proportion is the highest it has ever been during the 10 years of the study, officials noted.

As for buyers who steered clear of domestic vehicles, only 6 percent did so because of them being U.S. cars. This marks an all-time low.

“The decline in avoidance of U.S. models due to their origin reflects a buy-American sentiment that surfaced as the economic recession led to domestic job losses and adversely affected major U.S. institutions such as the Detroit Big 3,” Osborn stated.

“In addition, the quality, dependability and appeal of domestic models has improved during the past several years, as well, and this may also be a cause for declining avoidance,” he added.

Moving to the reason for buying a specific model, the most frequently cited cause was gas mileage. This has leaped over last year’s most popular reasons: reliability, the deal and exterior styling.

In light of this trend, there was a good bit of consumer gravitation toward the Chevrolet Volt, Nissan Leaf and Toyota Prius models.

Each of these vehicles had both gas mileage and environmental impact within the top two reasons consumers gave for buying the respective model.

Interestingly enough, though, the third most popular reason was different for each of these models.

Citing the “image the model portrays” was quite popular for Volt buyers. Leaf buyers were swayed by low maintenance costs. The reliability factor was influential for the Prius.

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NADAguides Says Second Half Saw Continued Spike in Traffic

NADAguides.com said the second half of 2011 showed continued growth for the site, as the unique visitor count climbed 12 percent.

August, in particular, was the most heavily trafficked month the online research portal indicated it has ever had.

As for the automotive section, it showed a 9-percent traffic hike versus calendar-year 2010.

Officials said this section “peaked in August, recording the highest number of unique visitors on NADAguides.com.”

Offering some overall commentary on the site’s growth, NADAguides director of product development Troy Snyder had this to say: “As the largest publisher of vehicle data online we are a leading resource for in-market vehicle shoppers and by analyzing their traffic search patterns we are able to gauge consumer interest and trends.

“NADAguides.com site traffic has had significant increases year over year, especially in 2011, indicating more and more consumers are researching before they buy and are increasingly more knowledgeable before they make their purchase,” he added.

Sharing some trends from other sections, the motorcycle, ATVs and utility vehicle section climbed 18 percent year-over-year, with the second half up 21 percent. The first half showed 14-percent growth.

The classic cars section jumped 13 percent from 2010, with the fourth quarter showing month-over-month increases of 24 percent, 25 percent and 26 percent in October, November and December.

The boats and personal watercraft section was up 10 percent compared to 2010. July was the strongest month ever for boats and personal watercraft.

Meanwhile, RV traffic during the second half climbed 10 percent.

Additionally, the second half showed  a 30-percent rise in unique visitors for the NADAguides.com mobile site. Officials contend that 8 percent of all NADAguides.com traffic is through mobile site visitors.

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Domestics Lead Consumer Guide Automotive Honors

This week, Consumer Guide Automotive revealed the recipients of its 2012 Best Buy and Recommended Awards, showcasing a total of 106 vehicles.

Two domestic nameplates led the way with the most models honored as Chevrolet and Ford each had nine award winners. Toyota was right behind with eight lauded units while Honda had seven vehicles praised.

Since 1967, the editorial team at Consumer Guide Automotive has used a rigorous and comprehensive evaluation process to identify the vehicles that it deems worthy of serious consideration by a consumer, the publication noted.

In assessing each vehicles, the editors utilize such criteria as price, features, performance, accommodations, fuel economy, reliability records and resale value.

The winners are divided into two categories: The Consumer Guide Automotive Best Buy and Recommended winners.

Officials explained that a Best Buy rating signifies that a vehicle is ranked at the top of its class and is strongly recommended by the editors. Best Buy vehicles are said to represent the best balance of attributes and price within their classes, and they are said to be the most ideal choices for most consumers.

This year’s models earning the Best Buy award include the Nissan Versa, Ford Expedition, Kia Optima, Buick LaCrosse, Dodge Charger and the Mazda MX-5 Miata.

Consumer Guide Automotive indicated that its Recommended list features vehicles that, though not ranked at the very top of their category, are still worth strong consideration by the consumer for their unique combination of attributes and value.

This year’s Recommended awards include the Toyota RAV4, Subaru Impreza, Honda Accord, Audi A7 and the Nissan Frontier.

“The key to Consumer Guide Automotive’s annual Best Buy and Recommended Awards is the careful evaluation of every aspect of each vehicle as it relates to consumers’ real-world driving experience,” editors explained.

“It is this thoroughness which is driving increasing numbers of consumers to check Consumer Guide Automotive reviews before buying a new vehicle,” they continued.

Consumer Guide's editorial team drives nearly 200,000 miles per year evaluating what these vehicles do well, and what they don't.

The publication said multiple editors evaluate each vehicle, a process that assure that recommendations are based on experiences that best reflect the settings and conditions that  buyers encounters every day.

“Whether it is driving through the city, highways, rural areas, long trips, or simply picking up the kids at school, the vehicles are tested in the same way that typical car buyers would use their vehicle,” editors concluded.

The following is a breakdown of the award winners:

Subcompact Car Best Buys
Ford Fiesta
Honda Fit
Hyundai Accent
Mazda 2
Nissan Cube

Subcompact Car Recommended
Chevrolet Sonic

Compact Car Best Buys
Ford Focus
Honda Civic
Mazda3
Nissan Versa
Volkswagen Golf
Volkswagen Jetta Sportwagen

Compact Car Recommendeds
Chevrolet Cruze
Hyundai Elantra
Scion Xb
Subaru Impreza

Premium Compact Car Best Buys
BMW 3-Series
Mercedes-Benz C-Class

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CNW: Days’ Supply of Used Models Softening Even Further

CNW Research’s latest used-vehicle supply findings concur with several other assertions from wholesale analysts — it’s not going to be easy for managers to keep their used inventories stocked.

Even with trade-ins climbing because of greater new-vehicle sales, CNW revealed on Tuesday that the industry remains at a 45-days’ supply of used vehicles.

Highlighting just how significant the supply dearth is, president Art Spinella noted that January is running at a 44.3 days’ supply, lower than any month of 2011. For comparison, the level stood at 50.7 days in January of last year.

CNW recollected that having a 70 to 80 days’ supply in the early 2000s was not uncommon. In fact, used supply hit 86 days’ in November of ’08.

“Dealers continue to struggle finding the right vehicles for their inventory,” Spinella acknowledged.

“It was once thought that having a 45 days’ supply was ‘ideal,’ but that figure is now considered far too low for most dealerships. The likely ideal level is in the low 50 days,” he explained.

CNW determined that small-car supply — just like on the new-vehicle side — continued to shrink as a share of total sales while full-size pickup inventories rose to its highest level of the year in December.

“Estimated sales for January shows small cars again declining to about 16 percent of sales while pickups should take more than 13 percent,” Spinella projected.

Early January Sales Trends

Looking at how used sales are shaping so far this month, CNW indicated that private-party sales continue to increase as a share of total sales, running more than 26 percent ahead of January of last year.

Spinella pointed out that franchised dealer used sales are up about 4 percent in the opening half of the month while independent dealers saw a near 3-percent decline.

As demand increases, CNW said dealers are beginning to see prices firming.

“For example, franchised dealers' average used-car asking price in January is about $11,516, and they are getting more than 94 percent of that asking price for vehicles bringing average transaction price to $10,855, up 2.9 percent versus year ago,” Spinella highlighted.

“It also is a gain of nearly 3 percent versus December 2011,” he added.

“If the rest of this month reflects historic first-half of January trends, the industry will sell in the 2.17 million unit neighborhood this month, or 8.2 percent ahead of last year’s 2.01 million,” Spinella went on to estimate.

In terms of age, CNW noted the hot products are still the one- to six-year-old rides, but the supply is tight.

Older models — more than 10 years old — are lagging somewhat based on CNW’s monthly segment tracking surveys.

“There is a return of younger consumers to the used-car market which should perk up the over-10 year old sales numbers in the coming months,” Spinella surmised.

“Pickups are gaining in market share while small cars are diminishing,” he continued. “This could change if gasoline prices rise dramatically, but for many of the 20-somethings, a move to anything newer than what they currently drive will improve fuel economy and offset all but massive fuel price increases.

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GM Dealers to Give Away Oil Changes to Help Boost Blood Drive

A pair of Chicago-area General Motors dealerships is hoping to lend a helping hand to a local blood center through a rather unique promotion this weekend. Bill Jacobs Cadillac and Bill Jacobs Joliet (a Chevrolet store) are providing free oil changes to shoppers who stop in Saturday and donate a pint of blood.

In addition to the oil/lube/filter change, donators will be given an $11 gift certified to Oberweis Dairy/Ice Cream.

The “Give us a pint and we’ll give you five Quarts” event runs from 8 a.m. (CT) until 2 p.m. at the dealerships, both of which are located at 2001 W. Jefferson Street in Joliet, Ill.

The donations will be given to the Heartland Blood Center.

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Lawsuits Associated with Various Credit Acts Hit New Highs

Lawsuits associated with the Fair Credit Reporting Act, Telephone Consumer Protect Act and Truth-in-Lending Act all set new records last year, according to federal data compiled by WebRecon.

Analysts determined that FCRA litigation had a big jump after several years of relatively flat numbers, while TCPA litigation more than doubled and TILA nearly tripled over the previous year.

WebRecon also found that Fair Debt Collection Practices Act litigation set a record as well, but fell just short of the company’s projection of 12,000 cases with 11,811 cases filed in 2011.

“The growth rate of FDCPA litigation has plummeted over the last two years, though it is important to note that the number of FDCPA lawsuits filed does continue to grow each year, just on a shrinking trajectory,” analysts explained, adding that FDCPA litigation hit its peak growth in 2009 when it rose 52 percent over the previous year’s numbers.

Breaking down the data geographically, WebRecon discovered the Denver District Court saw the most suits filed in it, totaling 658. Philadelphia was second with 634 suits. Los Angeles was third with 623, followed by Chicago with 592 and Newark, N.J., with 486.

By state, California led the nation with 1,654 lawsuits in 2011. Florida was next with 1,146 lawsuits, followed by New York (1,128), Pennsylvania (940) and New Jersey (711).

WebRecon offered annual comparisons of FDCPA, FCRA, TCPA and TILA litigation. These statistics are for cases filed in federal U.S. District Courts only.

—2011: 11,811 FDCPA cases, 1,838 FCRA cases, 660 TCPA cases, 1462 TILA cases.

—2010: 10,859 FDCPA cases, 1,295 FCRA cases, 272 TCPA cases, 529 TILA cases.

—2009: 9,135 FDCPA cases, 1,174 FCRA cases.

—2008: 6,025 FDCPA cases, 1,164 FCRA cases

—2007: 4,372 FDCPA cases, 1,347 FCRA cases.

—2006: 3,710 FDCPA cases, 955 FCRA cases.

—2005: 3,215 FDCPA cases.

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Polk: Vehicle Population Hits Record Average Age

The U.S. vehicle population has reached a record-high age after showing rapid gains in recent years, according to Polk, which said this aging fleet and longer ownership periods present dealership service departments — along with other auto repair and aftermarket businesses — with “significant business growth opportunity.”

More specifically, the average age of vehicles currently in operation as of July 1 of 2011 is 10.8 years, compared to 10.6 years on the same date in 2010.

This continues what Polk called a rapid increase over the last five years, climbing all the way up from an average age of 9.7 back in 2006.

“The increasing age of the vehicle fleet, together with the increasing length of ownership, offers significant business growth opportunity for the automotive aftermarket,” stated Mark Seng, global aftermarket practice leader at Polk. “Dealer service departments and independent repair facilities, as well as aftermarket parts suppliers, will see increased business opportunity with customers in need of vehicle service.”

Breaking the data down further, the age of passenger cars climbed only slightly to 11.1, compared to an age of 11 the prior year. Meanwhile, the increase for trucks (10.1 to 10.4) was more dramatic.

Polk explained that this deceleration for passenger car aging reflects the sluggish sales and the car-versus-truck sales mix during 2008 and 2009. During this period, there were a greater number of truck registrations than car registrations.

Officials pointed out, however, that that even though truck sales were stronger during this period, their aging rate was quicker.

That said, the market is likely to see this trend go in reverse in the near future, given the increases in the CUV and small SUV populations over the last two years. What’s more, with new-vehicle sales climbing last year and expectations for those gains to continue, Polk believes the market’s aging rate will probably soften compared to what’s been seen in the last three years.

Moving along, Polk also delved into U.S. vehicle population data. After two years of decreases in vehicle count, 2011 showed an uptick.

Specifically, there were 240.5 million units in operation as of July 1.

After reaching an all-time high of 242.1 million in 2008, the population dropped to 241.5 million in 2009 and 240.0 million in 2010.

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Beggs: Wholesale Market Is ‘Busting Loose’

The new year already has generated a new record for Black Book’s editors as last week they established a new mark for the most daily adjustments.

Black Book’s staff made a daily average of 3,280 adjustments last week, almost 400 more per day than the previous high set during the week ending Aug. 12.

Thanks to the bevy of activity, managing editor Ricky Beggs acknowledged the conversation within Black Book’s office has changed significantly.

“The water cooler talk that has been often focused on college football for the past four to five months is now over until August or September, and once again, a team from the SEC has been crowned the champion,” Beggs began during his latest video blog, “Beggs on the Used Car Market," referring to college football's Southeastern Conference.

“The champion of the used-car market this week was the fact that 53-percent of the changes the editors made were increases,” he continued. “We haven’t had this level of positive changes since the week ending last May 20.”

While the amount of daily adjustments set a new precedent, Black Book discovered that last week’s overall movement settled at a decline of slightly less than $5.

For comparison, Beggs mentioned that when Black Book previously established its daily adjustments record last August, the overall movement was a decline of $119.

Beggs explained that last week’s overall dip “was definitely supported by the various dealer and auctioneer comments we heard such as ‘expecting an upturn’ and a more enthusiastic ‘on the verge of busting loose within the next two to three weeks.’”

“With slightly more 'average' condition values adjusted than 'clean,' and more of them being increases, this is a reflection of the interest and demand due to the tax season type cars and trucks,” Beggs continued.

Breaking it down by segment, Beggs noted: "For the first time in at least the past 12 weeks we not only have one car segment, but two that increased in price week over week."

Editors found that entry midsize cars ticked up by $1, while the entry level cars increased by $12.

Black Book noticed that three other car segments declined by $22 or less for the week: full-size cars (down $22), compact cars (down $15) and upper midsize cars (down $11).

Turning over to truck segments, Black Book determined that the overall change settled at a decline of $15, a level Beggs said was similar to the past three weeks.

Editors mentioned that compact pickups have increased five of the past six weeks and were also joined a week ago by full-size SUVs, which increased by $9.

Showing the overall stability of the trucks, Black Book indicated that there were six of the 14 segment types that declined by just $7 or less.

Beggs closed his commentary by elaborating how why the wholesale market appears to be heating up.

“As we gathered and analyzed all the market data this week, another sign of the increasingly active market was an increased level of data on quite a few more late model vehicles, those from model years 2010 through 2012,” Beggs shared.

“From this analysis we included market driven data values on an additional 68 vehicle listings. These were a mixture of highline cars, full-size trucks, entry midsize cars as well as compact and midsize crossovers,” he continued.

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Dealer's Auto Auction Wins Another GE Remarketing Award

David Andrews, Dealer's Auto Auction of the South

Dealer's Auto Auction of the South announced recently that it took home Remarketing by GE Imagination Award honors for the second straight year.

Auction owner David Andrews, general manager Phillip Butler and GE account manager Mark Hopkins accepted the award from Paul Seger — who is the vice president of GE Remarketing — last month in South Barrington, Ill.

The auction is located in Horn Lake, Miss.

"Last year I gave this award to this auction and said they were a diamond in the rough,” Seger said when giving the award. “This year, I can say they are a shining star.”

GE declined to provide the full list of winners to Auto Remarketing.

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U.S. News Releases 2012 Best Cars for the Money Awards

Covering models in 23 different vehicle segments, U.S. News Best Cars recently highlighted its 2012 Best Cars for the Money Awards.

Ford took home the most awards with five of its models selected as winners: Taurus, Fusion, Fiesta, Edge and Fusion Hybrid.

For 2012, officials determined three brands emerged as winners for the first time: Subaru for its Outback, Audi for its Q5 and Jeep for its Wrangler.

Published by U.S. News & World Report, the magazine indicated 14 of the winners were introduced or significantly redesigned in the past three years, showing that newer models can offer good value while also providing the latest features that consumers want.

“You don’t have to choose between a great car and a great value,” explained Jamie Page Deaton, managing editor of U.S. News Best Cars.

“The award-winning vehicles are both easy to live with and easy to afford,” Page Deaton continued. “With 12 brands winning at least one award, it’s clear that a wide range of automakers are in tune with Americans’ desire for a solid value.

“Additionally, 14 of the winners have been introduced or significantly redesigned in the last three years, demonstrating that newer models can offer good long-term value. And with the freshest technology and styling, they’re more fun to own,” Page Deaton went on to say.

The 23 award winners include:

—Affordable Compact SUVs 2 row: 2012 Chevrolet Equinox
—Affordable Compact SUVs 3 row: 2012 Toyota RAV4
—Affordable Large Cars: 2012 Ford Taurus
—Affordable Large SUVs: 2012 Chevrolet Suburban
—Affordable Midsize Cars: 2012 Ford Fusion
—Affordable Midsize SUVs 2 row: 2012 Ford Edge
—Affordable Midsize SUVs 3 row: 2012 Mazda CX-9
—Affordable Small Cars Compact: 2012 Chevrolet Cruze
—Affordable Small Cars Subcompact: 2012 Ford Fiesta
—Affordable Sports Cars: 2012 Mazda MX-5 Miata
—Compact Pickup Trucks: 2012 Toyota Tacoma
—Full-size Pickup Trucks: 2012 Ram 1500
—Hatchbacks: 2012 Ford Fiesta
—Hybrid Cars: 2012 Ford Fusion Hybrid
—Hybrid SUVs: 2012 Lexus RX Hybrid
—Luxury Compact SUVs: 2012 Audi Q5
—Luxury Large SUVs: 2012 Cadillac Escalade
—Luxury Midsize SUVs: 2012 Lexus RX 350
—Minivans: 2012 Mazda Mazda5
—Off-Road SUVs: 2012 Jeep Wrangler
—Upscale Midsize Cars: 2012 Buick Regal
—Upscale Small Cars: 2012 Volkswagen GTI
—Wagons: 2012 Subaru Outback

The magazine reiterated the Best Cars for the Money Awards are geared toward helping everyday buyers navigate what could be a confusing market.

The awards methodology combines quality and value data into a composite score. Within each of 23 model categories, the vehicle with the highest score is named the Best Car for the Money in that category on the basis of safety, reliability and a consensus of industry experts’ opinions.

Officials added value is measured by a combination of a vehicle’s five-year total cost of ownership and the average price paid for the unit at the time the awards are published as calculated by TrueCar.com.

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ALG: No Change in Used-Vehicle Supply Outlook

When revealing its first Industry Report for the year, ALG did not make any significant adjustments to the current used-vehicle supply outlook.

Analysts acknowledged the last major adjustment was made for their July/August 2011 edition.

Looking ahead to when they next roll out a report for the March/April edition, ALG analysts projected to see a positive seasonal pattern.

“Expected declines (depreciation and seasonal pattern) will be within 0.5 points to 1 point on average due to a positive seasonal pattern than what was seen in the January/February edition with varying degrees for particular segments due to differing depreciation rates,” ALG explained.

“Based on the latest economic data, including housing and labor market figures, as well as overall economic growth rates, ALG may make further adjustments in the March/April edition to reflect the current and anticipated economic situation,” analysts emphasized.

ALG contends the general consensus on the outlook of the economy still remains a view of slow growth even with the improvement in labor markets.

“There are still many potential problem areas that need to be worked out including the European debt issues and slow growth in housing prices, among other things,” ALG acknowledged.

“ALG is paying close attention to these metrics, which affect the wealth of consumers, thereby having an impact on current and future big ticket item purchases such as automobiles,” the firm pointed out.

More Economic Commentary

ALG delved deeper into U.S. economic data, beginning with a mention that GDP grew at a 2-percent seasonally adjusted annual rate in the second estimate for the third quarter.

Relative to the 0.4-percent and 1.3-percent growth rates for the two prior quarters, analysts declared this third-quarter number is a welcomed improvement and has dampened thoughts of another U.S. recession.

ALG highlighted consumer confidence also saw a huge bump in November, going from its lowest level in more than two years (40.9 in October) to 56 in November.

“Though this is still far lower than what was seen prior to the recession, and not even close to the post-recession peak, the increase is a good sign as the economy moves further into its recovery,” analysts explained.

“There are clearly still many issues that need to be dealt with, including the prospect of a European recession, which some say has already begun, and the difficulties with the U.S. deficit,” they continued. “However, at present, the recent numbers have at least given some cause for optimism.”

Next, ALG turned its focus on fuel markets, noting there was little change made to the gas price outlook for its January/February edition relative to the November/December 2011 edition.

Analysts indicated oil prices for the last three months through October have been hovering near $86 per barrel while gas prices sat at $3.45 per gallon in October. This is down significantly from the $3.91 that was observed earlier in the year.

“Recent months have seen fairly stable oil and gas prices, though they often fluctuate a great deal from one period to another,” ALG stated.

“With this in mind, ALG expects that gas prices will average about $3.90 per gallon in the 36-month term, and continue to show steady growth in the foreseeable future,” the firm added.

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KBB: High Gas Prices Likely to Stay, but Automakers More Prepared Than 2008 Hike

Alec Gutierrez, Kelley Blue Book

It appears like the U.S. won’t see any relief at the gas pump any time soon and considering some of the volatile concerns overseas, fuel prices may climb even higher, according to Kelley Blue Book.

That said, automakers’ vehicle lineups have never been better-suited for gas-price hikes than they are now, KBB noted. What’s more, with Corporate Average Fuel Economy deadlines on the horizon, the market should see even more fuel-friendly rides in the future.

As for the time being, the Energy Information Administration expects national fuel costs to average $3.48 per gallon this year. That compares to an average of $3.53/gallon in 2011.

"Although initial estimates from the EIA do not suggest fuel prices to hit record highs this year, there are significant risks overseas that have the potential to send gas prices soaring,” explained KBB senior market analyst Alec Gutierrez, who went on to express a few concerns regarding America’s relationship with Iran and its impact of fuel costs down the road.

Oil costs might be steady now, however that could change dramatically in the event of an Iranian oil embargo, Iran following through on its threat to cut off the Strait of Hormuz oil pipeline or if the U.S. and Iran go to war, Gutierrez suggested.

Any of those events could push fuel costs significantly higher and possibly cause another U.S. recession, he added.

“In any scenario, consumers should be prepared to face gas prices of $3.50 per gallon or more for the foreseeable future,” he added. “Increased market share for compact cars and crossovers is likely in 2012 as consumers continue to emphasize fuel-efficiency when making their purchases.”

However, Gutierrez said it’s fortunate that the market has more fuel-friendly these days and stressed that fuel efficiency is stronger “than ever before.” He touted several vehicles unveiled at the North American International Auto Show in Detroit as examples of fuel-friendly rides that may attract consumer attention, including the Toyota Prius C (50 miles per gallon, $19,000 entry-level cost) and 2013 Ford Fusion (37 mpg).

In fact, Gutierrez listed five new vehicles achieving an average of 18.5 percent better fuel economy than their 2008 model-year editions, as the following list indicates.

—2013 Ford Fusion: 37 mpg, 27.6 percent higher than 2008 model-year.
—2012 Toyota Prius: 48 mpg, 6.7 percent higher.
—2012 Chevrolet Sonic: 40 mpg, 17.6 percent higher than 2008 Aveo.
—2012 Hyundai Elantra: 40 mpg, 21.2 percent higher.
—2012 Honda CR-V: 31 mpg, 19.2 percent higher.

“With so many vehicles available that offer excellent fuel economy, the market is better prepared today than at any time in the past to deal with spikes in energy prices,” Gutierrez noted. “Vehicles will only improve their fuel-efficiency ratings in the coming years as Corporate Average Fuel Economy standards continue to put pressure on manufacturers to increase the efficiency of their fleets.”

Of course, some argue the pressure from CAFE standards will hurt the industry in other areas.

In a recent interview with Auto Remarketing, incoming National Automobile Dealers Association chair Bill Underriner – a dealer from Billings, Mont. — voiced his concerns with CAFE, pointing out that hitting the fuel efficiency standard will come with quite a price.

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RVI: Trucks At Top of Wholesale Gains

Amid a modest uptick in used-vehicle prices from the previous month, December’s wholesale increases were led by gains in the larger vehicle categories, as these segments were ahead of the market curve in the year’s final month thanks largely to more moderate gas prices, according to the RVI Group.

More specifically, the RVI Used Car Price Index was 1.45 in December, up 0.6 percent from November and a 12.5-percent hike from December 2010.

“The primary reason for wholesale values increase continues to be the low supply. Even with new car prices seeing declines, the low supply continues to drive wholesale values higher,” RVI vice president Rene Abdalah told Auto Remarketing on Friday.

Breaking the month down, truck segments accounted for the top five sequential increases and six of the top eight.

The segment showing the heftiest increase from November was the full-size van category, which was up 2.6 percent. It was followed by small pickups (up 1.4 percent) and small SUVs (up 1.4 percent), with full-size pickups (up 1.2 percent) and full-size SUVs (up 1.1 percent) not far behind.

“Larger segments were market leaders in month-over-month increases mainly due to the continued decline of gas prices,” Abdalah explained. “Consumers have found low- to mid-$3/gallon prices the norm and have turned to purchasing larger vehicles.”

On the opposite end of the spectrum, sports cars (down 5.4 percent) showed the heftiest decline with luxury coupes (down 2.9 percent) having the second-highest drop.

On a year-over-year basis, all segments were up in price. The most dramatic increase was for subcompacts, which climbed 25.7 percent. Next up were small pickups (up 19.3 percent) and compacts (up 19.2 percent), respectively. Showing the lightest year-over-year gain was the luxury coupe segment, climbing 1.8 percent.

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