Tag Archive | "used vehicles"

Rapid Recon Salutes 100 Years of NADA and Vehicle Reconditioning

PALO ALTO — In 2017, the National Automobile Dealers Association (NADA) celebrates 100 years serving franchised automobile dealers. Next year also marks the centennial of the first evidence of vehicle reconditioning, according to a provider of reconditioning workflow time-to-market software solutions.

Rapid Recon issued a press release today saluting the NADA for 100 years of faithful service to the automobile industry. It also offered a brief look into the history of the industy, the association and the reconditioning.

The NADA story began in 1917 when 30 auto dealers traveled to the nation’s capital to convince Congress not to impose a luxury tax on the automobile. They successfully argued that the automobile is a necessity of American life, not a luxury. From that experience, the NADA was born.

“We’re excited to be an exhibitor at NADA in New Orleans for its 100th anniversary, a proud organization for a great industry,” said Dennis McGinn, founder and CEO of Rapid Recon. “It is remarkable how many people today make their living working in and supporting the American automobile dealership, nearly five million men and women.”

The company will be exhibiting in Booth No. 5417 at the NADA Convention & Expo, which will be held at the New Orleans Ernest N. Morial Convention Center on Jan. 26-29.

Some industry milestones, sourced from The American Car Dealership, show how quickly the franchised auto dealer network developed:

  • 1896: The first franchised new-car dealership opened in Reading, Pa. It sold Winton automobiles, one of the earliest successes of the emerging automobile manufacturing business
  • 1899: First automotive showroom opened in New York City, displaying Winton cars
  • 1905: Cars first sold on an installment plan. Two dealer groups formed from which would become the National Automobile Dealers Association
  • 1917: NADA officially organized with 15,000 dealers, representing 600 brands, many of which never produced a working vehicle or sold vehicles
  • 1933: First NADA Used Car Guide
  • 1934: NADA membership reaches 30,000
  • 2017: NADA membership totals 16,000 new car and truck dealers, with 32,500 franchises, both domestic and international members, representing 38 brands.

Recon Recognized

As for recon, there was no need for reconditioning at first, at least not as it exists today. What trade-ins there were in the industry’s beginning were animal-drawn wagons and similar conveyances, according to information collected by Rapid Recon. Undoubtedly, some of America’s first automobile dealers spiffed up those vehicles, replacing a wooden wheel or two, repairing a broken seat or strengthening a weak axle spring to give a worn-out buggy “like-new” appeal for buyers.

By the time the NADA was founded in 1917, the sufficiency of units in operation meant a growing opportunity for used-vehicle sales. According to motor vehicle registrations in 1917, as compiled by the U.S. Bureau of Public Roads, nearly five million cars and trucks were registered. While difficult to calculate how many of the 7,653 million vehicles registered from 1914 until then would have still be in operation, it’s likely many of them flowed back to dealers as trades.

By late 1916, creative rebuilders were putting old cars, now “reconditioned,” back on the road.

Motor Age magazines from the 1920s discuss reconditioning in he role of used-car sales success. The May 11, 1922, edition presented two ideas: “The used-car company will sell its car at cost, plus reconditioning, plus sales expense, plus a normal profit.” In a separate article, “The National Used Car Company Plan,” the publication floated the idea of centralized used-car operations and reconditioning by zone — the thought then being used-car sales were a distraction to new-car salespeople.

Most reconditioning in those early days was cosmetic, though there was a growing recognition of the need to make those cars both safe and somewhat “reliable,” according to Rapid Recon’s research. During the Great Depression, reconditioned vehicles supplemented dealers’ new-car opportunities.

The beginning of World War II is recognized as the birth of intentional reconditioning, which morphed into the operation that’s now integral to new-car dealership used-car departments. With new-car manufacturing curtailed by the U.S. government from 1942 to late 1945, new-car supply was virtually nonexistent. Used cars were in demand, and dealers survived by sourcing and refurbishing those vehicles. Service, parts, tires and other related opportunities became dealers’ bread-and-butter, not unlike today.

Throughout the ‘50s and ‘60s, most dealers viewed reconditioning as a necessary evil and as a means of disposing used cars taken in trade during that era of the two-to-three-year trade cycle.

Today, reconditioning continues as a discipline for cosmetically and mechanically upgrading used vehicles so they’re safer and more reliable and can command higher sales grosses. Recognizing the faster they can get used cars from acquisition to the front line to sell them, many dealers today are adopting time-to-market workflow software to reduce this cycle to three to five days, not the average and costly eight to 15 or so days, McGinn noted.

This need has expanded considerably in recent years with the flow of off-lease vehicles, which OEMs ask their dealers to market as pre-owned certified models. Certified pre-owned worked its way into the automotive vocabulary when Lexus launched the first CPO program in November 1993. Toyota’s program started in 1996. Most manufacturers and their dealers today offer certified pre-owned vehicles to buyers.

A Dealer’s Recall

One expert industry veteran, still in the business today, spent his earlier career working for Garber Buick in Saginaw, Mich., which was Buick’s first store. Its owner Gary Garber was one of General Motors’ first 13 distributors. Working in that historic environment gave this industry veteran opportunity to review and study old dealership and industry records, from which he shared recently, including perspectives on attitudes about vehicle reconditioning through the years and how over time recon practices changed.

“In the ‘50s and ‘60s, recon was patching vehicles up — making them look good cosmetically, but just good enough to pass off to somebody else and make some money on them,” he recalled.

It was not until the late ‘70s and early ‘80s that dealers began to take a serious interest in reconditioning used cars. That work, however, was predominately sublet. It was the advice of industry consultants, Garber said, that began to convince dealers they needed to bring reconditioning into their own operations to keep that profit internally.

About this time too, he added, dealers, seeing the growth in third-party service contract sales, formed their own off-shore service contract companies to retain those profits themselves. As service contract professionalism grew, those companies’ management teams, in order protect their risks, pushed for higher reconditioning standards. Better reconditioned vehicles, in turn, helped attract more used-car buyers, making used-car departments integral to dealership profitability.

As we move toward a new decade, industry changes will continue to keep manufacturers, dealers, and solution providers watchful. The huge volume of vehicle open safety recalls in recent years is one concern. Fortunately, use of recall management software woven into the reconditioning process helps identify affected models so their recall issues can be addressed before those vehicles reach the frontline and the consumer, whenever the recall is announced in the recon cycle.

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New-Vehicle SAAR Falls Below 17 Million in August, Manheim Reports

ATLANTA — The seasonally adjusted annual rate (SAAR) for new vehicles fell below 17 million for the second time this year in August, according to Manheim. The firm, however, said the drop should not be cause for concern, noting that it “may be a good think.”

A lower SAAR, the company stated, points to manufacturers not overly pushing the market. Although incentives in August were up compared to a year ago, they were flat sequentially. This was caused by a lot of stair-step money not being dispersed during the month due to dealers not reaching their quotas.

Preliminary numbers also show that a reduction in lease incentives might have caused a year-over-year decline in lease penetration rates in August, according to the company.

While leasing and new-vehicle sales stumbled this month, used-car sales are thriving.

“In the first seven months of 2016, used unit sales by both franchised and independent dealers increased at the fastest pace of this recovery, and more than twice as fast as last year. While new retail unit sales have declined this year, used unit sales are up. That’s normal for this point in the automotive cycle, and we expect it will continue into 2017,” read Manheim’s Used Vehicle Value Index report for August.

Certified pre-owned sales rose 6% in August compared to a year ago and 4% year to date, according to Manheim. The company said it expects full-year sales to reach a record 2.7 million.

Wholesale used-vehicle prices declined slightly in August, according to Manheim. However, the recorded Manheim Used Vehicle Value reading for the month was still 2.1% higher than the same time last year at 126.9.

According to Manheim, wholesale pricing this year has been supported by a retail market that has experienced higher volumes, stabilizing margins and respectable turn rates. But primarily, Manheim stated, wholesale pricing has been supported by the improved efficiencies in dealers’ used-vehicle operations.

A couple issues that played a part in last month’s decline in used-vehicle pricing, according to Manheim, were a lack of growth in hourly earnings and a cut to the average work week during the month. In terms of aggregate demand, Manheim added, the combination of these factors equated to a loss of 300,000 jobs during August.

For the second consecutive month, the number of people employed part time for economic reasons grew in August, the company stated.

“How did the financial markets react to this? With glee. They took it as a sign that rates would not be hiked at the September meeting, even though the normalization of monetary policy is long overdue. Federal-funds futures put the odds of a rate hike this month at only 32%, and only 60% by December,” Manheim noted in its report.

However, this mindset is misguided, according to Manheim. The company said it expects employment growth to slow over the next year and, and in order for the market to thrive, employment needs to grow. But low interest rates will not help employment growth, the firm added.

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July’s 2.3% Drop in Wholesale Prices Ties June Record, NADAUCG Reports

MCLEAN, Va. — Wholesale prices for vehicles up to eight years in age fell 2.3% in July, tying June for the biggest drop recorded so far in 2016, according to the NADA Used Car Guide. As a result, the firm lowered its seasonally adjusted used vehicle price index 1.1% to 118.9 .

The largest decline in wholesale price was recorded in the subcompact car segment, which saw prices drop 3.9% compared to June’s figures. Mid-size and compact cars followed a similar trend, with each segment recording an average price decline of 2.9% compared to the prior month. Prices for large cars fell 2.5%, higher than the industry average but better than the 2.8% decline the segment experienced last year.

The large pickup and large utility segments continued to show strength, with prices for each segment falling 0.5% and 0.3%, respectively, compared to the prior month. While other large vehicle segments experienced slightly higher depreciation, the majority of the declines were still under the industry average.

Mid-size pickup prices fell 1.4%, compact utility prices dropped 1.7%, mid-size utility prices dipped by 1.8%, and vans dropped 2.7%.

According to the NADA, the luxury segment was a mixed bag in July. Small luxury vehicles experienced greater losses, while mid-size and large luxury vehicles fared slightly better. The biggest decline in the segment came from luxury compact utility prices, which fell 3.1% from the prior month. Compact car prices fell 2.7%, while luxury mid-size cars and luxury large car prices fell by 2.1% and 1.8%, respectively.

Year to date, used-vehicle prices were 12.5% lower than they were at the end of 2015. Last year, depreciation reached a lesser 9.6% over the same period, according to the NADA.

Compared to all of 2015, subcompact prices have fallen 19.9% year to date. Compact car prices have fallen 16.2%, and mid-size and large car prices have fallen 14% to 14.4%. Year to date, large pickup prices are down 6.8%, while large utility prices are down 5.7%. Mid-size pickups are down 6.3% compared to full-year 2015.

The only segment to experience an improvement in depreciation relative to last year was the large utility segment, which saw prices fall 5.7% through July. For the same period last year, wholesale prices fell 7.1%, the NADA Used Car Guide noted.

Sales volume at auction was also on the decline during July. However, the firm noted, the decline is typical for the time of year. July’s decline marked the fourth monthyl decline in a row. On a year-to-date basis, however, volume is up 6%.

Looking forward, depreciation is expected to accelerate as the market enters what is typically the softest part of the year, according to the NADA. In next month’s report, the NADA Used Car Guide expects used-vehicle prices to fall even more than they did in July. August’s used-vehicle prices are expected to fall by 2.5% to 3% compared to July’s figures. Subcompact car prices are expected to drop by about 3% on a monthly basis, while compact, mid-size and large car prices are expected to fall 2.7%.

Compact utility and mid-size utility prices are expected to decline 2.3%, while mid-size van prices are expected to fall 2.7%. Large pickup and utility pricing are expected to suffer the softest decline at 1.8%, while luxury segment losses are expected to average about 2.5%, according to the firm. In September and October, prices are expected to fall around 3.2% to 3.7% per month.

NADA Used Car Guide’s full-year forecast for 2016 has prices down by an average of less than 5% on an index-basis from 2015.

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GWC Warranty Announces Product Expansion

WILKES-BARRE, Pa. – GWC Warranty, the best-in-class provider of used vehicle service contracts and related finance and insurance products sold through automotive dealers, has announced an expansion to its industry-leading product set.

Highlighting the changes to GWC’s expansive product set are upgraded terms for exclusionary coverage levels. GWC is now offering exclusionary coverage on vehicles with starting mileage as high as 150,000 miles. Additionally, GWC is introducing new exclusionary terms of three and six months to provide dealers with even more options for providing a higher quality of coverage that rivals a manufacturer’s factory warranty.

“At GWC, we understand that our dealers are a diverse group with vast array of product needs suited to their individual businesses,” said GWC CEO and President Rob Glander. “These changes add to our already expansive and flexible product set while giving dealers more options to choose from when creating a service contract program that is tailored to their specific business needs.”

In addition to the improvements to GWC’s exclusionary offering are upgraded terms for select stated component plans. Now, stated component coverage is available on vehicles with starting mileage as high as 200,000 miles. This new mileage eligibility is complemented by stated component term lengths of three and six months – all designed with flexibility in mind to meet the diverse needs GWC’s dealers and their customers.

Starting today, GWC dealers can log into the GWC Dealer Portal to view the new mileage eligibility and term lengths available to them as well as pricing for these newly added plans.

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Vehicle Depreciation Accelerates in Q1, Black Book Reports

LAWRENCEVILLE, Ga. — Year-over-year depreciation accelerated during the first quarter of 2016, demonstrating that the market has reached the peak of the spring season, according to Black Book. During the quarter, vehicles depreciated at a rate of 3.6%, compared to 0.6% during the year-before period.

Additionally, Black Book data found that the average price of used vehicles for model years 2010-2014 declined 0.9% during March. Full-size vans led all vehicle segments with the highest depreciation rate of 2.2%. Trucks followed with a depreciation rate of 1.3%, and cars experienced the least amount of depreciation at 0.4%.

“While this is the time of year when values see noticeable strength, it’s very apparent that this year’s spring market isn’t as strong as it has been the last few years,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book. “More than ever, it’s important for dealers and remarketers to pay close attention to the data to spot the trends that can shape their inventory strategies for the remainder of the year.”

Not all vehicle segments experienced depreciation in March, however. Sub-compact crossover values remained flat during March, ending the month with an average price of $12,218. Full-size cars — the best performing segment during March — experienced a 0.7% gain in value during the month, ending the period with an average price of $12,768. Sporty and compact cars both saw increases of 0.6% during March, bringing those segments’ average prices to $13,818 and $8,202, respectively.

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GWC Warranty Unveils New Website

WILKES-BARRE, Penn. – GWC Warranty, the best-in-class provider of used vehicle service contracts and related finance and insurance products sold through automotive dealers, has introduced a new, modern, refreshed version of GWCWarranty.com.

Highlighted by a renewed design that is easy to navigate with helpful interactive content and intuitive contact tools, the new GWCWarranty.com was designed with dealers and their customers in mind. Most notably, the new GWCWarranty.com boasts new tools to find a local dealer consultant, locate a nearby service facility and look up coverage, as well as a more dynamic and responsive design optimized for desktop, mobile and tablet browsing.

“At GWC, we realize that our website is heavily relied upon by our dealers and their customers across the country as a source for information about our business,” said GWC CEO and President Rob Glander. “This new website helps our online visitors more easily locate the information they need when they need it. It is a true reflection of the best-in-class service we commit to delivering each and every day.”

In addition to more interactive content that provides visitors a fresh look into how GWC provides its unrivaled “No Worries, Just Drive” experience, those clicking through the new GWCWarranty.com can enjoy easier access to helpful information and avenues to communicate with GWC. Informational videos and concise FAQs help visitors learn how to file a claim, request a duplicate ID card and renew, upgrade or transfer a contract. Meanwhile, simple, direct contact forms allow users to request more information or submit feedback with the click of a mouse.

Also receiving a facelift through this process was GWC’s award-winning blog, Accelerate. Winner of the 2015 Automotive Communication Award for Best Business-to-Business Blog, Accelerate has delivered helpful news and know-how to nearly 6,500 visitors since its inception in April 2015. The new format is designed to allow more seamless browsing so dealers can scan historical blog articles for topics, tips and best practices most useful to them.

“In the past two years, a significant increase in traffic to GWCWarranty.com brought about the need to simplify and improve the GWC Warranty online experience,” said GWC Vice President of Marketing Kate Eltringham. “We are confident that this new website is constructed in a way that makes vital everyday information about GWC more readily accessible for dealers and drivers alike.”

To learn more, you can visit the new website at www.GWCWarranty.com.

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