Used Car News

INDIANA
Gregg Kobel, vice president/general manager, South Bend Mishawaka Auto Auction, Mishawaka, Ind.:
“Sales are strong. The market has been very strong. There’s been a shortage of cars, but you’ve probably been hearing that for quite a while.
“We’ve got six lanes and we run an average of between 450 and 550 units per week.
“It’s off from this time last year, like other auctions. We’re roughly 150 units off of what we were a couple of years ago.
“That shortage is coming from the consignment side.
“As far as attendance, we’re drawing between 350 to 450 dealers.
“It’s getting stronger than it was this time last year. It’s probably increased in the past year by about 100 dealers.
“Guys are just traveling further and further to find cars.
“We’ve actually got a lot of Chicago guys gravitating out here.
“Normally, we’ll get dealers from all over the area. We’re penetrating Michigan, Ohio, Illinois, and some places in Wisconsin. Our sales staff has really done a fine job for us.
“We’re also getting more dealers coming from the areas we serve. Our dealer body is happy to see our growth, with more dealers coming.
“Some dealers are complaining that prices are too high. But I remind them that the dealers set the market, not the auction.
“The conversion rate is more than 70 percent.
“Our volumes are made up of 75 percent dealer consignment and 25 percent fleet-lease.
“Our fleet-lease volumes are very steady.
“I think there are some lease volumes out there that have been put in service during the past two or three years, so I think there’s some opportunity for an increase in that market.
“We also run some salvage units before our regular sale. We run an average of about 25 units.
“We also hold some off-site sales, but we haven’t had one of those in a while. For example, every other year we’ll do an auction for Indiana Toll Road (which is privatized).
“They’ll sell everything from street sweepers and pick-up trucks to electronic sign boards and office equipment.
“In terms of what’s selling best, it’s the low-mileage, front-line ready cars that just break the bank.
“I think what’s struggling are the real low-end cars.
“It’s the prices, because the price of steel is down. So the scrappers are laying off right now.
In the past, scrappers were offering up to $400 or $450, now they’re offering $200. That’s just fluctuated with the cost of scrap.
“Overall, the average price here is right around $4,000. That’s up from this time last year.
“It’s probably up about $600.
“We recently had a 25th anniversary sale. It was excellent. We had a super turnout and ran about 715 cars.
“We sold 63 percent that day. We lit them up.”
NEW YORK
Scott Prankie, owner/general manager, Rochester-Syracuse Auto Auction LP, Waterloo, N.Y.:
“Sales are starting to pick up a little more. It’s been a little slow during the summer.
“We’ve got three lanes and we’ve been running about 300 units through the lanes on average. That’s down a little, but close to what we were last year at this time.
“Supply has been tight, like everywhere.
“Sales percentages are right around 60 percent, but that’s down a little from this time last year.
“We’re getting close to 300 dealers in the lanes. That’s about the same as last year.
“Dealers come here from the Syracuse, N.Y., area, the Rochester area and further down south in the state. Mostly our dealers come from New York.
“We’re starting to get more Internet action.
“Our dealer consignment makes up about 90 to 95 percent of our volume. Fleet-lease makes up the rest.
“Our fleet-lease volume is a little bit of everything. We’ve got units from ARI, Wheels Inc., Emkay Inc. and repossessions.
“Repo volumes are starting to increase a little right now. They were steady during the summer.
“I think the demand for the higher-mileage vehicles is down. The lower-mileage cars are selling strong and steady. The good stuff is holding up.
“But I think the demand for the higher-mileage vehicles will pick up as the economy gets better.
“As far as who’s doing better, the independents or franchisees, I’m not sure.
“I expect truck sales to start picking up by the end of September.
“We also have Internet sales. We’ll post our vehicles on OVE.com.
“We just started running vehicles on Simulcast in the last few weeks.
“Our average price overall is about $5,000.
“The auction does some special events.
“We have a birthday bash coming up soon and we’re giving away an ATV in an upcoming sale.”

ALABAMA
Ronnie Ellison, owner, Ronnie Ellison Auto Sales Inc., Celera, Ala.:
“I’ve been in business here about 22 years. I have one location. For the first 19 years, I had two locations with my brother. But he died three years ago and so now I have one location.
“I’ve got five full-time employees, counting myself.
“I usually keep about 35 to 40 vehicles on the lot. That’s about the same amount of vehicles as this time last year.
“Sales may be a little bit off, but I still try to keep a good 45-day supply.
“I average about 25 sales a month. Right now, I’m about nine units behind last year’s sales.
“I sell buy-here, pay-here.
“We had a  very good tax season this year. The only problem was the Cash for Clunkers program. We couldn’t find enough inventory at a good price to replenish our units. We’re just now finding some of the larger units at a good price, like the Chevy Z-71s, the Tahoes.
“But the mileage was through the roof.
“I’ll probably sell 70 percent trucks and SUVs and 30 percent cars.
“My inventory is about 50-50 between domestics and foreign cars. On the trucks and sport utilities, however, it’s mostly Ford, Chevrolet, Dodge and GMC.
“Mostly, I get my inventory from auctions around here.
“I also have a couple of new-car dealers up here in town that have closed bid sales and I will play Russian roulette with them.
“The average mileage on cars here is between 120,000 and 150,000. The mileage has gone up on the larger SUVs and GMC Z-71s. But I see them coming back and I think by September the prices will start coming back down on those and the mileage will be coming down.
“My average price car here is $6,995. Yes, about the same as last year.
“The average model year is around 2000. I try to stay between 1997 to 2003 or 2004.”
“It’s the mileage that’s increased. I’m having to pay the same price for a car with about 25,000 more miles on it.
“For marketing, I have my own website and I advertise on Cars.com and AutoTrader.com. I don’t do any radio or television. I also use local Mule Trader magazine.
“I recently sold a 1998 Dodge Ram 1500 extended cab four-wheel drive the other day. It had 202,000 miles. I sold that for $5,500.”
SOUTH CAROLINA
Luke Godwin, general manager, Godwin Motors Inc., Columbia, S.C.:
“We’ve been in business 25 years. My father, Ed, owns the dealership.
“We have this location and we’re half-owners of another location in West Columbia.
“At this location, we usually keep about 45 cars on the lot. That’s the same as this time last year, but it’s been a little harder to find cars this year. It seems during the past two years it’s been difficult to find cars. I mean, five years ago, at this time of the year, you could find anything you wanted.
“The majority of our cars come from auctions. I buy all the cars here and I use three auctions regularly. I also buy online. I’ll buy cars in town (off the street) and from new-car dealers, too.
“We probably wholesale and retail about 35 cars a month. On the retail side alone, we’ll sell in the high 20s.
“We’ve not really seen a drop-off in sales over the last three or four years.
“Our average retail price has gone up significantly in the past two years. We’re probably at $9,000. Last year, we’d be at around $8,000. Five years ago, it was $6,500 to $7,000.
“We’ve just been able to find a little higher priced car easier than it is to find a lower priced car.
“This is a majority buy-here, pay-here dealership. We used to be 100 percent buy-here, pay-here, now we’re about 80 percent. The other 20 percent is from Internet sales, where they pay cash or have their own financing.
“We’ve been in buy-here, pay-here for 20 years and we used to sell stuff for $2,500 and a (few) hundred down. Now we’re selling cars for anywhere between $8,000 to $13,000 and get more down payment.
“Our average down payment is about $2,000. They’ve moved up $500 to $700 from what it has been in the past.
“The contract term has gone up. We used to keep contracts at no more than two-and-half years. Now we’re seeing with the higher priced cars that we’ve had to move to three-year terms.
“Our average model years are 2005 or 2006. Our average mileage is right at 100,000. I’ve pushed the mileage down with higher priced cars.
“Depending on the month, we’ll carry half cars and half SUVs. We don’t carry pickups.
“We carry half domestics and half imports.
“About 50 percent of our advertising is on the Internet and the rest would be print through local car shopping magazines. Our website has allowed us to post to Craigslist, AutoTrader, eBay and Cars.com.
“I recently sold a 2003 GMC Envoy XL, with 82,000 miles. I sold it for $11,900.”

IOWA
Mark Greb, owner, Plaza Auto Auction, Mount Vernon, Iowa:
“We can run five lanes here but we’re currently running four.
“Sales percentages have been in the mid to high 60s, though the last couple of weeks we’ve seen them dip into the low 60s.
“We’re averaging a 5- to 7- percent increase in sales compared to last year.
“I attribute that to the demand for used vehicles exceeding supply.
“Dealers are coming from further distances to bring their cars, because they know they’ll get good prices here.
“Volumes seemed to hit a low last year, we’re starting to see a gradual increase. It’s not near the 2005 numbers.
“We’re seeing dealers consign cars who hadn’t been consigning cars.
“Dealer count is up over last year, though we’re down from the peak. We are re-registering dealers who hadn’t been here recently and we’re registering probably five to six new dealers every week.
“We’re averaging just under 270 dealers. They’re coming from southern Wisconsin, western Illinois, northern Missouri, the eastern part of Nebraska and all over Iowa. Traditionally, we draw from a 150-mile radius.
“About 10 percent of our business is fleet-lease.
“Our biggest decline is probably in repossessions and it seems to be off around the country.
“We also have a quarterly motorsports sale. That’s increased from last year when we were doing them twice a year. We’re getting right about 100 units quarterly. We’ve been experiencing a 60 percent sales rate.
“Those units include motorcycles, jet skis, boats, trailers and lawn mowers. We also have a few collectible-type cars, but those generally do not sell.
“We also sell salvage monthly, but it’s not something we really concentrate on. We offer about 30 a month.
“Our average price overall is about $3,200 to $3,400.
“In the Midwest, General Motors Ford and Chrysler products continue to do well. There was a drop-off with the Toyota brand, but even that is starting to surge again. Small pickup trucks are doing well.
“The hybrids have struggled with gas prices steady at $2.50 to $2.60 a gallon recently. Ford hybrids have especially struggled.”
OREGON
Jerry Hinton, general manager, Brasher’s Portland Auto Auction, Portland, Ore.:
“Sales have been very brisk. Conversion rates for the first two quarters have been extremely high.
“We’ve been averaging in the mid-60 percentile since the beginning of this year. The market has shifted in the last three or four weeks, however. There’s been about a 10-percent drop conversion rates since then.
“We’re still well above what we were doing this time last year.
“We’re running about 1,000 cars per week, on average.
“I recently read that there is an 8.2 percent reduction, on average, of consignment nationwide. We’re about 9 percent off (in volume).
“Our dealers in the lanes over the last few years have actually doubled. We’re getting about 650 dealers.
“Dealers are having to go outside their normal fishing holes to get cars. They’re coming from longer distances now. With reduction in inventory, (that trend) is going to be that way industrywide at least through 2012.
“We normally get bidders from the seven Western states: Oregon, Washington, Montana, Idaho, Utah, California and some from Arizona.
“Dealers are just hanging on. I don’t think there’s any great optimism out there.
“The upside is our reduction in repos won’t be as great as other areas. Our repossessions will continue to be strong, even though they peaked last year.
“The commercial fleets also peaked last year and the rental fleets have gone more to risk programs, therefore they’re having to sell the cars themselves. So now you’re seeing 40,000, 50,000 or 60,000 miles on those cars.
“The one uptick is that dealer cars are starting to come back a lot heavier. That’s coming back. I forecast the last half of the year will be 40 to 50 percent higher than what it’s been.
“Our fleet lease volumes are comparable to what they were this time last year. It makes up about 40 percent of our total volume.
“Our captive finance accounts include Honda, Acura, Volkswagen and Audi.
“The biggest change with the captives is how much is selling upstream. Up to 60 percent is selling upstream.
“We also offer a GSA sale once a month. We get about 600 units a year.
“We run a recreational vehicle sale and get 30 or 40 of those a week, but we really don’t go after that market like our sister auction in Eugene, Ore. That’s their niche.
“Our average price in the lanes overall in the second quarter is about $7,500.
“The low-end cars, $4,000 and below, are doing quite well, because there’s not a lot of lending going on in the market place. Luxury cars are not doing as well.”

MASSACHUSETTS
Bill VanLaarhoven, owner, Martin’s Auto Sales, North Easton, Mass.:
“We’ve been in business for 20 years, eight years in this location.
“I have 17 vehicles on the lot. We carried a similar amount this time last year.
“On average, we retail about 12 cars a month. That’s also about the same as last year.
“However, the profits are down per unit. That’s a result of three factors.
“One, the cars cost more to buy.
“Second, the cost of repairs has increased, so it costs more to service the car. Also, cars that are traded in need more work.
“Third, it’s hard to get people to pay more for the car, so you have to negotiate a price based on their ability to get financing.
“We do straight retail and some subprime with three or four different companies. That’s increased about 15 percent from last year.
“We get our vehicles from all different sources; auctions, dealers, from the newspaper or off someone’s in-law who’s trying to sell their car.
“I would definitely say it’s harder to find inventory, even for a small dealer like me. I don’t have to have a lot of cars. I wouldn’t want to be a big dealer trying to supply a store with 100 cars a month.
“But I’m going to more auctions to be more selective about what I buy.
“I’m willing to pay more for a nice car, but there are limits to that, too.
“We recondition vehicles before they go out on the lot. We farm that out.
“We’ve been using the same people for years and they do a good job.
“Actually, we negotiated a better deal because we now pay up front. It’s a little way of saving a few dollars.
“We’re getting bigger down payments because the banks won’t do some deals unless we get bigger down payments.
“I’m now trying to get $2,500 to $3,000 from the customer.
“The average model year is probably a 2004. The average mileage is about 80,000.
“We currently have more cars than trucks, but that will change as we look toward the fall market.
“We recently sold a 2005 Dodge Magnum It had 69,000 miles and it sold for $12,000.”
WASHINGTON
Bill Heald, president, Maple Leaf Motors, Tacoma, Wash.:
“I’ve been in business 25 years.
“I have two locations, about 10 miles apart. They have similar inventory.
“I carry about 140 vehicles in stock.
“That’s about 50 fewer than what I was carrying this time last year. It’s just more difficult to buy the cars I want at the price I want to pay for them.
“There’s also no sense in carrying more cars than I need.
“My vehicles are all paid for. (I don’t floor plan).
“I sell about 35 to 40 cars per month, in that range. That’s probably down 20 percent, maybe 25.
“A lot of that (dip) has to do with the economy, people listening to bad news and thinking everything’s bad.
“ About 85 percent of our deals are buy-here, pay-here, with the rest being cash deals.
“I have my own related finance company.
“Tax season was OK, but it was short. It didn’t seem to last as long as normal. It was a good three- to four-week run.
“We get 15 percent as a down payment, which equates to probably $900. That hasn’t changed from this time last year.
“The average mileage on our vehicles is about 120,000. The average model year is around 2000, 2001.
“We carry more cars than trucks, probably 45 percent cars, 305 percent SUVs and vans, with rest being pickups.
“My inventory is probably 65 to 70 percent domestics.
“Our averaged price is probably $6,000. We haven’t had to raise our prices. We’ve been able to control that pretty much. I have a formula and I will not buy outside the formula.
“I buy everything from dealers, all new-car dealers. It’s been a little bit harder, but to be honest, I haven’t had to buy as many cars because is off.
“I was really concerned about inventory when Cash for Clunkers came up. But I’ve been able to pull through OK.
“I thought it was going to be worse than it was. I still think it was a bad deal. They destroyed an awful lot of cars that worked for me, I know that.
“Every once in a while I’ll buy something that’s outside of my box, but I’ll buy it with the thought process that it will be just a trial deal to stimulate a sale.
“I’m not really a pessimistic guy, but I am a little pessimistic for the next six months. I think the second half of the year is going to be tough. I think there are a lot of dealers who aren’t in a good financial position themselves to be able to pull through some of the (challenges).
“I do sell some stuff at the auctions and watch the lanes pretty closely and the values of cars have not dropped at all and that surprises me.
“The last vehicle I sold was a 1999 Ford Expedition for $9,999. It had 147,000 miles.”