Jerry Hinton, general manager of ADESA Portland, is the incoming president of the National Auto Auction Association. He has been married to Dawn for 33 years. They have two children, Joel and Emily.
UCN: Could you tell us about your background and how you got into the automotive business?
Hinton: As I was finishing my bachelor’s degree in finance from Brigham Young University, Frank Brasher – the founder of Brasher’s auctions – was recruiting at BYU so I interviewed with him. I had no idea what a wholesale auto auction was. In my mind, it was just a practice interview.
He invited me to his sale in Salt Lake City the next day. I decided to work for him for a year before I went to law school full-time. Before I got to Fontana, which is where I was supposed to go, Larry Brasher gave me a call and I ended up starting in Sacramento in 1986. From there, I ended up going to law school in the evenings at McGeorge (School of Law) in Sacramento and then just got a joint MBA from National University.
I moved up to Oregon when Larry bought the Northwest Auto Auction from the Peterson family. I finished my law degree up in Oregon. I’ve been able to use my law degree in my business dealings over the past 30 years. It’s been very instrumental in helping to navigate this litigious world that we live in and not be intimidated by the legal system.
So I managed the then-Brasher’s Northwest Auto Auction from 1991 through 2001. In 1997, I moved up to Portland and managed what was then Brasher’s Cascade Auto Auction. So from 1997 to 2001, I traveled back and forth and managed both auctions. Then in 2001, I focused on Cascades, which would later become Brasher’s Portland (and is now ADESA Portland.).
UCN: One of the biggest challenges of the last couple of years have been the massive recalls. How have the auctions adjusted to the effects of the manufacturers’ recalls?
Hinton: We’ve worked very closely with our customers to help them navigate through their requirements with the recalls. Some of the biggest challenges, quite frankly, are just making sure there are parts available and space to handle the volume. We’ve always worked closely with our clients to accommodate them, with whatever their needs are.
As far as the NAAA’s position, I think the auctions have always been accommodating to our customers. We’ve always been very nimble and very flexible. From the beginning of the association, we’ve always been able to adapt to the marketplace.
UCN: Can you discuss how the NAAA has responded to the increase in federal and state regulations that have affected businesses and their efforts to comply and grow?
Hinton: It’s very similar to the recall issue. We’re very flexible in adapting to the marketplace for our customers. We’ve provided the level of compliance that our customers have requested and that the federal government has required of them. So the NAAA and International Automotive Remarketers Alliance have joined together to provide compliance information and access to resources. The National Automotive Finance Association has also provided a lot of resources that have been utilized by the industry.
The NAAA’s been very proactive in helping members and associate members by providing resources (to help them in these areas). The NAAA has been fantastic in providing these resources through yearly lobbying efforts on the Hill.
We have a legislative committee and a PAC committee that help bring our customers, members and associate members together. They work to navigate through those federal and state regulations. We’re creating relationships with our legislators so that when there is an issue, they know who we are and we can talk with them.
We’ve also joined with the National Automobile Dealers Association and the National Independent Automobile Dealers Association in various efforts to squash some potentially damaging (legislation/regulations) and it’s been great to work together with them. It’s been a safe haven for our members and associate members.
UCN: What’s been the attitude of your members during these times?
Hinton: I think we’ve been very blessed to have really good years since the Great Recession. Most auctions are making hay when the sun shines. We’re all excited with having more cars in the industry. We’re certainly watching down the road to get ahead of any (problems). There’s a lot of excitement in the industry.
UCN: Digital marketing and selling continue to grow on the wholesale/auction side. What are the current challenges/issues for auctions in balancing between brick-and-mortar and online business?
Hinton: It’s nothing new. We’ve been doing internet sales or online sales for over a decade now. Whether it’s the internet or in-lane, the industry has adapted to those changes. For 69 years, the industry has always been nimble to whatever has come up. We recognized that this is something our customers want and we needed to be a part of. It’s something that’s evolving and we’ve been handling that. No problem. Most auctions if not all within the NAAA have a simulcast feature that provides that accommodation to our customers.
The dealer body has certainly evolved into wanting that service, particularly on commodity-type, later-model vehicles that have very few variables. The country has shrunk in that dealers are requiring cars from all over the country, not just little fishing holes they used to go to in the past. Dealers are proactive, plus you have Millennials who were born with an iPad in their hands. Even the older guys are adapting.
But there will always be a home for brick and mortar.
UCN: Have dealers changed the types of auction services that they use?
Hinton: Thirty years ago, dealers had their working capital floored by banks. That’s not the case anymore. Flooring companies have really taken off over the last 20 years. Each auction has a finance arm. There are also lots of independent flooring companies that provide financing.
That’s one of the significant adjustments and changes dealers have seen. That whole industry has really developed on the finance side specifically for the auto industry and the auction industry.
Dealers certainly want more certification programs. The NAAA offers a great certification program that the chains and the independents utilize. That’s been fantastic.
Another thing the NAAA has done has consolidated all of the arbitration rules from frame and flood to mechanical. You can’t put enough importance on that. Dealers used to have to remember different arbitration rules at every single auction. Even the chains had regional variations in arbitration rules. So you can’t understate the importance of the consolidation of those rules.
UCN: The nation’s economy has been a mixed bag, so what’s your outlook for the rest of 2016 going to 2017?
Hinton: It’s been very good the last few years for auctions and I’m very hopeful that it will continue to be good. I’m not an economist so I won’t pretend to forecast that. Certainly a lot of people are looking toward to the election to see who becomes president. I’m sure that whomever is elected will be watching the automotive sector.
UCN: Can you talk about how consolidation (i.e. ADESA’s acquisition of Brashers) has affected the industry and auction market?
Hinton: All of the Brasher auctions in this acquisition have been able to retain their personality and run on the same platform as they did before. I think it’s more of how the consolidation has affected the market overall. We’re excited about that footprint that ADESA has now that they didn’t have before on the West Coast. It’s a good thing for (ADESA). It’s great for NAAA and provides our dealers with a more consolidated mass of vehicles to look at without have to go to different areas. There are fewer pinch points, fewer user names and passwords. So it’s easier to do business.
UCN: Outside of the technological advances, what are the biggest changes in dealer services that you’ve seen since you started in the auction industry?
Hinton: One of the biggest changes over the past 10 or 15 years is the amount of post-sale inspections done. That’s a function that really didn’t exist 15 years ago, but all of the auctions provide that now. That goes to the fact that the average dealer is not a backyard mechanic anymore and requires a professional on site to review that car for him on his behalf. They need the services the auctions provide.
Also so many members have provided additional resources for the industry, like KAR Services and its safety program or Manheim and the grading system. Those are just two examples of businesses that could have kept that for themselves but they allowed the industry to adopt those and make it simpler for our customers and clients.
UCN: What are your goals for the coming year as NAAA president?
Hinton: I want to continue on with what outgoing President Mike Browning has done with the new Auction of the Year awards to recognize auctions that have given back to our communities. It’s all about serving others and giving back.
I also want to continue with the (Safe T. Sam) program that KAR Auction Services provided to NAAA and launched to all member auctions. It provides online certification with videos on everything from blood-born pathogens and slips-trips-and-falls to active shooters. It also provides certification for temp services, which is where most drivers come from. We already have 3,500 people who have become certified.
This next year, we also want to provide some safety awards, in the next year or so, which ADESA will sponsor.
Finally, we want to continue to drill down into more educational components for auctions at our conventions along with webinars. One of those areas is the exposure our auctions have relative to collections – drilling into things like Uniform Commercial Code filings and what they should do or shouldn’t do. It helps them to protect themselves from the exposure to bad debt. With $85 billion worth of cars that sold through our industry last year, that’s $85 billion that we’ve collected from dealers. We have to pay the seller regardless of if we’ve been paid by the buyer. So how does the auction protect itself against non-payment by the dealer?
Auctions have dealt with it on their own, but there are a lot of different ways to protect your security interests. We just want to increase the level of awareness and understanding of some of the legal things that are available to auctions that they might not be aware of.