Remarketing Predictions to Follow in 2016

By Jon LeSage, Edi­tor, Used Car Mar­ket Reports

1. Used Vehi­cle Price Drop Com­ing Up – or Not?
• Will this be the year of soft­en­ing prices from off-lease, trade-ins, and off-rental? That was sup­posed to be last year, but mar­ket dynam­ics and deal­er prac­tices adjust­ed well to the mar­ket.

2. New vs. Used Vehi­cle Con­sumer Pur­chas­es
• With used car prices soft­en­ing and new vehi­cle trans­ac­tion prices going up as high as they’ve ever been, we could see the return of the New vs. Used com­pe­ti­tion that became com­mon for sev­er­al deal­ers and OEMs in the recent past. There’s also an increase of trade-ins that the mar­ket is see­ing. ADESA’s Tom Kon­tos says that trade-in val­ues have been worth less late­ly, which means that con­sumers some­times recon­sid­er buy­ing a new car if they can’t find as much equi­ty in the deal. Aver­age terms of new-vehi­cle loans are climb­ing, which can fur­ther reduce the consumer’s equi­ty val­ue.

3. Con­test over Mul­ti-Plat­form Bid­ding
• Mul­ti-plat­form bid­ding sys­tems have been sought after for years by remar­ket­ing com­pa­nies as a way to stream­line the used vehi­cle auc­tion process and adapt to new tech­nolo­gies and appli­ca­tions – some­thing they’ve seen block­ing the effi­cien­cy of auc­tion chan­nels in recent years. That’s led to heat­ed debates which are yet to be resolved. In Novem­ber, the Inter­na­tion­al Auto­mo­tive Remar­keters Alliance released an open let­ter to the indus­try designed for the estab­lish­ment of a cross bid­ding mul­ti-plat­form online remar­ket­ing solu­tion; IARA said 20 of 23 respond­ing IARA con­signors sup­port­ed that strat­e­gy in a recent sur­vey of its U.S. con­sign­or mem­bers. Man­heim, Colum­bus Auto Auc­tion, BSC Amer­i­ca, and WTG Glob­al have backed MPS to help keep the indus­try on track to pro­duce live trans­ac­tions; they think it would dri­ve inno­va­tion and effi­cien­cy to auc­tions, con­signors, and deal­ers. ADESA and ServNet decid­ed to not to par­tic­i­pate in the remar­ket­ing industry’s pro­posed MPS. They see tech­nol­o­gy chal­lenges and antitrust con­cerns built into the cur­rent state of MPS, which has led them to the con­clu­sion that it would not be pru­dent to fur­ther pur­sue this ini­tia­tive.

4. Mobil­i­ty Comes to Remar­ket­ing
• Last year, Man­heim report­ed hav­ing about one mil­lion vis­its a month on mobile plat­forms that cus­tomers are using. About 47% of all Man­heim users had become mobile users by that time. Mobile apps are becom­ing com­mon in the buy­ing, sell­ing, and inven­to­ry man­age­ment process. Man­heim, Black Book, and oth­ers are offer­ing a wide range of mobile apps and sup­port ser­vices sup­port­ing remar­ket­ing mobil­i­ty.

5. Dis­rup­tive Star­tups
• Third par­ty star­tups like Vroom, Car­vana, Beepi, and Shift are start­ing to see a lot more sales traf­fic. Con­sumers can use their mobile device or lap­top to see pho­tos of pre-owned vehi­cles, find com­pet­i­tive prices, walk through the legal paper­work, and com­plete the trans­ac­tion quick­ly. Con­sumers val­ue con­ve­nience, and com­pet­i­tive pric­ing, very much these days. An Accen­ture study found that 75% of U.S. respon­dents to its sur­vey would con­sid­er mak­ing car selec­tion, financ­ing, price nego­ti­a­tion, back office paper­work and home deliv­ery com­plete­ly online.

6. Used Car Retail Brands and CPO
• Asbury Auto­mo­tive Group has been open­ing stand-alone used-car stores under its “Q auto” brand – and oth­er pre-owned/used brand retail stores are in the works for oth­er deal­er net­works. It looks like man­u­fac­tur­er cer­ti­fied pre-owned vehi­cle pro­grams has gained more inter­est and sup­port for major fran­chised deal­ers. CPO sales are expect­ed to con­tin­ue grow­ing and reach­ing record lev­el this year – with a fore­cast of the indus­try see­ing three mil­lion CPO units sold in the U.S. in 2017; that would be up from 2.55 mil­lion in 2015.

7. Merg­ers & Acqui­si­tions
• We may not see world famous investors announc­ing buy­outs of large deal­er chains this year, but M&A activ­i­ty is expect­ed to con­tin­ue. Erin Ker­ri­g­an, founder of Ker­ri­g­an Advi­sors, expects a new record for deal­er­ship merg­ers and acqui­si­tions in 2016 because of the large num­ber of deal­er­ship groups expect­ed to go on the block. Ker­ri­g­an report­ed that the val­ue of deal­ers with at least three stores increased 10% last year from 2014 to an aver­age of about $40 mil­lion. Many sell­ers are choos­ing to go to mar­ket, Ker­ri­g­an said.

8. Car Financ­ing
• Auto loans have seen slight increas­es late­ly, and that may increase this year. A one per­cent­age point increase in Fed rates this year could have a sim­i­lar impact on car loans. That may not be enough to nudge con­sumer into putting off new and used car pur­chas­es, but it’s some­thing that needs to be watched.

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