Despite global dangers and economic volatility, the two leading trade groups of the remarketing industry are seeing more signs of success while working to prepare consignor and auction operations for major industry shifts ahead.
National Auto Auction Association President Garrison Hudkins and International Automotive Remarketers Alliance President Jeff Bescher each outlined the results and goals of their organizations in brief annual remarks on March 29 during the Conference of Automotive Remarketing in Las Vegas.
In a state of the remarketing industry overview, Hudkins referenced the NAAA’s 2022 industry survey that detailed the data that analyzes trends across the auction industry.
“With this important data we gather every year, we can analyze trends and provide facts to illustrate how vital our member auctions are to the overall economy," Hudkins said. “Not only are AAA member auctions a vital component of the automotive industry, but they're also key contributors to the local economies.”
Hudkins outlined key data points:
- The gross value of all vehicles sold at an AAA member auctions last year exceeded $110 billion. Fourteen U.S. states have a lower annual GDP below that figure. But that figure was down from $121 billion in 2020 but on par with 2019.
- About 3.2 million fewer vehicles were sold at auctions last year, down 12% from 2021. That was due mostly to the big drop in new vehicle sales since 2020, especially lower new vehicle sales into rental and commercial fleets and the acute decline in new vehicle leases.
- 11 million vehicles were offered for sale at NAAA member auctions in 2022.
- The average transaction price per vehicle sold at auction reached an all-time high of $16,700 in 2022, up 4% from 2021 and 4.8% from 2019.
- Auctions in 2022 employed 104 people per auction, with an additional average of 33 temporary contract works. Member auctions employed 44,000 full and part time workers overall.
- In 2022, the average contribution to charity from an auction was $13,400, for a total charitable contribution by the NAAA members of $4.5 million.
Hudkins cited the NAAA’s 75th anniversary year as a trade organization.
“If you look at what an auto auction does, it's a remarketing company,” Hudkins said. “But it's also a logistics company. It's a marketing company. It's a banking organization. And it's a service industry. And auto auctions are clearly major employers supporting their local communities. But above all at its core, in addition to transparency, trust, fidelity and industry standards, the NAAA is about relationships. We develop great relationships with our own auction team members, and our customers, which has kept our industry thriving for 75 years.”
In celebration, the NAAA is rebranding its annual convention as the NAAA World Remarketing Convention. The event takes place at the Hilton Chicago Hotel on Sept. 26-28.
The IARA Global Outlook
Before the annual CAR economics panel on March 29, IARA President Jeff Bescher highlighted how the organization is keeping its members informed, engaged and ready to take advantage of trends in the industry.
“Last year, there was lots of stuff going on. Nothing has changed. There’s still lots of stuff going on,” Bescher said.
From a broad perspective, the sale of used cars still hits unusual highs, climbing 50% in recent years over pre-pandemic levels, and still hovering about 30% above those levels in 2022.
“They've recently started creeping up again, as demand continues to significantly outpace supply,” Bescher said. “That is something that will be with us for a while. There will continue to be a lot of uncertainty and volatility in our corner of the world due to numerous factors.”
Among those global factors: “There's little doubt that China would like the world to play by its rules.” Instead of cooperating with the trade policies established by the Western world led by the U.S., the Chinese are attempting to create a bipolar sphere of influence generating a lot of tension and volatility in many countries and economies, he said.
“It's interesting because China and the U.S. are having this issue right now, considering that the U.S. is the second largest exporter of goods to China, and the single largest importer of goods from China, including automotive parts,” Bescher said. “So how far will China go to change the status quo, and how far will the U.S. government go to respond to that?”
The U.S. already is trying to manufacture more microchips and build more factories to stop China from having the largest semiconductor chip market, globally.
Secondly, the raging war between Russia and Ukraine “could spiral out of control at any minute, and that could change everything that we do,” Bescher said. “Hopefully, that gets resolved.”
On a more positive note, Bescher cited the government’s official end of the COVID pandemic. “However, we now have an endemic COVID, which continues to affect supply chains and remote work determinations of both companies and employees.”
Fourth, the automotive industry is seeing the biggest changes in 100 years with a switch from internal combustion engines to electric vehicle technology, Bescher said. “These changes are coming fast and furious and exacerbating the supply issue caused by not producing about 10 million new vehicles over the last few years.”
Finally, a variety of factors are buffeting the wholesale used car market, including an increase in demand, rising gas prices, slowing economic conditions, higher interest rates, and more constricted availability of financing, Bescher said.
IARA Programs and Goals
“With so much going on, what is the IARA trying to do to address this? We're trying to keep our members informed of how these things might affect their business operations.”
The alliance is trying to boost communication among its members while enhancing its Certified Automotive Remarketer (CAR) and Audit and Compliance Training (ACT) programs.
“We're also providing information directly related to remarketing through our various committees.”
Since last year, the IARA has created a new and more intuitive and accessible website, updated its CAR certification modules, created, and rolled out the ACT module, and started an electric vehicles committee to work toward common standards, benchmarks, and solid resale values of used EVs. “We’re going to hear about EVs for the next five years; there's no doubt about it,” Bescher said.
The IARA also has hosted webinars for its members using outside experts, increased membership engagement and financial stability, and explored deepening its relationships with the NAAA and other industry groups.
More recently, the IARA conducted a study with an outside branding and research firm to review and assess all functions of the alliance, including value perceptions in education, talent, networking, advocacy, and standards. IARA leaders are trying to identify gaps where the group can be more valuable to its members.
“I'm happy to announce that on March 28, with approval from our board, we moved forward on several fronts in drawing our lines on our shared mission to enhance the value of IARA membership and position us to grow and thrive as a new generation of leaders enters the business.”
Originally posted on Automotive Fleet