Photo via Wikimedia.

Photo via Wikimedia. 

While summer hasn’t quite reached its end, the approaching fall season is already having some effect on the types of cars selling at Midwest auctions, including popularity of all-wheel drive and the Subaru brand. 

Carl Miskoten, managing member at Interstate 94 Vehicle Auction in Jackson County, Mich., says that in August and July he saw an uptick in the number of all-wheel-drive vehicles being sold at his auction.

"When we start nearing fall, anything AWD starts to peak," Miskoten said. "It's kind of interesting because not everyone wants a truck, so the AWD cars seem to be performing particularly well."

Many of the Subarus running through his lanes performed particularly well, he noted. The AWD Chrysler 300s and 200s were also strong performers. Alternatively, the two-wheel-drive versions of these cars were much harder to sell in July and August.

Muscle cars and convertibles also proved challenging to sell, given that demand for the models near the tail end of summer has waned.

Overall, Miskoten said that his auction saw fewer consignments but a higher sales percentage during July and August. In August, Miskoten’s auction reported a 10% decline in consignments and a 3% bump to its sales percentage — the same decline and increase was seen in July.

This meant that while Interstate 94 Vehicle Auction — a 12-lane auction that typically runs an average of 1,300 units a week — saw fewer vehicles running through its lanes, more of them sold, compared to the year before.  This, however, wasn’t necessarily a bad thing, Miskoten noted. Fewer consignments with a higher sales percentage, has been more profitable because they’re handling less cars but selling more.

One factor that might have contributed to the decline in consignment seen in July and August, according to Miskoten, is the upcoming model refresh for many OEMs. New car stores, he noted, have been offering deep discounts for the outgoing models in preparation of the new model-year vehicles.

“I think what has happened is that the new car stores discounted so deep in July and August because of the new cars coming out that we’re not getting as many trades,” said Miskoten.

Two states southwest of Interstate 94 Vehicle Auction — at KCI Kansas City in Kansas City, Mo. — Owner Doug Doll shares a similar sentiment. His auction hasn’t felt a decline in sales caused by the incoming model-year refreshes yet, but he does expect to see a decline once the new model-year vehicles hit dealer lots.

"I’m worried that there are going to be so many cars out there in the market that we're going to have a hard time selling them," Doll said. "And then with the model year changes coming in, we're going to be getting 2018s coming out and it’s going to affect the used car market when consumers see [those deep discounts] on the outgoing model years."

Another similar trend that Doll experienced at his auction was a decrease in consignments but an increase in sales percentage in July. 

“In July our sales percentage was actually 2% higher than the same time last year. Our sales percentage was at 60% last year in July and this year it was at 62%. We sold fewer cars this year in July due to volume being down, but the cars we did touch, we were selling more of,” said Doll.

He attributes the drop in volume in July to a softer market in the month.  However, that soft market did not last too long. In the first week of August, sales began to pickup, he noted. 

A combination of this uptick and a promotional concert to promote a two-day sale helped make up for July’s lackluster performance in August. In August his auction averaged 855 cars a week compared to 818 during the same time last year.

Off-lease vehicles were another boon to his auction's positive performance in August. There has been a lot of talk in the industry of a tidal wave of off-lease vehicles returning to market this year and in the foreseeable future. Doll describes the high number of off-lease vehicles reaching his auction have been a "blessing."  

KCI Kansas City is split between 55% dealer consignment and 45% factory fleet lease consignment. He has good relationships with Hyundai, Kia, and Toyota. These mid-range Asian imports are often some of his auction’s best-performing vehicles at his auction.

These factors have led to his auction being shipped a large number of off-lease vehicles from these OEMs, and he’s running anywhere between 300 and 400 units from Hyundai, Kia, Toyota every month.

Along with off-lease Asian imports, trucks still continue to be strong performers. Moving into the colder season, he expects the demand for trucks to get even stronger.

Looking toward the remaining months of the year, Doll isn’t as optimistic. He sees a challenging year ahead with the fate of his auction’s performance dependent on how demand changes in the next few months.

"If demand stays like it is right now we're going to be fine, but I just see it dropping off a little because there are going to be so many cars out there in the next three or four months," said Doll.

Miskoten is slightly more optimistic. He doesn't see a "terribly robust" next few months, but he does expect that sales will be at least satisfactory compared to previous years' performance.

Editor's note: This is part of an ongoing series that goes beyond the numbers to provide a snapshot of market conditions in the vehicle remarketing industry in the Northeast, Southeast, Midwest, Southwest, Rocky Mountain and Pacific regions. The Midwest region includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.  

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