This year, the IARA Summer Roundtable featured four concurrent roundtable discussions, each packed with informational discussions on varying remarketing trends and issues.
The topics included trends in automotive logistics; mechanical reconditioning and valuation; retail remarketing trends; and vehicle recalls.
The sessions were held on the second day of the three-day event and the first two concurrent sessions on the docket were Trends in Automotive Logistics and Mechanical Reconditioning & Valuation 101.
The Trends in Automotive Logistics session was moderated by Andrea Amico, president of Jack Cooper Logistics and Scott Kolb, CAI, CAR, director of business development and national remarketing at United Road.
The intent of this session was to inform attendees of the trends in the automotive logistics industry and to discuss the issues and opportunities to improve the handling of logistics. Some of the key points discussed were the proliferation of automation and the use of location-based data.
Mechanical Reconditioning & Valuation 101 was moderated by Jim Jackson, North American Remarketing Manager for ARI Fleet and Daniel Lynn, senior manager of National Accounts at AutoVIN.
This session’s goal was to look at the main issues and concerns that people in the industry face every day. Some of the issues tackled were the expected return on investment for every dollar put into a car and the key factors that go into deciding and approving reconditioning for a vehicle.
In terms of ROI, most of the attendees in the room agreed that it would be optimal if they received two or three dollars for every dollar they put into a car.
Dave Sutton of Carfax, however, brought up a strategy that his previous company employed. They would recondition about 10% of the cars they sent to auction a certified pre-owned level. They would only see about $1.25 for every $1.00 they put in. However, the strategy for these vehicles wasn’t to see huge returns, it was to strengthen the quality of their brand at auction.
His company was still seeing a return on investment, and the positive reputation of the brand at auction grew.
The top arbitration reasons were also discussed. Through data provided by ADESA, session attendees discovered that about 30% of all arbitrations are engine-related; structural damage was the second-biggest driver of arbitration at 13%.
ADESA also provided data on AutoGrade. The moderators asked attendees what sort of AutoGrade numbers they looked for when deciding on a vehicle. The number that most attendees in the room agreed on was three.
Jackson shared that his company, ARI, typically looks for AutoGrades of three or 3.5.
One attendee added that his company saw success in securing vehicles with AutoGrades of two and reconditioning them to a three. The ultimate goal with this strategy, however, was to reach the three threshold.
After a scheduled break, the Retail Remarketing Trends and Vehicle Recalls sessions followed.
The Retail Remarketing Trends session was moderated by Gerry Corcoran, national director, commercial remarketing services at Jim Pattison Lease and Patrick Steiner, director of remarketing for Nissan Motor Acceptance Corp. & Infiniti Financial Services.
One of the main takeaways from this session was that when a remarketed vehicle is retailed, the seller yields more money but it typically takes more time. In addition, a wholesaled vehicle typically yields less money but it takes less time.
Some of the biggest consignors who are selling their vehicles through retail remarketing channels discussed in the session were ARI, Element, Enterprise, and Hertz.
One of the session attendees, Mark Cangialosi from Hertz, shared that about one in four of his company’s cars are sold through the remarketing channel.
Further discussions throughout the session analyzed further advantages and disadvantages of retail remarketing. One key aspect of discussion was looking at the type of vehicles that best retain residual values and are best suited for retail remarketing. This opened up the door to attendees of the session to share how they leverage retail channels to improve retention and gain exposure for their vehicles.
The Vehicle Recalls roundtable session was moderated by Matt Arias, director of arbitration for Cox Automotive and Dave Sutton, national director strategic partnerships for CARFAX.
During this session, attendees discussed one of the main issues with recalls in recent years, the fact that companies are recalling vehicles is accelerating. In 2015 there were 46 million open recalls. In 2016, that number grew slightly to 47 million. And, so far this year, there have been 63 million recalls, 34% more than the industry saw last year.
While recall rates have grown throughout the year, California, Texas, Florida Pennsylvania, and New York have seen the biggest increase in recalls.
When a vehicle receives a recall notice, it is an immediate safety issue, given that the fact that it has been recalled means that an aspect of it is not working correctly. Apart from the safety aspect, it also lowers the transaction price of a vehicle and prohibits them from being rented.