The IARA Spring Roundtable in Review

Officially kicking off the Spring Roundtable was a keynote presentation from Bob White, executive VP and COO at ARI. His panel covered the past, present, and future disruptions in the automotive and remarketing industries, and ways to be prepared for changes.

“The degree of change, the scale of change, and the speed of change is something I don't know if we've ever experienced in our working lives,” said White during his keynote presentation. “A lot of this is driven by technology. It's really hard to escape the fact that technology is everywhere. I've heard some folks say recently, ‘No matter what business you're in, you're in the technology business.’ And there's a lot of truth to that, but it's not just technology itself that's changing or driving the change.”

During his presentation, he addressed how much more worldwide focus has been on the auto industry in terms of disruption, with the likes of electric vehicles, autonomous vehicles, the shared vehicle economy and other industry changes. He stressed the significance of industry professionals focusing on these disruptive trends.

“I think it is important that we adapt to change, we're open to change even when we don't know what the future holds,” he said. “I mean, you don't have to be perfect. Nobody is. You don't even have to be first in the market, but you do have to be willing to change and adapt what you do, how you do it, and who you do it for. And quite frankly, you just need to be willing to question everything that you do and what you've done."

White also likened the ubiquity of the smartphone, and the overall changes in the way people consume media, to the significance of technology and how greatly it has impacted humanity.

Residual Trends Forecast Forum

Shortly after the keynote presentation, the IARA hosted its consignor forum on the forecast of residual trends. The presentation examined trends that may affect vehicle residual values in 2018, as well as trends witnessed in 2017.

The forum discussion was hosted by Rene Abdalah, senior vice president for RVI Group, and included panelists James Crocker, director of operations for Merchants Fleet Management; Mike Scott; auction remarketing manager for Consumer Portfolio Services; and Layne Weber, director of wholesale western U.S. for Avid Budget Group.

“From our perspective, 2017, was very volatile, especially the second half,” said Abdalah during the forum discussion. “Through the third quarter, we saw residual values softening on a year-over-year basis of around 4-5%, and then we hit hurricane season and everything changed. And by the end of the year, we were comparing December 2017 with December 2016, and was pretty much on par. So the market strengthened and then started changing again.”

Abdalah said during the presentation that his organization was predicting that overall supply will continue to increase in the market. Panelists also noted a soft January, which was opposite from the increase in demand that was witnessed during hurricane season, which has tapered off since.

“Now I think we’re more into the typical. On a year-over-year basis, I think we’re looking at a softening, overall. And for the rest of the year, supply is something we’ll be keeping an eye on,” Abdalah said.

Crocker of Merchants Fleet Management also noted that his company has seen demand shift in the sedan market to crossovers and SUVs in 2018.

“Overall, I see values of the sedan continuing to go down. We’re seeing the incentives go up on these vehicles as the manufacturer’s fear that they’re going to have a lot of inventory around and we’re really seeing a shift to crossovers,” said Crocker.

Maximizing Reconditioning ROI

The last panel discussion to round out the educational sessions at Spring Roundtable was on ways to improve vehicle reconditioning ROI. This was held just prior to the IARA Circle of Excellence Award Luncheon and the official start of the Conference of Automotive Remarketing (CAR), which was held in tandem with the Spring Roundtable.

The panel was hosted by Kurt Madvig, VP of auction operations for ADESA; Julie Picard, VP and general manager of Manheim Seattle; and Doug Turner, regional manager for America’s Auto Auction.

During the forum, panelists provided an overview of current reconditioning trends, industry pain points, and a group discussion in which attendees answered a series of questions which allowed them to voice their thoughts on the reconditioning ROI.

“As you think about reconditioning, you have to think about how what the market looks like now and what is it going to look like going forward. Let’s face it; cars are being built better now than they ever have, the gap between imports and domestic cars is closing, domestic cars are better now than they have ever been,” said Turner. “Things are changing and they’re going to continue to change.”

He addressed that the continued improvement of vehicle longevity has had a serious impact on how industry professionals consider ROI.

“When you consider that, what does your online reconditioning strategy look like versus when you’re in lane,” said Turner. “Are they different? Do they need to be different?”