Archive for the ‘TechnoBahn’ Category

Good Looks Increase a Used Car’s Worth

by Laurie Giesen

Looks do matter. At least when it comes to a used car’s worth. Indeed, auction execs say the simple visual efforts – a good cleaning, reconditioning or new tires – can turn out to bring in the most bucks for a car on the auction block.

“The best thing you can do to a car to get top dollar is to clean it up,” says Tom Conaway, general manager at Value Auto Auction in Crooksville, Ohio. “You would not believe the condition of some cars that come in here, especially a lot of the bank repos, with trash thrown all over the place. Agood clean up, both inside and out, can go a long way in increasing the value of the car.”

Conaway explains that he has seen a $20 cleaning add as much as $800 to the value of a car sold at auction.

Other auction sales managers’ share Conaway’s view: Looks sell. However, sometimes it takes more than a simple wash — Detailing or even painting may be required.

Visual Appeal
“You need to spend a little money on the appearance to fix any cosmetic damages that might be there. Make sure all the fenders have been repainted if they are scratched,” says Doug Miller, vice president and COO of Central Pennsylvania Auto Auction in Lock Haven, Penn.

New tires can also be a good investment, as tire replacement can add up to $500 in value to a car if it has relatively low mileage, Miller says. “It depends on the car. If you have a car with over 100,000 miles on it and it also needs body repairs, I would not spend the money on new tires. But if the car is in good shape [otherwise], and has low mileage, tire replacement can add a lot of value,” Miller says.  An important tire consideration at auction is whether all four tires match, adds Conaway. “The letters on the tires have to match. It is better to have four Goodyear tires than one Goodyear, one Firestone, one Cooper and one of something else,” he says.

Additionally, Miller says value is added if the tires are the same brand as what the car had when it left the factory. “It’s always better if you can match the manufacturer’s specifications,” he says.

As for the wheels themselves, Conaway notes that “chrome or nice aluminum mag wheels always do better than standard hub caps.” Ed Kinsley, sales manager of Northeast Auto Auction in Kittery, Maine, adds that alloy wheels can add $150 to $250 in value to a car.

Although most auction managers say many bells and whistles add little value on the auction block, there are a few fancy features that can make a financial difference. Satellite radios, for one, will usually increase the value of a car, Miller notes. Meanwhile, automatic transmission is always valued over stick shift, adds Conaway.

Beyond automatic transmission and satellite radios, Kinsley says a leather interior can automatically raise the value, if it’s in good condition. “A leather interior is usually part of the premium package that can typically raise the value of the car anywhere from $300 to $400,” he says. But don’t put too much stock in a lot of high-tech gadgets. “Stereos, TVs, DVD players don’t add as much value as you think,” says Rueben Figueroa, sales manager of American Auto Auction in Dallas.

“Auction buyers are looking for a good deal and they will install the gadgets that they want themselves.”

And while some added features can increase value, missing ones can take away value as well. Miller notes that a number of cars are coming in with the CD disk for the navigation system missing. The lack of that little disk prevents the system from working and can reduce the value of the auto. A missing radio can also be a sign of a car not being cared for and can decrease the value more than the cost of the radio itself, Kinsley says.
And while the addition of high-end gadgets won’t always add value to a mid-range car, the lack of some features could harm the sale of a high-end car that is expected to have them.

“If a car is supposed to have a navigation system and it doesn’t have it, that might hurt the value of the car,” says Figueroa. But one of the biggest missing features that can ding value may be one of the smallest features? Missing keys. Figueroa says keys of high-end cars, such as Lexus and Mercedes, are expensive to replace and can really lower the value when such items are lost.

Preparing for an Automotive Auction

Cary Donovan knows auctions.

The vice president of used-car vehicle operations at Kentucky- based Sam Swope Auto Group LLC spends a couple of days per week at physical auctions and almost everyday at online ones. Even with all of his auction experience, Donovan always preps for them. He, like many dealers, turns to technology to help him decide what to buy.

“There is a lot of homework done before auction, Donovan says. “Its half of my life.”

To begin with, his team targets the inventory they need to purchase, and compiles a long list. After reducing this longer list, his team dissects all of the information they can on each vehicle. This includes running carFax reports and checking out reconditioning reports online.

Part of their homework is completed by using vehicle scoring system vAuto. The software “analyzes the market based on todays supply, Donovan says. The auto group has used the software for about the last six months.

Dale Pollak, vAutos chairman and founder, says it is impossible to accurately stock vehicles solely based on a dealerships past history because of the volatile market. You need to know what is hot or not, Pollak says. You need to see these trends before they start to shift.”

VAuto allows dealers to get a better understanding of what to purchase by providing live market-day-supply data. “The Heat Sheet, for exmple, reveals the top-selling vehicles in the market make, model, trim, and specific equipment..” Its not just software and the Internet that dealers use to help guide their purchases. For dealers doing less prep work prior to an auction, technology like paint gauges and smart phones are top ten picks.

Ron St. Denis, director of inspection operations at Manheim, says that the most prevalent devices at auctions these days are paint gauges, tools that measure paint thickness. Michael O’Connell, assistant general manager at BSC Americas Bel Air Auto Auction, says dealers have been using the gauges for the last few years. In a given auction, O’Connell estimates that 20% to 25% of attendees use these tools. He cites elcometer 311 as one of the most popular gauges. Joe Walker, vice president of Elcometer, says dealers are keeping with the technology times. “The day of the slicked- back-hair, used-car dealers have gone the way of the dodo bird, he says.

Elcometer, for one, keeps seeing an uptick in sales. Although the technology with gauges evolves such as the ability to line a gauge up with a PDA dealers don’t need these updates. “They need to identify paint and body work and that is it, he says.

Some dealers prefer their gut instincts to gadgets. Mike Moody of Kentuckys Jerry Moody Auto Mart buys 20 cars per month roughly, but never preps for auctions. “I go and roll the dice, says Moody. We always look for good, quality cars.”

Jimmy Marino, national operations manager at remarketing inspection company Inviso, says dealers are adopting technology at auctions in a slow, progressive evolution. “Its more of a hands on business, he says, noting online auctions and the economy have made sweeping changes to how dealers approach auction. “With the economy, car dealers aren’t to speculate.”

The most popular gadgets dealers tout are smart downloaded versions of blackbook, nAdA and e book, Marino says. These downloaded guides dealer to get pertinent vehicle details by simply a VIN.

What new gadgets do dealers need? Donovan would like to see a scanning device that reads VIN numberss. Although the technology already exists, Donovan says it is not perfected enough to be effective. The technology is floating around, but is not refined enough,” he says.

of the sub-prime repossessed units which tend to be older,

rougher and, as a result, less-expensive is relatively high

at auction right now. This may be attributed to two things: the

preference of some dealers to conserve floorplan capital,

and the relative success retailers in the buy-here-pay-here

space are having. The latter are often perceived as lenders

of last resort for the credit-challenged car-buying public.

Also, older units are in shorter supply at auction. This is

because franchised dealers are holding on to trade-ins that

they would have previously wholesaled. This is done in an

attempt to retail these units for the attractive grosses

they generate.

Often, sub-prime financing companies that have to satisfy

certain covenants with sources of capital are basing sales

strategies on liquidity considerations rather than retention

considerations. As previously stated, this may be an

appropriate and commendable strategy to provide “front-end”

liquidity for retail lending. Dealers may also find it best to

liquidate aged or unwanted used-vehicle inventory to generate

cash in order to weather potential economic storms.

So at a time when the government, the financial community

and the automotive industry are all seeking ways to inject

liquidity into the market, the auction industry represents a

ready source of cash from ample volumes of used-vehicles.

Wholesale market values may be depressed at present, but

there are pockets of healthy demand for certain types of

used-vehicles and auction companies can advise remarketers

of those opportunities. In these unprecedented times, the

need to create liquidity may ultimately supersede the desire

for price maximization.

Tom Kontos is Executive Vice President of Customer

Strategies and Analytics at ADESA, Inc.