CARY, N.C. -

Auto Remarketing has launched a new series this year called “Consignor Connection,” in which we catch up with a leading remarketing executive at a different consignor each month.

In a Q&A format, we talk about best practices, auction industry trends and more. The latest in this series features Darrin Aiken, assistant vice president of vehicle remarketing at Wheels Inc.

 

Auto Remarketing: On an industry-wide level, how has the increase in volume, particularly for off-lease units, impacted the auction industry in 2015?

Darrin Aiken: Supply will definitely increase in 2015. However, there isn’t a significant impact on prices or auction volumes. In 2015, we expect returns around 2.5 million, which is higher than previous years, but still under the record returns of 2001-02. There will not be many returned units until 2016-17, as 2014 new-lease originations hit 3.6 million.

The good news is that the industry is better equipped to handle an increase in inventory due to the rise in financing options, Internet and internationals sales, as well as CPO programs. These alternative programs assist the auction industry in distributing an increase in supply, not only for lease returns, but for rental units and other consignors’ vehicles. These capabilities have also enabled us to handle an increase in supply.

 

AR: How does Wheels strike a balance when it comes to choosing how your cars are sold, be it auction sales, online sales, open/closed sales, etc.?

DA: Wheels offers a multi-channel selling strategy for our vehicles. Often our first step to that strategy, which is different than most, includes offering vehicles to the drivers/employees on our proprietary website called WheelsDirect. Most of our customers use this program because it gives them an opportunity to gain higher returns and lower their days to sell. Our customers also see this as an employee benefit at no cost to their company.

If a vehicle is not sold through WheelsDirect, we then offer the used vehicle directly to the franchise dealer; this is the dealer who will complete the delivery of the new vehicle to our driver. Franchise dealers are a great way to maximize resale value on the used-vehicle sale.

This allows the dealers to review a vehicle in good condition and sell them on their retail lots. Once the vehicles have been offered for sale multiple times before it is officially turned-in, we send them to both online and in-lane auctions to ensure maximum exposure for our vehicles. This model ensures that we reach all buyers whether in person or online.

 

AR: What are some dynamics of the auction world and remarketing that are unique to fleet/lease consignors?

DA: For Wheels, there are a number of different factors that make our vehicles desirable for purchase. A key differentiator is our corporate maintenance program, which was active throughout the vehicle’s life. This assures buyers that the vehicle was well maintained. In addition, we provide Silver Certification, titles at the time of sale, and the peace of mind that there was only one owner. Although we have higher than average mileage vehicles based on age, we are able to effectively communicate the benefits to our buyers.

 

AR: What are some of the biggest challenges (and opportunities) in the auction market for consignors like Wheels in 2015? Are there any CFPB- or regulatory-related challenges that would extend to the remarketing world?

DA: There are no CFPB related challenges, as we are only involved with commercial leases. One specific challenge for us is fluctuations in transportation logistics throughout the years. Auction companies and transportation vendors have not developed a cost-effective model to secure units for fleet management companies consistently and efficiently.

 

AR: What are some ways that OEMs, consignors, dealers and auctions can work together to keep residuals strong?

DA: The auction industry should continue to focus on expanding the grading system for assessing vehicle conditions developing an international online presence, and getting MPS completed for the industry. This will make it easy for dealers and consignors to offer vehicles on any website, which helps facilitate a more competitive bidding environment. Dealers should remain focused on creating tools that assist them in efficiently selling vehicles while managing their inventory.

The OEMs should continue to build quality products and keep incentives stable. This will guarantee that the value remains strong when it comes time to sell.