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As the company shared developments regarding enhanced digital training for auction employees, Manheim’s Tom Webb needed only one word to describe past and projected movement of dealer consignment.

During his first conference call of the new year on Tuesday, Webb indicated dealer consignment was “up in 2010, up in 2011 and will be up in 2012.”

Based on volume at National Auto Auction Association member locations, Manheim noted dealer consignment rose between 5 and 10 percent year-over-year in both 2010 and 2011. That trend is after dealer consignment volume sunk between 10 and 15 percent during recessionary years of 2008 and 2009.

“The majority of dealer consignment still comes from independent dealers,” Webb insisted. “From franchise dealers, the majority of what they consign was generated on a used-vehicle transaction, not a new-vehicle transaction.

“If you have a tremendous increase in new-vehicle transactions and not much in used-vehicle transactions, that means you’re getting more trade-ins than you need and you’re going to consign more vehicles,” he continued.

“Or if you have the reverse case which we had in the last cycle, where your new-vehicle sales are up as are used-vehicle sales, you have a shortage of trade-ins. Therefore anything you do get on trade you keep and don’t consign to auction,” Webb went on to say.

Webb recapped that retail sales figures show 2011 was a positive year both for used- and new-vehicle sales.

“Used-vehicle sales are much more stable and less susceptible to swings in the economy. The increase in used-vehicle sales during the past two years has been only half of what we’ve had on the new-vehicle side of the market. However, they didn’t fall as much during the recession,” explained Webb, who cited CNW Research data that indicated used-vehicle sales were 5 percent higher in 2011 while new-vehicle sales moved 10 percent higher.

Webb elaborated further about last year’s new-vehicle sales performance.

“Even though last year’s sales tally was 12.8 million, to me it was more like the 13-plus million sales year, which was what we projected,” Webb began.

“If you look at the annualized sales rate was 13.1 million in the first four months of last year and 13.4 million in the last four months of the year, it was only during the middle four months because of the supply disruption that brought the annualized selling rate to 11.9 million and kept us under 13 million for the year,” he continued.

With expectations that strengthening new-vehicle sales should catapult used-vehicle sales even higher in 2012, Webb touched on another element he sees as positive for the entire industry — current new-vehicle inventories sitting well below 2.5 million and 60 days’ supply.

“This is almost a record period of time when days’ supply has remained under 60 days,” Webb noted when discussing how this reading has been at that level for more than a year.

“As I’ve noted previously, it is my belief that this depicts a fundamental shift in industry behavior and that we will not go back to the bad ways of the past,” he continued.

“If I am right, used-vehicle volumes will remain strong and used-vehicle sales will remain strong and dealers will make money,” Webb predicted.

December Manheim Index

Manheim determined that wholesale used-vehicle prices — on a mix-, mileage-, and seasonally adjusted basis — rose 1.1 percent in December, which resulted in a year-over-year gain of 0.6 percent.

The Manheim Used Vehicle Value Index stood at 125.1 for December, and the annual average for all of 2011 was 124.9, which represented a 3.7-percent increase from 2010.

“Support for wholesale used-vehicle values has been provided by improving retail demand in both the new- and used-vehicle markets and by the ongoing reduction in available wholesale supplies,” Webb explained.

“The importance of the retail demand component was evident in the fourth quarter as wholesale supplies began to rise for vehicles of particular makes, age, and price points, but without any adverse impact on pricing,” he added.

In looking at wholesale price movement by vehicle segment, Manheim noticed three segments rising: compact cars (up 6.1 percent), midsize cars (up 5.2 percent) and vans (up 2.3 percent). Meanwhile, SUVs and CUVs slid 4.0 percent while pickups were off by 0.2 percent. Luxury cars also dropped 2.1 percent.

“Auction prices for luxury vehicles weakened in the fourth quarter as some manufacturers in that segment pushed year-end promotions,” Webb surmised.

“Sports cars, meanwhile, enjoyed a significant lift in pricing in December. It was a rise that came well ahead of their normal spring rebound,” he added.

“For the year — indeed for the past two years — it continued to be compact and midsize cars that posted the largest price increases in the wholesale market,” Webb went on to say. “Mark this up to strong product offerings in the new vehicle market and to what are likely to be long-term shifts in customer demand.”

In other elements of the last Manheim Index update for 2011, Webb mentioned off-rental units continued to command strong prices at auction.

“The average auction price for rental risk units was basically a flat line from March through December. And it was a flat line at record levels,” Webb explained.

“That steady performance reflects the strength of underlying retail demand since the percentage change in the number of units offered each month varied from double-digit declines in the first half of the year to double-digit increases in the fourth quarter,” he continued.

Webb also mentioned prices for end-of-service commercial fleet vehicles rebounded, too.

“December pricing for end-of-service midsize fleet cars continued to rebound from what now appears to have been temporary weakness in October,” he noticed.

“There was the normal seasonal decline in the number of full-size vans and pickups coming out of fleets in December, but adjusted prices were up modestly,” Webb added.

What to Watch in 2012

When asked during the conference calls what factor he’s keeping on his radar this year, Webb told Auto Remarketing he is interested in an element mentioned by another questioner — whether automakers will ramp up incentives in 2012.

“I don’t think we can expect as strong of a pricing market as we had last year, but I don’t think we’re going back to the ways of the past,” Webb said. “Certainly there will be a little more fight for market share. The Japanese nameplates obviously have an issue in terms of exchange rates.

“There are a lot of differences out there. Some people think there is going to be a lot more pushing in the market. That remains to be seen. But overall it looks like it’s going to be a good market for dealers once again,” Webb continued.

“The other issue out there is the manufacturers are really offering a lot of strong products to which they can capture higher prices,” he added.
Webb also mentioned to Auto Remarketing that as he is finalizing Manheim’s annual Used Car Market Report that’s revealed during the upcoming National Automobile Dealers Association Convention & Expo, he intends to keep tabs on how Europe’s economic situation spills into the U.S.

“Last year, I put the No. 1 threat out there was the European sovereign debt issue. I think I was right on that one,” Webb stated.

“This time around, I think it’s less of a problem, but it’s more of a problem for them because I think they’re already in a recession,” he continued. “But I don’t think the contagion effect is going to be as bad as expected. I think it was the case where kicking the can down the road actually helped because our financial institutions are strong enough to withstand it. But you never know. Those are wild cards out there.”

Manheim Highlights Digital Tour to Equip Auction Employees to Support Growing Usage

Manheim declared it is beginning 2012 with a digitally savvy auction workforce due to a comprehensive training program that wrapped up in December — the Manheim Digital Experience Tour.

Last fall, officials highlighted the tour traveled to all 63 continental U.S. locations and provided 8,400 employees with hands-on training on Manheim’s digital tools including myAccount, Mobile Search, Bid & Buy, Vin Scan and more.

Manheim stressed the tour provided a view of its digital tools through the eyes of the customer.

The company thinks the campaign also deepened the connection between Manheim’s digital and auction products to make the vehicle research, bidding and buying process easier for customers whether they are purchasing from us in-lane, online or using our digital tools while they are standing in the lanes.

“The goal of the Digital Experience Tour was to ensure our employees had the digital knowledge necessary to provide customers with the best auction experience possible and to help them transact business more efficiently and effectively than ever before,” said Joe George, Manheim Digital Group vice president.

During the 11-week tour, George traveled across the country to kick off the majority of the training sessions.

George emphasized, “At every auction, employees were energized about Manheim’s digital tools and they have already begun to put them to good use helping customers.”

Employees who attended the Digital Experience Tour are signing up customers for Manheim.com, downloading the free Manheim App, demonstrating VIN scan and more.

In fact, Manheim pointed out the tour is continuing to generate many new ideas from employees.

“The Digital Experience Tour gives employees at the auctions a better understanding of how the job that they do every day impacts the digital customers who are not physically at the auction,” shared Pete Palmer, general manager of Manheim Atlanta.

“Whether the employee is a driver, detailer, condition report writer or title clerk, they all now have stronger understanding of how they impact the customer’s experience in a broader sense,” Palmer stressed.

Building on the momentum generated by the Digital Experience Tour, Manheim says it is now taking its digital training to customers.

The company’s Best Practices team, which includes The Wholesale Institute (TWI), has launched TWI on the Go, a new program that brings Manheim’s digital products to customers at the auction on sale day.

More plans to provide convenient digital training for customers are in the works as the company gears up to launch a new Simulcast product, and other new digital and mobile offerings in 2012.

“Our digital team is extremely focused on simplifying customer experience, and when we deepen the connection between our digital products and auction services, we are providing the ultimate experience for our customers by giving them more, better and easier ways to transact business with Manheim anytime and anywhere they want,” George concluded.