Automotive News Canada - July 2016 - 6

* J U LY 2 0 1 6

Auction 'bidness' changing
But growing online
segment not expected
to replace live bidding
anytime soon
BY ROBERT BOSTELAAR
O T TAWA C O R R E S P O N D E N T

IF YOU WANT TO SEE
metal move, there's no better
place than the busy lanes of a
dealer wholesale auction.
Increasingly, however,
metal is moving swiftly and
silently in online auctions
that bypass the physical sales
long at the heart of the used
car market.
While these so-called digital sales still represent a fraction of dealer-to-dealer transactions, they're already having a leveling effect on prices.
And because they can eliminate the guesswork on values,
they're even changing the
nature of the trade-in process
by giving vendors tools to
make deals they might otherwise have rejected and move
those trades immediately.
The key benefit to an auction launched from smartphone or computer?
"Real-time information," said Matt Francis,
pre-owned-vehicle manger at
Downey Ford in Saint John,
N.B.
"For instance, this morning I used it (for a Volkswagen
offered in trade) and by the
time I got back in the showroom I already had one offer
from a dealer."
Better yet, the offer was
higher than what the Ford
store would have been able
to put into an off-brand. It
helped close the deal, Francis
says.
Heading the online auction

Mark Endras has been writing code for online-auction
application TradeRev since
2009.
field is the TradeRev application developed in Toronto
by Mark Endras, a computer
science graduate whose family operates several car dealerships.
Endras began coding
TradeRev in his free time
in 2009 and two years later
launched the first version of
the app, which backs sales
with such services as electronic fund transfers, shipping quotes and inspection
and arbitration.
In 2014, auction heavyweight ADESA, part of KAR
Auction Services, paid US$30
million for a 50 per cent stake
in Endras's company. With
ADESA's support, TradeRev
expanded to the United States
in 2015 and to Britain this
year.
Endras says he believed
from the start that the advantages of programs like
TradeRev go beyond convenience.
"We have always thought
that real-time market pricing
- supply meeting demand just
in time - would change the
fundamentals of the automotive market."
Another Canadian offering is Selectbidder, founded
in Moncton, N.B., by broth-

ers Sean and Stuart Liptay
of Great Northern Auction
Co. and embraced by Downey
Ford and other Maritimes
dealers.
Selectbidder too is making inroads in the U.S., signing deals with independent
auctions scrambling to offer
an online alternative to their
physical lanes.
Global wholesale leader
Manheim Auctions, meantime, is responding with a
barrage of in-house products,
including simulcasts of its
in-lane auctions that allow
long-distance bidding and
multiple internet-based programs.
Says Manheim's Canadian
marketing director, Jack
Sulymka, "The auction has
truly become a place of business 24 hours a day, seven
days a week, because it meets
the changing needs of our clients."
Still, bidders who go by
gut instinct are taking on bigger risks, warns Manheim's
North American president
Janet Bernard. In the company's 2016 Used Car Market
Report, she observes that the
"increased price transparency" created by online tools for
dealers and consumers is narrowing the range of returns
on individual transactions.
"Lacking 'home-run' (highgross) deals, dealers can now
ill afford the outsized losses associated with buying
the wrong car at the wrong
price," Bernard writes.
A different note of caution comes from the executive director of the Used
Car Dealers Association of
Ontario.
- With files from
Mark Atkinson

USED VEHICLES: There's room for growth
Prices have been
up since 2012, but
haven't kept pace
with new-vehicle price
increases
BY STEVE MERTL
VA N C O U V E R C O R R E S P O N D E N T

CHANGES IN Canadians'
buying habits have pushed
up used-car transaction prices just like new-car prices but
J.D. Power's Robert Karwel
says there is still room for
growth on the used side.
Like their American
counterparts, Canadians
have embraced light trucks,
sport-utilities and crossovers,
abandoning their fondness
for compact and subcompact
sedans and hatchbacks.
That has sent average
transaction prices for new
vehicles up sharply in the last
few years, dragging used-vehicle prices up with them to
record levels.
It is only logical, says
Karwel, JDPA Canada's
senior manager for its Power
Information Network (PIN).
"If you sell more expen-

sive and better-equipped
cars as new cars, they'll be
more expensive as used cars
as well," he said in an interview with Automotive News
Canada.
PIN data included in a
recent presentation of newand used-vehicle sales trends
for this year revealed the
average 2015 new-car transaction price was $30,200, up
about $900 or 3.2 per cent
from the previous year and
roughly matching the jump
between 2013 and 2014.

USED PRICES TRAIL NEW
While used-vehicle prices have also risen since 2012,
reaching about $20,100 last
year, they have not kept pace
with new vehicles. The average transaction price has
climbed six per cent in five
years, Karwel said, compared
with 12 per cent for new vehicles.
Rather than focus on price
alone, JDPA looks at the
pricing ratio of used-vehicle transactions to new ones,
which Karwel said historically tends to be about 60 per
cent. For the first part of this
year, it's been about 58 per
cent, he said.

"That's why we're saying
we actually think used-car
pricing has room to increase."
Another factor that could
push up prices is an increasing length of loan terms for
used vehicles, enticing buyers
to buy bigger with the lure of
lower monthly payments.
"We're hitting a point
where nearly half of loans
on used cars are 72 months or
higher," he said. "That's an
awful long time to have a loan
on used cars."

TREND-SETTING TRUCKS
Trucks are responsible
almost entirely for the rise in
used transaction prices, the
PIN data suggests, rising nine
per cent between 2011 and
2015. Used car prices actually dropped by five per cent in
the same period.
However, analyst Dennis
DesRosiers said the PIN data
should be treated with caution, as it reflects only usedcar transactions by new-vehicle dealers. They account
for only a fraction\ of overall
used-car deals (Karwel estimated around 30 per cent)
and typically involve vehicles
no more than two years old.

Negligent-repair suit
lacked evidence
BY ERIC FREEDMAN
LEGAL CORRESPONDENT

A BRITISH COLUMBIA judge has
rejected a negligent-repair suit
against a Burnaby, B.C., dealership that installed a used rear axle
differential on a 2000 Yukon that
had been rear-ended.
Provincial Court Judge
Bryce Dyer ruled that
customer Paul La Bel
presented insufficient
evidence that Carter
Chevrolet Cadillac
Buick GMC improperly
installed the differential
in 2012, didn't disclose
that it was used and
didn't replace seals and
gaskets.
The store's invoice clearly
showed that it was a used part,
Dyer said, and La Bel "had no
basis to assume Carter would put
a brand-new part in a 12-yearold Yukon with 223,041 km on the
odometer." He said the replacement differential likely failed after
two years because of wear and tear
caused by aggressive driving or
pulling overweight trailer loads.

OWNER RESPONSIBLE FOR COSTS
THE OWNER OF A 2008 LAND
Rover - not the dealership that sold
and serviced it - is on the hook for
$4,525 to a specialty repair shop
although the customer didn't initially authorize the outside work,
a Saskatchewan Provincial Court
judge has ruled.
The decision means Olympic
Motors, which couldn't resolve the
electrical-system problem during
the nine weeks it had the vehicle,
isn't liable to Brad's Automotive
for parts and labour charges. The
dealership had sent the vehicle
to Brad's to diagnose and fix the
problem without the customer's
pre-approval, but the customer
later allowed the independent shop
to continue working on it. Saying
Brad's "is entitled to be paid for
conscientiously working on the
vehicle," Judge Paul Demong held
the owner solely responsible for
the costs,

NO GROUNDS FOR LIABILITY
THE SOLE TWO DIRECTORS OF
an Infiniti store in Ottawa can't be
held personally liable in a wrongful discharge suit by its former
general manager, according to an
Ontario Superior Court judge. The
judge also found no grounds for liability of six interrelated holding
companies.
The case was filed by Darren
Sproule, who had been hired in
1998 to work at two Tony Graham
Automotive stores and was promoted in 2006 to general manager of
the dealer group's Nissan-Infiniti
store. He was terminated in 2014.
Judge Robert Maranger found
no basis to impose personal liability on directors Maureen and
Elizabeth Graham in the absence
of fraud, deceit, dishonesty or lack
of corporate authority on their
part. Maranger also said although
the holding companies are financially intermingled, "they do not
exercise directly or indirectly any
control over the employees."

JUDGE RULES INTERFERENCE
A PORT ALBERNI, B.C.,

dealership committed an unfair
labour practice when its president promised unionized employees raises, bonuses and other benefits if they decertified the union,
the British Columbia Labour
Relations Board ruled. The improper communication came shortly before Pacific Chevrolet Buick
GMC s collective bargaining agreement
with the International
Association of
Machinists and
Aerospace Workers
was set to expire in
March. Dealership president William Pulford
admitted communicating directly with workers and apologized to
the union but claimed
he didn't know it was illegal. The
store, which he acquired in 2012,
had been unionized since 1962.
"Employer promises of beneficial changes to employees' terms
and conditions of employment if
the union is decertified constitute
unlawful interference and inducements to cease being members of
the union," the decision said.

OVERTIME PAYMENT OVERTURNED
The Ontario Labour Relations
Board has overturned a $10,000
award to a former finance/business manager who claimed a
Pembroke dealership failed to pay
him overtime.
Board Vice Chair Paula Turtle
found insufficient evidence that
Kevin Yantha actually worked
more than 44 hours a week at
Edwards Mazda, even if he were
on the premises for longer than
that. Yantha generally handled
financing paperwork for 30-40 sales
per month, taking an average of 45
minutes per deal.
"Yantha was not required to
remain at the workplace for the
entire duration of his shifts,"
Turtle said. "Furthermore, employees were free to engage in personal
pursuits during their downtime if
they remained at the workplace,"
including reading books and surfing the Internet.
The board also ruled that he
wasn't entitled to termination benefits because he chose to retire voluntarily after five months on medical leave.

CURBER SIDELINED, INCARCERATED
A North York curbsider is serving 750 days behind bars for acting
as an unregistered dealer and for
odometer tampering. That includes
the longest-ever such sentence in
Ontario - 450 days - for one conviction and a consecutive 300 days in
prison for another conviction.
In one of the cases, Mehran
Amini bought 30 vehicles - mostly late-model, high-mileage pickups from Western Canada - rolled
back their odometers and sold
them online in Ontario, sometimes
pretending to be a private seller,
according to the Ontario Motor
Vehicle Industry Council, which
investigated the violations. His
"elaborate scheme" included using
aliases and phony bills of sale,
authorities said.
Justice of the Peace Maimun
Gilani said Amini had victimized
purchasers, showed no remorse
and had been hostile to investigators. His first curbsiding conviction led to a $393,000 fine.

Automotive News Canada - July 2016

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