At that price range, you can almost be in a Gen V Viper...
Manufacturer 84 at 0%
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- Start date
I think a pretty good deal but we probably could have done better if we were really ruthless. I felt like a shark smelling blood in the water and I thought the deal was more than fair so I stopped playing the dealers against each other and selected the dealership I liked the most. 20% off MSRP is generally pretty solid.
MSRP was 49,900 and we paid 40,100+Taxes/fees. We were OTD for about 43k and change. The car is pretty nice so far. I haven't really tried full boost yet until she is broken in.
That’s the one. I’m not crazy about Lightning Blue, and I’m agonizing over a local dealer who has a regular GT350 in Kona and will change the stripe color to white “R” stripes.
Exactly. My wife said the same thing last night.
The dealer I bought my Nautilus from dropped their prices again. I have no complaints as they only had one with the right exterior/interior color that my wife liked and we bought.
The black reserve with the 2.7 eco is a nice price.
New Inventory | Apple Lincoln Apple Valley
The black reserve with the 2.7 eco is a nice price.
New Inventory | Apple Lincoln Apple Valley
Not bad at all. Congrats.
Thought the car industry guys would find this interesting, your world is changing fast. I just do not have good vibes going on about the recovery, I think they have done to good a job scaring people.
https://seekingalpha.com/article/43...t-on-q1-2020-results-earnings-call-transcript
CEO of KAR Auction Jim Hallett
Great. Thank you, Michael, and good morning, ladies and gentlemen, and welcome to our call. This is certainly a unique call in that we are hosting this call, while many of us are working under stay at home orders and many other restrictions on our normal business and our personal lives as well. What I want to cover today is I want to review key items impacting our first quarter performance. I wanted to talk about our top priorities top four priorities that I'm focused on right now. And even though we're unable to provide guidance on our expected results for 2020, I would like to comment on what I see as the major influences on our performance for the remainder of the year and beyond.
First, let me speak to the first quarter. As we reported this morning, our operating results were well below the prior year. However, this does not tell the complete story on how we were performing throughout much of the quarter. Starting with ADESA, North American volumes were 7% ahead of 2019 through the end of February. The strong performance in the first two months was driven by our digital platforms, OPENLANE and TradeRev. Physical auction volumes were up 1% through the first two months. We are also making good progress against our strategic priorities discussed on our prior earnings calls.
Starting in the second week of March, we saw a rapid deterioration in volumes as people began to shelter in place and retail activity slowed at an amazing pace. We saw volumes decline across all of our sales platforms physical and platforms being OPENLANE and TradeRev for the month of March compared to the prior year. In fact, our North American volume, excluding TradeRev, was down 45% the week beginning March 16 and down 87% the week of March 23. I will say the primary driver of these reductions was reduced retail activity in the used car marketplace. However, our decision to move to Simulcast-only auctions the week of March 16 and no physical or Simulcast auctions the weeks of March 23 and March 30, also had an impact on our performance.
When we decided to shut down all 74 of our North American auction locations with only a few days' notice, we were committed to paying all of our employees through April 3. The reduction in revenue, combined with the decision to pay both salary and hourly employees during that period of shutdown was a hit to ADESA's performance in March of over $35 million. The impact on AFC was not as pronounced in Q1 as it was for ADESA. We saw loan originations decline, but this will have a bigger impact on Q2 performance. We continue to earn income on the portfolio. We reduced the credit available to all AFC customers similar to what we did in 2008 when we saw a disruption of the retail used car market.
We recognized about $5 million in losses in Q1 after identifying issues with certain dealers early in Q2. As we learned in the Great recession of 2008, we need to recognize the losses early and keep the portfolio as clean as we can and it will serve us better in the upcoming quarters. One thing that is missed in Q1 because of all the unusual activity in March, is our success in controlling our corporate costs. We made controlling our corporate overhead a priority for 2020, and we were showing promising results in our effort to reduce SG&A. To summarize, what started out as a good quarter was derailed by a pandemic that none of us saw coming on our last earnings call less than three months ago.
And I'm confident that we will get through this, and I know that we have the right strategy in place for our businesses, and we can navigate the uncertainty that we're bound to face over the next few quarters. Now I want to speak to I call my top four priorities for KAR Global. So first, we must ensure we have capital to work through the pandemic. Accordingly, we have taken aggressive actions to reduce our costs, while all of our markets are opening well below normal levels of activity. We have furloughed approximately 11,000 employees in April, and we will call them back only as our volume begins to increase. We reduced the pay of all of our leaders and anyone making over $80,000 per year. Our directors volunteered to forego the cash portion of their director fees for the second quarter, and we have extended terms on trade payables.
We have negotiated deferrals of a portion of our rent on many of our locations for the months of May and June. Our first step in conserving our cash was to reduce our cost structure so that we could break even at low volume levels for an extended period of time. We still have about $100 million of available cash as of today, and we have not drawn down on our revolving credit facility. As we focused on conserving cash and continue to be uncertain on the timing and the pace of recovery of our business, we have temporarily suspended our dividend for the second quarter. An equally important priority is the safety and well-being of our employees. We are committed to operating our business in a safe manner. We are following all federal, state, provincial and local guidelines and these vary throughout our businesses.
It is important that we have a safe working environment and we will continue to respect social distancing, provide face mask where and when required and put the health and safety of our employees first when making decisions on bringing employees back to work.
Next, I'm committed to the digital transformation of the auction industry. I believe that this is an opportunity to accelerate some of those transformations. As you know, we have been leading a transformation of the way we do business with platforms like OPENLANE, TradeRev, Simulcast, CarsArrive and RDN. Over the past two months, we have demonstrated that we can provide our services through digital platforms and give our customers, both sellers and buyers, a great outcome and a great experience.
This pandemic has forced us to move faster in migrating our business to a fully digital marketplace. Today, all of our sales are online sales. Our competitors have had to go digital as well. I am sure that we will have customers that will want to return to the physical format when it is safe to do so. But I want to continue to demonstrate to all of our customers that we can provide a more efficient process with the same or better results without running vehicles across the block. It will take some time before we get some of our customers to embrace not running cars across the block, but I see this as a possibility in the way of the future. Our teams deserve a lot of credit and a lot of recognition for moving from our traditional live physical auction process to fully Simulcast auctions in only seven days.
We have signed up thousands of dealers to buy online that have never participated in any online buying in the past. At the end of our two weeks shutdown in North America, we had our first ever fully digital auction that was operated remotely with an automated auctioneer and all buyers and sellers interacting through our Simulcast platform. We have named this Simulcast Plus. Simulcast Plus has allowed us to sell vehicles from locations that were shut down. KAR Global is the first mover in the use of this technology, where there's an automated auctioneer and we're very encouraged with the initial results.
We have proven that we can operate in any conditions even the most challenging conditions of this pandemic without the need for people to congregate in our locations and without moving cars across the block. The opportunities and the benefits for Simulcast and Simulcast Plus auctions is tremendous. Combined Simulcast and Simulcast Plus with our digital platforms of OPENLANE, TradeRev and CarsArrive, and we can improve the cost structure while delivering the same exceptional service that our customers have come to know from us. And my final priority is to come out of this pandemic with a lower cost structure for our business. As you know, we have been forced on reducing our SG&A for several years. We have also had a number of initiatives tied to improving our gross profit by reducing the cost to deliver our services at the auction or off-premise services.
The pandemic has forced us to reduce our staff and other costs to a bare minimum to survive while our physical operations around the world are shut down. This gives us a chance to start over. We can reimagine how to serve our customers, we can reengineer processes to better match the way people are doing business today, including the use of technology throughout all of our businesses. When we get past this pandemic, we can and will have a lower cost structure going forward. We can operate with less SG&A, we can take advantages of efficiencies and the use of technology to reduce our cost of services and improve gross profit as a percent of revenue. We will need to see volumes increase from what we're seeing now, and we will have to offer our full suite of services before we will see improved cost structure in our results, but I am confident that we can get there.
Now let me provide some color on what we see going forward. We are not providing guidance at this time due to the uncertainty we're faced in all of our businesses. We continue to wait on the relaxing of restrictions throughout North America and Europe and cannot predict how soon we will see retail used car activity return to the normal levels, or when we will be allowed to bring our employees back to work to provide the many ancillary and related services we provide on-premise as well as off-premise. What I will tell you is that I am confident our wholesale marketplace is resilient. And will return to the levels of activity that we were enjoying prior to the pandemic.
I just don't know the exact timing. As far as retail sales, both new and used, I am expecting a recovery to in both the wholesale and retail sales once we are all back to work. We are already seeing evidence of that. We have a strong supply of commercial vehicles already parked at our auction locations. Repossession activity has been put on hold and is expected to recommence very shortly. This will add to the supply of wholesale vehicles that will need to be processed through the auction industry. And the return of off-lease vehicles will be an important contributor to the wholesale auction industry.
We not only have a backlog of lease returns from the last couple of months but we have strong lease returns scheduled for the next 2.5 years. We also know that the production of new cars will restart and that new car sales will drive will be driven by people leasing a new car when their current lease expires. One segment that is likely to remain challenged well into the future is Rental Vehicles. However, this is a relatively small segment for ADESA. I believe our outlook is positive, and it's a matter of when not if things get back to a new normal.
However, the strong supply of vehicles waiting to be sold at auction, combined with low retail used car sales will drive used car prices lower. We are likely to have an imbalance of supply and demand for the remainder of 2020. This will put pressure on our consignors as they adjust to reduced values for their vehicles, but will be a positive for the number of wholesale transactions as we look forward to the easing of restrictions over the next few months. I am concerned that unemployment will be a headwind to new and used automobile sales for the remainder of 2020 and likely into 2021.
The shutdown of our economy has certainly put a strain on many households. I am concerned that we will not see an immediate rebound when we start easing restrictions and people return to work. This could clearly stretch out the recovery period for the used car marketplace. We'll just have to wait and see how it plays out. I do want you to know that I want to be prepared to get through the next 18 months no matter what economic conditions we face. I continue to worry that we may see improvement over the summer and then face a second wave of COVID-19 cases this fall and winter.
Offsetting this perhaps is some evidence that one of the impacts of the virus is that people are much more comfortable traveling in their own vehicle than in a rideshare or public transportation. This may be a positive trend for private vehicle ownership. Clearly, there's a lot that still needs to be learned about what all these impacts will be. As the expression goes, all I can do is prepare for the worst and hope for the best. In conclusion, I am confident that we've taken the steps to manage our cash resources through an extended period of disruption for this pandemic. We will not get overconfident at the first sign of improvement.
This may be a long road back. We are focused on our net cash position on a daily basis and we will continue to conserve capital to ensure that we have the resources to get to the other side of this pandemic. We will take advantage of the opportunity provided to us by this pandemic to accelerate the digital transformation of the auction industry. And quite frankly, I find this very exciting. And we are committing to having a lower cost structure for our business as we return to normal over whatever period it takes.
So with that, let me turn it over to Eric for more details on our financial performance. Eric?
https://seekingalpha.com/article/43...t-on-q1-2020-results-earnings-call-transcript
CEO of KAR Auction Jim Hallett
Great. Thank you, Michael, and good morning, ladies and gentlemen, and welcome to our call. This is certainly a unique call in that we are hosting this call, while many of us are working under stay at home orders and many other restrictions on our normal business and our personal lives as well. What I want to cover today is I want to review key items impacting our first quarter performance. I wanted to talk about our top priorities top four priorities that I'm focused on right now. And even though we're unable to provide guidance on our expected results for 2020, I would like to comment on what I see as the major influences on our performance for the remainder of the year and beyond.
First, let me speak to the first quarter. As we reported this morning, our operating results were well below the prior year. However, this does not tell the complete story on how we were performing throughout much of the quarter. Starting with ADESA, North American volumes were 7% ahead of 2019 through the end of February. The strong performance in the first two months was driven by our digital platforms, OPENLANE and TradeRev. Physical auction volumes were up 1% through the first two months. We are also making good progress against our strategic priorities discussed on our prior earnings calls.
Starting in the second week of March, we saw a rapid deterioration in volumes as people began to shelter in place and retail activity slowed at an amazing pace. We saw volumes decline across all of our sales platforms physical and platforms being OPENLANE and TradeRev for the month of March compared to the prior year. In fact, our North American volume, excluding TradeRev, was down 45% the week beginning March 16 and down 87% the week of March 23. I will say the primary driver of these reductions was reduced retail activity in the used car marketplace. However, our decision to move to Simulcast-only auctions the week of March 16 and no physical or Simulcast auctions the weeks of March 23 and March 30, also had an impact on our performance.
When we decided to shut down all 74 of our North American auction locations with only a few days' notice, we were committed to paying all of our employees through April 3. The reduction in revenue, combined with the decision to pay both salary and hourly employees during that period of shutdown was a hit to ADESA's performance in March of over $35 million. The impact on AFC was not as pronounced in Q1 as it was for ADESA. We saw loan originations decline, but this will have a bigger impact on Q2 performance. We continue to earn income on the portfolio. We reduced the credit available to all AFC customers similar to what we did in 2008 when we saw a disruption of the retail used car market.
We recognized about $5 million in losses in Q1 after identifying issues with certain dealers early in Q2. As we learned in the Great recession of 2008, we need to recognize the losses early and keep the portfolio as clean as we can and it will serve us better in the upcoming quarters. One thing that is missed in Q1 because of all the unusual activity in March, is our success in controlling our corporate costs. We made controlling our corporate overhead a priority for 2020, and we were showing promising results in our effort to reduce SG&A. To summarize, what started out as a good quarter was derailed by a pandemic that none of us saw coming on our last earnings call less than three months ago.
And I'm confident that we will get through this, and I know that we have the right strategy in place for our businesses, and we can navigate the uncertainty that we're bound to face over the next few quarters. Now I want to speak to I call my top four priorities for KAR Global. So first, we must ensure we have capital to work through the pandemic. Accordingly, we have taken aggressive actions to reduce our costs, while all of our markets are opening well below normal levels of activity. We have furloughed approximately 11,000 employees in April, and we will call them back only as our volume begins to increase. We reduced the pay of all of our leaders and anyone making over $80,000 per year. Our directors volunteered to forego the cash portion of their director fees for the second quarter, and we have extended terms on trade payables.
We have negotiated deferrals of a portion of our rent on many of our locations for the months of May and June. Our first step in conserving our cash was to reduce our cost structure so that we could break even at low volume levels for an extended period of time. We still have about $100 million of available cash as of today, and we have not drawn down on our revolving credit facility. As we focused on conserving cash and continue to be uncertain on the timing and the pace of recovery of our business, we have temporarily suspended our dividend for the second quarter. An equally important priority is the safety and well-being of our employees. We are committed to operating our business in a safe manner. We are following all federal, state, provincial and local guidelines and these vary throughout our businesses.
It is important that we have a safe working environment and we will continue to respect social distancing, provide face mask where and when required and put the health and safety of our employees first when making decisions on bringing employees back to work.
Next, I'm committed to the digital transformation of the auction industry. I believe that this is an opportunity to accelerate some of those transformations. As you know, we have been leading a transformation of the way we do business with platforms like OPENLANE, TradeRev, Simulcast, CarsArrive and RDN. Over the past two months, we have demonstrated that we can provide our services through digital platforms and give our customers, both sellers and buyers, a great outcome and a great experience.
This pandemic has forced us to move faster in migrating our business to a fully digital marketplace. Today, all of our sales are online sales. Our competitors have had to go digital as well. I am sure that we will have customers that will want to return to the physical format when it is safe to do so. But I want to continue to demonstrate to all of our customers that we can provide a more efficient process with the same or better results without running vehicles across the block. It will take some time before we get some of our customers to embrace not running cars across the block, but I see this as a possibility in the way of the future. Our teams deserve a lot of credit and a lot of recognition for moving from our traditional live physical auction process to fully Simulcast auctions in only seven days.
We have signed up thousands of dealers to buy online that have never participated in any online buying in the past. At the end of our two weeks shutdown in North America, we had our first ever fully digital auction that was operated remotely with an automated auctioneer and all buyers and sellers interacting through our Simulcast platform. We have named this Simulcast Plus. Simulcast Plus has allowed us to sell vehicles from locations that were shut down. KAR Global is the first mover in the use of this technology, where there's an automated auctioneer and we're very encouraged with the initial results.
We have proven that we can operate in any conditions even the most challenging conditions of this pandemic without the need for people to congregate in our locations and without moving cars across the block. The opportunities and the benefits for Simulcast and Simulcast Plus auctions is tremendous. Combined Simulcast and Simulcast Plus with our digital platforms of OPENLANE, TradeRev and CarsArrive, and we can improve the cost structure while delivering the same exceptional service that our customers have come to know from us. And my final priority is to come out of this pandemic with a lower cost structure for our business. As you know, we have been forced on reducing our SG&A for several years. We have also had a number of initiatives tied to improving our gross profit by reducing the cost to deliver our services at the auction or off-premise services.
The pandemic has forced us to reduce our staff and other costs to a bare minimum to survive while our physical operations around the world are shut down. This gives us a chance to start over. We can reimagine how to serve our customers, we can reengineer processes to better match the way people are doing business today, including the use of technology throughout all of our businesses. When we get past this pandemic, we can and will have a lower cost structure going forward. We can operate with less SG&A, we can take advantages of efficiencies and the use of technology to reduce our cost of services and improve gross profit as a percent of revenue. We will need to see volumes increase from what we're seeing now, and we will have to offer our full suite of services before we will see improved cost structure in our results, but I am confident that we can get there.
Now let me provide some color on what we see going forward. We are not providing guidance at this time due to the uncertainty we're faced in all of our businesses. We continue to wait on the relaxing of restrictions throughout North America and Europe and cannot predict how soon we will see retail used car activity return to the normal levels, or when we will be allowed to bring our employees back to work to provide the many ancillary and related services we provide on-premise as well as off-premise. What I will tell you is that I am confident our wholesale marketplace is resilient. And will return to the levels of activity that we were enjoying prior to the pandemic.
I just don't know the exact timing. As far as retail sales, both new and used, I am expecting a recovery to in both the wholesale and retail sales once we are all back to work. We are already seeing evidence of that. We have a strong supply of commercial vehicles already parked at our auction locations. Repossession activity has been put on hold and is expected to recommence very shortly. This will add to the supply of wholesale vehicles that will need to be processed through the auction industry. And the return of off-lease vehicles will be an important contributor to the wholesale auction industry.
We not only have a backlog of lease returns from the last couple of months but we have strong lease returns scheduled for the next 2.5 years. We also know that the production of new cars will restart and that new car sales will drive will be driven by people leasing a new car when their current lease expires. One segment that is likely to remain challenged well into the future is Rental Vehicles. However, this is a relatively small segment for ADESA. I believe our outlook is positive, and it's a matter of when not if things get back to a new normal.
However, the strong supply of vehicles waiting to be sold at auction, combined with low retail used car sales will drive used car prices lower. We are likely to have an imbalance of supply and demand for the remainder of 2020. This will put pressure on our consignors as they adjust to reduced values for their vehicles, but will be a positive for the number of wholesale transactions as we look forward to the easing of restrictions over the next few months. I am concerned that unemployment will be a headwind to new and used automobile sales for the remainder of 2020 and likely into 2021.
The shutdown of our economy has certainly put a strain on many households. I am concerned that we will not see an immediate rebound when we start easing restrictions and people return to work. This could clearly stretch out the recovery period for the used car marketplace. We'll just have to wait and see how it plays out. I do want you to know that I want to be prepared to get through the next 18 months no matter what economic conditions we face. I continue to worry that we may see improvement over the summer and then face a second wave of COVID-19 cases this fall and winter.
Offsetting this perhaps is some evidence that one of the impacts of the virus is that people are much more comfortable traveling in their own vehicle than in a rideshare or public transportation. This may be a positive trend for private vehicle ownership. Clearly, there's a lot that still needs to be learned about what all these impacts will be. As the expression goes, all I can do is prepare for the worst and hope for the best. In conclusion, I am confident that we've taken the steps to manage our cash resources through an extended period of disruption for this pandemic. We will not get overconfident at the first sign of improvement.
This may be a long road back. We are focused on our net cash position on a daily basis and we will continue to conserve capital to ensure that we have the resources to get to the other side of this pandemic. We will take advantage of the opportunity provided to us by this pandemic to accelerate the digital transformation of the auction industry. And quite frankly, I find this very exciting. And we are committing to having a lower cost structure for our business as we return to normal over whatever period it takes.
So with that, let me turn it over to Eric for more details on our financial performance. Eric?
I will add a thought concerning the above: if you are trading a SUV or car and have a good number, I wouldn't wait to long. That huge pulse of auction cars and SUV's is gonna sell cheap and put pressure on.
100% true right now dealership know the used vehicle market is in the tank. Its easier to finance a new vehicle than older.
Only good news is that the truck market should hold up.
Only because of fleet sales and huge incentives. You take those away and its not gonna be good
In my mail, I got a private cash offer of $3000 from Ford this weekend on a new F250. About 45 days too late 
In my mail, I got a private cash offer of $3000 from Ford this weekend on a new F250. About 45 days too late
Terrible luck. Too bad it cant be passed on to someone else
Yeah, I know! I wish my dealer could refund me the $3000!
I just sold my car this weekend. I have been thinking of selling it before the Rona shut everything down. Immediately after, my car's value went down $5k so it wasn't worth dumping it.
This last weekend, I got an offer that was the original value before all this shit went down, so I jumped on it.
I'm with you though, car values are going to get rocky for a while. My buddy is a used car manager at a dealer and he was saying the auctions are crazy right now. No one is buying much, so if you see something you want you can get some really good deals.
Ford to restart production on May 18th and Flat Rock on the 25th
2 Ford plants in North America missing from list for reopening week of May 18. Here's why
Also, apparently the Mach - E is going to be Mexican produced... lol
2 Ford plants in North America missing from list for reopening week of May 18. Here's why
Also, apparently the Mach - E is going to be Mexican produced... lol
2019 Ecos and GTs should get the 6 months no payments. They really arent advertising 0% at 84 lately.
I wonder why
Looking for a new one?
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