4 AUGUST 20, 2018 Used-vehicle prices stronger than expected ‘Crazy year’ departs from typical patterns Opinion: A sizzling summer for used vehicle prices I PAGE 13 I used-vehicle values as new-car prices stay high. T reatened tariff s on imported vehicles that could price some consumers out of the new-vehicle market is another factor, both Cox and KAR experts say. Amy Wilson, Hannah Lutz and Melissa Burden awilson@crain.com ing,” said Zohaib Rahim, Cox Auto- motive manager of economics and industry insights. T e company’s Manheim Used Vehicle Value Index ended July at its highest point ever, rising 1.5 percent over June and 5.1 percent vs.
the year earlier, he said, and prices appear to be continuing that strength in August, too. the increases, experts said. Analysts from Black Book and KAR Auction Services Inc. also report higher prices than normal for the season. As summer wanes, used-vehicle values are unusually strong — a phenomenon experts at- tribute to increasing demand for used vehicles, growing dealer focus on that part of their busi- nesses and concern over potential tariff s. “People are thinking about these tariff s and what could come out of that, and I think that’s making used cars more valuable,” Hallett said.
“Going into the year, our economist and folks we work closely with were saying we should expect a 3 to 5 per- cent shift [down] in pricing based on just the infl ux of the off -lease cars with those volumes increasing year over year,” KAR CEO Jim Hallett told Automotive News . Instead, prices have “held up very, very strong.” Hallett: Possible tariffs a factor It has made some dealers want to increase used-vehicle inventory to beat the potential price spike that could follow any tariff going in- to place, Rahim said. A dealer survey by Cox- owned Kelley Blue Book supports that notion that some dealers are stocking up, he said.
Analysts with the industry’s major used-vehi- cle price tracking services all are calling out the unusual trend. Summer, especially the latter part of the season, is when used-vehicle prices typically dip in preparation for the summer sales push ending. “T at’s not alarming, but it’s very abnormal. We don’t see this price trend this part of the year,” Rahim said.
“Used-vehicle prices typical- ly peak in spring, so March and April, and they decline the rest of the year.” KAR executives attributed the high prices in part to fl at new-vehicle incentives that bolster T at might be creating a pull-ahead eff ect, “It’s been a crazy year for used-vehicle pric- Multiple forces are converging to bring about see USED , Page 36 For this AV odd couple, no clash of cultures Partners Ford, Argo AI achieve mutual respect Mark Wahlberg and dealer principal Jay Feldman celebrate their dealership with staff members. Edward Niedermeyer eniedermeyer@crain.com DETROIT — Engineers from Detroit and Silicon Valley are like oil and water, right?
So what happens when they come together to develop self-driving vehicles for the masses? How does that work? Indeed, the idea of an artifi cial intelli- gence expert helping to shape sheet metal seems about as likely as a vehicle engineer specifying the number of terafl ops for a general computing system. But as Ford and software partner Argo AI prepare the auto- maker’s fi rst auton- omous vehicle for 2021 deployment, such col- laborations are becom- ing commonplace.
TOM WOROBEC PHOTOS In an interview with Automotive New s, Argo CEO Bryan Salesky and Ford’s chief program en- gineer for autonomous vehicle development, Chris Brewer, waxed en- thusiastic about the cross-pollination of Argo’s high-tech capabilities and Ford’s vehicle de- velopment know-how. New co-owner Mark Wahlberg brings showtime to Chevy store Salesky: Lots of design input Actor energizes staff and customers, promises to be ‘as visible as possible’ T ey say the challenge of building a vehi- cle that can drive itself and hold up to the high utilization rate Ford says is needed to make the technology profi table is creating mutual respect.
C Melissa Burden OLUMBUS, Ohio — It has a name mburden@crain.com with star power. Now, Mark Wahlberg Chevrolet needs to convert that fame into car sales. With new energy, processes and support from Feldman Automotive Group, employees at this large dealership are pumped to try to double or even triple sales from the “It sounds like putting Argo’s stuff on a car requires a unique process,” says Salesky, 38. “But it’s no diff erent than balancing the 100 diff erent trade-off s that a chief engineer has to manage around noise, vibration and du- rability. T is is ...
what [Ford engineers] have to do on typical vehicle programs.” Rather than “bolting technology onto an existing vehicle,” which Salesky calls “an unnatural act,” his robotics experts are in- volved in the ground-up development of Ford’s fi rst autonomous vehicle. level produced by the former Bobby Layman Chevrolet. While Wahlberg won’t be in Columbus too often, he said he will be involved and will have a presence in the dealership, which sold 200 new and used vehicles a month un- der previous ownership, A visit last week from A-list Hol- lywood star and producer Wahl- berg, who partnered with dealer Jay Feldman in July to buy the dealership, didn’t hurt.
For his part, Brewer, 57, acknowledges unique challenges associated with devel- oping autonomous vehicles. Matching the lengthy development time required for tra- ditional vehicles with the rapidly changing sensor, computing and software technolo- gy Argo needs to stay on the cutting edge “T e energy level is way higher now, a lot of excitement brewing,” said Brian Gilmore, who became general manager of Mark Wahlberg Chevrolet on Aug. 1. He came from AutoNation Ford North Canton in northeast Ohio. Store employees know “this is going to impact our business when it comes to the name recognition, the traffi c it’s going to generate.
I think they all under- stand how big of an opportunity it is.” Case in point: Large TV screens in the ser- vice lounge and throughout the sales fl oor will allow Wahlberg to communicate with staff and customers. “We’re going to do some cool stuff . ... We’re creating this new technology called the virtual visitor, where at the press of a button, I can be on every screen of the store,” see ARGO , Page 37 see WAHLBERG , Page 33 Mark Wahlberg, right, standing with a staff member, created lots of buzz at the store.