Chapter 8. Glossary of Terms

A
Absolute Auction – An auction where every vehicle is sold to the highest bidder.
Absolute Low – The lowest price a seller is willing to take for a vehicle.
Absolute Sale – (See Absolute Auction)
Acquisition Fee – A charge included in most lease transactions that is either paid up front or included in the total cost of the vehicle. This fee covers a variety of administrative costs, such as the costs of obtaining a credit report, verifying insurance coverage, checking the accuracy and completeness of the lease documentation and entering the lease into data and accounting systems.
Adjusted Capitalized Cost (Adjusted Cap Cost) – The amount capitalized at the beginning of the lease, equal to the gross capitalized cost. This amount is sometimes referred to as the net cap cost.
Arbitration – A service provided by the auctions to protect the interests of both buyers and sellers to insure the transaction has been properly represented.
Arena – The area where the auctioneer works and the vehicles are offered for sale. (Also called Ring)
“As Is” – (See Red Light) Specifics on what constitutes an “as is” vehicle can vary from one auction to another, but generally will include vehicles six years or older, with more than 100,000 miles registered on the odometer or where the odometer is suspect. Other factors affecting the evaluation of a vehicle may also apply, depending on the individual auction’s policy.
At-Risk Vehicles – Cars or trucks owned by a daily rental company which, at their end of service, must be remarketed by the rental company. “Risk” means the rental company bears the risk of the price they will receive for this vehicle when it is retired from service. (Term “nonprogram vehicles” is preferred.)
Auction – The sale process by which multiple bidders compete to acquire a vehicle that is ultimately sold to the person offering the highest price.
Auctioneer – Highly skilled manager of the auction activity at the time of sale. Sometimes referred to as the “bid caller.”
Auction Access – (See Dealer Registration)
The national dealer registration system at some NAAA member auctions, which allows a dealer to electronically register at an auction and reserve a bidder badge. The system allows them to be automatically pre-registered at any participating member auction location.
Auction Agreement – A contract executed by the auction and its buyers and sellers that authorizes the auction to conduct the sale and sets out the terms of the agreement and the rights and responsibilities of each party.
Auction Guarantee – Specific guarantees may vary from one auction to the next, but usually cover the drivetrain, including (but not necessarily limited to) the engine, transmission and rear end.
Auction with Reserve – An auction where the sellers set a minimum price on their vehicles. They do not have to sell their vehicles if bidding fails to reach the reserve price, which may or may not be made public. (Floor price)

B
Bid – The amount of money offered for a vehicle in the sale.
Bid Assistants/Consultants/Spotters – (See Ringmen)
Bidder Badge – A credential that indicates a buyer’s bidder number for a specific sale. The buyer is registered with Auction Access, and the bidder number is connected to the buyer’s Auction Access account.
Bidder Number – The number issued to each qualified buyer on sale day.
Bill of Sale – A document provided by a seller showing the name of the purchaser and purchase price, which becomes the basis for calculation of sales and other taxes.
Black Book – Wholesale prices guide.
Block – The auctioneering and business transaction station in each auction lane.
Block Clerk – The person who records transaction information in the lanes.
Block Ticket – A computer-printed “paper trail” generated by the auction that documents the auction process from registration through the sale. (Also known as an invoice)
Buyer's Fee – A fee paid to the auction house by the winning bidder. The amount of the fee varies by auction.

C
Capitalized Cost (Cap Cost) – The price a buyer agrees to pay for a leased vehicle. The monthly lease payment is based on its depreciation, interest, administration, etc.
Capitalized Cost Reduction – An initial payment on a leased vehicle, which then lowers the monthly lease payment. That payment can consist of cash, a trade-in allowance on an existing vehicle or rebates and incentives provided by the manufacturer. The adjusted cap is the gross cap cost less the capitalized cost reduction.
Captive Finance Company – A leasing or finance company that is affiliated with a vehicle manufacturer.
Certificate of Origin – A document that conveys the title of a vehicle from the manufacturer to the dealer.
Closed Auction (sale) – An auction sale limited to select dealers, such as those representing a particular franchise.
Closed-End Lease – A lease in which the lessee is not responsible for any difference between the actual and estimated residual value at the time of lease maturity. The lessee’s only extra obligations under a closed end lease might be mileage or wear and tear exceeding the lease contract provisions.
Consignment – Vehicles assigned to an auction for sale.
Consignor – Any member of the remarketing community who provides vehicles for sale at the auction. Consignors range from automakers selling program cars to rental and corporate fleet operators to individual dealers.
Cross-Line Buying – Buying “across” manufacturer product lines, e.g., a Pontiac dealer buying a Cadillac at auction.
CyberLots® – Web-based collections of used vehicles that are offered to dealers for purchase over the Internet at a set price.

D
Daily Rental – Companies that rent cars by the day or week.
Dealer – An individual who has been licensed by the state to transact the sale and purchase of new or used vehicles.
Dealer Invoice – The purchase price of the vehicle that the dealer is obliged to pay the manufacturer.
Dealer Registration – (See Auction Access) The procedure whereby licensed dealers are registered to do business at an auction.
Dealer Sale Representative – An individual designated to act on the dealer’s behalf at wholesale auctions.
De-fleet – Action taken by commercial or rental fleet operators to reduce their number of vehicles.
Depreciation – The value lost as the vehicle ages. Depreciation is usually rapid in the early years of the vehicle’s life and can be greater or less than the average because of mileage and wear and tear.
Depreciation and Any Amortized Amounts – Total amount charged to cover the vehicle’s projected decline in value through normal use during the lease term, as well as other items that are paid for over the lease term. It is calculated as the difference between the adjusted capitalized cost and the vehicle’s value at the end of the lease. This amount is a major part of a lessee’s base monthly payment.
Disabled Sale – Auction term for a sale running inoperable vehicles with excess wear and tear.
Dispose, Resale, Remarket – Terms used to describe offering a titled vehicle for sale at an auction.
Draft – A bank collection item drawn by one bank on another. At auctions, the draft is signed by the buyer at the auction house and deposited, along with the title to the vehicle, in the auction’s bank. After the auction’s bank has collected from the buyer’s bank, the title is released to the buyer.

E
Equity – In an installment sale or loan, the positive difference between the trade-in or market value of your vehicle and the loan payoff amount. When the loan is paid off, the equity is the market value of the vehicle.
Excess Mileage Charge – A charge by the lessor or assignee for miles driven in excess of the maximum specified in the lease agreement. The excess mileage charge is usually between $0.10 and $0.25 per mile. Suppose, for example, that your lease specifies a maximum of 36,000 miles and a charge of $0.15 per mile over the maximum. If you drive 37,000 miles, the excess mileage charge will be $0.15 x 1,000, or $150.
Excess Wear and Tear Charge – Amount charged by a lessor or assignee to cover wear and tear on a leased vehicle beyond what is considered normal. The charge may cover both interior and exterior damage, such as upholstery stains, body dents and scrapes and tire wear beyond the limits stated in the lease agreement.
Exotic Highline® – (See Highline) A Manheim-trademarked term for a rare, unique or top-of-the-line vehicle, typically in the sports or luxury segment.

F
Factory Sale – The same as closed sale in which buyers are limited to those representing a particular brand.
Fair Market Value – The current value of a particular vehicle in the marketplace, based on mileage, exterior and interior condition, mechanical fitness and such. Floorplanning – A dealer’s vehicle inventory line of credit. Manheim Automotive Financial Services (MAFS®) specializes in dealer floorplanning through auctions.
Floor Price – The seller’s asking price for a vehicle.
Frame Damage – Any damage to the frame or frame members of a vehicle. Refer also to the NAAA Frame Policy.
Franchised Dealer – A licensed vehicle dealer authorized to sell and service a specific brand of new vehicles.
Frontline Ready – Vehicles that are in retail-ready condition and ready to be put in the front line of a dealer’s lot.

G
Green Light – Auction term for a vehicle that is sold with some buyer protection as to its condition.
Gross Capitalized Cost (Gross Cap Cost) – The agreed-upon value of the vehicle, which generally may be negotiated, plus any items the lessee agrees to pay for over the lease term (amortized amounts), such as taxes, fees, service contracts, insurance and any prior credit or lease balance.

H
Hammer Falls – An expression used to indicate that the auctioneer has struck a deal between the buyer and the seller, and a sale is consummated.
Hammer Price – The price offered by the last bidder and accepted by the auctioneer, who bangs the hammer or gavel to acknowledge this price as the sale price.
Heavy Truck – Trucks with a Gross Vehicle Weight over 33,000 lbs. are Class 8 or Heavy Duty. Class 7 trucks, 26,000 to 33,000 Gross Vehicle Weight are sometimes referred to as Heavy Duty.
Highline® – (See Exotic Highline) Manheim-trademarked term for a top-of-the-line car.

I
IF – An offer made strictly between the buyer and the seller and not binding on either party until the sale is consummated. Usually facilitated by the auction between the buyer and seller. The bidder agrees to buy the vehicle “IF” the seller will accept the offer within a specified period of time.
Incentives – A form of reward offered to boost sales; a special price reduction or rebate from vehicle manufacturers to influence the sale of a particular model. Incentives can be low to zero percent financing rates, no down payment, cash back offers, “free” options, etc.
Independent Dealer – A used vehicle dealer who is not associated with a manufacturer.
Inventory Turn – A measure of a dealer’s operations that calculates how quickly he sells, or “turns,” his inventory.

K
Kelley Blue Book – A publication that lists prices of used vehicles.

L
Lane – The passageway in front of the auctioneer where the vehicle travels to the block to be offered for sale. Usually listed as Lane 1, 2, 3, etc. or Lane A, B, C, etc.
Lease – A contract between a lessor and a lessee for the use of a vehicle or other property, subject to stated terms and limitations, for a specified period and at a specified payment.
Lessee – The company or individual to whom a vehicle is leased.
Lessor – The party to a lease agreement who holds legal or tax title to the vehicle and receives the lease payments.
Lights – (See Blue, Green, Yellow, Red) Each color provides important information about the condition of a vehicle, and is illuminated while bidding is underway.
Light Truck – A truck under 16,000 Gross Vehicle Weight, including pickups and vans. Classes 1 to 3.

M
Manufacturer's Statement of Origin (MSO) – (See Certificate of Origin)
Manufacturer's Suggested Retail Price (MSRP) – The suggested retail price the dealer is asking. Generally the same as the “sticker price.”

N
National Automobile Auction Association (NAAA) – An international organization whose members operate wholesale vehicle auctions. NAAA’s 360 member auctions remarket more than 16 million vehicles annually and are active in the Americas, Europe, Asia, Australia and New Zealand.
National Automobile Dealers Association (NADA) – Founded in 1917, NADA represents more than 19,400 franchised vehicle dealers.
National Association of Fleet Administrators (NAFA) – A professional organization created in 1957 for automotive fleet managers.
National lndependent Automobile Dealers Association (NIADA) – Formed in 1946 to represent independent automobile dealers nationwide.
No Sale Fee – A fee charged by the auction to the seller when a vehicle goes through the lane but is not sold.

O
Online Auction – An auction held over the Internet.
Open Auction – A wholesale auction open to all licensed car dealers, both franchised and independent.
Open-End Lease – A lease where no specific time limit is set for the vehicle to remain in service. In most cases, at the end of the lease, any gain or loss from the sale of the vehicle belongs to the lessee.

P
Post-Sale Inspection – An inspection service that helps dealers ensure that a purchased vehicle meets its announced conditions. Auction personnel test drive the car and inspect its frame and mechanical condition to ensure quality and performance before sending it on to the dealer’s lot.
Program Car – A vehicle that is sold directly to a daily rental company by an automaker under terms set by the manufacturer. Program cars represent a large portion of current model-year vehicles remarketed through auctions.
Private Transaction – When one consumer sells a vehicle to another consumer without the interaction of a car dealer.

R
Reconditioning (Recon) – The process of correcting mechanical and cosmetic defects to prepare a vehicle for resale. Auctions typically provide these services to consignors because their investments are more than fullly recovered through the lanes.
Red Light – Indicates a vehicle being sold “As Is.” A red light is illuminated while bidding is underway on such a vehicle.
Remarketing – The term that encompasses all services as well as the actual transfer of a vehicle from seller to buyer.
Resale, Remarket, Dispose – Terms used to describe offering a titled vehicle for sale at an auction.
Reserve Price – In most cases, the minimum price a seller is willing to accept.
Residual (Value) – The projection of the market value of a vehicle at the end of a lease. Specialized companies that evaluate used car price data to make their forecasts typically calculate residual values. Financial companies, including the captive finance operations of the auto companies, use these values to set lease terms.
Retail Price – The price paid by a consumer to a dealer or individual for a vehicle. The dealer or individual sets the retail price of a used car by evaluating the wholesale price paid plus reconditioning expense and other costs.
Retail Transaction – When a licensed car dealer sells a new or used car to a private individual. It is estimated that there are 1.6 wholesale transactions supporting every retail transaction.
Ring – (See Arena) The area where the auctioneer works and the vehicles are offered for sale.
Risk or At-Risk Vehicles – Cars or trucks owned by a daily rental company, which, at their end of service, must be disposed of by the rental company. “Risk” refers to the fact that the rental company is responsible for remarketing these vehicles at the end of their rental service, and thereby they are taking the price risk. By contrast, program cars are sold to rental companies with end-of-service price guarantees.
Run List – The listing of vehicles for sale at a particular auction.
Run Numbers – (a) Numbers assigned to a vehicle or a consignors’ group of vehicles when lane reservations are made. (b) Position in the lane during an auction.

S
Salvage – A vehicle that is not economical to repair and is sold for the value of its salvageable parts.
Seller’s Market – A market in which all or certain vehicles are scarce, and therefore buyers have a limited selection and prices usually tend to be high.
Seller’s Fee (Sale Fee) – The fee paid by the seller to the auction after the vehicle is sold. The fee usually is based on the sale price of the vehicle.
Simulcast Auction – A live auction that is simultaneously transmitted to remote locations via the Internet so that dealers not physically at an auction can bid in real time for vehicles in the lanes.
Subvention – A program or plan in which certain items are subsidized by the manufacturer, the finance company, the lessor or the assignee.
SUV – Sport Utility Vehicle.

T
Title – A legal document issued by the state showing the owner’s name and the vehicle’s mileage at the time of sale.
“Title Absent” (or “Title Attached”) Transactions – When a vehicle is sold “title absent,” the title is not available on auction day and must be produced and delivered to the auction by the seller within a certain period of time.
Trade-in – A vehicle that is sold to either a new or used car dealer as part of the purchase of another.

U
Unit – A single car or truck. A dealer’s or an auction’s fleet operator, or a rental company’s volume, is expressed in number of units.
Used Car Guidebooks – Publications that report current wholesale and/or retail prices of vehicles. Wholesale values generally are determined from factors including auto auction prices, other wholesale transactions and regional demand. Prices are listed according to year, make, model, options, mileage and condition of the vehicle. Retail prices generally are determined by factors including dealership retail sales prices, other retail transactions and regional demand.

V
Vehicle Identification Number (VIN) – A 17-digit combination of letters and numbers that identifies an individual vehicle. It is located on the driver's side of the dashboard at the base where the windshield glass and dashboard meet. Each digit or letter in the VIN provides information about the vehicle.

W
Wholesale Price – The price paid for a vehicle by a purchaser who intends to resell the vehicle.
Wholesaler – A dealer who buys vehicles at auction – or from a dealer or another wholesaler – and resells them in the wholesale market, i.e., to dealers rather than consumers. Wholesalers also buy and sell cars among the dealers with whom they do business.

Y
Yellow Light – A vehicle that is being offered with certain conditions that are announced prior to sale. Buyers cannot take these conditions to arbitration. A yellow light is illuminated while bidding is underway on such a vehicle.