"Automatically install new apps" not working
Apple is not doing very good programming lately, they have shifted their resources to making iOS look pretty. They are not enterprise ready yet and this is just one example, I have ran into this issue about 20 times and its such a time consuming task to manually click update or install on each iPad, because you can hold the command key and clicking one app will automatically highlight all, but yes the automatically install new apps checkmark should do all this for you, applause for Apple's software team on their historic buggy software releases.
I am not 100% on this but make sure your restrictions allow apps to be deleted and install apps is allowed, and delete all caches in the users library, reboot, try again.. sorry if that doesnt help..