Hammer Time: The Disappearing Dealer

Ah, the good old days. When ‘Show me the money!” was the car business’ mantra and sub-prime loans were cooked-up in four font legalspeak and signed by anyone with a pulse. Not anymore. Dealers are dying en masse. Car values are going down the proverbial poop train. October saw average wholesale values descend a full six percent according to Manheim Consulting. November was another 5.7% chop. December? Well… let me just say that every dealership I see these days (open or closed) seems to have most of the same vehicles left on their lot. What can I say? It’s Christmas time and no one needs a car. Even a cheap one (except me of course). The auctions have about half the dealer traffic who are buying less than half as much. Even the mighty 800lb. gorillas of this business are falling fast. Carmax is a good example of the heartier dealer species. When I visit their weekly auctions in Atlanta I’m usually seeing half as many dealers attending their sales. The lower demand equates to far lower return on their trade-in’s, rejects,and repos. So much so that Carmax even cited it as one of the reasons why they posted a major loss this past quarter.

Of course, the bigger reason behind all this is America’s finance boogeyman who tried to get Bankrupt Billy to pay for the portly paychecks of America’s aging and indebted Peter, Paul and Mary’s. Who will be paying for this game of musical chairs? The taxpayer? Santa Claus? Our beloved allies in the world? I really don’t know. All I know is that I thought hell would freeze over before a 1997 Geo Metro, 1993 Lexus LS400, and 1992 Honda Prelude Si, all met the hammer at the parsimonious price of $500 a pop. Now my Hell will only consist of selling these old sleds to whoever can afford to actually pay in cash.