By on February 28, 2010

Today I bought an Astro with a garbage bag for a driver’s window. Three very ugly Cavaliers. A Dodge Ram with a vinyl interior. A brown Chrysler Concorde with a deformed trunk lid. A Ford F150 with plexiglass rear glass. A Tahoe with 235k. A Suburban with a rebuilt title, and a Maxima that doesn’t run… yet. Total cost was about $8500. Why would I buy all this drek? Well, truth be told none of these will be keepers. I won’t be financing them. They won’t be used as rentals. In fact I have absolutely no clue about their long-term durability. I bought them because I needed to fatten up my dealer auction for next Tuesday. Will it work? You bet.

We’re in a time of year called, ‘Tax Season’. This is the time of year where most independent dealers will make their fortunes. From late January to late May Uncle Sam will be throwing over $300 billion in overseas supported currency into American hands. The single mom with three kids and a $16,000 income? Her tax return will border on the mid-four figures.  I’m not here to rationalize income redistribution or tow the political lines. But I will tell you straight up that when it comes to cars, money and bullshit are in full swing this time of year.

Most of that ‘money’ will be gone within a week and will go to either one of two things. Electronics or a car. The cost of most used cars at the auctions usually go up about 20% to 40% this time of year for one simple reason. They sell. Even the lowliest of vehicles can find the loftiest of returns during tax season. What this means for me is that 50+ dealers will be looking at my merchandise come Tuesday. I won’t curse my luck and say it will be a great sale. But when you’ve seen the waves of demand come and go as long as I have, you know when to buy and sell. This Tuesday I will hopefully rid last winter’s ‘wholesale heaven’ of 60 vehicles.

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26 Comments on “Hammer Time: Buying Ugly, Selling Happy...”


  • avatar
    lilpoindexter

    Yep It’s true…Last year I sold my 2005 Jeep Liberty around this time…It had been for sale since the previous August.

  • avatar
    criminalenterprise

    Cash for clunkers took a lot of low end junk out of the market forever, too.

  • avatar
    th009

    I suspect you meant “toe the line” unless you are planning to pull your newfound clunkers home at the end of a towing rope.

    http://en.wikipedia.org/wiki/Toe_the_line

  • avatar
    Dynamic88

    Around here, a couple of the larger independents even have a guy on site who’ll do your taxes for you. Then of course, you apply the refund to your vehicle.

  • avatar
    Jeff Waingrow

    There’s no end to how interesting business is when you have the luxury of seeing it from the inside out. Thanks to Steve for another insightful piece.

  • avatar
    educatordan

    Yeah I remembered it was tax time when I realized that the independents around here who spend most of the year with lots full of junk, suddenly were down on inventory.

  • avatar
    ClutchCarGo

    As a college educated, latte sipping, pointy-headed liberal who generally supports govt tax policies that help to level the playing field for all citizens, realizing that large numbers of low income Americans will be suckered into paying way too much of their EIC tax refund for a polished turd of a (ab)used vehicle is almost enough to make me start watching Glenn Beck. It’s just so sad to see that money squandered instead of being spent in a way that will really improve lives. Just waiting a couple of months to buy would almost certainly let them get more for their money.

    • 0 avatar
      BuzzDog

      Just waiting a couple of months to buy would almost certainly let them get more for their money.

      And unfortunately, I’m beginning to think that there are too many in this scenario who (a) have never seen a person live compfortably on a modest income, and (b) don’t know anyone who is able or willing to give them advice on making better economic decisions.

      It sounds like you and I had our parents to do that for us. Neither of my parents were particularly well-educated in economics (it at all), but both were well-read and aware of consequences enough to raise five children (who all worked during college) AND my folks managed to retire with a paid-for house and retirement funds…yet never earned mega-salaries during their careers. (As a side note, my father would probably turn in his grave if he knew that my total debt – including mortgage – was slightly more than 1.5 times my annual salary, yet I have friends who say I’m “cheap.”)

      We can’t force people to be intelligent, and I’m too big of a believer in free markets to regulate informed decision-making (having government regulate the latter tends to make transactions burdensome to both parties). But as a friend/employer/hopefully-decent-human-being I have to admit that I have helped a few single mothers keep their well-worn rides running for a few more months so that they could hold onto their tax refund and delay a purchase of a “new” used car until prices go back down after tax season.

    • 0 avatar
      educatordan

      @BuzzDog At the risk of sounding overly religious, bless you. I admire anyone who espouses conservative principals and then puts their money where their mouth is. The only “non-government interventionists” who anger me are one’s who say they don’t want government to help and then hold onto their own wallets with a tight fist like they expect the money for the working poor to fall from the sky.

    • 0 avatar

      Educatordan, why should the “working poor” have any claim on other people’s property? From your ID I’m guessing that you’re a teacher, most likely a member of a public employee union. As far as I’m concerned public employee unions are a threat to democracy. When public employees have political power (which they now have via contributions to politicians, mostly Democratic) they will invariably benefit themselves to the detriment of actual wealth producers. Have you ever taught your students what “rent seeking” is?

      If you want to start redistributing wealth, how about cutting salaries for teachers in public schools? Based on hours worked (including all the urban legendary preparing lesson plans and grading papers), teachers make more money than all but a handful of professions. It’s a part-time gig with full-time pay. Don’t even try the cliches about all the time you put in or money you spend out of your own pocket. To hear teachers union members talk about their profession, it is uniformly staffed by living saints, truly selfless folks eager to skip lunch so they can tutor a deserving student. Never mind the NYC schools’ rubber rooms where they pay teachers to not teach because it’s cheaper and less of a hassle than firing their incompetent asses. My sister and brother in law both teach in the NYC schools. My sister is an outstanding teacher, and she’s compensated very well. My brother in law makes more money as a teacher than he did working as an actuary and accountant. They both drive Lincolns.

      Public employees on average make more money than private sector employees and they get truly lavish benefits compared to what’s available in the private sector. This is not a sustainable situation, as folks in California and New York are discovering.

      We’re quickly becoming a nation of two classes, those that create wealth and those that live off of taxes.

      As for not taking “government” money on principle, as Sam Gompers, the father of the American labor movement, said, the biggest sin a company can commit against its employees is to lose money. If it’s cheaper to get money from the gov’t than from a bank, it’s stupid to not go with the cheapest source of funds.

      It’s interesting that a conservative who gets revenue from the government is a hypocrite but a liberal who minimizes his tax liability is just being prudent in his personal financial life.

    • 0 avatar
      educatordan

      I wondered how long that would take. “Let them eat cake.” Apparently.

      I am living and working in NM, a state that’s motto ought to be, “Thank god for Mississippi.” Cause that poor state is the only reason we aren’t at the bottom of every list of state rankings.

      Furthermore I work in the county in NM with the highest poverty rate, McKinley County. I am a registered Libertarian. A true libertarian believes that government ought to get the heck out of most of the things it has it’s nose in, but a TRUE Libertarian then believes that the tax money returned to our pockets would be best used in private replacement of those government monopolies. I would like my tax money back so I could give it to the charities I chose. Not for some bureaucrat to “redistribute.” I would like to have most of MY money back to donate to worthy charities of my choosing. I aspire to a gently used sedan. And if you do an internet search you will see that teachers in NM rank pretty low on the pay totem pole.

      Forgive me Paul, Edward, and Steven. I try to keep my personal politics out of here, I know it’s a car blog, but I can’t resist a throw-down and a misconstruing of my words by someone when I’m simply trying to give a regular poster some props.

    • 0 avatar
      BuzzDog

      Thanks, buddy, for the kind words. I get props every day in a way that more people need to experience.

      I’m recovering from minor surgery (which is why I’m probably spending too much time on this site…lol) and just realized that I’ve gotten – without asking – food, rides and help around the house from co-workers I’ve helped over the years. One of them had a son who needed a car, and I sold him my old one for what the dealer was willing to give me as a trade. I could’ve gotten another thousand or so on craigslist, and yes, I’m sure a lot of people think I’m a fool. But you know what? I don’t care. People gave me breaks and made things easier for me over the years, and maybe one day this young man will do the same.

      Yeah, I know…people are inherently evil and greedy, and people like me need to be shipped off to some remote island where we can sit together around the fire and sing, “Kumbaya.” On the other hand, people can be kind and thoughtful when treated in the same manner. Now let’s get back to cars…

    • 0 avatar
      criminalenterprise

      Ronnie Schreiber:

      Can it. You dare call a fellow reader out as a “threat to democracy” for simply belonging to a profession that is unionized? For those of us who know teachers outside the NYC system, your ideas about their lavish pay and easy hours are bunkum.

      Why come to a car blog and lurk with an angry political agenda, just waiting for any opportunity to clumsily segue into a canned set of talking points? It’s disappointingly unoriginal.

    • 0 avatar
      postjosh

      criminalenterprise

      February 28th, 2010 at 8:10 pm

      “Ronnie Schreiber:

      Can it. You dare call a fellow reader out as a “threat to democracy” for simply belonging to a profession that is unionized? For those of us who know teachers outside the NYC system, your ideas about their lavish pay and easy hours are bunkum.

      Why come to a car blog and lurk with an angry political agenda, just waiting for any opportunity to clumsily segue into a canned set of talking points? It’s disappointingly unoriginal.”

      +1 my daughter attends public school in nyc and i rate the teachers here highly. they definitely don’t do it for the money / benefits which by nyc standards ain’t great. now back to cars…

    • 0 avatar
      ClutchCarGo

      BuzzDog:
      Yes, I had the good fotune to have sensible living modeled for me by a mother who understood money and how to use markets to her advantage. Despite having to raise 5 boys after the death of her husband, she managed to send all of them to college (insisted on it, actually) by working multiple jobs while being pretty tight with a buck, yet managed to drive a new car by trading in the current one every 2 years while it still had residual value (this was back in the 60s when Detroit iron still HAD residual value). She also modeled compassion for those less fortunate than herself. While not particularly religious, she modeled more of Christ’s virtues for me than most people who loudly claim to be Christian.

      Ronnie Schreiber:

      I don’t know how they do it in NYC, but my public teacher wife here in IL puts in more hours doing “urban legendary” planning, grading, record keeping, staff meeting and parent conferencing OUTSIDE of her classroom hours than I put in at my regular full time job. She regularly works most weekends and thru those Federal holidays that we in business envy, and if she ever calculated her true hourly wage it would never measure up to what someone with a Masters degree like hers would be earning in corporate America. However pathetic your teachers were, the teachers that I know aren’t putting up with public school crap because they get to drive Lincolns. And no one says that the working poor should “have a claim on other people’s property”. It’s just the decent thing to do for the more fortunate of us to see to it that the least fortunate among us have a shot at making it in the richest country on Earth.

  • avatar
    MarcKyle64

    The problem is that they can’t wait. There’s probably something terminally wrong with the old beater like an engine rebuild is due and it may not last that couple of months for the prices to go back down.

  • avatar
    xyzzy

    Can I take from this the implication that if I’m looking to buy a beater (pickup truck in my case), June is the time?

    • 0 avatar
      BuzzDog

      I’d also shop carefully around the traditional end of the school year, because a lot of kids get their first car at this time as a way to get to summer jobs, or to take to college. I’m not saying that there would be that much of a variance in price; it’s just that – at least where I’ve lived – there seems to be fewer beaters on the market at that time.

      For some reason I always seem to find the best beater deals in the fall and winter. But with C4C having messed with the beater inventory, it will be interesting to see what the market will look like for the next few years.

    • 0 avatar
      fincar1

      During C4C I saw several cars for sale privately that would have qualified for the program. My guess is that the owners couldn’t qualify to purchase a new car even with the subsidy for C4C.

      And another thing: cars last a long time around here without rusting out, like they do in Eugene. A good proportion of the beaters available are ones that are too old to have qualified for C4C tradeins.

  • avatar
    golden2husky

    “…Public employees on average make more money than private sector employees and they get truly lavish benefits compared to what’s available in the private sector. This is not a sustainable situation, as folks in California and New York are discovering….”

    Uh, no. During normal economic times, private sector employees make about 20% more in direct compensation than comparable public sector employees, at least in engineering/architecture around these parts. However, in this field, job security is non-existent. As soon as the work load decreases, the layoffs start. This makes the remaining staff nervous, and they try to keep themselves extra busy so as to not be next on the list. Management likes this scenario because they extract max output from their sheep.

    Those who choose to get similar jobs in the public sector do so knowing that they will get notably less direct compensation then their private sector counterparts. However, they accept this for the far superior job security, a pension, and paid for (mostly) health insurance. Still, the overall compensation is still less. Fast forward to the economics of today, the public sector folks now come out ahead because of the downward pressure on wages due to high unemployment. Funny thing is nobody whines when the public guys are on the bad side of the equation, but as soon as they are on the positive side, people start to whine. And no, I am not a public sector union employee…

    • 0 avatar
      BDB

      +1

      I mean, Christ on a Cracker, when’s the last time someone said “I want to be a [public school teacher/firefighter/cop/garbage collector] so I can strike it rich!”

    • 0 avatar
      BuzzDog

      BDB, does your question about cops and firefighters include the City of Chicago from, oh, about 1920 to 1940? (grin)

    • 0 avatar
      DweezilSFV

      Nonsense. Add in 100% health care coverage and the gold plated retirement, the public sector employee is cleaning up. And it’s bankrupting CA.

      It is on the order of an urban legend, the meme, that the public employee will make less than one in the private sector. That is so much “bunkum”. Perhaps in the 60s.

      According to Willie Brown, himself no heartless conservative, 80% of the financial problems for the state county and city governments in CA can be laid at the feet of the public employee unions and their lavish compensation and retirement packages.

      He ought to know: he was complicit in getting those perks and bennies for them over a period of decades in CA politics.

      Public employees aren’t giving up a damn thing when they hire on.

  • avatar
    detlump

    Interesting discussions, both. I had never thought of people taking their refunds and buying cars, I always thought they would spend it on something less tangible, like a vacation. At least a car is a “durable” good that one can use to go to work to make more money.

    • 0 avatar
      George B

      Interesting, because I would have never thought that the working poor would spend money on a vacation over buying a car. Owning a car, even an ugly one, opens up a wider variety of jobs and allows for lots of work schedule flexibility.

  • avatar
    50merc

    Ronnie and BuzzDog said it best. Lots of people would be do much better economically if they handled their money better. My parents had a car repossessed during the Great Depression and it taught them a lesson. Once burnt; twice shy. The did a lot with a little.

    I once worked for a state agency that conducted private vs. public pay comparability studies. The studies (surprise!) always showed the state’s workers were underpaid. I criticized the data on the grounds that it mostly represented large employers that were willing to participate (and, not coincidentally, gave higher pay). Medium-sized and small businesses (that are usually stingier with payroll) were underrepresented. The same pattern exists in urban vs. rural pay scales. So basically, if you live in a small town and work as an employee of a small business, your compensation package doesn’t get counted. And Mom-and-Pop outfits usually can’t pay well.

    It’s also telling that quit rates for most kinds of public jobs are very low. If their compensation is so miserable, why don’t they move to greener pastures?

    Another point often missed is that quoted government pay rates are typically for new hires. Many employees get periodic “step” increases as well as any across-the-board pay raise. Incremental growth over time can amount to quite a lot. Some guy in Illinois digs out and publishes the actual compensation of teachers and such. Annual pay over $100,000 is surprisingly common for those established in their careers.

    It’s hard to assign dollar values to intangibles such as job security, but you know that’s worth something.

    Public employees usually have generous policies for paid time off. I’d never seen a study of actual usage of vacation and sick time, so I did my own. My state government didn’t collect such data for its workforce, so I compiled data for my own agency and obtained some data from another, very large, agency that had its own computerized records. Interestingly, high use of vacation time correlates well with high use of sick leave. People who want off find a way. They tend to keep leave balances near zero but avoid hitting unpaid time off. Then there also are the dedicated folks who pile up huge leave balances. I salute them.


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