Auction Day: From Hydrogen to Helium
This market has ceased to make sense.
$7300 (plus auction fee) for a 2003 Honda Accord EX coupe with 220k and a bad rear bumper.
$8800 (plus auction fee) for a 2003 Chevy Tahoe with 102k and scrapes along the side.
$23,800 (plus auction fee) for a 2003 Corvette Z06 with 16k and some really crappy plastic add-on’s.
Keep in mind that last price was well over two grand higher than on Ebay. Same miles. No Wal-Mart quality chrome add-on’s. No interior detail needed.
What the hell has happened to the car market?
Well I’ll tell you. The first two sold to a Middle East exporter who will no doubt roll back the miles in their time honored tradition. A lot of salvage cars also head over there (the United Arab Emirates in particular) where thousands of immigrants spend their days using the finest hammers and blunt tools to bend these vehicles back into shape.
I once saw a neat video about how all this is done. Courtesy of a million plus vehicle a year salvage auction company. The video highlighted dozens of East Asians and Africans pounding out old metal and switching out the electrics. Parts would already be put in the shipping containers along with the carcass of a vehicle and sent to rebuilders a half world away.
It was interesting. Especially to the auction’s investors. Junk cars do make money and do employ an awful lot of people the world over. However getting that video for public consumption in North America was somewhere between verboten and fugheedaboutit! I never managed to get that video for TTAC.
I don’t know who bought the Corvette. The dealer may have already had a member of the general public wanting to buy the car for him, which is as common as kudzu these days.
At this particular sale I always see non-dealers walking around the cars. Dealer sales are in name only these days. Nearly everyone buys vehicles for the public. However this is the only sale I’ve been at where the public is literally swarming around the vehicles before the sale. As a guy who has to spend $10k+ every year as a dealer for the right to sell ‘cars’ of all things… I don’t see why we even bother with dealer licenses.
This business is not rocket science in theory. But it IS challenging in practice. The ‘education’ comes from losing money on cars you should have never bought in the first place. Most members of the public are clueless when it comes to these things, and when I see a piece of junk sold at the public auctions, it’s often times an individual with no experience bidding on it.
I believe in free markets though. At least when it comes to buying cars. So you want to buy at an auction? Go for it.
Just remember that auto auctions are a lot like Wall Street. You will always be the last one to know when you have bought the wrong thing.
More by Steven Lang
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Many years ago, around 1971, I needed a car, but I didn't have any money. Luckily my grandfather's friend Nate was a used car dealer. He took me to the auction and we bought a 1965 Chevy Malibu sedan with a small block and powerglide for about $400. He then took it to the shop where they turned it into a creampuff. I remember seeing one mechanic removing miles from an odometer with an electric drill, and another one making an engine run smoothly with 90W. I still don't trust used cars.
Do prices vary much by region? I check OKC's Craigslist "owner" cars frequently, focusing mainly on under-$6,000 listings, and I haven't seen a price surge. Maybe Mr. Lang could make money by spending a couple days scooping up cars in Oklahoma (or New Mexico, from what Dan says). Admittedly, though, I don't pay much attention to high demand Camry's, Accords or CUV's. But here's an '03 Tahoe that seems better than the car mentioned by Mr. Lang, and with an asking price a thousand less: http://oklahomacity.craigslist.org/cto/2557056702.html