Hammer Time: Used Car Market Feeling the Pain, Too

hammer time used car market feeling the pain too

We just had the local Dodge dealership close down in Marietta. This coincided with one of the briefest sales I’ve ever seen at a nearby Friday afternoon sale. With that in mind… Dealers make a LOT of money off of trade-in’s and ‘we buy your POS’ lowball offers. No big deal. That’s always been a big part of any auto retailers bottom line. Until now. At a time when some of the larger dealer networks used to offer 80 to 100 trade-ins on a weekly basis at the dealer auctions, sources now say metro-Atlanta’s trade-in inventory is down by well over a third. Neutron bombed metro-Atlanta also appears to be fielding far more repos at these sales, and even a few high demand models that apparently are ‘Not needed in inventory’. With a local landscape that resembles the bad old days of Tecumseh Sherman, and a new emphasis on even finding reliable lending sources, it’s no surprise that even the billion dollar retail outfits are feeling more than a credit pinch.

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  • Volvo Volvo on Oct 24, 2008

    Steve Thank you for the excellent education. If I wanted to buy through a broker you would be my first choice. Too bad you are on the other end of the country. Best of luck to you. And you are right. As a private buyer I would only attend an auction hoping to obtain a car below wholesale. That probably would be a bid that would not succeed and only clog up the process. Do cars at dealer auctions have a floor or reserve price?

  • Steven Lang Steven Lang on Oct 24, 2008

    "Do cars at dealer auctions have a floor or reserve price?" In virtually all cases, yes. The only time is when they are seized by the government, they are over a certain number of days if they're a repo (and the seller states it's absolute), or if the seller simply wants it 'gone!'.

  • Usta Bee Usta Bee on Oct 24, 2008

    When I was younger I worked as a driver for a few local dealerships taking and bringing back cars to the auctions, mainly Carlisle and Manheim PA, and Baltimore MD. That was an eye opening experience to say the least. Visualize your local mall's parking lot, and that'll give you an idea of the size of these places. Literally hundreds and hundreds of cars on acres of land. There was everything you could imagine as far as brands go, and trade-ins, fleet vehicles, and ex-rental vehicles. The "program" cars or ex-rentals were funny, you might see something like 20-30 Chevy Malibus all parked together and all the same color. They even ran special days for high-end import and exotic cars. The actual auction procedure was something to be seen. They'd have a long row of stalls, like a car wash, to drive the cars through, and the walls between them were all open so you could walk between each one. The auctions in each stall were all going on at the same time. The auctioneer would be on a PA system calling out the auction in each stall, and the noise was deafaning. Sometimes you couldn't tell what they were saying from the noise bleed through from from the other auctions going on. They'd have a driver from the lot drive the cars into the stall, and you'd have at least 20 or so dealership buyers standing around bidding on the cars as they came through. Literally one car after the next, all day long. Offhand I can't remember exactly how long each auction took, but I'd say it was only 2-3 minutes at the most. In that time the buyers had to look over the car as far as the condition of it goes, and then start bidding on it. Occasionally they'd wind up getting a lemon that had something wrong with it, or some accident damage that was undisclosed by the seller. Most of the cars that the dealers took to the auction were ones that were sitting on the lot and not selling, and they wanted to get rid of them for something more in demand. The hoopty trade-ins that the dealers took in that didn't meet their resale quality standards were sold either at the smaller local auctions, or were sold to the small corner used car lots around town. Picking up the cars from the auction was always a fun process because they'd hand you the keys and give you area of the lot the car was parked in. You then had to walk through a sea of cars, and find the one you're looking for by the number on the windshield matching the keychain tag. The biggest problem we had was dead batteries, so we always carried a jumper box and jumper cables. From there it was driving the car back to the dealership, and hoping it didn't break down, blow up, or get in an accident on the way home. It was actually a fun expeience as I got to drive a wide variety of vehicles. The only downside was that the other drivers were old grumpy retired guys.

  • 50merc 50merc on Oct 24, 2008

    Usta Bee: "The auctions in each stall were all going on at the same time. The auctioneer would be on a PA system calling out the auction in each stall, and the noise was deafaning. Sometimes you couldn’t tell what they were saying from the noise bleed through from from the other auctions going on." That often happens even at the auctions with only two sale lanes. Sound system deficiencies exacerbate the problems. It's a blessing when bids are also posted on a video display.

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