Hammer Time: Buying Ugly, Selling Happy
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.
More by Steven Lang
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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.
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.