By on May 2, 2011

Wanna buy a Hummer? You can buy them as cheap as dirt these days. There was a beautiful one that went through the block at a weekly public auction in Oakwood, GA. Nice leather interior. Well kept. The H2 models in particular were an easy piece to market and sell not too long ago… but not last Thusday. It no-saled. Not even the hope of a bid at $13k. Then came the H3. No sale at 10k. No takers. Only two no-sales from new car stores that generally sell everything. Why?

If you said that SUV’s simply don’t sell these days…. you would be wrong. So many folks are taking the contradictory logic of buying used gas guzzlers these days. They want an SUV for all the usual reasons. Big, safe, luxurious. And of course ‘the big one’.  Consumers can ‘supposedly’ buy them cheap when gas is high. So they pull the trigger on the belief they bought it at the right time. Gas prices are high right now. That is true. But so is the bidding at the auctions. .

In today’s wholesale market there is a fierce pecking order that comes to play even before the consumer gets his foot in the dealership’s door. First off, the imports absolutely rule the used car roost when it comes to midsized and full-sized SUV’s. Sequoias and Pilots are high above the endless herds of forever sitting Tahoes and Expeditions. Toyota 4Runner’s and Nissan Xterra’s still have strong cache and are becoming increasingly difficult to find in good shape. RAV4’s and CR-V’s are even rarer birds these days.

All of them are still bought at stiff price premiums at the auto auctions. All of them represent ‘finance fodder’ where the actual selling price depends on payments and the term of the loan. In today’s finance driven market, the cash dealers are definitely SOL compared with the buy-here pay-here dealers. Finance deals make more money. Plain and simple. So those buyers rule the sales.

Except now something has changed on a global scale. Even the former mighty dealers of funny money have fallen to a new force at the auto auctions. Exporters.

Exporters send high demand Japanese SUV’s far away from our depressed domestic economy.  Thus enjoying the simple returns that come with weak US dollars and less shaky local currencies. Even with customs, duties, and tariffs to contend with, they make a solid profit. Ghana, the United Arab Emirates, Costa Rica… even Nigeria.  Japanese SUV’s with American levels of features and content are a red hot commodity in dozens overseas markets.

The funny money that is the US dollar has gradually made all the auto auctions fiercely competitive. Dealer sales. Salvage sales. Even the public sales are now export happy. I’ll give you another example at the Oakwood sale.

A 2004 Honda Element EX 4WD with over 136,000 miles and at least $1000 in cosmetic issues, an orange exterior, and a bad Carfax to boot… still sold for $8300. I saw an 08 in a good color and half the miles sell for $10k just six months ago. Dogfights between exporters always drive the prices beyond clean Black Book values at the auction.  But they are just the top dogs in a long pecking order.

Then there are the used car stores that are brand specific. Many folks think that the used car stores can easily buy these types of vehicles by the boatload these days. Not even close.

The ‘factory’ (a.k.a. the manufacturer) is now busy trying to keep their dealers healthy at all costs. Japan is rebuilding which means far fewer vehicles on the new side of the ledger for franchise dealers. Where is that money going that once went to new cars? On the used side of course.

The used Japanese cars and trucks are getting bid up with a vengeance. Add in the fact that we’re still in ‘tax season’ where used car prices are already sky high, and you wind up with an auction market that has prices beyond the best and worst of public expectations.

That is unless you buy the ‘unpopular’ SUV. If you want a late model Trailblazer with high miles, you can buy them aplenty. Orphan brand SUV’s such as Saturn VUE’s and Saab 9-7’s are there for the taking. Even the larger public sales in your state should have plenty of unpopular SUV’s.

As for those Hummer’s I mentioned earlier? You can’t find an SUV more dead in the financial water than a Hummer. Clean Manheim Market Report value on the silver 2003 model with 100k was $16,400. At the public sale it couldn’t even hit $13k. The 2006 H3 with 79k had even less traction in the marketplace. No money even below ‘rough’ value.

So if you’re looking for Bush era bling factor… there are Hummers. Then of course there is the practicality of a Trailblazer if you want better capability at half the price. But if you want the absolute best bang for the buck… don’t buy anything right now. It’s still tax season.

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25 Comments on “Auction Monday: Oakwood...”

  • avatar

    Hi Steve, What is an example of a ‘public auction’? Thanks

  • avatar

    It had never occurred to me that the weak dollar is a reason for higher used car prices, I guess i always thought of used prices of being regionally not internationally influenced

    Great article as always Steve

  • avatar
    Educator(of teachers)Dan

    Yeah I always know where we’re still in Tax Season cause the shady used car dealers around her that seem to do very little business during the rest of the year suddenly have empty lots. Of course they only deal with the most pathetically down on their luck customers.

  • avatar

    Steve, another factor which is driving demand for exports is that container backhaul rates (ie containers leaving the US & Canada) are currently rock bottom, meaning the cost to physically ship the car is much, much cheaper than it used to be. I work in ‘bulk’ shipping (lots of coal/iron ore/lumber/steel) and we’re finding that container rates are so cheap that in some places containers are taking cargoes which would normally be the preserve of bulk ships – filling containers with lumber/steel bar and in some cases scrap metal!
    Aside from containers, the whole shipping industry is in quite a bad place at the moment – The problem is simple. Too many new ships, not enough cargo.

    • 0 avatar

      So, shipping containers are now being reloaded and re-shipped? They were becoming popular as modular homes a couple of years ago. I could see our esteemed TTAC poet-laureate OBBOP assembling a nuclear-proof “shanty” from several of these and be safe and sound, but, alas, no more?

      • 0 avatar

        There’s plenty of containers around if you want one. Like I say the market is in the pits at the moment and you can pick up a rusty old 40ft container for anything between $1k-$2k if you move it yourself. Given the US Dollar is now getting weaker and the Chinese Yuan is getting stronger, the buying power of the US will only get weaker and the demand for containers will head further south as imports are reduced.

      • 0 avatar

        To outfit one from a company costs approx. 20K per unit, so a sizable house is about 4 units or 80K, a larger one would be upwards of 160K easily. Course they’re not terribly pretty so I think that’s what keeps them a novelty. I personally prefer the over sized Quonset hut design.

        The whole situation is eye opening and driving me towards a new vehicle more and more. I feel terrible for people who are in less fortunate positions where the sub-10K market is filled with crap because its being picked clean by these people.

        I know this seems strange, but who seriously thinks 23 mpg for a mighty SUV even if discounted is a smart buy? I’m saying from a strictly mileage saving angle, if they discount it by a few thousand the mileage will catch up eventually and in the long run cost more. This just seems so strange but then again people aren’t really intelligent so much as seem so.

    • 0 avatar
      Educator(of teachers)Dan

      I’m pretty sure my Chinese scooter is made from scrap metal that was shipped to China, melted down, and re-purposed. (Still pretty reliable for what it is.)

  • avatar

    I’m still waiting for them to park the Hummers out by the curb, keys in the ignition, signed titles on the dashboard. Maybe then I’ll pick one up.

  • avatar

    Customers wandering onto a used lot looking for vehicles in the $10-15k range are probably not eager to sign up for a $600 monthly gas tab as well.

  • avatar

    Hate dealing with exporters, especially at Manheim Imperial. They’re rude, caustic, and typically don’t shower. They run up prices on absolute garbage (I swear they just put lower-mileage clusters when they box up these 200k-mile Pathfinders and send them overseas). Plus, they don’t understand why I’m laughing at the sight of them running a paint meter over an 8 year-old Audi with 15k miles, a plastic bag over the driver’s window, and hot air.

    Speaking of Elements, I paid $5850 for an ’03 EX 2WD with drywall screws in the front driver’s body panel and 175k miles. Still sold it, but yeesh.

    • 0 avatar

      They definitely change the miles, I deal with a handful of the middle eastern and Russian exporters. Of course, the mileage change doesn’t happen till it is on foreign land so everything is fine and dandy from the US side. I have sold a TON of 1-2 year old high mileage Camry and Corolla’s for export in the last year.

      My family operates a rental car franchise and one of our desert locations averages 4-5k miles per month on their cars, thank goodness for these exporters haha. If I undercut the other rental cars/lease returns on the market with half the miles just by a slight amount then I have a sale since they obviously don’t care what the odometer is reading out.

  • avatar

    I sure liked the H3 – in yellow or red, please. I just wish I could afford to house, clothe and feed it! Whether I could safely see out of it with my vision limitation and not be a danger to anyone else on the road is another story, though.

    Another in a great series of “behind-the-scenes” car biz articles. Thanks, Steve!

  • avatar

    the exporters have always been a problem for toyota truck fans.

  • avatar

    So do these high used car prices translate into dealers giving people more for their desirable trades or do they just offer KBB value and pocket the extra profits? I’m not really in the mood to start up a car payment again but I am curious as to how this could possibly benefit me if my upgraditis proves malignant.

  • avatar
    SVX pearlie

    It is unbelievable to me that none of the above posters wants a hummer from Fergie…

    • 0 avatar

      Only if it came with Fergie. And she wasn’t allowed to sing. Or talk.

    • 0 avatar
      Educator(of teachers)Dan

      @Sinistermisterman, he meant this hummer

      Brings a whole new meaning to; “I don’t know the words but I can hum a few bars.”

      • 0 avatar

        Oh lordy. I need to learn some more North American slang. There are plenty of British slang words that end up being used for all the wrong things. Much like that E-type built on an XKR:
        …which they called the ‘Growler E’…

  • avatar
    Steven Lang

    johnxyz: Click on the ‘Oakwood sale’ portion of my write-up. Also google ‘red top auto auction’ for another one in my neck of the woods.

    Public auto auctions are ones that let in the public and dealers attend their sale.s. If they’re decent, the auction will have several new car dealerships selling off their trade-in’s.

    A lot of great points everyone. Always a pleasure to read and learn about things I’ve never thought about before.

  • avatar

    I’ve got a lease turn in and repo lot near my house. LOTS of RVs and junk American cars. Sometimes I see what was someone’s sweet ride in there that was a repo for sure. I’d love to go to an auction just to see what they’re selling for, but it’s for dealers only.

  • avatar

    Just want to put out a few facts. I own my own Freight Forwarding Co. and would love to know who is quoting you prices on containers. I need approx 200 x 40 ft HC containers for projects in New Guinea and i have been quoted approx $4,000.00 per unit and the prices keeps going up every week. The worst thing is i can only obtain 10-20 containers a month. They have quoted me new containers for $6,000.00 each with no shortage of supply. All freight rates are up compared to a year ago and many lines are expanding their services. My company also picks up, loads and ships cars all over the world. Over the years i have been asked to handle cars (4 to a container) for shipment to the middle east and west africa and we will not handle them for any money. Toyota, Honda & Nissan have contracts with Hual line for the middle east & West africa to dump their rough leased cars and go out full every two weeks to keep their USA prices high. We only handle collector cars from well known dealers. Over the last 40 years i must have moved 10,000 cars. When money is tight and the market is down money is invested in moving cars around the world. Just a month ago i shipped a XK Jaguar to Japan and the buyer was after me every day for the paper work. When he finally gets the car and goes to fill it up he can only buy a few liters a day and that car must take a liter just to get started,

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