Auction Day: Seconds!
There comes a time when the prices for used cars at the auto auctions go the way of an exuberant bubble.
A small army of consumers get their tax refunds. The car lots wake up from their winter slumber, and values for vehicles go the netheregions of the human imagination.
I sell cars during this time, not buy them. In the last three months of every year I will usually buy a lot to avoid the tax time market prices. Sometimes as many as 12 vehicles in a day. But when tax season comes, I buy a chosen few and sell them by the dozen.
Then, after the buying frenzy begins to ever slowly ebb, there will be a welcome break in those hedonistic valuations. Where instead of winding up $1000 to $1500 behind the selling price, I wind up second to another bidder. Almost always to a guy who has been buying cars for a long time. Today was that day.
My first second was this 1991 Acura Integra. Now a lot of you folks will quickly realize that this vehicle is old enough to buy itself a drink, and you would be right. But age in a rust free climate that offers smooth roads is not that big of a deal.
The exterior? $260 paint job. The interior was presentable. A/C was fine. However the clutch was not shifting right, the big fartcan back muffler was a bit of a negative ding, and the hatch area had barely no semblance of the ultra-thin Acura fabric. The odometer showed 164k miles… which was probably inaccurate. I only bid up to $700 and watched a wholesaler outbid me at $750.
These sell quite well once they’re cleaned up. But I’m sure this one would have needed to be shucked to a paint shop, a mechanic shop, and an upholstery shop between the auction and the retail lot. Such time issues have a big hidden cost in our business and if you find another nasty surprise in that process, you can wind up ‘polishing a turd’. So this one simply went down the pipe.
Then we have the most heavily depreciate midsized car of the modern day. A Mitsubishi Galant. This 2009 model had 123,791 miles, and although the trunklid mentioned an ES trim level, apparently an ES in the rental happy Galant world only means alloy wheels as an option.
These lower trim vehicles usually sit at my lot for a bit. Cloth interiors. More than 120k… but an 09 model. I stopped bidding at $4900 for the sole reason that I usually can’t get the same margins with a higher cost vehicle with lower feature content. The final bid was $5000, and given that I already have several Tauruses and 3.5 Liter Intrepids that fit this bill at a far lower acquisiton cost, I can’t say I regret this decision.
Now this one was a gritting of the teeth moment. A 2007 GMC Canyon Work Truck with 111k and nothing too special about it. Except for the automatic. Late model, compact, automatic pickups are insanely easy to finance and this one had the added benefit of some paint transfer on the fenders that a less experienced buyer would falsely see as a permanent issue.
I bid up to $4500, and a friend of mine who buys up trucks was standing near me and bid $4600. I had to invoke King’s Rule and give him the favor of bowing out. In exchange for him looking out for me during the next go around. Hopefully that happens and I don’t wind up in a dogfight.
Finally we had the transportation equivalent of dog food go through the block. A 1999 Saturn SL. Based out. 5-speed. Perfect 35+ highway miles per gallon transportation for those folks who subscribe to the common practices of penny pinching and personal parsimony. I always have several of these on the road. Although the 5-speed is often a more challenging sale here in the Atlanta ex-urbs.
I showed a fist and held the bid at $1000. Waited for a few seconds. Then. Damn! Someone jumped in and I bid it up two more times before letting it go to some other nearby shadow for $1500. Typically I try to keep my costs under $2000 for a stickshift equipped basic vehicle, and this one would have likely cut it close once you added the buyers fee and the need for new rubber all the way around.
There was a ton of other stuff today. Fewer buyers came to the sale. But those who did show up bid all the money in the world. So if you’re in the market for a 1999 Lexus LS400 in clean condition and only 117k miles, you are looking at nearly $8000. Wholesale. If that sounds insane to you, just think about the financing terms that will be applied towards that vehicle. I’m seeing $1500 down. $80 a week for at least 36 months. Maybe even 48 months.
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- ToolGuy "The more aerodynamic, organic shape of the Mark VIII meant ride height was slightly lower than before at 53.6 inches, over 54.2” for the Mark VII."• I am not sure that ride height means what you think it means.Elaboration: There is some possible disagreement about what "ride height" refers to. Some say ground clearance, some say H point (without calling it that), some say something else. But none of those people would use a number of over 4 feet for a stock Mark anything.Then you go on to use it correctly ("A notable advancement in the Mark VIII’s suspension was programming to lower the ride height slightly at high speeds, which assisted fuel economy via improved aerodynamics.") so what do I know. Plus, I ended a sentence with a preposition. 🙂
- ToolGuy The dealer knows best. 🙂
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Fascinating as always. Weekly payment schemes make me realize how fortunate I am to understand such things as amoritization tables. I guess as long as there are enough fools willing to effectively pay 35% (36 mo) or 50% (48mo) APR's for years on a beater, have at it! My stepmom once paid 25% APR on a Chrysler Sebring (which, naturally, quickly disintegrated) from an actual dealership, so I have little sympathy for idiots who can't do rudimentary math. Then again, speaking of fools, I still owe $60k on student loans from a private university.
What are "king rule" and "based out"?