Hammer Time: Don't Buy With Your Eyes!
People buy with their eyes in this business. Always have and always will.
I don’t care if you are a pseudo-sophisticated Yuppie wanna-be who thinks that Subaru is a value brand, (It’s not. They cater to the Costco crowd.) Or an impoverished mother of five who is taking her $6000 tax check and blowing it on the Cadillac of minivans.
Image completely rules this business. New or used. As much as I would love to sell old sturdy wagons and functional minivans that will last for another seven years, my customers want the modern-day crossover. The SUV that hypothetically gets great mileage if you read the window sticker upside down. A compact with an impossible to find leather interior, and of course, the upscale ride with the nice big wheels.
The first test of whether a car sells in this business comes down to a simple question.
“How much is it worth?”
That question is not answered by the window sticker. It’s figured out by the eyes, the hands, the ears, and all the senses within your body when you touch, see, and even smell that vehicle.
New or old? Doesn’t matter.
The reason why the Mazda 2 and the Honda Insight haven’t sold a lick, while the Mazda 3 and the Honda Accord are still wildly popular, is because those first two cars have completely flunked that test for most of the buying public.
Doors, steering wheels, and dashboards. Most cars are psychologically sold within the first twenty seconds of sitting in a car, looking at your surroundings, taking it all in, and turning the key. Your facial expressions and implicit behaviors tell the whole story. If you sit in a vehicle that feels and looks cheap, it doesn’t sell. Not enough sound insulation? Buttons and knobs that have the tactile qualities of a dog’s rubber-bone chew toy? Those are the things that quickly submarine the sales potential of a car well before the dealer tries to four-square you into a higher price.
The same dynamics take place on the wholesale level. At the wholesale auto auctions, where your trade-in’s, off-lease and repossessed vehicles get sold to the highest bidder, it’s the look of a vehicle that creates the market demand.
You want a premium price at an auction? It has to look clean and front line ready. Interiors need to be cleaned out and deodorized. The wheels need to be shiny, and there is one more missing ingredient that 99% of my fellow dealers miss when they come to sell at the sales.
A well-paid auctioneer and ringman.
You want the premium price? Tip them well. The guy who uses his powers of persuasion to buy with a microphone, and the guy on the floor with him, are no different than the salespeople on the showroom floor trying to shuck off leftover Cruzes and Silverados.
Incentives create sales. And unlike the commission based salesman at the new car stores, auctioneers and ringmen get paid a flat fee by the auction. Which means that when I come on the block and sell my inventory I always tip them.
Typically I give $20 to each one if it’s a smaller run of ten or fewer vehicles. Larger runs get $50 and a particularly successful one gets $100. As an auto auctioneer and ringman in my earlier days, I lived the importance of getting good tips and back in the late 90’s and early-2000’s, your tips often exceeded what the auctions paid you. These days tipping is scarce, which frankly gives me even more incentive to do it.
I had a small run of six cars two Tuesdays ago which was a rolling representation of how important clean cars and well-paid staff are to any organization.
A 1999 plain-jane beige Lincoln town Car with 211,000 miles was bought for all of $425 late last year from a title pawn. This was crusher money (the market price for junkyard bound vehicles) and with the interior driver’s door panel smashed to hell and five months of sitting around with dirt and debris, it wasn’t worth much of anything to the pawn company. The body was perfect. However long-term neglect can make even the nicest of vehicles looking like junkyard relics.
I took my Snap-On battery box, started it up, and bought it. From there I hired a detailer who works for Carmax $70 to do a good thorough clean-up on the Crown Vic, topped off the fluids, and had a driver take it to the auction for $25.
It sold for $1800 less the $125 auction fee. Two guys who never bothered to open the door on this thing got into a dogfight and the auction staff, composed of a World Champion ringman and a sharp competitive bid-caller, squeezed every single penny possible from that thing.
Most of my other vehicles fell into the same pattern. Even my mistakes from 2013. A 2004 Pontiac Grand Prix GTP that was bought for $3200 and tripped a transmission code only after I had driven it for a week sold for $3800. A Kermit-the-frog green Rodeo with a knocking engine that blew up after the absent minded customer forgot to put the oil cap back on it went for $900. A Y2K red VW Golf four door with low miles, but a tranny that couldn’t stay in overdrive had been bought for $2155. Another mistake that does happen in the course of buying lots of vehicles where, in essence, you are sometimes playing the percentages between good cars and bad cars. I made a few hundred selling it that day. If I hadn’t tipped my auctioneer and ringman I have no doubt it would have sold for at least $500 less.
What didn’t sell? A 94′ Lexus LS400 that I had bought for $900 plus a $120 auction fee way back in late 2012. That one had been bought without a serpentine belt and to be frank, I got lucky on it. It has been financed twice and even though I did not want it back, the brief owners had employment issues. Not even four months of grace each time could keep this vehicle away from the lot. So I drive it to and fro these days, and since I rarely have time to clean it, I was expecting a low price at the sale.
I wasn’t disappointed.
I no-saled it with a bid price of $1450. Much less than the crappy Lincoln. Enough to break even on a pure purchase basis. But not enough to pay for the set of new tires I bought for it that usually go for $600 a pop, and the Lexus still has plenty of life left. A clean one at this time of year will usually sell wholesale for at least $2000.
That’s how the cookie crumbles in the car business. Homework and good work lead to the higher returns. But what about you? Has there been a vehicle you bought with your eyes instead of your head? How were you able to finally get out of that never-ending expense?
CrapBox on Mar 27, 2014
Tip the car cleanup boy. He makes a silent, but important, contribution to the saleability of the vehicle. I should know, I cleaned cars for years. Dealers at the auction and customers on the lot were always impressed by my work. It's not just about cleaning a car, it's about giving it a new history.
AllThumbs on Mar 28, 2014
What a good question! It made me realize two things: 1) The cars I've bought with my eyes are the ones I've loved best, even if they were not terribly sensible to own (I currently have four in that category); 2) The cars that were/are objectively best were/are the ones I kept/keep replacing. I am clearly shallow and irrational.
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