Enthusiasts consider this idea every once in a blue moon. “If you could have just one car for the rest of your life, what would it be?” Last-gen BMW M5? Porsche 911? Corvette? Pontiac G8? Lotus Elise (just kidding). But how about folks who don’t care about cars? What should they get? The Camrolla and Civords would likely be at the top of the lists for the frugal and apathetic. But maybe a Grand Marquis or Crown Vic Interceptor would do fine. Then you have pre-Daimler Jeep Cherokees, RWD Volvo wagons, Subarus of certain stripes, and old Benzes that may now require German translations and Indian parts. The 10+ year old used car world has several winners for the tightwad crowd. But what about new and late model cars?
I bought my first hybrid back in 2006. An ’01 Prius that was an absolute dealer queen. Oil changes every 3k. Every recommended service by Toyota performed. A brand new battery. New factory-spec tires from the dealer. It was a complete freak of nature amplified by the fact that I bought it at a time when I was the only dealer in the auction lane. The cost including the auction fee was $6650. It never left the auction. I took 24 pictures. Wrote a glorious soliloquy on eBay, and sold it to a guy from Alabama for $8800. That sale represents the only profit I’ve ever regretted.
I was 23. White upper-middle class suburban punk. A year back I had been majoring in toxicology and pharmacology at Emory. Hell, I figured I had only so much time to enjoy, and I was right. A year later, I found myself helping take public a company that would be inevitably intertwined with the 9/11 bombings. The COO used to say that if the applicant passed the mirror test they would hire them. The job? Aviation security. Which reminds me of how things are shaping up for Volvo at the moment.
I’m sick and tired of all the GM crap. Four brands will die. Boo friggin’ hoo. Nobody seems to mention that virtually all the cars are either cannibalistic shitboxes or uncompetitive black holes. I won’t miss them. In fact, I wish GM would take a whole lot of other brands with them to the pit of liquidation. For starters . . .
My wife and I are among the few remaining newspaper readers. She peruses the ‘Living’ section, scouring every square inch for coupons. I just look for deals on motor oil. Sometimes my eyes will wander around to cheap tires or the latest headlight cleaning shtick. I despise cheap tires and God knows cleaning Chrysler headlights is far from my list of to-do’s these days. But finding a great deal? That’s what I live for. At least when it comes to eliminating any future purchases. For those of you seeking the frugal nirvana I have two words for ya. Forget retail.
I was sitting around with the COO of one of Atlanta’s largest dealer networks. They now have nine different dealerships. Most of which have historically catered to the upscale and affluent. That is until now. For the first four months of this year, 60 percent of their retail sales profits came from vehicles that sold for $4500 or less. New car. Used car. CPO. Everything. That completely floored me. Then he asked the very same question I’ve heard at least fifty times this year, “How many new cars would it take for us to make as much as we get from these sleds?”
Every day I see a wall. On the outside are tens of millions of consumers who lack the commitment, integrity and responsibility to keep their word. Debt, crime, and fraud are their elixirs and it’s literally destroying this country. It fills the lots and keeps the auctions busy for hours. Then I see the other side of that wall. Hundreds of millions trying to get ahead and do the right thing in their lives. They are my buyers, the lane clerks, the ringmen, the consigners, and all the people outside the auction who choose a better path. Everyone thinks that the auctions are a cut-throat place where only the knowledgeable and careful survive . . . and they’re right.
I always wanted to control the Big Three. Not the once-mighty Detroit automakers but the three biggest personal expenses: house, car, and food. Thankfully, I got lucky with the house. Cars are my living. And food? My wife is an awe inspiring Zen master; I’m still working on spaghetti. But over the course of time our priorities have changed. Health care crept up. Then education. Now it’s saving for the volatile road of the near future. The world has changed, more folks are embracing frugality, and the world of cars reflects this seismic shock.
10 years, 6 months, and 1 lifetime ago, I bought my first car at auction. It was a base 1986 Honda Civic hatchback. One owner. 166k miles and power nothing. Not even close. It did have A/C and a radio (thank God!). But it was little more than basic A to B, which was fine because I was in school at the time. I bought it for $525 at a public auction, which came to $630 including taxes and auction fees. It was a beautiful buy at a point in my life when I literally needed to save every nickel in my pocket. So what did I end up doing?
The taxpayers will be paying for the GM and Chrysler bankruptcies. The living. The dead. The unborn. Hell, even my dog. All of us here who give our money to a Congress and President that can’t say no get the honors. Shouldn’t we get something for it? I’m not talking about a bouncy little check in the mail from Uncle Sam. We already have enough of those. How about a car? Seriously. This is a bankruptcy the public will be paying for after all. We’re going to be paying in interminable interest payments and political pontifications if nothing else. Since that’s the case, why not offer all these wonderful unloved surplus vehicles to the public?
One hundred billion dollars. Small change? Not even for Bill Gates. For $100 billion you could give 400,000 students an Ivy League education. If we’re talking about a quality state education, we’re looking at closer to two million graduates. That’s absolutely massive. Amazing . . . and think of our long-term GDP growth? Now consider our current spending on Detroit Inc.
His cell phone line was dead. A disconnected phone is always the first sign that one my automotive “investments” has gone south. Number two: timing. His payment was due that afternoon. By 2:00 PM I was at the house. My car wasn’t there. Common scents told me his associate, DJ Jazzy Dumbfuck, was inside getting high. Angry rap songs blasted from inside. Knocked on the door . . . doorbell . . . knock . . . doorbell . . .
I have a 1983 full-sized A-Team van. OK, it’s a Dodge model, not the black GMC of TV fame. But still. If you’re gonna own a repo, it’s awesome when you’re in the mood. Playing card table. Custom fridge. Plenty of classic interior fur. 1980s glazed silver with the custom striping. Happily (and sadly) I haven’t used it yet. So it stays put. Vans like this are public enemy #1 these days, as they suck gas like twenty-seven 1973 vans. In theory. (Remember: it’s parked.) Oh, and my ’83 Dodge stops me from buying a new, cleaner vehicle from new GM or new Chrysler. And so the government will offer me something like $4500 for my ancient, arthritic van. Apparently that kind of cash for this kind of clunker is a fine idea if you’re a politician using other people’s money (the living and the unborn) to curtail American oil imports and save the planet. As a guy on the sharp end, I’m not feeling it. Not that anyone asked me, but here’s what I would do instead. For a LOT less.
We now have two hybrids on our lot. It won’t last and, trust me, I know that. But I’ve always tried to buy low and sell high when it comes to cars, and non-Prius hybrids are actually reasonable these days. The car in question was a 2001 Honda Insight that was offered by a domestic dealership that had little experience with the product. The check engine light was on (recall related), the A/C was blaring ($35 of tint solved it), and the retail price was a bit prodigious ($6988 with 145k miles). They had a sealed bid sale and I got it for $4001.
Most folks don’t know a Pontiac Torrent from a Joe Torre. Those of you immersed in the labyrinth of automobilia know that the former is a glorified shitbox. But everybody else? Not so much. By the same token, there are some excellent cars that don’t appear on the new car buyer’s radar. Terrific vehicles that get lost in the shuffle of pointless new names and missing marketing campaigns. As Buickman will tell you (and tell you and tell you), there are an awful lot of excellent cars that don’t get the attention they deserve and therefore don’t sell. And when they do sell, they depreciate alarmingly. Even when the chips are down, or especially when the chips are down, used car buyers are far more conservative than their new car counterparts. Unfamiliarity breeds contempt.
I drove a Toyota Camry for 12 years and 239k miles. My two brothers also drove Camrys. My mother drove a Camry. Even my father drove a Lexus that was just a gussied-up Camry. All these Camrys were bought because there was a time when Toyota offered a car that truly few others could match. Quality, longevity, durability. They seemed to always be two clicks above the competition in virtually all respects. But now, it’s a very different story.
I don’t know what the hell to do. I’ve got an old Lexus SC400 that’s getting a new amp and I’m trying to figure out what adapter out there can make it work. Circuit City is shuttered. I should know that since I got a video camera there for nearly bupkis a few months ago. Other than that, well, I guess I’m kinda screwed. Nobody nearby replaces amps and has that friggin’ adapter. Which reminds me . . .
There are three things you really can’t avoid if you’re an American: death, debt (government inherited) and sales. Now that four GM brands have officially Oldsmobiled themselves, you’re going to hear a lot of retail sales cheerleading in the MSM. “Now’s the best time!”, “Vultures are gonna feast on these deals!”, and my own personal favorite “Get ’em while they last!” But unfortunately that last cliché is a really big part of GM’s problem.
The 1992 Volvo 740 had more broken plastic pieces than Joan Rivers (if she hit a brick wall in an Aveo). Grandma had let three generations of family use and abuse it. Bless their hearts. They all made an indelible imprint on it. Split rear seats of leather and cloth. Driver’s side window tucked away in the glovebox. Did I mention the jungle gym activities of the young’uns making the rear seats almost useless? Well Grandma was still awesome with the maintenance. Regular oil changes, a light foot, services in all the right places and, wow . . . original Volvo tape deck. This wagon may have looked like old Eurotrash, but it was still young at heart thanks to Grandma—and the rust-free climate of Atlanta. After the jump, the 2000 Dodge Caravan.
Just for bowel movements and mirth (PC version), I like to visit eBay’s “No Reserve” section. Where is it? Well, there actually isn’t one, but if you type in a given car or model year and then type “No Reserve,” “NR” or “N/R,” you can actually find some very interesting deals. Clicking on Completed Items will show you the market. The many (Police Interceptors), the few (Oldsmobiles), or the one (Grand Marquis). The ones with the green Sold marks and multiple bids are the ones worth a look and, of course, the deals are all over the map. But a lot of the offerings inevitably hit right around the Average Manheim Market Value. Take for instance this 2009 Lincoln Town Car with 3400 miles.
Who needs ’em? Of course the soccer mom and sales folk amongst us really “need” the perpetual motion of a second car. But what about the married schlep who walks to work? Or the enterprising couples that work together? For them a second car may be nothing more than an inconvenience and an expense. Some folks in high places (and low places) say you should go for an alternative that conserves resources and costs less. Fair enough. But is that always a rational choice?
Everyone asks me when is the best time to buy. Well . . . this may truly be it. The whoredom that is our federal government has decided to put a magna cum “clunker bill” on the front burner. If you’re fortunate enough to have a vehicle that is 2001 or older, you have a clunker. At least according to the wise and impartial souls promoting this legislation. Although the original offer was $10K smooth per vehicle only a few months ago, the amount has now gone down to $5K and a little cash for the “un-American” manufacturers as well. Will it go down? Well, I don’t know. But this is how I would play it.
Nothing can truly open your eyes to the futility of a declining industry than a free market. In this respect, automotive retailing is really getting what it deserves. You literally now have tens of thousands of people wasting their lives away at dealerships. The parts guys waiting for the Pavlovian phones to ring. The service folk trying to serve the dual masters of near-term revenue and immediate customer service. And of course you have sales people. From the professional and decent to the human train wrecks. These folks are there to lubricate the American economy with everything from brilliance to bullshit. Is all of this “people power” smart?
This year is going to be a devastatingly bad one for car valuations. If you’re a keeper, this is great news. New and near-new cars are going to continue with their proverbial freefall. You will more than likely be able to get a good vehicle with 80 percent of its useful life for 40 percent of the price (two to four year old vehicle). The frugalists amongst the keeper crowd will likely do even better than that. A well-engineered seven- to nine-year-old vehicle may truly be the best sweet spot in the market right now. With some diligence, you can find a conservatively driven car with 50 percent of its life (90k to 120k miles) for a mere 20 percent of its new car price. But what will be the absolute best deals? Read on . . .
I hate the word fetish. It beckons the thoughts of neurotic foot lickers and perverts the world over. I always believed the word “aficionado” was more apt for my liking of old Volvos. It’s true that a lot of normal folks idolize the Porsches and Ferarris that embody the “speed” of the automotive experience. Some of us love the luxuruies of Rolls Royces and Bentleys . . . hell some idolize the Toyonda clones for their high quality and simplicity. In times past I’ve been ‘all’ there. I love the contributions all these manufacturers have given to our culture and our garages. But these days, I really appreciate longevity . . . and frugality . . . and functionality . . . which is why I absolutely love old Volvos.
I used to travel over 40,000 miles a year . . . and enjoyed it. No offices. No cubicles. Only me and the radio on the way to auctions in three different states. Heck, I didn’t even have a cell phone at the time. So long as I showed up at the auctions thirty minutes before the start nobody really cared. I read books. Wrote articles. Saw the rural south, and probably met about 2,000 people in my travels. But these days my priorities have changed . . . I hate losing all this time. And I’m not the only one.
Most folks buy cars on impulse. Sure, they’ll read a bit in Consumer Reports or maybe even take a gander through online resources, but most consumers really do buy with their eyes when it comes to cars. Unfortunately they will also find themselves in debt up to their ears if they choose to finance it. So what should non-cash buyers do? To quote Lao Tzu, “When in doubt, do nothing.” Or, to put it in the words of this commuter, “We don’t need another fucking car on the road.”
I used to fly in to do an old auction out in Baltimore. It was a strange place reeking in decrepitude and there were a lot of weird things out there. A 130,000 mile Saab 9000 with no registered owner, ever. A couple of Peugeot 505s with huge attached bumpers that were used to push non-running junk through the block (apologies to Paul Niedermeyer). Oh, and about 300 Daewoos rotting away in no man’s land.
The Honda Accord [shown] had at least seven things wrong with it. The non-primed hood was the color of pure rust because, well, it was. The tranny would need at least a computer and probably a vehicle speed sensor as well. Damn. Those few things alone were going to cost as much as a junkyard transmission. The trunk hinges were bent. The driver’s window regulator was bad. The chrome windshield trim was missing and shade tree glue was all over the place. The radio was kaput, and the tires were as worn out as an old broom. A $250 trade-in with at least $1000 in repairs . . . would it be worth it to fix?
Way back in the good old days of 1997, my wife was driving an old Steenkin’ Lincoln. The only claim to fame any 1983 Lincoln Mark VI would ever have was a brief cameo as a coffin for Spock in Star Trek III. Like Spock’s last ride, we literally needed to use everything to keep this one going. Thumbtacks, duct tape, a staple gun for holding various parts upright. I bought so many fluids and parts on a weekly basis that all the help at the parts store knew me by my first name. The thing was a mess. Well, after it hit 220k, it started to make really scary sounds. Even SUV drivers were now giving her space and I knew it was time to start prospecting for a cheap used car.
I always tell people that their footwear will have a greater impact on their life than the car they drive . . . and they laugh. Then they start to think about it. All that money that goes into purchasing, financing, repairing, and insuring a car can be used for so many better purposes (for a non-enthusiast). College. Vacations. Cheap wine. You name it. The list is endless and the knowledge to achieve those ends is definitely out there. But how can it “really” be done? How can the laymen amongst us overcome the stacked deck of MBAs and conspicuous consumption that is seemingly “the American way” when it comes to cars and so many other things?
A car can be an incredibly expensive, sophisticated, intricate, and downright scary thing to own. Changing oil? Are you nuts? Heck, before I got my license I couldn’t even tell you the difference between a Capri and a Caprice. There were far too many other things going on in my life that were far more important. College for one. Girls (or in my case, girl) for another. Money . . . well, unfortunately not so much. That’s why I now tend to be very forgiving when it comes to teaching others about cars. Speaking of which . . .
I hate trash. Unfortunately we live in a society that is waist deep in it, thanks to “planned obsolescence” and the unfathomable cost cuttings of the day. Case in point? Well, a ten-year-old Ford Taurus [pictured here] recently went through a Carmax auction. I bought it for $200 and, yes, it actually runs quite well despite the elephant man front end. The engine has been given regular changes over it’s 109k miles. The transmission shifts smoothly enough (for now) thanks to its recent replacement. And the interior isn’t in bad shape at all. So why did the owner decide to get rid of it and later sell at auction for so little? Read on.
Orlando is the unpopular car capital of the world. You name the dying models and brands. The City the Mouse Built has them in abundance. As I was counting the Mitsubishis and Chryslers on my way to a Disney Cruise, my mind began to wander and wonder. What if we avoided all these wasted resources? Surely there must be a few kindly politicians out there who can appreciate the more fiscally conservative amongst us. Somebody? Anybody? Bueller?
A reader writes:
“Would you have any idea on the auction value of a low mileage 2007-2009 Toyota Tundra CrewMax Limited 4×4 5.7? I have been looking to upgrade from my current 2005 Tundra to one of the new ones but hate all of the new car dealer shenanigans. Thanks so much for your time and response. I really appreciate it.”
Ugly ain’t it? This Dodge truck looks like it got into a fight . . . and lost. Three front body panels need to be replaced, stat. The ladder rack is as big and surface rusted as a 1970s beater, and the truck has more nicks and scratches than Boy George’s last escort. This would be the type of vehicle most folks would run away from and be ashamed to have on their driveway. Screw ’em. I got a helluva deal.
What is quality? Consumers believe they find it in a car that never breaks. Engineers look all the way to the parts level and see how long a given component actually lasts. Advertisers bullshit their way through it, and dealers don’t care so long as the car gets out of the lot before the wheels fall off. As a car guy, I look at how long someone owns a car and WHY they get rid of it. Case in point. I now have access to a database that will eventually cover over 200,000 trade-ins over the course of the year. As someone who has a keen interest in metrics, I’ve found that the current vehicle’s mileage and condition at trade-in time can tell me an awful lot about quality. The findings?
Two hundred people, one car, twenty seconds. As an auctioneer, my job is to use my powers of persuasion to create the urgency to buy. Quick glances, fidgeting, eye contact, folding of the arms. Your body language and uncontrolled behaviors often tell me more than you can ever imagine even before the bidding starts. Don’t worry though. I’m really no hero and hopefully no villain. I’m simply keeping the score in a game where subtlety and nuance will eventually dictate my every move.
One of the hardest questions I have to answer: “When is it cheapest to buy at the auctions?” I often find good deals even in the most competitive times of the year. But if we’re really talking about ‘averages’, as in lowest residual values for used cars, I’d say that the period between late September and mid-November is the cheapest time at the auctions. No spending holidays for consumers. No tax refunds for the public to use as down payments. Even the weather’s a pain since fewer customers visit the lots when the cool season starts. Plus, most used car dealers buy with floorplans (a finance company’s money) which often have nasty clauses that exact fees within 30 to 90 days. So what should you do if the retail deal isn’t for you? To paraphrase baseball Hall of Famer Wee Willie Keeler, in order to find a good deal in this business you have to, “Hit em’ where they ain’t.”
The first rule is that everybody at the auction is your friend. This doesn’t mean you back slap or kiss ass (though many do this quite well). But I like to say that the three currencies in the auto auction business are conversation, collusion and company. Simply put, you converse and collude with those you hang out with in the hope that when it’s your time of need, they leave you the hell alone.
When I was a kid, I really thought debtors could end up in prison. My Dad grew up in Old Europe (pre-WWII) and with memories of German hyperinflation, depression and Nazism came a very firm belief in paying cash . . . no matter what. Conservative isn’t the half of it. He simply can’t stand the very idea of investing in any asset that can only depreciate over time. For the last ten years I embraced the same attitude of “neither a borrower or a lender be.” My customer has always been the ‘cash’ customer. That is until the debtor’s economy hit my fleet of automotive mules with a proverbial 2 × 4.
It pays to have friends in high places. Just as politicians have favored constituents, the automotive auctioneer almost always has a good memory for those who help them during the sale. More than anything else, the auctioneer wants to generate a market and get his own share of greenbacks. Some are easily corruptible. Others less so. But supporting him at times when the bidders that are ‘working the sale’ (a.k.a. colluding) can be worth far more to the auctioneer than the occasional greenback. Doing it the right way, at the right moment, can create a very nice win/win situation that goes straight to the bottom line.
When it comes to cars, nothing is more expensive than an education. A bad owner. A neglected model with expensive problems. Or even a stupid owner with nothing but dreams in their head can easily turn a pearl into Chinese recycled swine. Case in point. I once had a well intentioned mom buy a 1998 Audi A4 from me. The good news? It had over $8000 worth of records over a period of 120,000 miles. The bad news? Re-read the last sentence and add arrogant 16-year-old kid and clueless Mom into the equation. I explained to them the high costs and maintenance involved, referred them to a very good repair shop, and even showed them the owner’s manual stating the next service due. As you already figured out, it didn’t matter.
Tax refund. Got one yet? Well even if you don’t, millions of people will, and this is great news for car dealers. The fortunate folks who can afford to pay off their Christmas largess with a few paltry Benjamins left over will often go car shopping. $700 down, $500 down. Heck anything more than a pulse will get you into a car these days. The effect of all this newfound money being dispersed into our economy: a lot of interesting and stupid behavior at the auctions. For starters, everything gets a lot more expensive.
There are three types of beater: cheap, cheaper and push start. A cautious consumer can’t let brand snobbery blind him to the truth about a car. Case in point. A low mileage leathered-up Olds Silhouette minivan. In Gold. Sure it’s the epitome of GM mediocrity, equipped with more parts bin pieces than a Junkyard Wars jalopy. But, in this case, the owner stabled the Silhouette in the great indoors. A ream of paperwork highlighted the undeserving loving care the machine received. So I bought the old Olds for $2200. I’ll be financing it for a little over four grand. Hey, it’s a living.
I’m a third generation mule trader. Grandpa literally bought mules and cows from the rural outskirts of Bavaria and sold them at the nearby cattle auctions. Dad’s been a food importer since 1949 for a company called Roland where he’s sold to Chinatown wholesalers and store owners for nearly 59 years. As for yours truly? I have auctioned off and horse traded the modern day mule at thousands of dealer sales. I love cars. I love the auction business. Most importantly I love learning. Educating people about cars and auctions, creating the urgency to buy, and learning about managing cars AND people is what I do outside my family life. It’s engaging. It’s a pain in the ass. And it would be completely unnecessary if people looked at a car the same way I do.
20 years. When most folks ask me how long the average car should last, that’s what I tell them. It’s actually not true though. The real answer these days is a lifetime. In fact, I’ve seen cars at the auctions that were literally passed on from one generation to the next. They hit all sides of the American, Japanese, and European palette. Older Volvo 240’s and Toyota Camry’s are truly numerous. But Subaru SVX’s, Suzuki Samurai’s and even old-school Buick Roadmasters have been there in the automotive flesh as well. In fact, I’ve even seen some of the most unreliable vehicles in recent history (Excels, Chevettes, Kadetts) crawl through the 20+ year old finish line in good running order. What makes the real difference? Read on.
Back in 2006, I sold a frugal friend a Volvo. He paid $2500 for the conservatively driven 1995 Volvo 940. It had all the records. Top quality tires. Volvo OEM components. A true cream puff for the true enthusiast. As fellow classic Volvo aficionados, we actually kept up with each other over the years. Him for advice and updates. Me because I enjoy the company. Unfortunately, two years and 45k miles later, his wife used a telephone pole to permanently customize the front end. The insurance company cut him a check for the original purchase price. With that money, he could have easily bought a car from a smorgasbord of good used cars in today’s market. But he didn’t… here’s why.
We used to call it 60-80. You could buy a two-year-old used car with 80 percent of it’s life left for 60 percent of the new car price. Then, as Detroit & Co. started to overproduce ad nauseam, the ratio went down to 50/80. Then 40/80. These days you can pretty much buy a decent two-year-old car (think discontinued Ford, Mercury & Buick models) for about 35 percent of it’s new car price without dickering too hard. So, is that the sweet spot in today’s market? Nope. At least not for the non-enthusiast. The biggest bang for your buck lingers a little further down the curve. Specifically the five to six-year-old commuter vehicle with about 75k miles that has become as popular as an old can of buckwheat. Think Ford Taurus, Buick Regal/Century/LeSabre, Mercury Sable and virtually anything with the name Oldsmobile on it. Sure these are the equivalent of leisure suits for the self-effacing car snob. But I’d be damned if they aren’t the best deals for those who, in Rhett Butler-speak, “Frankly, don’t give a damn.”
Ah, the good old days. When ‘Show me the money!” was the car business’ mantra and sub-prime loans were cooked-up in four font legalspeak and signed by anyone with a pulse. Not anymore. Dealers are dying en masse. Car values are going down the proverbial poop train. October saw average wholesale values descend a full six percent according to Manheim Consulting. November was another 5.7% chop. December? Well… let me just say that every dealership I see these days (open or closed) seems to have most of the same vehicles left on their lot. What can I say? It’s Christmas time and no one needs a car. Even a cheap one (except me of course). The auctions have about half the dealer traffic who are buying less than half as much. Even the mighty 800lb. gorillas of this business are falling fast. Carmax is a good example of the heartier dealer species. When I visit their weekly auctions in Atlanta I’m usually seeing half as many dealers attending their sales. The lower demand equates to far lower return on their trade-in’s, rejects,and repos. So much so that Carmax even cited it as one of the reasons why they posted a major loss this past quarter.