31st March 2012

Hammer Time Rewind: Hit Em Where They Ain’t!

posted in Car News Articles |

 

One of the hardest questions I have to answer is: “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 best deals in this business usually come when competition is constrained on several fronts.

For example, I bought a mid-level 2004 Dodge Grand Caravan SE this past Thursday for $2200. The 101,000 miles on it kept the vehicle out of reach for all those dealers who depend on finance companies that have cutoff’s at the 80k or 100k mark. It was also bought at a public auction where dealers are fewer, and the opportunity to collude is greater.

The minivan in question also had a ‘check engine’ light which warded off those who justifiably are concerned about the possibility of replacing a Chrysler transmission. A simple diagnostic tool informed me of the vehicle’s need for a $15 thermostat.

Before the sale started the battery was dead. I used my own mobile charger to jump it since the auctions rarely supply enough of these things.

Finally, the vehicle was being sold ‘AS/IS’ which means that there was no guarantee regarding the vehicle’s powertrain at all.

In a crowd of about 100, the field essentially shrank down to 2. The auctioneer let the bottom fall out (lowered the price considerably to encourage more bidding) and seven bids later it was mine.

Of course now I’ve got to sell yet another minivan. But it’s far easier to sell an unpopular vehicle at two-third’s of average wholesale than to bid it up a popular car to retail prices and beyond, and hope for some finance fodder to come your way.

Note: This article was originally published in 2009 and to be frank, you probably do not want to go to a public auction in order to find yourself a ‘Wee Willie Keeler’ type of deal. I’ve been at it for well over a decade now, and public sales are one area where amateurs and professionals are routinely knocked for a loop.

Lots of uncertainty. Little disclosure about the vehicles.  A well-paid auctioneer who has probably made 100,000+ high pressure sales pitches over the years. Unless you are willing to pay for an expensive ‘education’, I do not advocate the auction route.  

 Private owners, impound and estate auctions, family and friends, and even the neighbor down the street wanting to trade in his vehicle can all be far better sources for great deals. Think of it. You can drive the car, have it independently inspected, and the competition is essentially the seller’s perception of the vehicle’s value. Enjoy this article, but go that route. 

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