If you go to an auto auction when the economy is smoking and every ones attitude is optimistic you will find it nearly impossible to get a good deal. Thousands of cars and trucks go through and they are all unbelievably high. But if you have a marginal economy where people are unsure of the economic outlook, the deals start to reveal themselves, especially on project vehicles.
I have been to the wholesale auto auctions many times during good economies and the prices are so high that it makes you a little sick to your stomach just to watch it. You just wonder if the auction staff is going to give the high bidders hot dogs and balloons with their retail purchases. I personally cannot imagine what they are doing with these vehicles that they get hung in the backsides, but apparently they pass the cost off on their loyal customers. You would often wonder if they can actually find someone out there that would be willing to give more for the units than they did.
Not to mention during the better economies a lot of people decide it would be a great idea to become a dealer. They usually don't last long, but while they are around these newbies become the target of an unspoken campaign to relieve them of their assets. That is another subject all together. The point is that their inexperience leads them to give to much for cars and trucks.
Then you add the fact that new car stores are buying up everything with a steering wheel, 4 wheels and under 70,000 miles. Which in effect forces used car dealers to give more for lower quality vehicles just to have some on their lots. I'm sure they resign themselves to the fact that "I'll just have to sell more volume and make less on each unit.". Which is comical to me, worst part is I've caught myself saying such ridiculous things (again another subject).
When the economy is bad the dealers confidence wavers and they will pass on a lot of great deals just because it needs some paint work, windshields a transmission or whatever. That is the stuff I target year round. The dealers dropped perception of value becomes the greatest opportunity. The same dealers that were given the bank for cars and trucks with damage are running from any kind of necessary repairs. The funny part about it is that even if you buy one you think is perfect at an auction, you discover otherwise by the time you get it home.
Give me a project car anytime. You know for a fact that it has problems and are rewarded for your confidence with a better price. As long as you have a good network of mechanics, body shops etc.. you will do well to get it repaired and road ready.
If you are an individual who is thinking about becoming a dealer, by all means reconsider. You will make more money buying project cars as an individual than you could ever make as a dealer. I remember the days when I was just buying them on the side and making a ton of money. As a dealer you have high insurance, paperwork, overhead, customer liabilities (a big one) and a lot more to deal with. You would do better to get cars and trucks from a local public auction or an online auction venue like VprojectCar.com.
Now is the time to start buying them up. Get the deals while they are out there. You will make some money and stimulate the economy getting it ready and maybe help someone else get a great deal on a vehicle when you sell it. Happy project car hunting.
About the Author
Founder of Black Meadow Financial Group and VprojectC
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