Yidney

If a car sits unsold long enough on a dealer lot, a dealer will ship it to auction. That short sentence pretty much exhausts my knowledge of car auctions. Unless the car has some actual problem, it stands to reason that a car that hangs around long enough to go to auction is a car with a limited audience. Recognizing that there are many variables, but just as a ballpark, what kind of haircut does a dealer take when it resorts to selling at auction? Let me use as an example a very clean, near mint 2015 BMW 6 series convertible. These cars are not common, but not rare either. But many for sale have been for sale for months, or even a year. They have a small pool of potential buyers for a number of reasons, including that the price, while less than half of new, is still not low, they are expensive to maintain, the warranty has or is about to expire, and the market for a 440hp two-door convertible in an SUV world is tiny under the best of circumstances. So they sit unsold. Depending on miles, the asking prices are roughly $50-60k. So if a dealer finally resorts to selling the car at auction, what will he get for that car? $45? $35, $25?

Plutoe

It's very simple, if the costs to repair plus the vehicle cost\cost to carry exceeds a price that does not return a budgeted gross profit, let some other sap with a lower total costs take the chance.

MaschioneCazzuto

AMG's in general mercedes benz's (depends versions MCLAREN-AMG NOT). take huge hits at auctions mecum, Barrett Jackson, local auctions. The maintenance cost of repairs scares buyers off.

Rudeney

Used cars are an interesting market. When a dealer decides to cut one loose, there are a few different ways to do it. If the dealer is a large operation (like also a new car dealer), they probably have people on staff who take the car to auction. For smaller operations, they could take it themselves, but often use either a wholesaler or a consignor. A wholesaler actually buys the car from the dealer and then either takes it to the auction, or resells it to another dealer. Wholesalers typically do not have retail licenses so they can only sell to other dealers. A consignor does the legwork of getting the car to auction, then takes a fee, usually a percentage of the auction sales price.

As for why a car sits and does not sell, there are too many factors to list. But the example you gave is a good one showing that expensive cars don't usually sell quickly. When I was looking for my SL, I found may cars that had been sitting for months and months unsold. Sometimes it was because of the condition. One I looked at was actually a good car, but the battery was dead, the brake wear light was one, and the dealer just seemed uninterested in fixing those issues. That might be fine for a $10K Toyota, but not a $50K specialty car.

Last week, we bought a 2010 ML350. The dealer was a small "boutique" in Atlanta. The car was great and his price was thousands below others. When we went to sign the paperwork, the dealer showed me his purchase slip from the auction. He lost almost $200 on the deal. He said had I not bought it, he was sending it back to auction the next week. It's crazy, too, because we looked at an identical car at a larger "pre-owned" dealer that was more expensive, but in worse condition (3 owners vs. 1 owner for the one we bought). And that gets into another factor, which is the dealership. Some people don't like buying from a small dealer - they are more comfortable with a large operation or even a new car dealer's used lot. Me, I don't care - I'm buying the car, not the dealer.

Another thing about auctions is the buyers. They have to pick a good mix of cars and know what sells in their area. Down here in The South, we don't like buying cars from the Rust Belt. I like cars from California or Florida. Local cars are good, too. One owner cars are good. Of course the car needs to look like it was cared for and not have any weird smells or odd stains. Selling quality used cars is a bit of an art form in finding the right mix that sells at a particular location.

COOPERDB

`


About 18 months ago I made an cash offer of 50k

on a 2012 CL63 - a car that I had been watching for

some time

This was at a major dealership

The dealer came back with a price of 56k and if I did

not make the purchase the car would be shipped to

California for an upcoming auction

Well they shipped it and got 46.6k for it

minus sellers fee and shipping

Greed took a hit


Thank-You
D.B.


`

Yidney

D.B., Your example is exactly what I was thinking about. There is a 2015 6 series Beemer convertible 1,000 miles away that sold at auction just about a year ago, then was sold again at auction last July to the current dealer. The asking price is the highest in the country for the miles. It's one of the those small dealers that sells mostly nice stuff, including old things like 60s cars. They have been sitting on that investment for the better part of a year. At some point they are going to have to either drop the price or send it back to auction, where it will now sell as a one year older model. I would think they would accept a lowball offer from me and cut their losses.

EDIT: In case you're wondering why I am even looking at a car that has the highest price for the miles in the country, it's one of those where the original buyer paid $2,000 extra for a special paint color, and god knows how much more for a special full leather interior in a special color, got a special order wood color, and then checked every other option box. So it's basically one of a kind and the interior just grabs me.

Rudeney

Years ago when I was looking to by the C-Class for the kid, I found a great example at a Lexus dealer in Atlanta. It was a C230, silver on gray, very low miles (24K), one owner, clean Carfax. There were a few problems - the ABS light was on, the power driver's seat would not slide, and it was missing the spare tire and jack components in the trunk. It was priced at least $2500 over market value (not even considering the problems). I offered $2500 less than their asking price and was (literally) laughed at. They told me they sell excellent luxury cars and they do not negotiate. The salesman then said the car was scheduled to go to the wholesaler the next day anyhow. So, why not sell it to me for (probably) more than what a wholesaler would pay? Because losing money at "wholesale" is booked differently than retail. For example, salesmen don't have to be paid commission on wholesale deals and they don't have to do any title work. It's likely not enough to make up the difference in losses, but it's their bookkeeping process.

Yidney

I'm a terrible poker player with car dealers. It's always because I want "that" car. So I'm usually not going to walk away. I always consider it a win if I get them to toss in a bottle of touch up paint.

Rudeney

LOL! That's how my wife shops, too. She always buys a new car, so you'd think we'd have the advantage by being able to go to different dealers and pit them against each other. Unfortunately, she always ends up wanting some very specific color and option combination where there's only "one" in the entire Southeast. When I worked at the dealership and was in sales for a few months, I took the "secret care salesman's training class" and now I know it all! Seriously, there are no tricks. The best bargaining tool is your two feet. If you don't get what you want, walk. The salesman's job is to get you emotionally attached to the car. Once that happens, they have the advantage.

rocky raccoon

I have a part-time retirement gig as a driver for Manheim Auto Auctions, a dealer-only company. Last sale day I drove a 2008 E350 4matic with 44000 miles through the auction lane. I checked all systems as best I could and could find nothing wrong with the car. It was the buy of the day sold at $4000. The selling dealer was a local big-name and the buying dealer a Mom and Pop "canopy" dealer. Don't have the full story behind the reason for the sale. Car looked basically new, as though my wife was driving it. She now drives a 2008 E320 diesel.

Rudeney

$4K is a great price for a car like that. But that's the wholesale market - if those aren't selling well, the prices drop. As for the original dealer not keeping it, the car is 10 (almost 11) years old. A lot of brand-name dealers won't sell cars that old. The MBZ dealership where I worked would not sell anything that couldn't be CPO'ed, so 7 years was the cut-off.

MaschioneCazzuto

I bought a 2011 E550 sedan used one owner corporate car. Florida owned whole time. Old guy barely used it. Delivery 2010 I but it in 2016. Had 21k miles on it. Black exterior, tan interior gorgeous. Amg, package fully loaded. Paid pennies on the dollar for it. Used non cpo'ed benz's are sold at wholesale prices all the time. Find gems. I used it for a while then sold it to family member.