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.

(Read More…)

We just had a public sale close up in Atlanta. This was a place I called ‘The Red Light District’ for the whorific dealers and management team that ran it. These putzes used to steal keys after the cars ran through, knock out odometers (to hide real mileage), put racing oil in the engines, and did everything short of telling the truth to their customers. But for every jerkoff at this place that bought a near dead car at the impound lot sales and sold to a clueless public, there were other public sales that did offer some (not all) good vehicles. How can you tell the difference? Here’s one clue. Look for the names of the sellers. If new car dealerships, credit unions, banks and rental companies make up the bulk of their business, it’s generally a good operation. It doesn’t mean the car you eventually buy will be worth a flip. But if you’re willing to play the automotive lottery you deserve to dream. Just make sure you don’t buy anything too shiny or hip.

The Geo Metro. One Liter. Three Cylinders. A near-car that represented automotive nirvana for tree-huggers and penny pinchers throughout America. Except not anymore. Gas is down 60 percent from its zenith; the Metro has once again become as fashionable as OJ Simpson at a Jewish family reunion. I bought one today with only 95k miles on it for only $500. White. Base. Nothing special. But then again, what is these days? I’ll tell you what is. Toyota and Lexus SUVs. These things are getting bought with price premiums that would make a Kuwaiti Mercedes dealer blanch. Spied a 2001 Toyota 4Runner Limited in Blue loaded up with 178,524 miles. It sold for $6800. A same year Lexus RX300 with, get this, 236,499 miles, sold for the same price. Why? Well a mint condition Toyota SUV is apparently worth its weight in lead (which is still expensive these days) if you’re willing to press the mileage ‘reset’ button. Meanwhile, a 2005 Toyota Celica GT with 100k miles sold for $7k. No one seemed to care. Young buyers are becoming an endangered species with the credit markets flipping the bird to the young and equity deprived. Also, it’s a complete bastard these days to get financing approved for any late model vehicle with over 80k.

Looking for higher returns? How about 25 percent! That’s right 25 percent a month, every month. Plus penalties. Plus fees. Plus the entire value of any car you repo and sell off. Not a bad deal for aspiring deca-millionaires if you ask me. The minus? Well, you have to spend a few of your crumbs to have a well funded lobbying group pay off the politicians. Welcome to the Title Pawn industry in the great state of GA, and yes, the repo side of this business is becoming absolutely huge at the auctions. Thousands of cars have been ‘involuntarily donated’ to a group of hyenas that would make Jesus remove his flip-flops and wear steel tipped boots. As for the rest of us dealers and auctioneers? We just get a first glimpse of the collateral damage that comes with a bad economy and a well-funded government.

She beckoned me. She betrayed me. Like a transvestite with a svelte smooth body, exposed by ungodly rough stubble underneath her lip. The 1990 Mercury Sable had a perfect silhouette that was maligned by two hundred parking lot dings and scratches on her lower front bumper. An older lady had given her some brutal blows to that lower psyche of hers over the years and now it was my turn at the wheel… so to speak. Little did I know that this first encounter would be just the beginning of The Crying Game. This particular example of a Mercury Sable was as unique as it was dichotomous. 47,000 original miles in 18 years. But a base model with a fecal brown exterior. The equally repugnant plaid brown interior did the vehicle no favors. But Hell. For $600 I’d just be willing to cover her up in a paper bag and drive her around town for a while.

(Read More…)

Those who know the least are screwed the most (both figuratively and literally). Case in point. 1997 Nissan Pathfinder XE. No leather, but a roof and a helluva good look. 206,852 miles. It sold for the mind numbingly high price of $3800. Why? Well, to find the answer you have to go back to the good old days of the 1970’s when odometers were turned back more often than a stoner at the Lion’s Club. This one will undoubtedly be sold to an immigrant who knows as much about Carfax as yours truly knows about Lawrence Welk’s bubble making machine. As for the domesticated mastodons, a 2004 Explorer repo with 94k miles sold for $4100 and a 2003 Trailblazer with leather and all the options checked, but 131k, sold for $4700. As they say in Detroit Yiddish, “Oy vay! [sic]”

Once upon a time, Honda represented everything that Detroit was not. Efficient, lean, reliable and most of all, innovative. While The Big Three soldiered-on with the same powertrains for decades on end, Honda constantly renewed, redesigned and released cars that genuinely improved their customer’s lives. Profits and widespread admiration followed… until the Honda hybrids came along. Then Honda, long regarded as the technology leader, got its ass kicked by Toyota. What happened?

Sometimes it’s the stingiest person who pays too much. Case in point. A 2007 Chevy Aveo with no a/c, ugly gray color, and wheel covers made out of recycled Chinese plastic. Yours truly was the high bidder on this 25k mile car for only $4000. It was a reasonable offer given the lightning quick depreciation of any stripper in Atlanta. In Georgia, no a/c in a car means no customers. Nada! In fact, the neighborhood Kia dealer used to give them away if the customer in question would finance a regular Rio. Some people never learn.

Everybody who knows me knows I’m a tightfisted son of a bitch. I may own Benzes for their profits, but gas sippers are my daily drivers. My wife’s daily driver has been an old Volvo wagon (which she loves). And like many of you, I’m nearly OCD when it comes to buying quality on the cheap. When Robert asked me to find him a $5000 car, I found a $4000 car. Why? Because $4000 is the new $5000. For those of you contemplating a new ride and have the cash, now’s a good time to buy. The Manufacturers’ Suggested Retail Price (MSRP) is dead.

How cheap are work trucks when no one’s working? Case in point. 2008 Ford F250 Superduty with rear seats, Automatic, and a throbbing 6.4L V8 powerstroke diesel with 350 Hp and 650 lbs. of torque. 41k highway miles, and, oh yeah. Like most other trucks at the auctions it’s a repo which has become a mantra for Atlanta inventory. Charge out price this morning at Carmax Auctions was $10,500, and that was with absolutely no announcements that would normally detract from the truck’s value (Engine Noise, Transmission Slips, Frame Damage, etc.). Oh, and every other truck and SUV repo that was at today’s sale, didn’t sell. Even a Toyota Tacoma and Hyundai Santa Fe Limited found no buyers.

No, the Germans don’t want to start retooling for Panzers and offer the world an opportunity to make it ‘3 out of 5’. But Yahoo! News reports that Daimler-Benz will suspend auto production on December 11th and resume on January 12th, due to flagging demand worldwide. This will be true for ALL Daimler owned plants. Although production may return afterwards… who knows? If the world economy continues it’s counter-clockwise spiral, we could see Daimler retool their plants in a similar way to what Toyota has been forced to do in Princeton, Indiana and San Antonio, Texas.

We just had the local Dodge dealership close down in Marietta. This coincided with one of the briefest sales I’ve ever seen at a nearby Friday afternoon sale. With that in mind… Dealers make a LOT of money off of trade-in’s and ‘we buy your POS’ lowball offers. No big deal. That’s always been a big part of any auto retailers bottom line. Until now. At a time when some of the larger dealer networks used to offer 80 to 100 trade-ins on a weekly basis at the dealer auctions, sources now say metro-Atlanta’s trade-in inventory is down by well over a third.  Neutron bombed metro-Atlanta also appears to be fielding far more repos at these sales, and even a few high demand models that apparently are ‘Not needed in inventory’. With a local landscape that resembles the bad old days of Tecumseh Sherman, and a new emphasis on even finding reliable lending sources, it’s no surprise that even the billion dollar retail outfits are feeling more than a credit pinch.

Atlanta area. Fire engine red 1999 Chevrolet Tahoe with 119k on the clock. Loaded to the gills with everything save leather. One owner, no accidents, perfect Carfax. Looks like it just came out of the showroom. My older brother (who considers himself the world’s best bargain hunter and resident expert on everything) gave the Tahoe the once-over and couldn’t find anything wrong with it to point out where I’d done it wrong.  I asked him how much he thought I paid for it. He said “hmmm… I’d say around $7500.” Bought at auction for $4825. Oh, and this one went to former TTAC Managing Editor Frank Williams, who also gave me a 1993 VW Eurovan for $750 that I’d bought for him a year ago.

The 2006 Jetta came with everything but a willing buyer. This time, it wasn’t the VW’s fault. Like the 12 Kias that came before it, the Jetta was a repo, complete with its own customized owner-inspired design. A few tears in the floor where stereo wiring used to be. Gashes on each corner to test out those European bumpers. Then of course, they had to blow the damned glovebox into a thousand pieces of plastic using an M-40. The poor Jetta may have already suffered enough from modern day German electronics and a Euro denominated price tag. But like an errant animal, kid, spouse, or Wall Street executive, it was the owner that made it a truly bloody mess. No sale @ $9800. The big question: is this Jetta the harbinger of hundreds of thousands of repos– new SUVs, pickups and cars sold to anyone with a pulse via easy credit and no money down deals– yet to come? You know; once lenders stop allowing deadbeats to drive them for free, rather than take the hit to the bank’s balance sheet.

The minivan market’s always interesting to those of us on the front lines; the genre reflects the paradox of the most conservative and loyal car buyers. Many of these folks will shop for ‘brand name’ regardless of whether the model in question really deserves a price premium given it’s history. For example, the average 2007 Grand Caravan (SXTmodel with 22k miles) is going for $10,200 average, wholesale, book. That’s a steal compared to the Sienna LE ($14,650) and the Odyssey LX ($14,850), which have generally trailed their name brand stablemates in the quality category. Speaking of history, a 2007 Saturn Relay is around $9400, while the Ford Freestar SE is going for $9550. As October’s historically the worst month for used cars (no ‘sale’ holidays, no tax refunds, fear-inducing elections), this may be the right time to pull the trigger on a near-new minivan at 40 cents to the depreciating dollar.