Used Car Sales

[5 Star Auto Spa]

Does anyone currently buy, fix up, and sell used cars? We were thinking about getting into it for down time for our technicians (there only so much cleaning that can be done!). Pro's and çon's of it for people that are doing it now......?

[KMS]

I used to. You can make a lot of money doing this as long as their are good body cheap cars in your area. Always use used parts for big ticket items, and don't try to hit a homerun on each vehicle. You want to buy cheap, fix cheap, and sell quick. You want to do volume and I recommend not selling them at your shop. Good luck.

[bstewart]

I think alfredauto has done used sales in the past, maybe he'll chime in.

[alfredauto]

Don't sell junk. I sell about 60 - 100 cars a year, it helps pay the bills. If anyone tells you selling cars isn't a full time job they are dreaming. I put my service customers first, you really have to be careful because the used cars can suck up all your time.

 

I recommend coming up with a plan of attack, and stick to it. If you sell junk you will end up fixing junk for junk clients. I try to mix it up, I have some low end cars and keep a couple higher priced models. The $2500-$8000 price range works for me. Less than $2500 doesn't leave room for repairs, over $8000 and its too close to the big dealers with their financing bs I can't compete with. You need to know your market, in my area pickup trucks and 6-7 passenger SUV's sell instantly. Minivans are hit and miss. I happen to collect w210 Mercedes so I always have a couple for sale, but they are a niche car. If I inadvertently buy junk I wholesale it. win lose or draw it disappears asap.

 

Pros: you can make some real money and you always have extra cars to drive. Auctions are fun. It keeps the mechanics busy. A full lot generates more business. Instant cash infusion when one sells.

 

Cons: time consuming, you can lose $$$$ easily, you can ruin your reputation FAST If you sell junk. Paperwork can be tedious. Full lot means nowhere to park. Many new friends will want to borrow your dealer plates. Less profit than expected.

 

Last thing, once you get your dealer license the state will make sure your paperwork is in order. Most used car dealers are assumed to be liars, cheats, and scum bags and the state knows it. Do it right. Don't sell junk. If you have questions feel free to ask.

[lmcca]

wow, nice post, very informative - thanks!

[5 Star Auto Spa]

I was going to say the same thing.....thanks Alfred! What type of warranty do you provide for the cars that you sell? When you say they CAN take up all of your time, are you referring to customers that have purchased the vehicles and are back to have repairs done per warranty?

[mmotley]

The $2500-$8000 price range works for me. Less than $2500 doesn't leave room for repairs, over $8000 and its too close to the big dealers with their financing bs I can't compete with. You need to know your market, in my area pickup trucks and 6-7 passenger SUV's sell instantly. Minivans are hit and miss.

I don't sell that many cars, but I would say I definitely agree with this statement. I've had a few cars over 10K and they don't move very quick. All my 3-5K cars wen't QUICK though!

[alfredauto]

The law says anything with less than 100k miles gets a 30 day warranty. I warranty everything for 30 days to avoid confrontation. In NY all retail cars must pass inspection so they are good enough no matter what. I sold one recently and the girl ran it out of coolant and blew the head gasket after about a week. Rather than tell her to shove off I bought it back. I'll fix it on my time and resell it, not a big deal.

 

By time consuming I mean the auction takes up a full day, reconditioning takes time, handling the car shoppers takes time. After the sale they always come back with a squeak or rattle, you need to hold their hand for a while. If you want to put used parts on that's more time. Bodywork means shuffling them to the body shop. Cleaning the cars is never ending, because nobody wants a dirty car like the one they already have.

 

My problem is I refuse to overpay, at the auction I might bid on 50 cars and go home with nothing. That's time I could have been fixing something and making money.

[mmotley]

The law says anything with less than 100k miles gets a 30 day warranty. I warranty everything for 30 days to avoid confrontation. In NY all retail cars must pass inspection so they are good enough no matter what. I sold one recently and the girl ran it out of coolant and blew the head gasket after about a week. Rather than tell her to shove off I bought it back. I'll fix it on my time and resell it, not a big deal.

 

By time consuming I mean the auction takes up a full day, reconditioning takes time, handling the car shoppers takes time. After the sale they always come back with a squeak or rattle, you need to hold their hand for a while. If you want to put used parts on that's more time. Bodywork means shuffling them to the body shop. Cleaning the cars is never ending, because nobody wants a dirty car like the one they already have.

 

My problem is I refuse to overpay, at the auction I might bid on 50 cars and go home with nothing. That's time I could have been fixing something and making money.

ALL great advice!!! I'm getting ready to build a new location, and I thought I wanted to build a separate office for car sales and really get into it. After doing it for a little bit, I'm not sure it's worth the time/headache.

[alfredauto]

I may have come across too harsh, used car sales net me over 20% on average. Not too bad I suppose. At first I hated the game, I envisioned clean trade in cars selling for cheap at the auction meaning easy money. Not so much. The local auctions have a lot of rusted junk. I was lamenting to an old timer at the sale about a lemon i got stuck with and he said "son, its called tuition. We all pay it"

 

By the way, The auction is the most expensive way to buy a car. Customer trade ins are by far the best deals. At least you know what's broken when you buy it. Other dealers old inventory is also good of they will sell directly to you. I buy a lot from Manheim online, in western NY everything is rusted so I buy cars from the south and ship them in. Rust free cars sell here easily. I can usually get deals on older high mileage units that are rust free, nobody wants a high mileage rust free car in southern NJ because they all are rust free.

 

Overall I think once you get used to having a dealer plate its hard to quit. You can buy a vette if you want one, sell it after a few months and your vette was a free rental car.

[GermanCArDEpot.com]

We sell about 4 to 5 cars a month . Works pretty good for us we give a 30 to 90 day 50-50 warranty .
Only sell cars that everything works . Try to stay under $6000 . 80% of the cars and sell to customers that are already mine.

Edited April 22, 2015 by GermanCArDEpot.com

[davine4real]

My advice would be definitely 2k-5k. Don't recommend selling them at shop. Get separate lot. Folk expect perfect car when sold by mechanic shop. It does require time. Contrary to popular belief, it is a separate business if you want to make real money. The auction can be simplified but does require taking chances for most reward. I've been transitioning my business from repair to sales w/repair. Greater risk with sales but greater potential economic reward with less manual labor. I say go for it.

[FROGFINDER]

I try to sell cars in the $3k to $7 area. Buying cars customers don't want to repair works. Trading tear down time dollars for titles works too.

[alfredauto]

Though of this thread today, a car buyers dad called me upset about a 10 year old car his daughter bought back in January. Stated the motor mount is broken. My response was Things happen in 5 months, we will gladly repair it and work with you on the price because I appreciate your business. His answer was I'm a thief and a liar for selling his daughter a car with a motor mount that I knew was going to break and I need to pay up or else.

 

It's a surreal experience selling cars. I believe the guy might have actually been mad enough to commit a crime over a $35 motor mount.

 

It's also an emotional roller coaster ride. Cash money tied up in cars is rusting in the parking lot and they might as well be invisible. Tire shine has worn off, a battery went dead so the monitors need to be rerun, another one the drum brakes locked up due to the humidity. Someone broke the door handle on another one. I hate these cars, all of them. I get an idea; I'm going to wholesale a car carrier full and dump these things. Messy divorce here we come. While I'm looking up the # for my auction guy someone comes in and plunks down the sticker price on one, ten minutes later another couple bought a different one. A third one goes out tomorrow. I'm loving these jewels again. Until next time.

Edited May 15, 2015 by alfredauto

[flacvabeach]

Just got my dealer license last year in Virginia. It's hard. To do it legally, you have to have a lot and in Virginia Beach, lots zoned for used cars are premium property. You have to pass a formal dealer training class. Very heavily regulated by VA MVDB part of DMV. You will have to have a personal bond for the first three years. You will have to prove you have insurance coverage for your lot and inventory. The auction environment is brutal to newcomers and I have learned that there is a reason that every one of those cars is in the auction, you just haven't figured out what it is yet. Learned an interesting saying the other day - "the profit is in the buy." If you pay too much for the car it's very difficult to make it up by raising the retail price. If you don't have a lot of capital, it's hard to do the really profitable stuff like financing, especially buy-here-pay-here. If you dive in, join VIADA - great support group. If you have decent credit you can sign up with a floorplan company and use OPM - other people's money - to obtain inventory, but that cuts into profit. I use NextGear and it has been great for us. They do wholesale valuation for us, too. Average time on the lot for the best selling cars is around 49 days, for stinkers, much longer, so don't expect to turn over a lot of cars in a hurry. We have found 5-8k to be a good price range for starters. You will chew your fingernails when nobody buys a car for weeks and then suddenly you sell three Priuses in one weekend. I have bought cars back and done expensive repairs gratis after the sale just for good will, but the majority of sales go well. If you have an established repair shop, you will be the envy of other car dealers. Get with me via email if you have questions.

[xrac]

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[Mario]

Be careful for doing goodwill repairs on vehicles after you sell them if they are as-is. I know in ohio the courts have looked at it as an "implied warranty".

 

Example you sell a 4x4 jeep to a customer and he has loud brakes. You clean up drums and noise goes away. No charge as he just bought it as-is two days ago, but you want a happy customer. Jim Bob takes his jeep wheeling a week later and tears the transmission up in a mud whole. He now expects you to replace the trans in his week old, as-is jeep and tries to use the implied warranty clause against you!

 

You would be surprised by the characters you meet when you start selling cars.

[mspecperformance]

The instability and dishonesty in selling used cars has turned me away. I don't think I would ever directly get into unless I was shielded by a corp and let someone else be the face and mouthpiece for that biz.

[alfredauto]

It certainly is frustrating to hear "my muffler is rattling and now it has an oil leak...(10 months later) what are you going to do about it? It never should have passed inspection that way."

 

People fall in love with their new used car, once the romance is gone and they filled it up with cigarette butts and dorito bags and neglected the maintenance for 15,000 miles their new love looks the same as their old junker. With no money or credit to buy a new car they are angry. And it's all my fault. Because they are in the exact same spot they were in before they expected me to solve all of their problems. Then tax time hits again and we start all over.

[HarrytheCarGeek]

It's also an emotional roller coaster ride. Cash money tied up in cars is rusting in the parking lot and they might as well be invisible. Tire shine has worn off, a battery went dead so the monitors need to be rerun, another one the drum brakes locked up due to the humidity. Someone broke the door handle on another one. I hate these cars, all of them. I get an idea; I'm going to wholesale a car carrier full and dump these things. Messy divorce here we come. While I'm looking up the # for my auction guy someone comes in and plunks down the sticker price on one, ten minutes later another couple bought a different one. A third one goes out tomorrow. I'm loving these jewels again. Until next time.

 

I KNOW exactly what you mean, hahaha!

 

Srsly, though, I thought I was becoming bi-polar. Then after I discovered a pattern that consisten marketing help me cope with it.

 

Thanks for the post, you made my day.