So You Want To Be A Used Car Dealer
Life was good. I had a contented grin on my face and calm in my heart – tooling along about 75 just north of Barstow on I-15. We had left the California Auto Dealer’s Auction a few hours before – heading for Las Vegas. I was looking forward to our normal night of debauchery before ending up in Utah Valley the next day. You know, drinking Jolt Cola (double the sugar and four times the caffeine), stuffing ourselves at the Rio Seafood Buffet (record – 14 lobster tails, 167 clams, 71 shrimp) and losing, (up to $20) on the dice table. The next morning we would drive on home with our auto purchase deals of the century.
We had two cars this time, both bought by Steve – a 1994 Trans Am and a 1983 Mercedes 450 SL. Steve bought both without ever looking very closely. They came simultaneously in two separate auction lanes, and he made very quick decisions, urged on by two auctioneers. They seemed great steals, way below Wholesale Blue Book. On closer inspection the TA had a six – yes 6 – cylinder engine, and the Mercedes had bald tires and no spare – also no AC, no radio, one headlight working, no low beam, no interior lights, soft brakes, inoperable gas gauge, oil leaks from the engine, transmission, power steering, etc. etc.
Part of my peace of mind came with not having the usual buyer’s remorse. That comes with the close examination of a car just purchased abetted by your buddies telling you it was still a great buy. I dubbed to drive the Mercedes back to Utah – hey, it was red, a sports car, convertible, tan leather and despite a couple of problems, it was still a MERCEDES. At 6:00 PM, darkness had already fallen in the desert – there was little traffic. As I shifted in the seat, repositioning myself for comfort, I tightened my grip on the steering wheel to give me leverage. The steering wheel popped right off into my hands. Aaaggghhh! Finally, God had caught up with me was my first thought.
I tried jamming the wheel back on the steering post, then tossed it aside and tried turning the post with my hands. Nothing other than skinned palms – finally slammed on the brakes and drifted to the side of the interstate – fortunately the Mercedes brakes pulled sharply to the right. The first thing I did was to give thanks I had previously had a pit stop. The second was to yell at Steve in somewhat colorful language (not normally used on a good friend) as he pulled in back of me. The third was to grip the side of the door as I exited in an attempt to stop my shaking.
He had a flashlight and we put the steering wheel back on, albeit tenuously- it seemed to work fine as long as you held downward pressure. We traded cars immediately. I felt like about a year of my life had been taken off life’s end. We again stared for the Rio Buffet and arrived without any more serious incidents. Eventually one of the tires on the Mercedes blew outside Cedar City. Did you know that with a bit of manual ironwork adaptation, a Trans Am spare will fit a Mercedes?
The second bald tire had the decency to wait until about another 50 miles up the interstate. Ugly, really ugly. Not my problem since I was in the underpowered, now spareless Trans Am. However I was pulled over and ticketed because of no plate or drive-a-way permit. The six-cylinder engine eventually blew up about a year later outside Lander, Wyoming. One of Steve’s children behind the wheel – no one had been dumb enough to buy it. The Mercedes turned out to have over 200,000 actual miles (speedometer had been spun back by a previous owner with a high speed reverse drill) and needed an $8,000 engine rebuild plus another $3000 to fix all the other things wrong. Nothing like being a car dealer.
Every guy’s dream is to someday have a used car dealer’s license. Be able to go to the Dealer Only Car Auctions, maybe have a dealer’s plate and in general participate in the mysterious world of buying a car below wholesale and getting a deal.
Used Car Dealers are one of the vertebrae in the backbone of US commerce. Believe it or don’t, 40,000,000 cars are sold or resold every year. While there are only 18,000 new car dealers, (and shrinking every day) there are about 148,500 active Independent (read Used Car) guys who will gladly assist you into a previously owned, mildly used vehicle. They will provide financing, an extended warranty, and detail a complete history on the car, which they fabricate with the best of politicians. And they will tell you what a great deal you got and how you are the best negotiator they ever met. These boldfaced lies are somehow accepted by most of us; even though we know that most Used Car Dealers were either former lawyers or minor officials of the Garbagemen’s Pension Fund who have gone on to seek a higher calling.
Like most car guys, I longed to have a salesman license. I yearned, I dreamt, I lusted, I drooled. I really didn’t want anything to do with finding a location, getting the dealer’s license, obtaining bonding and insurance and submitting to rigorous and wholly unnecessary inspections and exams from the DMV. I just wanted a license to get into the Dealer’s Auctions, munch a hot dog, watch the cars go by and occasionally find a great bargain. Maybe make a little money on the side by getting cars at the auction and selling them to friends and relatives. Sounded like a reasonable plan. Uh Huh.
DO NOT SELL TO FRIENDS OR RELATIVES
Let me digress here for just a moment and comment on friends and relatives. Selling to your relatives will absolutely guarantee that there will be a long line of them at your funeral anxious to pee on your grave. Your friends will be more tolerant wanting only to spit and then salt the gravesite so that nothing will ever grow there again. Relatives and friends somehow believe that in buying a car through you, it has become a VS1 crystal clear diamond. Anything goes wrong; it’s your fault.
Some friends/partners/fellow car idiots and I hooded (sorry, hooked is what I really meant) up with a dealer who agreed to get us licensed if we would pay him $200 for every car we bought. A great deal, right? We should have inquired as to his background, finding later that he had been convicted of bank robbery and his main experience was selling repossessed construction equipment for cash only – he also neglected to list us on insurance, bonding, etc. In other words your normal dealer. But we were smart guys, right? A banker, stockbroker, insurance agent, real estate developer, Carpet guy, Furniture Factory Rep. What could go wrong? We were all young, vigorous, worshiped cars, and still believed (somewhat) in the milky kindness of human nature.
So, off to the auction we went to test our freshly unfolded dealer wings. Everyone knows that the best auctions are in California, correct? No salt, low mileage, great cars mechanically and cosmetically – everyone knows that. Californians worship their cars like the Canaanites worshiped Baal. And finally – finally the chance to buy below low blue book.
We flew SLC – LAX on a one-way tickets, took the shuttle to the California Dealers Auction in Orange County and beelined to the high-end auction lane (Mercedes, Infinities, Porches, Corvettes, Lexus’, Range Rover’s – you get the picture). It was like watching magpies swarm a shiny penny. We had major pressure to buy at least one vehicle so we had a ride back.
CARS AT THE AUCTION
But lets talk for a moment or so about what kinds of vehicles are at the auction, especially in the high-end lane. In a lovely perfect world, the cars at the auctions would be there for some thoughtful reason. The dealer consigning was reducing inventory, the bank was pressuring, the end of the month was in sight, the flooring line needed reduced. Or he just wanted to see if he could make a very small profit by running the car through the auction, maybe just attempting get his invested money back and break even.
All of the stories we told ourselves – why we were poised to get a great deal – were, of course, complete nonsense. The cars were there because there was something wrong with them – they couldn’t even be sold to the suspecting public – and the dealer was dumping his Junkers on unsuspecting numbskulls like ourselves. No dealer in his right mind ever brings a car to the auction to help you as the buyer get a good deal. Its there because he can’t sell it and the reason that it can’t be sold is that there is something wrong, usually mechanically with thousands of dollars of repairs in the buyer’s immediate future. Or it’s a color craved only by a one eyed Octoroon and had an original salvage title washed and rebranded in New Jersey.
Here are few of the things that happened during the first few years as we suffered lesson after lesson.
Bought a Suburban that we neglected to hear the auctioneer mention (ever so softly) that it was two-wheel drive. We didn’t even know that they made two wheel drive Suburban’s. Ever try to sell a two-wheel drive Suburb in Utah during January.
A Volkswagen Jetta would not shift correctly – actually it wouldn’t shift out of second gear. Found out eventually that the car was composed of a 1996 front half and a 1997 rear half and the computer couldn’t communicate.
Realized that at times we were bidding against ourselves as the auctioneer kept nodding to a ghost bidder. Ghost bidders are present all the time at all auctions as the auctioneer shouts out bids. These from the nonexistent Ghost Bidder to try to get someone to bid up close to the reserve price.
In the early days you made calls from a pay phone with your credit card – the more enterprising dealers at the auction would stand fairly close, memorize the card numbers and you would end up with calls to Mexico, Columbia and Bolivia on your next bill.
A four wheel Chevy LUV pickup – before we could get it home the rear drive shaft broke and actually fell off on the highway. Solution – just toss the drive shaft in the bed and drive it as a front wheel drive pickup. Better than the Ford Explorer where the transmission actually dropped out of the car about 15 miles from the auction site.
A beautiful Mazda red king cab pickup with custom hubcaps – when you turned right it took twice the steering wheel revolutions as turning left.
And finally, a rugged older Jeep with a slightly sweet odor. Under the rear seat were two dead rabbits, crawling with maggots, and a bottle of MD 20/20 – a wine also know as Mad Dog 20/20 – and several ounces of Maui Wowee – high grade cannabis.
After a couple of years, our felonious sponsor lost his dealer’s license – more criminal activity – so we shifted to another brigand who charged a yearly fee, but he had the integrity of a vampire bat and didn’t follow through on anything. It was especially onerous to have to bring thousands and thousands of dollars in cash to an auction, because our sponsoring dealer had no credit and therefore we couldn’t use a dealer check. Also we had trouble getting our titles since he had pledged a bunch of them to the bank when they reached his office.
This whole state of affairs disintegrated to the point where serious action was called for; and since we were now experienced dealers – having lost tens of thousands of dollars and a couple of marriages – it was time to move on. We used my office building, painted on a sign and a few parking stalls, talked Lynn, who had a legitimate insurance business into bonding and insuring us. We even passed muster under the evil and all Seeing Eye of the DMV. Now we had dealer plates, checks we could use at the auctions – we were in hog heaven.
We bought an Eighty-Four-passenger school bus on the cheap to haul family members around and to make an occasional trip to Wendover, Nevada. The problem was that a bus is a commercial vehicle, and the insurance is out of this world. Finally our insurance partner said that if only we were part of a school group or a Religious Group, it would be quite inexpensive. Thus was born the Bandini Brotherhood and Bible School, organized over the internet for $40 – Stan as the Great El Supremo and Lord High Inquisitor. We each had Preacher Identification Cards and a religious parking pass allowing us to park in handicapped zones – that part was certainly appropriate – especially mentally.
Of course the monthly and quarterly reporting, sales tax remuneration and licensing requirement were pretty much ignored. We began to receive nasty, uncalled for, threatening letters form the State and DMV. Someone had to step up and be responsible for the paperwork. No fun and prone to various mathematical and theoretical errors. Eventually we hired a young man, with a pleasing personality and a high interest in cars (and as we found out later, a daily drug habit). Right away he acted as if he was a partner – no problem since the paper work was getting done. We put him on our checking account. Yup. Thirty Thousand embezzled dollars later, along with very vicious threats from the DMV, cancelation of auction privileges and personal humiliation; we decided that his smiling countenance had a larcenous heart behind it
He skedaddled for Louisiana leaving us holding bounced checks and irate sellers who had not received their titles.
But as with all things, time passed and we got better at being faux dealers. We lost less money on each car, the DMV stopped investigating and auditing us at the drop of a hat, and we began to realize that maybe the Shiny Penny Highline Lanes were not the place to buy.
It’s been twenty-five years now since we got our first passes into the auctions. Have we learned anything at all? I believe we have.
- Only bid on cars still under warranty from the factory. No matter what the auctioneers says, whether its guaranteed or not, only buy cars with a valid warranty. Always check to see if there are books and records with the car, and if the GPS CD is missing – almost always is.
- Do not buy for relatives or friends unless you are trying to reduce the number of these people in your life.
- Look at the auction lanes where there are factory lease and rental cars. These usually have semi-legitimate reasons for being there.
- Always examine the vehicle before it goes thru the lane. Especially mechanically. You are not supposed to drive the vehicles around at all, but being used car dealers we go with the “Rules are to be broken, occasional commandments obeyed”. Look in the trunk and under the seats to make sure there is no bodies, rabbits, or illegal chemical substances
- Realize that if there is a problem on an auction “guaranteed” vehicle and you go to arbitration, the auction will always side with the other party.
- Hot dogs at the auctions of are inferior quality even for “floor sweeping dogs” and can cause astonishing regularity if eaten in quantity.
Will there be other lessons to be learned at the auctions? More character building experiences, more near death fiascos, more stories to tell. No Question.