This week at the auction
My name is Bill Pearson and I am the owner/general manager of Finish Line Ford in Peoria, IL. I work closely with Dale and his vAuto team. Most importantly, I’m one of his primary sources for insights as to what is going on in the wholesale and retail market place. I personally attend 2-3 auctions per week around the country. I‘ve been following his predictions regarding the deflationary cycle of the used car market in the first quarter of this year. To this extent, I have some insights to share regarding my experience at the auction this week.
First, on Monday I was in Nashville at a Ford closed sale. There were a bunch of us regulars, standing around, watching guys who we have never seen before pay absolutely ridiculous numbers for cars. . For example, the ’08 Ford Explorer XLT’s were bringing money in the mid $15,000 range. I know that the retail market for these vehicles is around $15,900. I thought to myself that a year ago, I would have been one of those guys who didn’t know the retail market and would have been over-paying for vehicles. I ended up purchasing no vehicles that day and I believe that I saved myself $40,000.
The guys buying the vehicles were apparently sent there to “get some inventory,” and inventory they got. On Wednesday I went back to the Nashville auction for the open sale and purchased four truckloads of cars, including ’08 Ford XLT’s in the low $14,000’s, the exact same vehicle selling in the high $15,000’s two days earlier. The difference in Nashville between Monday and Wednesday was the fact that the guys that we seldom or never see weren’t there, it was just us regulars. Moreover, on Monday (closed Ford sale) I watched guys pay in the mid $14,000’s for ’08 Ford Escapes. Two days later, at the same Nashville auction (open sale) I bought Mazda Tribute’s, (the exact same vehicle) for $11,400. Can somebody tell me that an ’08 Ford Escape is worth $2,600 more than an ’08 Mazda Tribute? Again, the difference was that Wednesday’s sale lacked the heard mentality of uneducated buyers.
Last month I delivered just short of 300 used retail units. During 2008, I retailed 1200 more used vehicles than 2007. The difference is that I won’t buy a used car unless I know how to retail out of it. It’s a discipline that I’ve come to understand and live by. I think that Dale is right, we have seen a post-holiday buying spree and based on my experience this week, I think that it will level off. What I’m certain of is that there is almost limitless supply of vehicles to be purchased. You just have to know the retail market and avoid the heard mentality.