One year down, looking forward to many more
Well, my first year as a licensed dealer is just about over. I have learned several things. The first is that it is not as easy to sell cars at a profit as you could be led to believe reading about it on the internet. Finding good cars at a price low enough to cover your overhead and make a profit is hard.
I thought I would just buy cars at the various Manheim auctions across the country, have the car shipped to Jacksonville and then be able to make a good profit on each one. The problem is that all the other dealers are doing the same thing. Many of these dealers are “buy here pay here” dealers who can overpay for the car upfront as they will make multiples back on the interest they charge. In the under $15K car market these “buy here pay here” dealers are driving the price of the vehicles up to near retail and in some cases above retail. This leaves very little for dealers such as myself. Don’t get me wrong, there are still bargains to be had but you have to look hard to find them.
I have also learned (the hard way) to only buy cars that are rated at a 4.0 or higher. Manheim offers a rating service from 0 to 5 on used cars. Not every car gets rated as you have to pay Manheim to do the rating. After some bad experiences with several shady dealers (one specifically in South Florida that I made the mistake of buying two cars from) that misrepresented their cars I am now only buying cars that have a rating. I may consider a car that is less than 4.0 but above 4.0 gets a car that usually just needs minor things to make it ready for sale.
The final thing that I will share in this blog is my choice of retail locations. I started out selling on ebay and even signed up with a dealer package for a short time. One problem with ebay is that most of the cars sell for close to wholesale. Additionally, there are a lot of people on ebay who will click “buy it now” and then want to inspect the car and start negotiating. I had to put a long list of disclaimers in my descriptions including “all inspections must happen prior to bidding/buying it now” and restricting bidders to those who have over 10 positive feedbacks. What really drives me, and some of my dealer friends crazy, are the people who think they are expert negotiators or just plain lowballers. These are the people who watch American Pickers, Storage Wars, or some other reality TV show and don’t understand that these shows are scripted entertainment NOT reality. I have had several occasions where someone will offer 30% or more less than my asking price. People, this is ridiculous. There just isn’t that much mark up on these cars. Lately I am avoiding ebay unless it is a car I need to sell quickly and am willing to take a low. I mainly list my cars on my website and Autotrader.com. If it is a specialty car I will take it to bringatrailer.com.
I’m looking forward to my second year. I welcome questions about any of my blogs or any of my cars that are listed here or elsewhere.