When Deciding what to do with your Wholesale Units Don’t Forget About Copart
I was out having dinner with some of my dealer friends last month when the topic of vehicle appraisals and wholesale profits/losses came up. Now, I have always been a big believer in the old adage: “your first loss is your best loss” when it came time to decide what to do with the problem children in my inventory. It didn’t matter to me if it was the 2014 BMW X5 one dealer had just taken in (with a serious low engine knock and oil the color and consistency of chocolate milk that no one bothered to check when taking it …but went ahead and put all of the money into it anyway… just to make the deal), the sight unseen non running framer with nice wheels and tires worth more than the car, the angry looking 1986 Winnebago with the 454, bright orange carpet and interior (and water damage) and all of the oddball stuff we accumulate (motorcycles, ATV’s, trailers, boats you get the idea). After all, there is a butt for every seat.
Let’s face the facts; wholesale pieces like these don’t get any better, prettier or more valuable with age and making major repairs for most small dealers in the hopes of retailing out of the car later ties up valuable and necessary working capital. So what to do with these cars that nearly every dealer in America has stashed in his bullpen? Have them pushed (literally) through the local regional lane auction? Sell them to the gypsies? Bundle them with something good and push them on a wholesaler? Scrap? … Possibly… it depends.
I finally said … “It sounds like all of those cars would be perfect vehicles for Copart…they pick them up for free … give them a wash n vac, their Dealer Services Manager will actively work the car in the post-sale counter bidding process within the confines you give him/her like a pit-bull on a poodle and you are putting those units in front of a global marketplace consisting of 750,000 registered buyers from over 160 different countries all at the same time….want to know what a vehicle’s really worth? You can ask the world to vote on it for less than $100” The response…? Crickets.
Of the 4 people at my table only 1 had ever used them, the others either erroneously thought Copart was an ‘insurance” or “salvage only” auction, had only ‘heard the name’ or had ‘never heard of them” or thought they were a parts house.
Copart is a 30+ year old global auction with over 200 auction yards all across the U.S., Europe, Asia and the Middle East 160 and sell over 2 million Cars, Trucks, SUV’s, Classic Cars, RV’s Boats, Motorcycles, ATV’s, Water toys, Heavy Equipment and Snowmobiles every year. Yes, a lot of their offerings are parts and salvage/insurance company offerings… but the fastest growing part of Copart’s business is in clean titled, run and drive, used cars. All vehicles are sold “as is” and come complete with 10 or so photos of the car and any damaged areas. In addition to the global audience the best part of their service….is the service.
Every selling dealer has a local Dealer Services Manager to manage and ‘rep’ the car, they offer free pick up within 25 miles of their closest auction yards (Oregon has 3 and Washington has 4). Their post-sale ‘counter bidding” negotiations they have with the top 3 bidders on your behalf when your reserve target isn’t reached are bare knuckled and immediate and the good reps have a rolodex of buyers a mile deep. Like most auctions there are vehicles that work at Copart and vehicles that don’t. What I’ve seen that works are the higher mileage imports (especially Lexus), older domestic and import trucks, RV’s and some of the odd ball stuff. If I had a vehicle with an engine or tranny on its last legs that’s where it would go. Older Buicks, Chevrolet cars, and Ford Explorers you should try somewhere else. Late model cars of any stripe seem to bring all the money most of the time.
Copart has one of the largest and most active weekly auctions of classic cars you will find anywhere (restored and unrestored) and before you think their buyers don’t have deep pockets check out the YouTube video of the Ferrari F50 with the crunched front end they ran through their auction recently that sold for $500k. Copart has at least one yard in most of the 50 states is a Fortune 500 publicly traded company, are experts at what they do, and should be an important part of every dealers business model, if it isn’t already.
Roger of The Car Guys