When Deciding what to do with your Wholesale Units Don’t Forget About Copart
Roger Alvey – I was out having dinner with several dealer friends last month when the topic of vehicle appraisals and wholesale profits/losses came up. 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 2006 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… or the angry looking 1986 Winnebago with the 454, bright orange carpet and interior and water damage.
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 3 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 pit-bull on a poodle and you are putting those units in front of a global marketplace consisting of 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 tell you for less than $100” The response…? 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”.
Copart is a 30+ year old global auction with over 1 million members (dealers and the public), in 160 countries, sells almost 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 only… but the fastest growing part of their business are in clean titled used cars. All vehicles are sold “as is” but can be sold as ‘seller certified’ if you want 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 ‘work’ the car, they offer free pick up within 25 miles of their closest auction yards (Oregon and Washington each have 3). Their post-sale ‘counter bidding” negotiations with bidding buyers they do on your behalf when your reserve target isn’t reached are bare knuckled and immediate. Like most auctions there are vehicles that work 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.
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 (and throughout Europe and the Middle East), 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
P.S. UPDATE: Lately I am seeing clean titled wrecked cars doing some incredible numbers in Copart auctions …