May 19, 2014

Car hunting

As mentioned in my last post, we're now on the hunt for a new car for MrsZ. We sold her CR-V back in NY before she moved out here, for various reasons. With three adults and two cars in the house, we were doing pretty well. Since GfZ is going to be away for most of a week at a time, and MrsZ is going to be going back to work, it's time to find her a set of wheels.

This is not proving as easy as I'd hoped.

My wish list is relatively short:
- reliable
- fuel efficient
- non-salvage title
- reasonable condition
- as far under $10,000 as possible, and preferably under $5,000

Franchise car dealerships (So-and-so $BigBrand) don't do a lot of business in this price range. When I was in the business in '99-'00, we didn't do a lot under the $6,000 mark - the margins get thin and the cars tend to need more work than it's worth for a business to make them sale-ready. Usually it's not even big work, but it adds up in a hurry.

For example:

A ten-year-old compact sedan with 130,000 miles, taken in on trade for $4,000. On average it's going to need new tires ($500), maybe a new set of brake pads ($150), an oil change ($20), alignment ($75), inspection ($15), wiper blades ($20), and a good detailing ($100). About $850 of work all told. So the work gets started, and while it's on the alignment rack it's found to have a worn control-arm bushing. Another couple hours of labor and fifty bucks in parts.. before you know it you've put $1,500 into the car and the break-even point (on paper) is now $5,500. That's not making a dent in overhead, or making up the shop time "lost" on paying customer cars. No profit yet, just breaking even. It goes on the lot with a sticker of $7,500 (and book value* is, say, $8,000).

Joe Customer comes in looking for a car for his daughter, on her way to college. She loves this car, and it's in dad's budget. But he wants another opinion. So he takes it to his mechanic, who throws it on the rack and pronounces the suspension worn, the brake rotors borderline, the exhaust is almost rusted through, and the transmission shifts too hard. He can fix these things for $900. Joe comes back with the car and the list, and asks for $1,400 off: $500 because no one ever pays list, and $900 to fix the items on the inspection report.

Negotiation ensues. The dealership agrees to fix the items on the report before delivery - internal cost about $600, but Joe doesn't need to know that. They'll take another $300 off, but can't do the full $500 Joe wants. Dickering continues, and they finally settle on $400. Done. Joe brings in a check for $7,100 (and tax, and fees, etc) and daughter drives off to college in her new used car.

The dealership has a gross profit of $1,000 in the car. ($7,100 sale less $600 additional repairs, less $5,500 purchase and initial repairs.) From that, they have to pay the salesman ($75-250, depending on the pay arrangement) and the rest of the overhead costs - which are not small. For the sake of round numbers, another $700 covers overhead and salaries etc. Owner nets $300. Not bad, not bad at all.

Except a month later, Joe's daughter hits a pothole hard enough to crack something. She won't admit that to dad, so he assumes it was a defect the dealership knew about and hid - and starts badmouthing them to anyone who will listen. Is the loss of business worth $300? Debatable.

Back to the topic at hand, though: we kept a couple sub-$5,000 cars tucked in a corner. Not advertised, but around. Most of the list started in the $8-10k range (this was in 1999, remember). Dealerships have apparently continued this approach.

Used car lots are an even dicier proposition than a franchise - they have less to lose, often fly under the radar, and will change names, owners, and DBA/LLC to avoid bad reps. If I see a "BUY HERE - PAY HERE" sign I keep driving. Dodgy cars will get bare-minimums done to pass a state inspection, then flip off the lot. Warranty service? Fuhgeddaboutit. And unfortunately, the folks who tend to frequent that type of lot are either not informed about or not able/willing to take advantage of consumer protections that are out there.

I've been trolling Craigslist trying to find a suitable car. I've had a couple good leads, and we were all set to go look at one today. Twelve-year-old Honda Civic, 125k, pictures looked good, price was fair if a little high. MrsZ called Friday night and got the address and set up a time to meet on Saturday afternoon - and we'll call when we're on the way.

We went to the bank and withdrew enough cash to pay for the car. I put together all the bits and pieces I needed to give it a thorough once-over. I asked a few people who knew the area about the neighborhood we were going to. General consensus was, "a little rough but not really bad; just keep your head up." Fair enough. I added a NY reload to the normal carry, and we headed out.

We called when we headed out and they'd forgotten us. Can we reschedule for tomorrow morning? Sure. Picked a time. And then we threw the curve ball. Would you mind meeting us in the police station parking lot? It's two miles away and we'd feel better in a public place. They promptly declined, because they "didn't want to bother driving the car somewhere for a maybe". Game over. MrsZ said, "Oh. Okay. Thanks anyways, we're not interested then. Bye."

A few years ago I wrote a post about using your head when buying stuff online. Nothing has changed, especially this line: "if things sound hinky, don't be afraid to back out of the deal beforehand."

The car we were going to look at was listed for a few thousand dollars. The sellers obviously knew that, and someone who was serious about it was going to bring about that much money. People have been killed for far less. Trust the lizard brain. Walk away if something isn't right.

All that said ... anyone have a line on a used car? We're still looking. :-)

* - "book value" is a crock of shit. It's improved slightly from when the book was the NADA Guide, but the only real measure of used car values is what they're running at the auctions right now. The Book may say your used Yugo is worth five thousand, but The Book ain't writing the check. It's a good starting point at best.

1 comment:

Old NFO said...

Probably a good one to 'pass' on... Might not have ended well.