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What is our process for buying a car to sell?

16
September
2019
The first process to getting vehicles onto our inventory lot is that we buy in bulk.

I have built some really good relationships with new car dealers over the years, so I pretty much get most of their traders.

Once a week I go to my different dealers. They have a group of used cars in the back for me to check out. They hand me all the keys, so I basically get first choice on all the vehicles.

I figure out the ones I want, lump them together, and make a bulk bid. Everything I don’t want, the other dealers in town get second choice. If nobody wants them, they go straight to the auction.

I personally test drive every single car, and I do all the buying myself. I look them over, check the oil, crawl underneath them, do everything I can to try and buy the best car possible up front.

I’ve been the only buyer for Country Auto for 22 years, so I’ve got a pretty good knack at it. It helps a lot having the first right of refusal, so I’m not fighting 20 other guys at the auction whom I know nothing about.

What does it take to reject a car? What kinds of cars does Country Auto accept?
I actually have a list of cars—a do-not-buy list—vehicles that we know are problematic and expensive to fix. They have known issues with transmissions, motors, that sort of thing. So if it’s on my do-not-buy list, I don’t purchase it. That’s probably my number one thing. 

The other thing is a major issue in keeping goodwill with other dealers in the area. Sometimes I will buy a few of the problematic vehicles because it helps the new car stores out.

Doing that helps me keep my foot in good with them. But if the cars have really bad issues and I drive it first so I’ll know that, I buy it appropriately. For the ones that have promise, they’ll go in our shop, we put a tranny in it, we warranty it, and move on from there.


The ones that aren’t promising as sold as-is.

Do we accept trade-ins?
Generally we go through the same buying process for trade-ins. My manager goes out, test drives the vehicle, evaluates it, and puts a number on it. As long as we get it, we’ll trade for it.

We split our inventory up into three different sections on the lot: warrantied cars, tweeners, and POS.

Basically we start off with POSs which stand for “piece of s**t” and we advertise it that way online. POS of the week. That way there’s no misunderstanding of what you’re buying.
Putting them on the POS lot is how we dispose of a lot of our trades. And when I get those crappy cars from new car dealers, I’m helping them out by taking those cars but also giving myself a way to get rid of the car. We don’t fix it. We don’t run them through the shop. We just sell them as-is, really cheap and call them what they are: POSs.

It was kind of funny when I started doing that, years ago. It just kind of turned into a thing where people appreciate us for the honesty. They value us for it because they know we’re honest about everything.

The next section is what we call tweeners. They’re pretty good cars, they’re high mileage. We don’t want to warranty them because they’re not that good. When a customer comes in who really doesn’t qualify for long-term financing on a bigger loan from us, but we want to give them a chance and they have a low down payment, we sell ‘em a tweener.

If they have a good six month history on a tweener, we’ll move them up. If something does go wrong—say three or four months in with the car—and it’s not warrantied but they’ve made every payment on time, then at that point we’ll just upgrade them into a nicer, warrantied car and let them have that car.

Our top section is warrantied cars.

Should people try to get financing before coming in?
It’s really best for people to come in. We’ll try to approve them when they’ve filled out the application, but once they’re inside with a face-to-face with us, we can find out their wants and needs, and match vehicles to their budget. Our customers are credit-challenged. Going to a bank or other type of finance place would be discouraging. One: the customer will get told “no.” And two: the bank might say “yes” but with a loan of only 67 percent of the value, which is unrealistic.
 
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