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Investing in used cars?
Old 09-30-2022, 08:00 AM   #1
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Investing in used cars?

With the current car market...
Low supply = higher price...
High demand also =higher price...
How many thousands of cars do you think need to be replaced after this storm?
I passed on buying a new truck a few years back... currently could sell it used for nearly twice the price today...
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Old 09-30-2022, 08:07 AM   #2
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Two initial thoughts.... (1) I "think" the high point for used cars has come and gone... From what I've been reading/seeing the prices are starting to come down... Maybe it's by area of the country, I don't know for sure. (2) Beware of buying used (or even new) cars from the Florida area over the next few+ months..
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Old 09-30-2022, 08:19 AM   #3
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Originally Posted by old medic View Post
I passed on buying a new truck a few years back... currently could sell it used for nearly twice the price today...
And therein lies the problem. You’d need a wayback machine to “invest” because at today’s prices, you’d be buying at the peak. Or at least what many believe to be the peak. Automobiles are a depreciating asset - always have been and always will be. The last couple of years have been an anomaly.
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Old 09-30-2022, 08:22 AM   #4
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Two initial thoughts.... (1) I "think" the high point for used cars has come and gone... From what I've been reading/seeing the prices are starting to come down... Maybe it's by area of the country, I don't know for sure. (2) Beware of buying used (or even new) cars from the Florida area over the next few+ months..
Car-Guy would know better, but I am reading the same thing. New car inventories are rising and demand for used cars is falling. Way more used cars are going without bids at auction now than a few months ago, some banks are getting concerned selling repos at a loss if at all. Used car prices at auction are falling and will continue. By all accounts that ship has sailed...
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Old 09-30-2022, 08:29 AM   #5
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Used cars? Just have a look at what happened to CarMax stock yesterday. That tells the story.
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Old 09-30-2022, 09:15 AM   #6
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You'll eventually see trailer loads of used cars heading south toward Florida. But first, the people must deal with insurance adjusters and get some money. Many along the SW FL coast may not even have jobs to go to.

Hopefully the population went inland--and took all their cars with them. If they didn't make a good faith attempt to take a car elsewhere, they could have difficulties dealing with their insurance companies on flood damages.

My college roommate and another friend have/had homes 500' off the south end of Ft. Myers on a canal. Things don't look good for them. They've not reported their status on F/B or the internet. Another friend in Ft. Myers said virtually every restaurant on Ft. Myers Beach has "disappeared."
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Old 09-30-2022, 09:19 AM   #7
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You'll eventually see trailer loads of used cars heading south toward Florida.
What used car buyers need to be concerned about are trailer loads of used cars heading north from Florida.
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Old 09-30-2022, 09:32 AM   #8
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What used car buyers need to be concerned about are trailer loads of used cars heading north from Florida.
Right. Could be a play with used cars renting them thru turo if one was inclined.
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Old 09-30-2022, 03:04 PM   #9
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Beware of buying used (or even new) cars from the Florida area over the next few+ months..
We ran across one at a reputable dealer several years ago... clean car fax...had a law officer friend run the vin and came back last registered on the NC coast 2 years earlier who took a direct hit with flooding.
Should had got a picture of his face when I pointed out the rust UNDER the dashboard...
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Old 09-30-2022, 03:30 PM   #10
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I passed on buying a new truck a few years back... currently could sell it used for nearly twice the price today...
And then you'd have to replace it at today's inflated prices. Hard to not take a loss that way...
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Old 10-01-2022, 09:37 AM   #11
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Used cars? Just have a look at what happened to CarMax stock yesterday. That tells the story.
Yep. Now do Carvana.
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Old 10-01-2022, 10:05 AM   #12
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And then you'd have to replace it at today's inflated prices.
Nope... I would have kept my old truck anyway. Its paid for and runs just fine.
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Old 10-01-2022, 10:11 AM   #13
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There will no doubt be a fair amount of flood damaged cars on the market over the next few months. Including insurance company writeoffs.

Some will be transported north to be sold to unsuspecting buyers.

Best to avoid these units.

The best investment we made in used cars was to keep our 2006 Accord and our 2007 Solara instead of replacing them!
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Old 10-01-2022, 10:11 AM   #14
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Yep. Now do Carvana.
May be time to just buy the stock
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Old 10-01-2022, 10:17 AM   #15
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May be time to just buy the stock
Only if you are a true gambler.

Carvana: Bankruptcy May Be Inevitable

Carvana executive faces criminal charges in Illinois
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Old 10-01-2022, 10:22 AM   #16
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May be time to just buy the stock
I think you forgot the sarcastic tag (/s) on your statement!
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Old 10-02-2022, 12:02 AM   #17
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I watched the video linked in the other thread (car sales bubble) with the car sales guru Lucky Lopez. At one point Carvana was mentioned and the interviewer and Lucky snickered about Carvana being toast or something to that effect. The comments on Seeking Alpha are very revealing but the actual articles are generally positive.
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Old 10-02-2022, 06:59 AM   #18
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Saltwater flood cars are even worse than freshwater flood cars. Tge salt keeps corrosion going.
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Old 10-02-2022, 07:14 AM   #19
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Saltwater flood cars are even worse than freshwater flood cars. Tge salt keeps corrosion going.
Both are bad (agree salt water is much worse), even if well serviced afterwards. (Changing/flushing all the oils and fluids.) Almost seems there should be a law about reselling a car that's been submerged without disclosing it to the buyer.
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Old 10-02-2022, 10:16 AM   #20
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It's a process

Some so great, some don't. YMMW it depends to what scale. If you plan to specialize in a very niche low volume market - then a lot won't apply.

1.)Dealer License. Not a biggie, but cumbersome depending on the state.

(Requires proper insurance, dealer plates, and in some states - physical location that stores X number of units)

2.)Market is at a high point now. (Mind you in stocks, we LOVE saying "don't time the market! it's ok if it goes down after you buy it! ) but many of us in varying businesses - well, we like profits. Big ones.

3.)You make your profit when you BUY the car. Why? Because it's inevitable you'll sell it. It's a a guarantee you'll sell it. But at time of buying, you should *know* the endgame - how much do you spend on reconditioning - who is your final buyer - how much will they pay - and WHEN -- keep in mind in normal times, cars depreciate. The Big Auto Dealer Chains (AutoNation, Lithia - the "transparent" ones who crush people and make the biggest profits....) - allow a used car on the lot for 60 days - after that, staff gets financially penalized for having it on the lot.

4.)Have vendors on the ready. The paint guy, the dent guy, the windshield guy. The Body shop. The State Inspections shop. The Brakes and Tires guy, etc etc etc. Decide if they will get your cars DONE without making you hold onto the car too long.

BTW "Lot Rot" - it's fun if you recondition your car perfectly - but then innocently, a mechanical thing goes wrong, someone scratches it, etc.


5) .Dealing with the public. - the fun part. Sure, plenty of fine people just want to sign and buy. BUT keep in mind, meeting strangers off "Craigslist" etc. That comes with risk - and if something goes wrong with the car - well - these days with the great culture that we weren't allowed to discuss - people hurt people over the wrong French fry order so keep that in mind. Also note costs of putting your car online - not just the free sites, but a paid site or two and why said website will optimize YOUR listing to be seen on the top. of page -versus someone listing 200 cars a month.

Oh, and hope that your buyer has cash ready - MOST customers aren't like people on this forum - they DON'T have that kind of money and many - *gasp* have poor credit histories so when they say "ya I'll buy it" - the friendly girl at the bank tells them otherwise. The "I got approved online, here's my voucher" people - - have to prove income, debt ratios, etc - - not always easy - and - well - not the most reliable clientele -- and they know it - they receive mail and phone calls about that problem all the time.

Conversely there are success stories. A fella owned a gas station in Virginia in the 50s, and a company called Pontiac asked him to sell a few cars off his lot. Since then that guy bought up real estate in Tyson's Corner when it was nothing - and today owns 22 dealerships in Northern Virginia. There's small individual retailers who know their businesses and do very well too. But there's more fails than success.

I *have* seen people who are mechanics. REAL mechanics not "I love cars sine I was a kid" but REAL mechanics do ok with buying a turd....using their own sweat equity to fix it up ...and turn it for a profit.

It's like anything I guess: Some do well, some get crushed.

Also, let's look at retailers - those evil dealers. What are the gross profiting on the used car? Average cost of a unit - what - $25,000? They gross $2,000 on the sale after all reconditioning costs. A doc fee of lets use 500. So he made $2500. BUT he still needs to pay rent, fixed overhead, advertising, insurance, etc. Yes he makes money on financing and after sale products but usually a one man car investor won't have that.

The percentage of net profit - would be laughed out of the room on this forum - especially if sweat equity was being put in and it's not passive.
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