| The ongoing financial insanity has hit home in the car | | | | case, a lot of dealers simply stuck their heads in the |
| industry, and the worry is that the hits will keep coming. | | | | sand with the hope that the pounding would somehow |
| The perspective from inside the Used Car Dealer | | | | miss their store. I guess its human nature to hope for |
| sector is eye popping with concern. As an industry | | | | the best, as well as to resist change. Many dealers |
| insider, the author (me) has seen the decline in Used | | | | now wish that they had adjusted their business plans in |
| Car spending first hand. I used to go to the two main | | | | advance to soften the impact when the storm finally |
| auto auctions here in the Seattle area every week | | | | hit. They are boarding up their windows now though, |
| and purchase about 60 used cars per month, between | | | | and it hurts. |
| what I sold here in Seattle and what I exported to | | | | Up in Canada, the dollar was weak against the Loonie |
| Surrey BC, a Southern suburb of Vancouver proper. | | | | (The goofy name the Canadians gave their money). |
| The interesting facts in and around my personal | | | | For a while back in early to mid 2007, Canadian |
| experience go back to before August, 2008. These | | | | dealers were flocking into the States to buy cars that |
| experiences are relegated geographically to the Pacific | | | | would sell retail for five or ten thousand dollars more in |
| Northwest, so they can not stand as a harbinger of | | | | Canada than they would in the US. Canadian retail |
| things to come. The same and worse has already | | | | buyers who lived close to the border would mob UD |
| been the case around the country at large, and that | | | | border area dealers on the weekends and pay cash |
| should have acted as a warning flag to dealers in the | | | | for US cars. It was a feeding frenzy, and very |
| Northwest. Seattle though, has an economy that | | | | profitable for industry professionals, both in Canada |
| seems to whether the cyclical financial storms whose | | | | and in the US. |
| visitations come and go upon our systems, and the | | | | As the population in Canada is only one tenth the size |
| same has been true of this one so far. Most other | | | | as the US population, it didn't take long for the market |
| States have experienced much worse effects than | | | | to flood out up North. A lot of Canadian dealers began |
| we have here in Washington State. | | | | to sit behind lots full of American car inventory that |
| During the early part of 2008, my Business Partner | | | | was no longer flying off the shelves. By early in 2008, |
| had necessity to spend a few months in Arizona on | | | | the fun was over and dark clouds of uncertainty had |
| business unrelated to the Auto Industry. He continued | | | | begun to gather on the future's horizon. The Canadian |
| to go to a Dealer Auction once per week regardless, | | | | dealers that I supplied continued to buy volume |
| simply because it gets in your blood. His reports were | | | | because of a certain niche that worked for them, but |
| sobering. Prices at auction plummeted, dealer | | | | this was an anomaly and it too has evaporated into |
| attendance fell, and the inventory moved at the auction | | | | the smoke. We sent four cars North in September |
| house fell dramatically on a week to week basis. In a | | | | compared to August when sixty went across. |
| belated ripple, as I spoke with my partner on the phone, | | | | My most active Canadian dealer told me a month ago |
| I begin to see the same trends, on a comparatively | | | | that he never listens to the news. It just doesn't interest |
| diminished scale, begin to manifest themselves here in | | | | him and he can do without the negativity that seems |
| Seattle. | | | | to be the expense that comes with gaining a wider |
| At South Seattle Auto Auction in Kent, Washington, | | | | perspective. His position on news watching has |
| anywhere from 1,900 to 2,600 cars were being run in | | | | changed recently. Historically, this dealer, who has been |
| ten lanes back in April - May of 2008. Of these cars, | | | | in business at the same location for more than 15 |
| about 48% to 52% were being sold every week. As | | | | years, has always moved more than 50 cars per |
| of August - September, the inventory at the auction | | | | month. Usually it has been closer to 70. In the last two |
| had dropped to 1,600 to 1,800 and cars moved | | | | months he has seen his sales go down to two or |
| reduced to under 35%. That statistical reality alone | | | | three cars every weekend. He says that now he |
| constitutes a screeching halt in the sector, and that | | | | listens to the news four times per day. |
| screech has been echoing and reverberating out on | | | | What the future will bring is not visible in the old crystal |
| the dealers lots with their retail interface. People are | | | | ball. We are in uncharted waters here, and the |
| just not buying cars. | | | | economic system has been fundamentally changed. |
| It makes sense when we consider that big ticket items | | | | For car dealers right now its hard to find optimism. One |
| are absolutely not moving right now, and this | | | | thing seems likely however. Those dealers that are |
| phenomenon is global. The construction industry is on | | | | able to hang on will be riding higher than ever once the |
| its lips. We all know about the housing sector. Should | | | | storm blows itself out. They will have fewer |
| we have expected the auto industry to escape the | | | | competitors to dilute their markets. |
| ravages unnoticed. Of course not, but as us usually the | | | | |