One of my favorite sayings from the car business is “the money is made when the car is bought, not when it is sold.” As a young used car buyer just learning the ropes, I must have heard that saying a hundred times. Now that I am an older car guy, I use this saying hundreds of times. Why? Because it is one of the truest statements about our industry. If the money is made when the car is purchased, then extra care should be taken when purchasing used cars, to assure that each used car is properly purchased.
Purchasing used cars is one of the hardest skills to master in the used car industry. The supply and demand structure is constantly changing. The market is constantly in a state of flux. To make things even harder, no two used cars are alike. To be an effective buyer, a person must be both an expert at evaluating the condition of each vehicle and an expert at evaluating the constantly changing marketplace.
A used car manager can have a difficult time in determining the value of a used car. There are no set guidelines to follow, and often it is more of an art than a science. However, there are certain fundamentals and processes that can improve your purchasing decisions.
The purchasing process should be seen as two separate functions: the inspection, and the valuing of the vehicle. These processes should be viewed separately; yet, if a person makes a mistake in either part, it will result in a bad purchase.
The first crucial step in purchasing used cars is learning how to DO THE SAME THING EVERY TIME. When appraising a used vehicle, establishing a repeatable pattern is crucial. Follow the old saying “practice makes perfect” and follow the same routine every time. This will help you eliminate mistakes.
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Aristotle
When buying cars at auctions you sometimes only have seconds to:
- Determine if the vehicle has any paintwork.
- Determine if the vehicle has any frame damage.
- Determine if the vehicle is mechanically sound.
- Calculate the market demand for that specific vehicle.
- Determine how much money you should pay for the vehicle.
A good used car manager and used car buyer can perform all of these functions within seconds. How can they perform all of these functions so quickly? Simple; they follow the same routine on each vehicle they appraise and buy. Having an established pattern is crucial whether you are buying 20 cars an hour at an auction or a single car through your appraisal process.
Get your own routine and stick with it. Do the same thing every time.
It’s important when purchasing used cars to establish a pattern that works for you, one that you are comfortable with. I always start examining a vehicle at the driver’s side fender. I then proceed to the hood, and then continue moving clockwise around the vehicle, looking for signs of paintwork and frame damage, until I return to my starting point. I start at the driver’s fender because that is where the VIN plate is located.
I do this because I will NOT buy a vehicle across the auction block if I have not personally verified the year of the vehicle with the VIN plate. This habit stems from purchasing a 1998 Mercury Mountaineer that turned out to be a 1997. The markings on the windshield from both the dealer and the auction read 1998. The auction failed to arbitrate the vehicle for me and I lost $1500 in a matter of seconds. Did that hurt? You bet it did. When buying used cars, we all make mistakes. The important thing is to learn from those mistakes. I learned my lesson, and I never made that mistake again.
Following the same routine will help you reduce the number of reconditioning issues you overlook and perform a more thorough inspection. You can’t accurately establish a used car’s value if you can’t appraise the vehicle properly.
If you found this information helpful, check out Used Cars 101.