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The last two years of unprecedented used car values made vehicle remarketers look like experts — without having to work that hard at it. But as the wholesale market corrects to historical normality, consignors need to flex new muscles to keep holding costs at bay.
There is plenty of room for improvement, two remarketing experts say, from buying smarter and rethinking reconditioning to inspecting and streamlining your disposal process.
Buying for Resale
Getting the most for your car on the back end begins at the front. This means buying a vehicle for fleet that the end buyer wants, says Joe Lyons, remarketing and fleet sales manager for Marple Fleet Leasing.
Having a vehicle that is properly contented for the used car buyer has “been a fleet issue for 30 years,” says Lyons, who was also a remarketing manager for Dollar Thrifty Automotive Group.
Power windows and locks are essential equipment today, even for the cheapest of subcompacts. Lyons recounts taking a $400-$500 hit at auction with Dodge Calibers because they didn’t have power windows. “It’s worked its way down to that level,” he says. “There are people today who haven’t experienced a car with crank windows.”
Color counts. Lyons remembers a group of Ford Focuses in pastel green that sold for $300-$400 less than those with more neutral colors. But choosing cars with colors that sell can be a moving target. “Certain colors come in vogue and then become the kiss of death, and suddenly the manufacturer brings it back again,” he says.
Watch out for certain finishes on new cars, such as three-stage paint or pearlescent coats, because they cost more to repair and those types of finishes are harder to match the paint, Lyons contends.
Interior color matters as well. “Go with darker interiors,” he says. “Lighter interiors show every stain imaginable.”
Where you sell is a factor. You might save some money by buying SUVs without four-wheel drive, for instance, but you could feel it on the back end. While Lyons says he would have a hard time selling a two-wheel drive SUV in his area, metropolitan Philadelphia, “You’ll sell the heck out of them in Texas and Florida and Alabama,” he says.
On the other hand, if you bought four-wheel drive SUVs in the southern markets, you wouldn’t necessarily see a commensurate return on resale. While moving vehicles to sell them in a different region is an option, cost is always a factor.
Before you buy, understand what’s hot and what’s not — options, powertrains, color or trim level — in your used car market. Lyons suggests gaining input from whoever will remarket your vehicles, whether it’s your remarketing department or wholesale buyer.
Watch the Odometer
Certainly, mileage correlates to sale price. But in Lyons’ experience, vehicles with inordinately high miles could lose more money at auction than expected. “With higher miles on a relatively new car, sometimes the MMR (Manheim Market Report) adjustment may not be in line with what the actual market is bringing,” he says, adding that higher miles could hurt the value even more, especially for premium and luxury cars.
Dealers don’t want cars in the current model year with mileage higher than the teens, Lyons says, understanding that a current model-year car competes with a new one. For a 1-year-old car, 20,000 miles into the low 30,000-mile range is acceptable, while a 2-year-old car should be sold with mileage that is still under warranty.
Pulling cars out of fleet with some mileage left on the warranty makes it easier for the dealer to get it certified for a manufacturers’ CPO (certified pre-owned) program. It’s also cheaper to add an extended warranty if the car is still under the manufacturer’s warranty, Lyons says.
The Recon Question
Aside from a thorough cleaning, a traditional rule of thumb when it comes to reconditioning is to spend $1 to recoup $2. Another guideline is to understand if the reconditioning will improve the grade of the car. Outright repairs can get tricky, Lyons says, because in the auction grading system, you’ll still be marked down for a “previous repair.”
Paintless dent removal (PDR) and glass repair is generally money well spent, Lyons says. PDR improves the quality of a panel without getting hit for a previous repair because you don’t have to repaint it.
Chips in bumpers can be repaired for $200 or less, and repainting a bumper is an acceptable repair.
Wheel repairs are similarly acceptable. There are services to repair a scraped wheel for $75 without having to replace it for $400, Lyons says.
A small crack in a windshield that hasn’t “spidered” can be repaired for about $45 with a resin solution. If you have to fully replace, aftermarket glass may be cheaper but can lead to problems. Lyons has seen cars rejected at auction because the windshield replacement blocked a clear view of the public VIN plate on the top of the dash. In addition, if the dealer wants to get the car certified, manufacturers require OEM glass for that model.