Buying Cars at Auction Online (How it works)

Summary

In this insightful video, the speaker delves into the complexities of the automotive dealership landscape, focusing on the challenges posed by high bank fees and the current auction market. Highlighting the pressure dealers face to maintain profitability, they discuss strategies for bidding on cars and predict a market correction as rental companies like Hertz offload inventory. The speaker also emphasizes the importance of audience engagement, encouraging viewers to comment and follow on social media for further insights. This candid exploration offers valuable lessons for aspiring entrepreneurs in the automotive industry.

Takeaways

• 🚗 Takeaway 1: The automotive industry is heavily influenced by banks, which impose high fees and dictate terms that dealers must accept to stay operational.
• 💰 Takeaway 2: Many dealers face financial pressures due to flooring lines and obligations to pay employees, making them vulnerable to unfavorable deals.
• 📈 Takeaway 3: The current auction market is characterized by inflated prices, leading to dealers overpaying for vehicles that are not worth the price.
• 🔍 Takeaway 4: The speaker emphasizes a strategy of buying cars at about 50% of their wholesale value to ensure profitability when reselling.
• ⚠️ Takeaway 5: The speaker warns of an impending market crash, similar to stock market bubbles, due to potential oversupply of vehicles.
• 🏚️ Takeaway 6: Many cars available in the auction are of poor quality, leading to frustrations for dealers looking for good deals.
• 📉 Takeaway 7: A significant number of cars are in default, with estimates suggesting up to 13 million vehicles, which could flood the market if repossessed.
• 🚦 Takeaway 8: The speaker anticipates that once large rental companies like Hertz begin selling off their cars, the market value will drop sharply.
• 🛠️ Takeaway 9: The bidding process in auctions is influenced by market conditions, leading to inflated bids for less desirable vehicles.
• 📲 Takeaway 10: Viewers are encouraged to engage with the speaker's content on social media for further insights and updates on the automotive market.

Q & A

What challenges do car dealerships face regarding financing?

Car dealerships often struggle with banks dictating high fees and requiring substantial down payments, which limits their ability to sell cars and affects their profitability.

How does the bidding process work during car auctions?

During car auctions, dealers place bids on vehicles, and the process can include a live bidding war where the seller can counter offers. However, many vehicles are overpriced, making it difficult for dealers to find good deals.

What is the significance of a 'rebuilt title' for a car?

A rebuilt title indicates that a car was previously salvaged due to damage but has been repaired and restored to working condition. This affects its resale value and marketability.

Why is there a concern about the car market crashing?

There is concern that an influx of repossessed vehicles and cars from rental companies like Hertz could flood the market, leading to a significant drop in car prices.

What strategy does the speaker mention for bidding on cars?

The speaker aims to bid around 50% of wholesale value for cars with rebuilt titles, allowing for a potential resale at 70-80% of retail value.

What role do banks play in the dealership process?

Banks control much of the car dealership process by setting high fees and conditions that dealers must adhere to, which can create financial strain on the dealerships.

What types of vehicles does the speaker focus on during the auction?

The speaker focuses on affordable cars and commercial trucks, particularly those that can be used as rental vehicles, as they tend to offer better profit margins.

What does the speaker mean by saying the auction is 'hot'?

The term 'hot' refers to a competitive auction environment where sellers are demanding high prices for their vehicles, often leading to dealers overpaying for cars.

How does the speaker compare the car market to the stock market?

The speaker draws a parallel between the car market and the stock market, suggesting that both can experience bubbles where prices rise unsustainably, leading to a potential crash when the market corrects itself.

What action does the speaker encourage viewers to take at the end of the video?

The speaker encourages viewers to like, subscribe, and comment on the video, as well as to follow their Instagram account for more automotive content.