The Car and Truck Fleet and Leasing Management Magazine

Confessions of Car Wholesalers

November 1974, by Staff

Probably the most lively session at the AFLA Fall Meeting in Chicago this year was the Confessions of Car Wholesalers, a panel discussion of the wholesale car business followed by a testy question and answer session moderated by Pierce Walsh of Warren Buick. Members of the Panel included: Eddie Malone, Gold Coast Auto Brokers; Inglewood, Calif.; Glen Coleman, Coleman Bros. Motors, Morgantown, Ky.; Arthur Iverson, Albany Auto Sales, Chicago, and Sol Nieman, McCullagh Leasing.

 

Malone - My background in the automobile business goes back a long way. I was with the Chicago White Sox in 1949, 50 and 51. There was a thing called a curve that got me into the automobile business in a hurry. It didn't take them long to find out that I was a little overmatched in the big league. But some years ago, I went into the automobile business as a retail salesman. I progressed up to being a manager, I was a general manager. I became a used car dealer. I eventually became a Chevrolet dealer. And eventually my business experiences led me into the wholesale business, and we do wholesale a lot of cars. We buy and sell an awful lot of cars. We're kind of an important cog to you people. To start with, we couldn't survive without you. If you could find another way this morning or this afternoon to get rid of your cars without wholesaling, if it's more profitable, you wouldn't need to sell your cars to a wholesaler. So we need you and we know this and we respect you for this. But we do have a service that's very worthwhile and it's important. We do one thing - we just turn your inventory into cash. I know one time while I was a Chevrolet dealer, my office manage came to me one day and said Eddie we don't have any money in the bank. Some of you dealers know what I'm talking about. So I looked out the window and I had $25,000 in used car inventory. So, immediately I got hold of a wholesaler, a wholesaler with some money. So you know what I'm talking about when I tell you all we do is turn your inventory into cash and make you look good all the time.

I've been asked to talk to you about the used car market in southern California. Right now it's a very complex and a very confusing and a very unpredictable market. It is very complex and confusing because if we were to sit down and talk to 20 different dealers within a 50 mile radius we would probably get four, five or six different opinions of how business is. Excellent, good, fair and dealers that are fighting for their lives. It's hard to analyze what the market is. People are now buying cars in packages instead of one at a time. With the shortage of cars, with the increase in price of these cars, that was such a drastic step at one time, I believe we've got to have a good strong market for at least 90 days.

 

Coleman - We try to buy roughly around 25 cars a week in this area. We buy a few from leasing companies, pick them up in other states and other cities throughout the country. We take them home and try processing them in the best way we can. We have no particular way other than the fact that when we unload a transport they're for sale. We try to wholesale them for what we can, we fix the rest up either for wholesale or for retail. But we don't hold any cars for retail. This has worked for us. I don't know if it would for anyone else or not. I think one of our successes might be that we deal with a lot of little people. As most of you know the big operators never make you a lot of money. The people that keep you in the business are the little operators. The people that maybe own shoestrings but are still as honest as the speaker before me mentioned. They tell you that when they take a car and they'll pay you next week or next month or whenever they can, you can depend on it. No matter what people say about the automobile business, I believe they are the most honest people I have worked with, and I have worked in other businesses. In the other businesses I have had problems with finding honest people. In the car business I have had car fewer of these problems.

Iverson - There is probably in the wholesale business three ways to go with a car. If you're going for top dollar you've got to make the car, but then your costs get too high so you can't come out there. So then you get the wholesaler in who's going to do all the work and he's going to want to make a profit on that car. He'd like to make $600 a car. That would be fair enough. No one would be offended by getting a car passed out to them too economically. That's always good but it never seems to work out that way. So Warren Buick this year is going way out for fleet. So they said to me what do you want to do with these fleet cars that we've been taking in here. I'll buy them for what they want for the car. For what they say the price of that car will bring. I'll try on a hundred cars and after I go through a hundred cars I see if it can work. And he might tell you that they want $1900 for that car. Fine, we'll pay them $1900 for that car. We're going to try not to go through the haggling and chiseling. We're just going to step right ???? and fight that car off whatever it is. You've got to be able to make some money. These lease cars are good cars mechanically. I'd say out of 95-percent of the lease cars I've had very few mechanical problems. The cars have mileage on them but they drive good. They have good service and good maintenance on them. They run fine. I've never had a lease car with a bad engine in it, or transmission. I buy a lot of cars that are trade-in cars. They do not run as good as the lease cars. Now the interiors and the bodies, that's something else. But mechanically they are great, and with the cars this year, the market is going to be great. People that have cars that they are going to turn over are going to be in real fine condition with them. Because the price increases that these manufacturers are going to throw at the people, they are just not going to swallow it. They are not going to stand and pay that big price. This year I know more people that are buying used cars. The 72, 73, 74 car is going to be a real strong car and the cars are going to bring top dollar. Whatever you do with the car it is going to bring more money than it has before. Those cars are going to be in big demand.

Nieman - The energy crisis brought home the fact that the final result of a car lease is never known until that used car is sold. Although the capitalized cost or the monthly rate may vary between lessors, the expertise in the handling and the merchandising is the most important factor in lease costs today. It has always been important but more so today because more dollars are involved with the substantial increase of new car prices.

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