Wheeling & Dealing in Fontana
If it’s Thursday, Rob Murray must be in Fontana.
And sure enough, on this recent Thursday, Murray, a self-employed Riverside used car broker, is scouring 90 acres of exhaust-choked asphalt for used car deals. Murray’s goal, as always, is to find the best looking and best priced of the 2,400 cars that will be driven, towed or pushed through the six-lane concrete barn known as the Southern California Auto Auction.
The 31-year-old, whose age and clean-cut looks set him apart from the largely middle-aged and rumpled crowd, is hardly alone in his search for the best buys. At least 500 other auto brokers and dealers, many of whom travel to Fontana from throughout the West for the weekly event, are wandering around the 90-acre lot. They check under hoods, finger dents, and, of course, kick tires.
“It’s a regular circus,” Murray admits. “We’re all a bunch of characters.” Indeed, it would be hard to argue that the daylong affair, which is closed to the public, is anything other than carefully choreographed, exquisitely organized frenzy.
Largely unknown to the general public, these auctions are a lot like swap meets for used cars. Last year, about 6 million vehicles were sold nationwide at auction.
Starting at 9:30 a.m., six wisecracking, motor-mouthed auctioneers simultaneously preside over six steadily moving lanes of used cars and trucks. When a vehicle arrives at the auctioneer’s platform, it is generally given less than a minute to fetch its price before being moved out the door to meet its new owner.
And so it goes, usually for the next eight or nine noisy, fume-filled hours.
Auto makers come here to sell thousands of hardly used demos and executive cars; car-leasing companies send vehicles here after their leases run out, and dealerships use these auctions to unload the trade-in they don’t want on their lots.
The buyers are as diverse. New car dealers check out the excess inventory and “demo” cars being sold by General Motors and other auto makers. Used car dealers can stock their lots. And there are brokers like eagle-eyed Murray, who do some buying and some selling, usually as agents for faraway dealers.
About 90% of the cars sold here are recent trade-ins. For example, a Volvo dealer might accept a 1983 Honda as a trade-in on a new 760 Turbo GL on Sunday with absolutely no intention of selling it on his lot. By the end of the week, the humble Honda will have been consigned to Fontana, where it will be washed, cleaned, assigned an auction number and held in storage until it is rolled onto the block the following Wednesday.
About 60% of the time, the seller finds a buyer. If not, the seller takes the vehicle back.
“You’ve got to be careful,” advises Murray, who has been making the rounds of Southern California auctions for the past several years. “You’ve got to know what you’re buying. And it helps to know who’s selling it.”
Despite their backwater settings, homespun trappings and gritty clientele, the nation’s 300 or so used car auctions are gradually becoming more than trade shows for eager sellers and their back lot castoffs. In fact, auctions are increasingly being used by such top drawer businesses as General Motors, Hertz Rentals and Bank of America as an easy way to dispose of excess inventory, leased autos and corporate fleets.
The Fontana lot is owned by General Electric Credit Corp. and Ford Motor Co., a fact that has led to increased business from auto makers, leasing companies and major corporations. The auctions in Fontana take place on Wednesdays and Thursdays. And they represent the new and old in automobile auctioneering.
On Wednesday, GE Credit’s professionalism and sophistication is most evident. The lot is opened only to new car dealers for the auction by Big Three auto makers of excess inventory and cars that had been leased to executives.
On Thursdays, it’s the used car brokers and dealers--the ones whose tastes seem to run more toward the biscuits and gravy served in the cafeteria. Fellows like Nick Hansen, owner of Nick Hansen’s Auto Town in Twin Falls, Ida.
Hansen drives to Southern California one week a month for three frenetic days of auction hopping. Along with the rest of the regulars, Hansen hits the action at GE Credit’s Rosemead lot on Tuesday then travels to the California Auto Dealers’ Exchange in Anaheim on Wednesday.
By Thursdays, Hansen admits that he’s weary and his eyes are bleary. “In one week, I might look at 7,000 cars and buy six,” he says.
Despite the cost of traveling to Southern California and transporting his vehicles back to Twin Falls--usually by drivers whom he brings in from Idaho--Hansen is convinced that this region offers the very best in used cars.
Why? Hansen says it’s the mild climate, which is gentle on the finish and underbody, and the extensive freeway system, which reduces the need for punishing stop-and-go travel.
“The mileage is a little high,” Hansen says. But it apparently doesn’t deter bidders. Prices are equally high, he complains after dropping out of two spirited biddings for four-wheel-drive trucks.
Murray, the young Riverside broker, has all but given up on Fontana as a source for the popular four-wheel drives. His strategy is to buy those on Wednesdays in Anaheim, where prices are a little on the low side, and sell them Thursdays in Fontana, where he thinks the proximity to the mountains and a more “cowboy” atmosphere prompts higher values.
The week before, Murray brags, he bought a Mitsubishi four-wheel drive with 7,000 miles on the odometer for $8,700 in Anaheim. Two days later, he saw the identical truck sell for $10,000 in Fontana. At last report, Murray had plans for a quick and profitable sale.
Quick-thinking brokers aren’t the only ones making money. The auction houses collect consignment and purchase commissions that range from $70 to $150 per vehicle, depending on the purchase price. The average commission, insiders say, is more than $100.
And business is brisk.
In January, the Fontana auction will double in size, making it the largest facility in the nation. And Michael Zafirovski, president of GE Credit’s auto auction subsidiary, said the company might soon begin offering its traditional financing services to its auction buyers who must now operate on a strict “cash and carry” basis.
But Zafirovski admits that he doesn’t want to impose too many changes too quickly. “We don’t want to have a too professional, too buttoned-down auction,” he explains. “We want to keep that local flavor.”
