Buying Cars - Auctions and Dealers

richsadams

Hi All

My wife Sandy and I finally moved to New Zealand from Arizona last month. Mr. Green

Prior to that we've been reading everything we could about buying a car in NZ. After doing a lot of research I found an option that most American car buyers are unfamiliar with (at least I was), buying a car at auction. Car auctions are big here, very big. It’s a little intimidating because the vehicles they are selling are quite often different from those you might be familiar with. Nutcase

There are variations of familiar vehicles (different names or body styles) and others that we’d never seen before. Various vehicles are sold at auction for various reasons. Most are purchased overseas (read: Japan) and imported for sale. Some are vehicles taken in on trade by local auto dealers who, for one reason or another don’t feel they can resell them at a profit. Others are there to be sold by private parties. A majority of the cars on auction are at least three to ten years old. Now mind you, these aren’t the fresh, polished, shiny used cars you’ll find on dealer lots. They are cleaned up, but often have small to large imperfections such as faded paint, dings and/or scratches, stained carpets, broken or missing dashboard knobs, etc. Usually there’s nothing glaring, it’s mostly cosmetic. Some are in fine shape, others, not so fine. So if you’re handy with tools and don’t mind visiting a few auto parts stores or wrecking yards later, this might be the way to go. Yes

Auto auctions are pretty straight forward. You bid on a car or truck and if you end up being the highest bidder, it’s yours! As with other kinds of auctions, some cars have a “reserve” price. That is, there is a price the actual seller/owner won’t go below. Only the owner and the auction company know what that price is. Others are sold with no reserve.

The largest auction company in New Zealand is called Turners Auctions. I’m sure other auction houses function the same way, but since they were the biggest… We also asked around and they seemed to have a decent reputation. Turners sells thousands of cars all over the country. They also auction everything else under the sun; office furniture, farm equipment, boats, you name it. Here’s their web site…

http://www.turners.co.nz

Turners holds auctions almost every day, sometimes two. Each day they feature vehicles in certain price ranges…everything from hundreds of dollars for damaged vehicles up through tens of thousands for the nicer models. They have a number of locations throughout New Zealand. The largest is the Penrose site just outside of Auckland which they refer to as their “Super Site”. With hundreds of vehicles sold there weekly, it is “super” to be sure. To get a feel for things and being the adventurous types we went down on a Wednesday evening to see how it’s done. Wednesdays they auction, well, let’s say “lower end” vehicles, most selling for around $2,000.

By the way, whenever I refer to prices, it will always be in New Zealand dollars unless I indicate otherwise. Here’s a great currency conversion site…

http://finance.yahoo.com/currency

All of the vehicles Turners will sell that day are on display for a few hours prior to the actual auction so you can look at them, get inside, start them up and even take them out for a spin. The “test drive” amounts to driving them out of the large warehouse building and around a short “test track” set up with orange cones in their rear parking lot. So there’s a lot of flooring it and slamming on of brakes. You really can’t get over 50 kph (about 30 mph) or so, so you really can’t get a feel for how they’d drive at freeway speeds but you can determine if they will get to the freeway. Each car has a window sticker with all of the basics such as year, model, mileage, etc. plus a dollar range of an expected sale. This figure turned out to be at the upper end of what cars and trucks actually sold for, but it was fairly accurate. Another sticker is placed in the window; a checklist that shows a cursory mechanical review and if they found anything wrong with it. Most passed all of the tests.

All cars in New Zealand require a government sanctioned Warranty of Fitness (WOF). bobby

Inspection stations take a good look at every car annually (or every 6 months in the case of imports) to ensure they are road worthy. The cost is minimal and it’s mostly a safety check but gives you some comfort in knowing your car will probably not fall apart before the next inspection. All of the cars being auctioned have gone through this process. Turners also offer on-site inspections by independent mechanics. The cost is around $40 for each car you want them to look at and they seem to do a pretty decent job and are honest about the results. For some additional peace of mind they offer mechanical “warranties” for six months to two years. You can get minimal to full vehicle coverage depending on how much you want to spend. Warranties start at about $100 and go up from there. Otherwise the vehicles are auctioned in “as is” condition.

We didn’t test drive any cars that night as we wanted something a little more, um, substantial than they were offering. Rolling Eyes

Most of the cars on display were pretty well used up with faded paint, stained carpets, some tears in the upholstery, etc. It was easy to tell if they had been driven by smokers too. Some reeked of too much air freshener but many were in good shape and probably would run another 50K or so. All-in-all they were as advertised and we did get a feel for the process. If you want to bid you simply sign up at the front desk, giving them your name and I.D. They require a driver’s licence of course and a passport is helpful. They give you a small card with a number on top. That allows you to drive the cars around and later you can bid by holding your card up during the auction. They also give you a “programme” which lists all of the vehicles for sale that day and they order in which they will be auctioned. The building is very large but fills with the smell of exhaust (there are a lot of diesels) and by starting time Sandy and I had to go outside to get some fresh air. When auction time approaches they play some country western flavoured music and there is a canned announcement outlining the rules and regulations. It’s a somewhat festive atmosphere with brightly coloured flags and banners. Fast food and drinks are available and as with all auctions; they try to generate some excitement.

At the Penrose site there are three auction areas. On a busy day they sell cars in all three areas at the same time. It isn’t as noisy and confusing as we expected…they pretty much have this thing down. Each area is broken down by price so if you’ve settled on a price range, you can stay in that one location. If you’re interested in cars in several price ranges, you’ll likely walk back and forth between them. Each area has a couple of dozen nice plastic seats in front of the auctioneer’s podium. The music stops right on time, the auctioneer calls everyone in and the viewing areas are closed. Some sit and some stand for the auction. Folks politely take their places and the auction commences. If you’ve ever watched a Barrett-Jackson classic car auction on T.V., you’ll see it’s very similar…but these are rarely classics. Cars are driven in front of the audience and an electronic information board at the podium gives some of the details about the car. The auctioneer begins by asking a usually outrageous price for the first bid. If it is a reserve sale there are signs at the podium that indicate when the bidding is “Getting Close” and then when the reserve price has been reached; “Now Selling”. Otherwise the auctioneer will indicate if it is a “no reserve” sale. No one generally bids at first and the auctioneer commences to describe the vehicle’s attributes. (When they talk they don’t speak or ramble in “auctioneer” like they do in the U.S. or at Christies, although they do have a Kiwi accent they are generally easy to understand and not in a big hurry.) On this particular night the gentleman we watched was a bit of a stand-up comedian and now and then poked some good-natured fun at the vehicles as well as the crowd. As time goes on the opening figure drops and drops until someone mercifully holds up their card. Then the bidding starts. Bids go up in various increments, sometimes in hundreds of dollars, sometimes in tens of dollars depending on the original price and interest. The people attending that evening were, how shall I say it, somewhat resource challenged. The bidding increased in increments of twenty to fifty dollars at a time. But when the last bid was taken and no one would bid higher, the auctioneer’s gavel cracked and the “winners” were usually very happy with their good fortune. One young gentleman sporting a greying ponytail poking out of a backwards hat, tattered jeans and a red plaid shirt actually jumped for joy when he “won” a little pick-up truck (or “ute” as they call them here). He was all smiles all the way to the payment counter. Laughing

If yours is the winning bid one of the salesman finds you and takes you over to another area where you fill out some basic paperwork and give them a non-refundable deposit of $500. You have three hours to come back with the total amount (or the next morning for an evening auction) in cash or bank cheque. They will accept credit card payments up to $4000. They also offer financing and you can get pre-approved. I didn’t look into that so I’m not sure if it’s a good deal or not. In addition to the actual auction amount they charge a couple of other fees which can amount to about $500 depending on the price of the sale. Once you’ve paid the balance they give you a temporary registration and install a couple of licence plates. They hand you the keys and you’re on your way. Nice One

We came back early the next morning for a noon auction and found several vehicles of interest. Having had years of experience working on cars I felt some-what comfortable taking a look at what they had to see if they were selling anything I’d be interested in. There were about 150 cars to choose from. There’s everything from tiny two-door Korean “what the heck is that?” models Laughing

to luxury cars, vans and large panel trucks. I immediately found a beautiful maroon ’99 Volvo S80 sedan decked out in soft, tan leather with all of the bells and whistles. It was a great looking car, even sounded nice when I started it up. The fly in the ointment was that the mechanical sticker indicated there was something amiss with the right front suspension (“a clunking sound”). That could be a loose strut or something much more sinister. Sandy reminded me that we were looking for something more in the way of a SUV or van, so we passed on the Volvo. It later sold for about $24K (or $16K U.S.) which I found was a good $10K less than the Blue Book price so whatever the problem was, it was probably still worth the risk. There were lots of other cars and trucks to look at and test, which is what we did for the next couple of hours. We finally settled on a couple of Honda Odysseys. I know, I know…soccer mom cars! Wink

Well, they filled the bill as we were looking for something that would work for us in a couple of ways. With some real estate and property investment I wanted to do it would do well hauling people around (seats up to 7!), business work, tools, etc. We also wanted something comfortable (and could double as a taxi) when we wanted to drive back and forth from Tauranga to Auckland, a two plus hour trek. We can pick up our friends when they come to visit with lots of seating room, space for luggage and the all-important golf clubs! That said, we sat patiently and watched other cars come and go as we waited for the first in our preference to show up…a gold ’99 Odyssey. It was quite clean, had low kilometres (or “K’s as they refer to mileage here) at about 63K (or around 40K miles) and was a higher-end model with leather interior and several nice options. It drove well earlier and seemed to be in pretty good shape. It had what appeared to be a new set of Michelin tires too. As I found it a bit late I didn’t have a chance to have one of the mechanics review it, but after giving the engine and transmission oil the “sniff test” and crawling around under it, I was satisfied it would get us to our new home.

The bidding started at $18K (which is about what they sell for at a dealer) and trickled down to $10K where someone started the bidding. It crept up to about $11K and everything went quiet. I was biding my time to see how much interest there was. Not only are you competing with other individual buyers, Turners also has a “private box” for registered auto dealers. During some of the other sales it was apparent what the dealers thought would sell on their lots and what wouldn’t. They also have salesman that will bid for people by telephone. There was some dealer interest in our choice, but things finally got quiet. The auctioneer admonished the crowd that this was a steal and that the reserve had not yet been met. It turns out that if the reserve isn’t met but there is a genuine bid, a Turners salesman will contact the owner on the spot and try to negotiate a deal. Just before the gavel was going down I raised my card. That caused a couple of more bids to suddenly appear. Once again I waited and raised my card at as the auctioneer commenced his “going for a third and final time” speech. And that was it. The auctioneer felt he had spent enough time on this one, allowed a few moments for another bid and slammed the gavel down. “Bidding ends at less than reserve, sale to be negotiated”. I felt satisfied as my bid was about $4000 less than the “street price” for the same vehicle.

A tall, bald gentleman in a suit and tie rushed over. He introduced himself as Garry (noting the two “r’s”) and in a flourish of flipping paperwork on a clipboard told me that my bid was under the reserve price. Carefully folding up one of the papers (seemingly so no one else would see…for what reason I have no idea) he showed me the reserve price which was $2,000 higher than what I had bid. He said he couldn’t go back to the owner with my bid, but would I pay what amounted to be $500 under the reserve price? I said I would pay $500 more than my bid but that was it. He scowled properly and headed off to parts unknown. A few minutes later he came back and said there was no way the owner would settle for that amount but said he would take the price of $500 less than the reserve he indicated earlier, okay? No, not okay…but I would split the difference, paying $1000 more than my bid (which is actually about US$600 more so we weren’t negotiating for big money.) He disappeared for a while. In the meantime the second Odyssey we had our eye on came up for auction. I brought my card to the ready and as the price slowed and reached a level I was comfortable with began to raise it. Low and behold Garry came out of nowhere (I suspect now he hadn’t gone back to talk with the owner at all) and said the owner had accepted my offer. We both headed for the room where dozens of others were completing their paperwork and we completed ours. A trip back to our bank for a cashiers check and we had a “new” car. I ended up paying $13,000...about $3,000 less than they sell for outrightl. Yes

The Odyssey had some cosmetic work to be done. It was missing its name badge on the tailgate and the lock buttons on the front doors were missing. After looking it over Sandy and I think it may have been stolen as the ignition appeared to have been replaced, it was missing its radio and one of the power window switches was broken. It also had a new set of tires. We think kids probably took it for a joy ride, stole the radio, wheels and tires and left it for the police to find. It may have been a while and the owner’s insurance company probably paid out only to have it recovered. Hence, it ended up at the auction house. That’s our take on it anyway. After spending about $500 on parts, a new stereo, etc. it was as good as new. Our costs are still far below what one costs at a dealer so we feel it’s been a good investment.

During our time at Turners we were also looking for a second vehicle. Sandy thought the Toyota RAV4’s were cute and so we drove a few. She liked the little three door models. They had plenty of pep and turn on a dime. I liked how they handled and Toyota’s repair history (like Honda’s) is excellent. We found one we liked but it showed some signs of rust in one area so we passed. We kept our eyes open and did finally find a pretty electric blue 2002 at the Toyota dealer in Rotorua. It only had 20 “K’s” (about 12K miles) on it and appeared to be in great shape. Car dealers here are very similar to those in the U.S., but the salespeople tend to be more polite and there’s much less pressure to buy. If you tell them you’re just looking, they’re happy with that and leave you alone. What a concept! The RAV4 we were looking at was of course overpriced, but we took it for a long, leisurely drive (they’re happy to let you take it out, even over night if you want) and Sandy fell in love with it. We remembered a good lesson…don’t buy it on the spot. Leave it, sleep on it and come back the next day. That’s good advice and usually puts you in a better position. We did come back the next day and after some negotiation (fortunately we were able to pay cash) we managed to get a pretty decent price ($23,000) and now we have our two cars. Clapping

Automobile insurance isn’t required here, but if you have any investment at all you’ll want to get it. It’s very cheap by American standards as all it has to cover is the repair of your and/or another vehicle…basically no fault insurance. All of the medical costs for your and anyone else’s injuries are paid by the government plus only in rare circumstances can you sue another party. If you get a NZ drivers license (which we did) and are able to produce a five-year “no claims” letter from your former insurance company (which we did) the cost is even more reasonable and we’re told it will drop after we’ve been here for a year or so. Everyone and their brother sells insurance here. The banks sell it, AA sells it (same as AAA in the U.S.), the dealer sells it (they were the highest priced…surprise!). Be sure to shop around. We received quotes that varied by as much as $500 on one car. We finally used a broker recommended to us by our consultants. It will cost us about NZ$1000 annually for both cars!

So that’s our experience with buying and insuring cars in New Zealand. I’m sure we’re not unique so I’ll bet there are other stories. We’d like to hear some and hope that ours will help you when you get here. It’s really not as scary as you might think. Mr. Green

We’ll write more about some of our other experiences soon.

Raeven · Posted: Sat Jul 03, 2004 2:37 pm Post subject:

Hi, Rich,

Great to see you back on the message board!! Fascinating reading, and I can't wait to read your experiences in getting those NZ drivers' licenses. Any and all posts from you are always a fabulous read!!

Thanks so much for sharing!! Believe me -- we're paying attention!! Glad to see how well you guys are settling.

All the best, Rae

JCM · Posted: Mon Jul 05, 2004 9:26 am Post subject:

Yes Rich - what a fantastic, in depth report. I've never been to a car auction here, yet from what you've said, I feel I know exactly how they operate. Clapping

I think I'll move this to the main forum for a while where more people will read about the process. Yes

richsadams · Posted: Mon Jul 05, 2004 3:57 pm Post subject: Cars

Hi JCM, Rae and All!

Thanks for the kind words...back at 'cha!

michelle · Posted: Tue Jul 06, 2004 6:50 am Post subject:

Hi Rich

Excellent post, always find the thought of auctions a bit scary. interested to see that you got a RAV4 for $23 000 this seems very cheap for a 2 year old model you got a very good deal and has given me something to aim for.

Michelle