What happens to high-mileage cars?

[Porsche virgin]

I've been looking at cars (as my wife will tell you I do all the time, regardless of whether I'm in the market or not), and it seems like the high mileage cars (70k+) are all at no-name used car dealers.

When new car dealers get high-mileage cars as a trade in, do they immediately ship them off to auction? Is this where the used-car lots are getting these cars?

The reason I ask is because I put maybe 5k on my car per year, and there is no reason why I couldn't buy a high-mileage, well-built car and use it for years.

Thanks!

[Porsche-O-Phile]

My understanding is that a brand name dealership will only keep about 1 in 100 vehicles on its own lot (Certified Pre-Owned or "CPO"). Those are the best of the best - the ones with relatively low mileage and that can be prettied up for low cost with a cheap coat of wax, some shiny stuff on the tires and what-not. All the rest immediately get resold to either auction houses or third-party dealers.

"High mileage" doesn't really matter that much. It's a silly convention that can sometimes work in your favor (like you've figured out from the sound of it). Some makes/models are simply more durable than others. And in general I'd rather have a 60,000-mile vehicle driven normally than a 20,000-mile vehicle owned by some punk kid and drag raced at every light/neutral slammed/etc. Point is, the type of use matters a lot more than the number alone might...

[MatthewBrum]

I think big dealerships have a tendency to auction cars off with over 100K miles on them. I would prefer getting a deal on a high mileage quality car than pay a premium for a low mileage junker. Also, since many cars are used for communting to and from work. A commuter car with just over 100k will have very little wear if maintained properly.

[onewhippedpuppy]

I've been told (by dealers) that most new car dealers have a mileage "ceiling". Anything over that ceiling automatically goes to auction, unless it's particularly desirable or unique. That's why most new dealer lots don't have anything with more than 50-60k. Everything else goes to auction, where it's picked up by the shady used car lots.

To me mileage is largely irrelevant, condition and upkeep is key. When we were recently looking for a new minivan for my wife, I looked at 2 year old 50k vehicles in far worse shape than the 223k Saab 9000 Aero I used to own. Honestly, any quality car should be good for 200k easily, if taken care of.

[TerryBPP]

The large dealership base there on-site used cars sales on the flexibility of customer financing the car. If the car has high mileage or more than normal mileage it increase in the rate of financing available along with the year. Limiting this flexibility makes it available to less customers which in turn makes it harder to sell.

..and yes, franchise dealerships send 99% of there trade-ins to auction. Not only due to mileage or year but also because their own financing has a term limit, usually 90 days. Which means after a that date the financing expires and they have to pay cash. So in lieu they run it through the auction to negate losing the capital, usually breaking even.

[Porsche virgin]

Good info. Thanks.

I don't mind the idea of driving a 100k+ car every day, as long as it's been properly maintained.

I DO mind the idea of buying from one of the iffy used car dealers though. I suppose the trick is to wait and find a nice one- or two-owner car that is being sold by the owner and then get a PPI.

[TerryBPP]

Originally Posted by Porsche virgin

Good info. Thanks.

I don't mind the idea of driving a 100k+ car every day, as long as it's been properly maintained.

I DO mind the idea of buying from one of the iffy used car dealers though. I suppose the trick is to wait and find a nice one- or two-owner car that is being sold by the owner and then get a PPI.

The good thing about auctions now is you can request a PPI which allows you to return the car for up to 14 days after purchase.

You basically benefit from a franchise dealer screw someone out of a trade in. So it virtually buying a privately owned car for 30% less than the owner would have sold it private for.

[Porsche virgin]

Originally Posted by TerryBPP

The good thing about auctions now is you can request a PPI which allows you to return the car for up to 14 days after purchase.

You basically benefit from a franchise dealer screw someone out of a trade in. So it virtually buying a privately owned car for 30% less than the owner would have sold it private for.

Are private parties allowed to attend auto auctions? I thought that was just for dealers. How do you find out about these types of auctions?

Thanks!

[onewhippedpuppy]

Terry IS a dealer.

[Porsche virgin]

Originally Posted by onewhippedpuppy

Terry IS a dealer.

D'oh! I didn't know!

[dd74]

Originally Posted by TerryBPP

The large dealership base there on-site used cars sales on the flexibility of customer financing the car. If the car has high mileage or more than normal mileage it increase in the rate of financing available along with the year. Limiting this flexibility makes it available to less customers which in turn makes it harder to sell.

..and yes, franchise dealerships send 99% of there trade-ins to auction. Not only due to mileage or year but also because their own financing has a term limit, usually 90 days. Which means after a that date the financing expires and they have to pay cash. So in lieu they run it through the auction to negate losing the capital, usually breaking even.

Terry - what's thought of as high mileage to most dealers? 50,000? 60,000? Higher? I mean, what's the normal amount of miles to expect from a two or three-year-old car at an auction?

[Laneco]

We have owned quite a few high mileage cars. In fact, at this time, the only car with less than 135,000 on the clock is Steve's 08 Jeep Wrangler.

Our daughter's Camry has 235,000. My 911 has at least 150 (broken odo), the truck has 165,000 etc.

I would trust these known well maintained cars on a cross country jaunt on any day.

angela

[TerryBPP]

Originally Posted by dd74

Terry - what's thought of as high mileage to most dealers? 50,000? 60,000? Higher? I mean, what's the normal amount of miles to expect from a two or three-year-old car at an auction?

Its really dependent on the market of the specific Make/Model. IAn Acura TL's with 85k miles will sell with no problem but a Pontiac Grand Am with 60 k is a no go. I wouldn't be surprised if large franchise dealers are keep Prius's with over 100k miles due to the premium right now. Kind of a black art.

[kang]

Several years ago, I sold a Toyota truck with ~130,000 miles on it. I ended up selling it privately (and made more money than trading it in), but at one point I took it to a used car dealer to see what they would give me for it, learn about the market for it, etc.

The guy I spoke with was very knowledgeable about this market, and he was very friendly. He could tell I knew what I talking about, what my truck was worth, the market, etc. We spoke for some time about the used car market.

He could only offer me below low Kelly blue book. He would then auction it off, getting low Kelly blue book (which is why he could only offer me less than low blue book). In my case (a Toyota truck), he said it would likely be bought by a used car dealer from an area where (not to be racist, this is just they way it is) a lot of Mexicans live, as they like Toyota trucks (especially for their gardening businesses).

A different kind of car, but also with high mileage, would be purchased at auction from a used car dealer who thinks they are in an area with a market for that particular car. I high mileage Lexus has a different market than a high mileage Toyota truck.

So yes, they go to auction.

[the]

Originally Posted by Porsche-O-Phile

My understanding is that a brand name dealership will only keep about 1 in 100 vehicles on its own lot (Certified Pre-Owned or "CPO"). Those are the best of the best - the ones with relatively low mileage and that can be prettied up for low cost with a cheap coat of wax, some shiny stuff on the tires and what-not. All the rest immediately get resold to either auction houses or third-party dealers.

That's not true. The majority of used cars that you see at a BMW or Mercedes franchise dealership have come from an auction. If you ever get to go to one of the big high line auctions, you'll see buyers from all of the franchise dealerships there.

When a dealership leases a car, it actually sells the car to the leasing company. So, take a mercedes for example, the dealership sells it to Mercedes Financial, a separate company. When Mercedes Financial takes the car back at the end of the lease, they want to get as much as possible for it - they don't care about the dealer at all, they aren't associated with the dealer. There is no incentive for MFinancial to give a "sweet deal" to any dealership. The highest price is going to be obtained by selling the car at open auction.

In addition, the lease company often has contracts with third parties (such as residual insurance), which require that the car be sold through open auction.

(Of course, that does not apply to "trade ins," i.e., when someone actually owns a car, not leased, and trades it into the dealer. Then the dealer can buy and pay whatever it wants for a car. That is pretty rare these days for BMWs and Mercedes, everyone leases, and those that buy usually keep longer than 2-3 years).

"CPO" is for the most part a marketing gimmick. The "certified" part is really just a basic inspection. On a warrantied car, that's not a big deal. The CPO warranty part is ok, but misleading. They advertise it as a "100,000 mile warranty," but don't highlight the fact that it is only one year (on a Mercedes).

So if you buy a used MB with, say, 30,000 miles on it, you'll never use the "100,000" mile part, you'll probably drive it 10,000 miles in a year and the warranty will be up.

It also is only a limited warranty, not a full warranty.

[the]

Originally Posted by dd74

Terry - what's thought of as high mileage to most dealers? 50,000? 60,000? Higher? I mean, what's the normal amount of miles to expect from a two or three-year-old car at an auction?

12-15K per year.

[nostatic]

Originally Posted by the

"CPO" is for the most part a marketing gimmick. The "certified" part is really just a basic inspection. On a warrantied car, that's not a big deal. The CPO warranty part is ok, but misleading. They advertise it as a "100,000 mile warranty," but don't highlight the fact that it is only one year (on a Mercedes).

So if you buy a used MB with, say, 30,000 miles on it, you'll never use the "100,000" mile part, you'll probably drive it 10,000 miles in a year and the warranty will be up.

It also is only a limited warranty, not a full warranty.

Depends on the brand. Audi CPO is now 6 years/100K miles from the original service date (original factory warranty is 4/50). They have changed that over the years, but that is their current setup.

[the]

Audis need to go to a 10 years warranty, like Hyundai did!

They are all gimmicky. Not to say they don't have some value, they of course do, but they are all intentionally misleading. Audi is "6 year/100,000 miles" but really is a 2 year warranty (4 years you already have from the factory, they add 2). And "100,000 miles," yeah, you'd get that in those 2 years if your car had 50,000 miles at the end of 4 years, and you then did 25K per year.

There is some value to those "cpo" extended warranties, but it isn't as much as people think. For any car, you can get an online quote from companies like Warranty Direct, for a similar limited warranty. For most cars (like a mid-sized BMW, MB or Audi), a 1 year extended limited warranty is under $1000.

[Por_sha911]

Back when I sold cars, the dealers had a regular parade of "wholesalers" who would come in and buy whatever we didn't want to put on the used lot. Sometimes we would package a nice car in with otherss to get them to take a few dogs off the lot. The wholesalers would either put an "Earl Scheib" on them and resell them or take them to the auction.

[VincentVega]

(70k+)

That's low mileage. My current DD is 170k. Guys like me buy 'high mileage' cars for peanuts and drive 'em for a few years.