Here’s an interesting article from CUNA, the credit union trade group.
The story in a nutshell: The South Carolina Department of Motor Vehicles shut down an informal car sale site that happened to be located at a local credit union. The reason: Used-car dealers in the area complained that they were losing business.
Apparently, the sale had been happening for years. Every weekend, people would slap contact info onto their cars, boats, motorcycles, and RVs, then park them on the lot of the SRP Federal Credit Union. Granted, the location has become something of a mini-dealership, with 50 to 75 vehicles per weekend. But why should dealers assume that they would be getting the sales otherwise? And on the contrary, maybe the weekly credit union event spurs dealership sales. Potential car buyers look around on the credit union lot and don’t find what they’re looking for, so they head over to the local dealership.
In an industry so much in need of even minimal activity, it seems that this move by the DMV is a step in the wrong direction.
Of course! Sales transactions spur more transactions. When someone sells their car, they now have cash, and they may need a replacement (from a dealerhip?)
I agree, totally the wrong direction. Most likely, the cars on this lot were not finely-detailed off-lease 2-year-old Volvos. People sell their cars in this way because they don’t want to trade them in – the dealer probably won’t give them anything close to what they’re worth. I recall a dealer offering me a $200 trade-in value on my 1979 Impala when I bought a Crown Victoria in 2004. I declined and sold it on my own – by leaving it in a lot with a sign on it – for $900.
Similarly, the dealer, had it chosen to re-sell the car locally rather than dump it into the auction system or donate it, would’ve charged a perspective buyer $1500 for the car, which it was not worth. That’s why people on the margins avoid dealers.
Now, a 25 year old car is an extreme example. I’m sure people were selling 2004 Grand Ams and Honda Civics at this lot – vehicles you actually might see at a Used Car Dealer. But for whatever reason, people preferred to buy them there – probably because they were getting better deals.
There’s nothing to prevent people from seeking a car out from an individual seller regardless of whether they get rid of a lot like this, it just makes it harder for the car buyer to find whatever car they’re going to buy. People going to this lot to buy from a person rather than a dealer probably won’t now decide to head to the dealer – they were looking for deals, and they obviously know that buying from a person will cost less.
So in essence the South Carolina Department of Motor Vehicles told SRP Federal Credit Union that they could not allow anyone, including a possible CU member, to leave a car in their private parking lot? Under what jurisdiction? Was the CU “manning” the lot with sales associates that assisted the buyer with the sale of the cars? If not, I cannot understand what right the SC DMV had to tell a CU what to do on their private property. I am beginning to see strain in the auto dealer segment – maybe this is just a symptom. While there are many great dealers in the country, I suspect the entire industry is facing a major shake-up starting with the new car sales process. It just doesn’t seem to make a lot of sense in today’s market in its current form.
Ken —
Here are some more details from the article about the legality of the issue:
“They told us we were violating the law. The code has benign language about ‘affecting the sale of vehicles’ in cases where we might lend money to a buyer. The code says we’d need a dealer’s license, which we don’t want and aren’t qualified for under the regulations.”
Technically, the DMV is correct, according to the credit union’s lawyers. The only recourse is to go to the state legislature to change the code to allow “tent sales.” However, that won’t happen. “We’re not ready to take that on. There is so much going on right now, that we have to pick our battles,” Templeton said.
This is unbelievable! This little credit union cannot afford to fight the battle,but someone should. Seems to be a blatant violation of individual rights to sell one’s property?? The credit union is not charging to park the cars What happened to an individual’s roghts to sell their own property?? I know we have all seen certain sites that people bring their cars for higher visibility. What’s next, limitations on Ebay, Craigslist, etc??
Shame on you South Carolina DMV!!!!!