Auto writers can talk about the dream cars all day long, but when you want to learn about what sells on the used market and why, Steven Lang is the man. He’s written some of the best pieces I’ve ever read on what makes the used market tick for places like Yahoo! Autos‘ Motoramic. Now he’s applying his real-world knowledge to a new venture, which provides the tools to buy cars at auction without the massive hurdles placed on independent car dealers.
Over the last few years, Steven Lang has become one of my favorite automotive journalists. He’s got the prerequisites an auto writer needs (an ability to put words on paper in the right order to make an interesting story, an interest in cars in general), but were he beats every other auto writer handily is his background.
He started out as a financial analyst, “making numbers dance on a computer and figuring out all the wonderful loopholes one needed in order to achieve a certain goal in corporate America,” he says. Eventually, he couldn’t ignore the allure of working with cars for a living, so he got his auctioneer’s license.
“I’ve been in the business fifteen years,” he says. His first experience in the industry was at a wholesale auction outside of Atlanta. “I started out as a ringman and auto auctioneer, moved on to be in charge of liquidating over 10,000 vehicles a year for Capital One Auto Finance.”
Automotive wholesale auctions are where all the emotion drains out of the car shopping experience. Car dealers buy cars based almost solely on whether or not they can make money on that car. Camrys, Accords, Corollas. There’s money there because those cars are a commodity that can be turned in a hurry.
If you’ve ever attended an auction, you see the kind of money cars sell for, and you can’t help but start doing calculations in your head on the kinds of cars that aren’t necessarily appealing to large car dealers interested in turning inventory. You might not want to invest in the high-dollar, late-model prime real estate, but in that second or third tier of higher mileage older cars? Lots of cool cars show up at auction at rock-bottom prices. There’s money to be made there, too.
That’s the kind of math Steven Lang was doing as he was moving those 10,000 cars a year for that major auto finance company: “I started buying and selling vehicles on the side and ended up making more money doing that than I did with Capital One,” he says. Enough money that in 2005, he ventured out on his own to become a full-time car dealer.
The challenge for car dealers that don’t want to be salesmen in an existing car dealership, though, are the hurdles placed in the way by states that ostensibly want to protect consumers, but really just want a big chunk of the profits a car dealer makes. It makes access to auctions all but impossible for people who have the kind of Automotive Attention Deficit Disorder that afflicts people like me, who change cars the way they go through Kleenex.
“Well, first you need a place of business with the appropriate zoning,” Lang says. “Metropolitan counties in Georgia typically require a full acre of paved surface and are highly resistant at providing zoning approval in areas that don’t already have nearby car dealerships.” Those requirements are similar for just about every other state in the country.
That real estate requirement places a huge burden on a small business just starting out. “Typical rent ranges from $1,500 to $5,000 in the metropolitan areas. You then have insurance, your surety bond — which can run in the several thousands if you have poor credit — the application to the state, signage, an office, a working phone, and continuing ed classes. You have to physically be there, or have a designee be there for the continuing ed classes and for when the state does the inspection of your property. You also have to make arrangements to keep all books and records at your location,” he says.
Lang started out on his own, but he had a huge advantage over anyone else getting started in the business. “I had another dealer handle my rent, signage,” and all the other expensive odds and ends a dealer has to lay out for. “I was a popular auto auctioneer at the time so he had a pretty healthy incentive to help me.”
The idea in Lang’s new venture is to give other entrepreneurs and enthusiasts the same leg up he had, without having to spend years as an auctioneer. He also wants to do it largely electronically, so that people in other states can have access to auctions and databases. “Beyond access to the wholesale dealer auctions in their neck of the woods, they’d also have discounted fleet car insurance (only $1000 a year here in Georgia), dealer tags which eliminates the need to pay for registration fees and ad valorem taxes, and access to the online databases which show what the manufacturers and larger dealer networks are selling in their area.”
“I am primarily looking at this as an opportunity to let hardcore auto enthusiasts buy what they like, and to let [automotive] publications have access to vehicles that can help them create content,” he says.
He’ll be running the business out of an office park is in Moultrie, Georgia. “It should be completed by January 2015. I am only performing a small scale operation. A pilot of sorts. It will be four dealers at that particular location,” he says.
“The cost will be $500 a month. It will be all inclusive. The only items the owner will have to maintain independently are their fleet insurance ($1055 a year) which can replace their personal car insurance,” he says. “The State of Georgia requires a $25,000 surety bond which costs about $200 every two years.”
Ostensibly, anyone in the country could use Lang’s business venture as a starting point, but he’d rather concentrate on the southern states to start, “because I happen to know more of the folks on the licensing boards.”
But for residents anywhere around Georgia, the $500 per month fee is a wash when you start doing the math. “You don’t have to be a Georgia resident to have the license, and I figure that having the insurance and the three dealer tags for whatever you drive will help defray much of the annual cost for most folks.”
If you’re interested in what Steven Lang has to offer, he’s officially open for business in January, but he’s looking forward to hearing from you. You can contact him at t firstname.lastname@example.org or at 770-262-9880.