Buying a Motorcycle Part IV: Where It Comes From
A Day at a Wholesale Dealer's Auction
You've just been visited by the repo man. You're having a beer and watching Desperate Housewives when you hear the distinctive bark of a CBR1000RR starting up in the street in front of your apartment building. It sounds just like the one you bought last August. You haven't been able to make the payments for the last two months, but you've just been able to scrape the money together and you're going to pay in the morning. The motor revs for a second; that sounds just like the Akropovic exhaust you put on your bike! You get up to go to the window and peek out on the street, just in time to see your bike turning the corner. You've just been visited by the repo man.
Six months later, you're visiting a friend in another city a few hundred miles away from where you live. You duck into a cycle shop to check out used bikes: you've been thinking of getting a new one. There, parked in front of some used cruisers and dual-sports sits a black CBR1000RR with an Akropovic can and a "Motorhead" sticker on the windscreen. It's got to be your bike. But how did it get here?
In a nondescript industrial section of the San Diego suburb of Poway, CA is a large warehouse and parking lot that is one of three facilities run by National Powersports Auctions. Once a month, dealers, brokers and others come to bid on the hundreds of dirtbikes, streetbikes, cruisers, ATVs, watercraft and RVs. It's a fascinating display of frenzied commerce that should fascinate anybody who has ever wondered where some dealers procure their large supplies of clean, low-mileage, late-model motorcycles for sale.
National Powersports Auctions is the premier Powersports auction in the United States. They claim to sell 3,700 units a month between their three facilities in San Diego, Houston and Atlanta. What such huge volume means is that if a used unit sold at a dealership in the United States wasn't a trade-in, it probably was purchased at a National Powersports Auction.
Most of NPA's inventory comes from one of the major banks that finance Powersports purchases in the United States, giants like General Electric Consumer Finance or CapitalOne. These banks need a quick, efficient way to liquidate a vast amount of repossessed vehicles at a minimal expense. The banks double-dip by offering prospective dealers and brokers financing to purchase the units, making the auction a one-stop shop for dealers looking for fresh inventory.
Insurance companies also take advantage of NPA's facilities. A great number of units are also salvage, some rideable and re-titled, others with extensive damage and salvage certificates only.What's In a Name?
A salvage-titled vehicle can be a great way to save money without sacrificing style, safety or performance.
If you've ever had a car you called a "piece of junk", you might consider owning and riding a salvage-titled motorcycle. A salvage-titled vehicle can be a great way to save money without sacrificing style, safety or performance.
"Salvage" can mean different things in different states. In California, a salvage-titled vehicle can be registered and ridden on public roads, but will always have the word "salvage" on the Certificate of Title. In other US jurisdictions, a vehicle that has been in a severe accident can never be re-registered and may be sold only for parts. Other states, like Florida, allow you to "resurrect" title to a clear one after repair and inspection, which gives new meaning to buying a Honda Hurricane.If the vehicle is being offered to you for sale and it already has been registered as salvage, make sure you inspect -- or have a repair facility inspect -- it to ensure it has been properly repaired and is safe to ride.
A vehicle has its value significantly reduced by a salvage title, even if it is perfectly repaired and functioning. For one, that permanent salvage designation will always limit resale value. Also, insurance companies often refuse to provide any coverage -- either comprehensive or even basic liability -- for salvage-titled vehicles.
If the vehicle is being offered to you for sale and it already has been registered as salvage, make sure you inspect -- or have a repair facility inspect -- it to ensure it has been properly repaired and is safe to ride. Just because it passed some kind of "inspection" means little in some states. In California, all that is required is a "brake and lamp" certificate from a repair shop (meaning a mechanic verified the lights and horn work), and verification that the vehicle's identification number hasn't been altered. The frame doesn't have to be checked for broken welds, the brake rotors don't have to be checked for warps, and the forks don't have to be checked for alignment. Caveat Emptor!
If the vehicle is purchased directly from the insurance company -- like all the salvage title bikes at the auction were -- the buyer will eventually receive some kind of "salvage certificate" from the seller. This certificate just confirms that the VIN is assigned to this vehicle and that it has been salvaged. It is then up to the buyer to take the necessary steps to make the vehicle road-worthy so it may be titled in her state.
Buying salvage title can save you plenty, especially if you want to buy a motorcycle for racing, stunting, trackdays or jumping Snake River Canyon. But only careful research and planning will tell you if it can be a safe, practical way to obtain a bargain ride for the street.
Finally, there are plenty of units that dealers are unloading for various reasons. Some might be lien sales; vehicles abandoned by customers who couldn't pay for repairs or service, while others might be "lot lizards"; bikes that have sat too long without selling. Additionally, Eagle Rider -- the chain of cruiser rental shops -- had a large number of Harley Davidson and Victory cruisers ex-rental bikes they were getting rid of on the day I attended the auction.
After a day-long "preview" open to bidders to check out the units before the auction starts, the bidding is ready to begin at 8:00 sharp on Friday. I went down there with a friend of mine who operates a motorcycle dealership and wanted to unload some of his "dead wood". The dead wood was five motorcycles and scooters that he couldn't or wouldn't sell to his customers. He also wanted to load his truck and trailer with as many good deals for his shop as he could. "I'm looking for starter bikes and 600cc sportbikes", said my friend; I'll call him `Fred', as NPA chose not to cooperate with the production of the story and I don't want to jeopardize his standing with them.
Fred had already checked out the bikes he was interested in by accessing NPA's preview page and by inspecting them in person the day before. He had his eye on GS500s, Rebel 250s and the vast number of late-model Japanese sport 600s. Time permitting, NPA runs the bikes through their mechanical inspection, checking the frame, bodywork, motor, transmission and other components. The vehicle gets a score for the motor, body, and overall, so the buyer has some idea of what he will need to do to make the bike ready for their sales floor, or how valuable salvageable components are if sold separately.
Inside the warehouse, the sight of thousands of street and dirtbikes was overwhelming to a motorcycle enthusiast's eye. Everything was represented, from the wildest Big Dog Ridgeback to a burnt-out hulk of a Kawasaki ZX-6 that looked like it had met its end in a house fire. The bikes were arranged in long rows, several hundred long, with corridors between the bikes to allow a large rolling platform to move between them.
On this platform sat an auctioneer and two assistants. The assistants would type information and bids from internet buyers into the auction system while the auctioneer would call out the high bids in a rapid-fire banter. In front of the cart, two "ring bosses" were poised to spot and encourage bidding.
The auctioneer started on the first unit for sale. Less than 40 seconds later, it was sold, and the next of over 1300 motorcycles to be sold that day was on the block. Auctioneers claim to be able to sell over 100 units an hour. To keep up, a team of workers pushes the large blue cart along the lines of bikes, and an attractive young woman holds a flag marked "Current Auction" in front of the bike for sale. The action is fast, and you have to be careful to be sure the bike you want isn't sold out from under you before you realize it's being auctioned; Fred lost more than one opportunity like this.
The action is fast, and you have to be careful to be sure the bike you want isn't sold out from under you before you realize it's being auctioned...
The action is fast-paced as the participants are mostly seasoned veterans who attend many auctions a year. One man had numbers from many buyers and was bidding on almost every bike. By lunchtime, he had purchased over 30 motorcycles and was on his cell phone asking if his dealers wanted more bikes. These brokers know the ring bosses and auctioneers so well that they just make eye contact or move a single finger to indicate they are bidding.
What was notable that day was that people were bidding top dollar that day for sportbikes of all displacements. A clean, low-mileage 1000cc sportbike would go for well over the Kelly Blue Book retail price. A quick glance at the crowd revealed the reason; many of the dealer's ID number tags were hand-written with marker rather than printed. The dealer can bring as many "guests" as he wants to the auction; many of these people were friends and family members looking to find a good deal on a sportbike, dirtbike or Harley. Since they didn't have to make a profit, they didn't seem to mind bidding over KBB retail, so long as they were getting a nice motorcycle. At press time, NPA has not answered any information requests, so I do not know if this violates their policy or if they encourage it to force the sales prices up higher.
The high price for sportbikes makes life a little tougher for Rich Mason, who purchases motorcycles and cars in the USA to export to England and other European countries. Prices at the auctions sometimes get so high that if "the exchange rate's bad it's not worth it" to buy the bikes and ship them to England, despite the fact that the USA is a treasure trove of low-mileage, late-model sportbikes: "some of them are like brand-new...it's crazy".
Stunting and stunters were also a theme of the day. One 2003 Honda CBR954RR was fully enclosed in a stunt cage, complete with a 12 O' Clock bar at the back. The bike's label noted the motor as a "six" for transmission trouble, common enough for stunt bikes. The very young man (accompanied by his father who worked for a dealership) who bought it bid well over the Kelly retail price. I asked him if he had noticed the notation about the transmission. "Is that bad?" was his response. Other sportbikes had obvious signs of stunt abuse: balled-up rubber under the rear fender from burnouts, bent levers, loose bodywork and other signs of abuse. Repo man coming next week? Stunt party! He probably could have found better deals in the local classified ads or on Craig's List, but NPA lets him use dealer financing and is convenient.The day wore on, and the hungry jaws of commerce chewed up hundreds more units. Fred was able to snap up a trio of EX500s for just a little more than KBB wholesale value. His dead wood sold, some for less than what he wanted to get, others for impossible amounts. A 50cc Chinese scooter a customer traded for a $100 store credit because it was not registerable in the US fetched $300 from a Mexican buyer. A 2001 Suzuki GSXR750 that had sat on his showroom floor for six months at $5,500 was snapped up in 25 seconds for $6,000.
By four PM the auction was over and I was helping Fred load his truck and trailer with the six units he was taking back home. He probably could have found better deals in the local classified ads or on Craig's List, but NPA lets him use dealer financing and is convenient. More importantly, it helps him keep his shop busy and full of customers by having fresh inventory, even if he doesn't make huge profits on bike sales.
For consumers, from what I saw I think there are less stressful and cheaper ways to obtain a good deal in a used bike. Although there are some beautiful motorcycles available, late model Japanese bikes go for almost retail price. A 2004 Kawasaki ZX-10R went for $8,400, despite the KBB website valuing it at $7,720. Even if you have a friend on the inside and can get to one of the auctions, I'd recommend staying away and letting the pros fight it out.