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THE WHEELS OF JUSTICE

 By Sgt. James Post

 Reselling Police Cars at a Profit      

This article can help you avoid future losses and it can be as simple and cheap as a car wash – but more on that later. There is no sense in selling your used cruisers for way less than they are worth. You’re not in the business of providing good deals to the citizen buyers or taxi companies; you are in the business of “protecting and serving” as effectively and efficiently as possible.

Planning for the End

American law enforcement agencies face a real financial crisis. With “COPS” grants drying up everywhere and those monies now being channeled into Homeland Security, every agency must find ways to save money while not impacting service delivery.

Next to salaries, most departments’ largest budget item is the fleet. We’ll show you how to save money by making more money at resale. But, planning for profitable fleet dispositions should begin well before fleet acquisition. Therefore, we will suggest ways to buy cars which are going to make you more money. Our discussion is geared towards agencies which purchase new vehicles, but smaller departments (which purchase used cruisers) may be able to benefit, as well.

To understand why departments lose money, we need a little history lesson. For decades, new and used car dealers have perpetrated the myth that high mileage is a bad thing; when, in fact, high mileage is just another way they can further depreciate your trade-in. The fact is that American police cars are engineered and built to last 200 to 300 thousand miles. The 2005 Tahoe advertising actually includes this. In addition to reliability of the heavy-duty driveline, they’re tough structurally, too. The previous body style Crown Vics (1980s) were rated second only to the Mercedes in high-speed, head-on collision survivability tests and the current Ford models all have five-star (the highest) crash ratings.

To further muddy the waters, there is no listing for police package cars in the various wholesale pricing books. Few new car dealers are interested in used cruiser trade-ins and, if they do accept them, you can bet it will be for a fraction of what they’re really worth. Thus, departments are faced with disposal themselves. Most governmental entities have specific regulations which govern how they dispose of excess/obsolete inventory. The most popular are sales by sealed bid (often called a silent auction) or by public auctions and it is safe to say these two methods generate the least profit for the sellers. If you are so handcuffed, you should initiate efforts to get these policies modified to allow you other types of disposal.

Saying Good-Buy

There are essentially two methods to dispose of used vehicles in the open market – wholesale or retail. The same is true for police cars. The variety of wholesale and retail choices are listed below:

1) Trade in to new car dealers upon purchase of replacement vehicles;

2) Direct sale to a used police car dealer;

3) Consignment to an automobile auction house;

4) Public police auctions;

5) Sealed bid sale to the public; and/or

6) Department sale by other methods (electronic, printed media).

The first half of the list consists of wholesale methods; the second half provides retail options. Each method has its own advantages and disadvantages. When examining the alternative methods from a cost point of view, it should be remembered it is important to consider the selling costs associated with each method, as well as the price received.

Wholesale

Wholesaling (selling to used police car dealers to wholesalers and brokers or consignment to automobile auction houses) offers the advantages of quick sales and low selling costs, but prices will be substantially lower than selling retail. Wholesale methods are often used by departments interested in quick sales with little or no reconditioning – often called “as is.”

When sales are consigned to auction houses, the department has little (or no) input in the sale. Many times, they are sold directly to the firm at a set price and the company then preps them for sale and keeps the proceeds.

Another popular method is to wholesale your cars directly to used police car dealers. There are several around the country and many advertise in this publication. They will buy single units, but usually prefer to buy entire fleets. They may buy all your wrecks, too, to use as parts or for rebuilding. They buy in quantity and resell the reconditioned cars to other wholesalers, police departments, taxi companies and private buyers.

The least preferred method of wholesaling is a dealer trade-in. Top prices are usually never obtained through trading in a vehicle to a dealer. Sometimes, trade-ins can be used to negotiate better prices – depending on the condition of your fleet. In addition, trade-ins can eliminate the problems of disposal, new car delivery and the need for storage, as well as most selling expenses.

Always remember this when considering trade-ins: Have you ever seen used police cars sitting on your local dealer’s used car lot? Of course not – your squad cars will never see that lot. Your cars will be “wholesaled” to used police car dealers or others. Simple mathematics shows us that this is probably the least profitable way for you to sell your cars – no matter how easy it seems. Your local dealer has to make a buck, too – and this will be at your expense.

Retail

Retail sale methods which omit the middleman usually yield the highest prices. Methods four, five and six previously mentioned are considered retail transactions because, in most instances, you will be selling directly to the consumer. The main disadvantages of retail methods are the higher reconditioning and other selling costs and the possible delay in disposal. Many police departments are not equipped to properly prepare (detail) cars and have to utilize outside vendors. All three methods require storage from the time of retirement to the time of disposal, which incur storage costs, insurance costs, and unused depreciations. Advertising will be necessary to stimulate consumer interest and administrative and management personnel will be needed to successfully conduct or oversee sales.

The public police auction offers the advantage of competitive bidding and may raise prices. Auctions will attract wholesalers, as well as the general public. If your fleet is of sufficient size to enable scheduling of frequent auctions, the problems of storage costs and unused depreciation may not be an issue. Some departments hold regularly scheduled auctions of police cars.

Sealed bid sales are a fairly simple method of disposal and are even manageable for larger fleets. Bids (offers) are sealed in envelopes and opened at a designated time and the highest bid wins. The main drawback is the necessity for storage and having vehicles available for inspection prior to bid awarding. Your personnel expenses can be minimized by limiting inspection periods to certain hours or specific days. Sealed bid sales eliminate the administrative costs of public auctions, such as crowd control, handicap access, attendee parking, etc.

A fixed price sale is just that – you set the price and advertise the vehicle. Several state patrols do this. Missouri advertises their (priced) cars on their Web site. Others may use local advertising or trade publications or direct mailings.

Although there are variations in how departments get the word out, the basics are similar. Used cruisers are advertised and prospective buyers can look the cars over. Posted with each car are known defects and the price. Most state patrol units are offered first to other agencies and then to the general public. Usually, prospective buyers at fixed price sales can start the cars, but not drive them. This system seems to be the fairest for buyers and sellers alike.

A New Way of Doing Things

The newest method of selling used cruisers is courtesy of the electronic age. We mentioned Web sites earlier and you should certainly have one, but we’re talking about the newest car selling phenomenon - on-line auctions. There are several available in cyberspace, but we will discuss only one – eBay®. Unless you’ve been in hibernation the last decade, you have heard of eBay, the most amazing sales method of this age and the most successful auction method ever.

One of the newest members of the huge eBay family is eBay Motors®. Created after eBay execs noticed the volume of cars and accessories being sold through eBay auctions, eBay Motors is a separate entity which specializes in vehicles, parts and accessories. Selling a car on eBay Motors is similar to selling anything else on-line.

Having owned a couple of hundred cars in the last 45 plus years, I would never have imagined myself (or anyone else) buying a used car without driving it; or hearing it run; or crawling under it; or playing with all the bells and whistles. . . you get the idea. But, they do – and hundreds do just that on eBay Motors every day. Based on Q3-2004 figures, eBay Motors now expect to deliver $10.7 billion in vehicles, parts and accessories sales annually.

Do used police cars sell on eBay? You bet they do. At any given time, you can find 75 to 100 used cruisers on the site. There are no records to indicate how many departments are using this service, but several do.

And, how about prices? Shane O’Roark, owner of a successful mid-America used police car dealership, Kansas City Motor Vehicles Sales, is a veteran of police car sales on eBay Motors. In the three years he’s been utilizing this service, he has seen the number of available cars increase dramatically.  He stated his reconditioned cruisers once sold for one to two thousand dollars more on eBay than on his lot; they still sell well and at a profit, but the competition has leveled out the prices. Regardless, O’Roark praises eBay as another outlet for his inventory.

There are some regulations for selling police cars on eBay Motors. The key stipulation is that eBay Motors only allows the sale of decommissioned police vehicles; they cannot have light bars still on the vehicle; and all markings should be removed. eBay’s complete policy on selling police items can be found at: http://pages.ebay.com/help/policies/police.html.

Here are a few tips about selling police cars on eBay Motors:

•      The system is easy for anyone with basic computer skills to navigate. There are people available who will sell on eBay for you for a nominal charge, but try it yourself first. eBay has made this a little easier for you through one of their other services, CarAd®. For a small fee, you can use the CarAd program to list your vehicle. It makes listing a lot easier and you get a professional looking site as a bonus.

• Don’t scrimp on photos – you simply can’t have too many. Focus on visible damage and feature views of all sides, front and rear, engine, dash, odometer, seats, door panels, trunk and tires.

• List everything you know about the car – good and bad – repairs, wrecks, recalls, number of operators, etc. Describe your maintenance schedule, brake and tire replacement criteria. All this helps sell your cruiser.

• Timing can be everything. Use the ten day auction option and plan it so the ten day period includes two weekends. Studies have shown bidding is most active on weekends when most folks are on-line.

• Have someone monitor your auction. This does not have to be 24/7, but someone should check for E-mail inquiries frequently. Prospective buyers appreciate fast responses. And, you can modify your price at any time, as long as there are no bids.

• Buyers are normally responsible for transportation after the sale. As a courtesy, you can research local companies to save time for your buyers.

• I suggest you utilize a “reserve” price. This is the minimum price for which you will sell your car. Without a reserve, you are obligated to sell it at the highest price bid.

• You can utilize “private” auctions for a minimal fee. In a private auction, the bidder’s IDs are not revealed. Some eBay bidders have been contacted by sellers (with similar cars) trying to sell them cars cheaper and outside the eBay process (and all the built-in security).

• PayPal® is another highly recommended eBay service. PayPal allows any seller to accept credit card purchases from buyers. PayPal qualifies the buyer and the proceeds can be deposited directly into your agencies’ bank account.

Don’t Give Away the Farm

Regardless of the method of disposal you decide upon, there are several things you can do to increase your profit potential. Some of these tips should be considered even before new cars are purchased.

Purchasing Considerations

• Paint schemes: If you’re planning to sell your cars anywhere under 100K, I don’t recommend black-and-white paint schemes. Solid white and other solid color cars are easier to sell and bring a lot more money than two tones. Patrols in Missouri and Kansas utilize multicolor fleets and they sell quite well, with waiting lists for the next batch.

A diversity of colors appears to improve the demand for used police cars. From the standpoint of resale alone, the more distinctive the car, the higher the price. Light pastel colors appear to be good choices for exterior colors. With the availability of contemporary vinyl, attractive, easily identifiable graphics are possible with any color body. If you still desire a black-and-white combo, you might follow the Wyoming State Patrol’s lead and order white tops only.

Do you want more proof? As long ago as 1970, in a southwestern state, resale prices of similar white and colored state patrol cars, while nearly identical to one another, were substantially higher than those received in other states having single color fleets. The fleet manager explained that white cars sold as well as colored ones (due to the demand for white cars in the hot climate), but the mixture of white and colored cars helped raise the average resale price of all their cars. Of a group of state toll-way cars sold in 1972 to an auto auction house (which in turn reconditioned and resold them), the observation was that a substantially lower price was received for the reconditioned white cars than for the reconditioned colored cars.

To summarize: White police cars sell best (to other departments) hands down; colored cars sell well, particularly to civilians; and black-and-whites are the worst sellers.

• Accessories: Most contemporary police packages contain all the options needed to successfully market your used cars. AM/FM radios are sufficient, but if you add cruise control, it will usually pay for itself at resale. If you plan to install prisoner seating, buy the matching cloth seat (instead of vinyl) for resale.

• Holes: With the plethora of antenna mounts, magnetic options and quick disconnect fillings available, it’s hardly necessary to drill holes in squad cars anymore. The Kansas Patrol drills no holes in the body at all; Missouri has one hole on the rear quarter for the whip.

Light bar wiring cables can be routed along the windshield with stick on attachments; antennas can be mounted with magnets or trunk lip mounts; push bars and speakers are available which use factory mounts. There’s no reason to attack the body with a drill anymore. Ditto for the interior. Search out equipment consoles which use your stock seat mounts for attachments.

• Sporty police cars: The police Mustangs are long gone and the last generation of Camaros will soon be a memory, too, but there will always be a niche for hot rod type specialty police cars. Obviously, they are the only choice for surveillance work, but they can have a roll in traffic enforcement, too.

They are ideal when the need for covert enforcement occurs. The Florida Highway Patrol recently added eighteen Mercury Marauders to their fleet. They are multicolored, completely unmarked and have tinted windows and mag wheels to boot. The Mercs are used for speeders and aggressive (road rage) drivers with great success.

There should always be great resale potential for high performance “sporty” police cars with car enthusiasts who cannot purchase new ones. The main consideration should be to plan (in advance) how to sell them when retired. You may want to sell them in a different arena or at lower miles than your marked cars.

While It’s on the Road

There are a couple of things you can do while your cars are in service to help you get top dollar when they retire.

1) Maintenance schedule:  Adopt a rigid maintenance schedule and stick to it. Most departments still change the oil and filters at 3000 miles, despite factory recommendations being higher. Due to idling and severe conditions, this is still a good idea. Other protective maintenance details (such as tire rotation) should be scheduled, too.

2) Keeping it clean:  This is the one single item which will cost you the least, but has the potential of bringing you the most in return. Equally as important as a maintenance schedule, you must establish a rigid cleaning schedule. Cars should be washed once a week (at least) and more frequently in harsh weather. Once a month, the car should be washed at a facility where the undercarriage is washed, too. This is year-round. When the engine is serviced, the engine compartment should be washed, too.

Interiors should be swept or vacuumed at least once a week and the inside of all glass cleaned. Minor scratches and dents should be touched up immediately. It’s been proven that a clean car gets better gas mileage, but it also generates great PR for your department and shows the taxpayers that you’re taking care of their purchases.

3) Enforcement:  Good maintenance and cleaning programs are only effective if they are followed. They must be accompanied with weekly inspections and enforced with disciplinary actions if not followed by operators. You can make it easier for your officers by equipping every car with paper towels for checking oil and cleaning windows, cleaning solutions, whisk brooms, etc.

It may be time for your agency to consider a tobacco policy. Missouri and Iowa state laws treat police cars like any other state property and ban the use of all tobacco products inside them. It makes reconditioning cheaper if there are no holes or stains to repair.

4) Don’t throw anything away when you equip your cars. This includes side moldings, rear seats, rear door panels, door handles, etc. The small amount of time and space it will take to save all equipment removed (and marked with the donor’s VIN) and stored until resale will make a difference in price. The next owners will appreciate all the original stuff and you will be compensated for it.

5) How many miles? Plan on trying to sell your cars before they reach 100,000 miles. Although this number is totally arbitrary, 100,000 seems to be the “red flag” which scares off a lot of folks. A good number seems to be in the 40 to 50 thousand mile range. In 1978, the U.S. Department of Commerce conducted an extensive study on the acquisition and disposition of police cars. Based on a study of 29 city departments’ and several state patrols’ maintenance and repair costs, and subsequent resale prices, they concluded that the optimum patrol car replacement should occur between 40 and 60 thousand miles. That seems to still be the standard today. Missouri sells their units at 49,000 miles for 75% of the original sticker! The GSA pushes the envelope a little further, but they still are within the recommended limits as most police sedans are sold at six years or 60,000 miles. Regardless of the miles you pick, stick with it no matter what financial “crisis of the day” might tempt you to drive them another 20,000 miles. You will never be able to establish a successful, predictable resale program without a mileage standard which is carved in stone.

Before the Sale

When your cars are taken out of service, there are some steps you can take to guarantee the top return on your investment. With contemporary squad cars costing more than the first home many of us owned, everything you do is important!

1) Some thoughts about storage:  Storage of your out of service awaiting sale is critical, particularly during inclement weather. Obviously, indoor climate controlled storage is the best and you might check for unused warehouses in your area. The next best choice would be a fenced lot. Storage areas should be accessible and very secure.

If the cars will be stored three months or longer, disconnect the batteries, top off all fluids and be certain all the windows are closed. For winter storage, check coolant potency and add an additive such as Stabil® to the gas tank.

2) Make minor/obvious mechanical repairs, such as flat tires, a dead battery, leaking exhaust, or a cracked windshield. As an absolute minimum, every car should start and be able to pass your state’s inspection and any tires with less than 50% tread should be replaced.

3) Provide the service history with the vehicle, noting all repairs, recalls and replacements.

4) Touch up minor scratches; make minor interior repairs. Replace factory seating, spare tire and the jack (if removed). And, don’t forget the original owner’s manual. Why the hell did you take it out in the first place?

5) Don’t destroy the value of your cars when you remove the decals; spend a little time and remove them carefully. Ditto for the removal of police equipment.

6) Thoroughly clean the cars, including the engine and the interior. If funds permit, have them detailed. The Missouri Patrol maintains their own full detail shop. If you have maintained a rigid cleaning schedule all along, your detail time and expense will be reduced substantially. Plan the detailing for as close to the sale date as possible.

7) Timing is everything. Plan the time of your sales well in advance. Bad weather will have a negative impact on attendance at a public auction. Even if it’s held inside, buyers still have to get here. If you decide to sell by sealed bid, fixed price or on-line, timing is an important consideration, too. Inclement weather can effect buyer’s inspections and their ability to pick up cars after the sale, compromising your storage.

8) Advertise the sale (whatever type) well in advance. If you are in a community under 10,000, it would pay to advertise in the nearest large city over 100,000. This is the single most important step. A well advertised sale will generate more buyers and higher prices. You can even try displaying bumper stickers for 60 to 90 days before the sale which read “You Can Own This Car – Police Car Sale On (date).” Your Web site should advertise when and how you plan to sell your fleet. If you plan to sell on an electronic auction, provide a link to their site.

9) Before any type of sale, determine what your cars are worth. Since there are no books on the subject, take a little time to survey places these cars are being sold, such as the used cruiser dealers and the Internet.

 10)   On sale day, it doesn’t hurt to have a mechanic, officer or supervisor (someone knowledgeable of the fleet) on hand to answer questions.

 11)   Finally, both sealed bids and public auctions should be structured so the department can refuse the highest bid if it’s not satisfactory. If the bids don’t approach what you feel they should, try another method, advertise elsewhere, or try again in 30 days. Remember, your goal is not to create happy buyers or good deals; your goal is to provide the best return possible on your fleet.

Disposing of your used cruisers requires as much planning and research as the original purchase did. And, never forget...there are buyers for every car!n

About the Author:  The author welcomes your comments and suggestions. He can be reached at:

Sgt. James Post

172 CR 136

     Eureka Springs, AR 72631