Opening a used car lot near the wreck of a derelict shopping mall in the middle of a recession sounds like a collision course for bankruptcy.
But standing in his Eastside showroom beside a gleaming orange 1971 Oldsmobile 442, an old juke box on the wall softly playing rock tunes, Brandon Hockett insisted: “Used cars are where it’s at.”
Ten months after Mike’s Superstore opened on Shadeland Avenue, used-car manager Hockett claimed strong data backs him up. Selling 80 vehicles a month on average at about $8,000 per auto, he said, is a testament to that durable old fact: Americans need wheels.
“We’ll sell more than 100 this month,” Hockett said.
Even when the 1930s’ Great Depression collapsed Indiana automakers such as Auburn and Cord, used cars dealers survived, a trend evident today in Indianapolis, where about 300,000 used vehicles change hands in a typical year.
Of course, this recession has grated on sales. In September, drivers bought about 19,400 used cars and trucks in the metro area, according to vehicle registration data from Polk Global Automotive.
That was down 32 percent from September 2008, the last good month before Wall Street’s woes froze the credit markets, making consumer loans hard to get.
But the car market hasn’t entirely crumbled.
“People have to get to work. They can’t afford new cars,” said Andy Shatara, finance manager at Indy Motors, a Westside car lot on Lafayette Road.
Mike’s and Indy Motors are located in retail corridors that have seen better days. But that is not necessarily a sign of economic gloom in the surrounding neighborhoods.
True, the metro-area jobless rate remains high at 7.7 percent. And the continuing credit crunch keeps loans tight.
Indeed, Shatara notes, no banker wants to finance a 1999 Ford Taurus or some other faded glory.
In a region where public transit is limited, though, commuter cars are still in demand.
“People can’t afford new cars,” Shatara said. “We have a lot of customers who come in with $300 or $500 for a down payment. That’s as much as they can come up with. The banks want big down payments.”
Indy Motors’ solution: It’s opened Circle City Financing, a buy-here, pay-here arrangement. “I look at this as a mini investment,” Shatara said about car sales.
So far, the dealership maintains about 70 cars and trucks on the lot, selling on average about 40 to 50 a month. The typical sales price: $7,500.
Lately prices appear to have bottomed out, a sign the market for used autos is picking up steam.
In October, the price of all used vehicles sold at 170 auction lots nationwide averaged $9,447, up from $8,628 a year ago, reports Adesa Analytical Services, a part of the Carmel-based Adesa automobile auction empire.
It is still a buyer’s market, though. October’s average used car sales price trails the price for that month in 2007 and 2006. But as demand has firmed up, used dealers are scrambling to find cars and trucks.
Mike’s has an advantage there. Brandon Hockett’s grandfather, Michael Hockett, founded and years ago sold Adesa. The elder Hockett now has Auction Broadcasting.
Its wholesale lots in Sun Belt cities funnel a steady supply of used cars to Mike’s Superstore and Mike’s Buick GMC Mazda, a nearby dealership handling new and used autos. Brandon Hockett, used car manager for both lots, figures 450 used cars and trucks fill the two lots.
Half are crammed into the lot at Mike’s on Shadeland.
“If you sell 100, you need 200,” Hockett said.
Showy cars abound.
There’s the Olds 442, next to a black 1969 Chevrolet El Camino. In the driveway, awaiting a new interior, is a vintage white Chevrolet Impala convertible coupe.
The classic cars are partly for show. Advertised on used-car Web sites, they help bring in browsers and buyers not just from the neighborhood, but from a 30-mile radius.
Typically, half the customers have begun their used-car shopping journey on the computer.
“Sometimes you get a car on the lot and you know it’s not going to sell fast. But these cars sell other cars,” Hockett said. “We took a gamble opening here. But it’s paying off.”
