Saturday, January 16, 2010

Developing A Plan

I would like to get into the business of buying junky Metros at a low price, and fixing them up for sale.

I have reason to believe this could be lucrative, but I don't know for sure as no one I know of does this exactly. PAMetrofixer, and many others on this page do the actual work, mostly the mechanicals on the engine. However, no one buys them, fixes and resells them. Johnny Mullet said if he had a supply of them, he would consider rebuilding them for sale. So, the idea is there, but the details have yet to be worked out.

The thing that will be the hardest I think is quickly identifying good deals at low cost. One critical factor is developing an eye for problems. There are a lot of “inspecting a used car” guides out there, but all of them say, have it looked at by a pro mechanic. That's got to be me. So. To gain experience, I want to look at lots of “deals” and try to identify problems. There aren't many Metros in my area, so I will mostly look at other makes and models.

Once I have identified problems, I can make the adjustments in price. Basically, I want all the costs of fixing these problems, plus the purchase price, to add up to $500 or less. So, if the head is cracked and the carpet is shot, I add $100 for the head, plus $130 for new carpet, plus say a $250 asking price equals $480, just under my ideal price and thus a good deal. But if the asking price was already $400, then I could offer $250 or leave it alone.

Then there's the travel problem. I want to physically inspect everything before I commit to buying it. This requires two trips. Also, a non- productive trip costs gas and time, which must be paid for by the profits from selling other Metros. Craigslist does not provide much information, usually you get an asking price and maybe a picture. Sometimes if there's an obvious problem they'll describe it in the ad to explain the low price.

A second problem is how to detect problems when the engine isn't working. This can be gotten around somewhat by checking the condition of the fluid (oil, coolant, ATF)
Rust is a no-brainer. If the frame is rusty, then no go. Body rust, I will deduct something from the price. I think Johnny Mullet is right about the body shops that won't touch frame problems, for liability reasons. Maybe there's a way around that, I don't know.

Once I have a fixer upper, then I have to fix it. I need to make a serious investment in space to work and specific tools. This has to be as low and recoverable as possible. Used and borrowed tools should help with this. For a list of intended fixes see here. This part has been well documented and I expect to find lots of help from the forum community. However, my fixes may tend towards the cosmetic stuff, depending on what the market is interested in.

Now that the car is in good shape, I expect to sell it for $2500 to $3500. Watching the market for a while may help me fine tune that. My ideal customer wants to save gas, but doesn't like the stereotypical junky little car that smells bad, etc. These folks probably are not inclined to do the major reconditioning themselves, but some may return later for service at my self service garage (more on that idea another day). These potential customers have been looking at cars priced several thousand dollars higher, so maybe these prices will not turn them off.

Attracting customers is always a challenge. I intend to make full use of the internet, but cars by nature are best sold locally. Craigslist is a good possibility, being localized. Billboards cost $500 to $1000 per month, so that's not an option. Maybe word of mouth is enough, I doubt it. Having the cars in a lot by a busy road may help. A display of Metros is certainly unusual.

Sorry for the long article, but I think best by writing it all out.