What Are the Ethics of Buying Bargain Luxury Cars in a Recession?
There are great deals to be had, but observe a few rules to ensure painless, respectful negotiation
There’s a general rule in any economic crisis: the toys go first. Check any online car listing site barely a week after a market crash, and you’ll see all manner of exotic, luxury and otherwise uncommon vehicles suddenly available, typically at prices that fall below the more speculative figures that have been driving big-ticket items ever upwards.
The last time this happened it was 2008. The burst of the sub-prime mortgage bubble had millions of people reconsidering their priorities, especially those of the two and four-wheeled variety. Currently, America is teetering on the brink of another full-blown recession, with markets hit hard by uncertainty and unemployment numbers skyrocketing, and the entire process is repeating.
We want to be clear about something here. We’re not talking about people who are being forced to sell because they desperately need cash to pay their rent or buy food. Specifically, these vehicles represent individuals who are seeking greater liquidity during an uncertain time by moving wealth out of collectible assets so that they can have cash on hand to shore up their existing businesses, take advantage of opportunities that might present themselves, or act as a hedge against a further downturn.
“I’ve chosen to divest myself of a number of watches in the past few weeks,” a New York City business owner told us while we were researching this story. “Honestly, I wasn’t planning on selling down my collection, but I was definitely happy to find buyers with cash in hand. It helped me out in the current situation, and it wasn’t a negative experience whatsoever.”
While the vast majority of these cars and trucks are being sold by owners who have the same attitude, that doesn’t mean you should approach the market like it’s midnight at Wal-Mart on a Black Friday fire-sale. You’re dealing with real human beings trying to make the best of a bad situation, not faceless corporations, and that means you’ll want to consider the ethics of purchasing what may very well have been someone else’s dream car.
It’s a well-worn trope that Craigslist users are among the most difficult would-be car buyers on the planet, and the near constant stream of “cash offers,” bizarre trades and long-distance bargaining that accompanies any listing has launched a million memes.
Don’t be that person. Just because there may be financial vultures circling overhead doesn’t mean you have to become one of them. This means being conscious of how you negotiate the price on a vehicle you have an interesting in buying.
Keep in mind that the seller has already most likely lowered what they’re asking to below what’s normal for the market, which is what attracted you to the listing in the first place. They didn’t do this because they’re ignorant of what they have, but rather because they want to move on from ownership as quickly and painlessly as possible.
This means two things. The first is to assume that the person you’re dealing with knows as much about the vehicle as you do, and understands the market well. They’re not going to be open to a dramatic lowball offer, and taking that approach might very well end the conversation.
The second is that even though they might be keen to liquidate an automotive investment, the person you’re talking to may very well be about to part with a car that they’ve treasured, or which was something they had always aspired to own. There are bound to be emotions mixed up in the selling process. Let’s put it this way: they’re not just looking for a buyer, they’re looking for the “right” buyer, and it’s on you to be that person. Be sensitive and respectful in your communications, and be aware of the circumstances surrounding the sale.
There’s a flipside to the influx of interesting and unusual automobiles beginning to flood the market at prices that are significantly lower than their usual ask. You’re going to encounter a fair number of vehicles that might not be exactly what they’re stated to be, or which might come with a fairly large asterisk attached. In other words, you’re going to have to protect yourself as a buyer.
What could be lurking out there that might cause you to approach the scene with a little extra caution? Much as a financial crisis makes owners rethink their vehicular portfolio, so too does it prompt project car owners to clear out the garage, particularly if they’re in a little over their heads. What might have seemed like a good idea as a rainy-day wrench six months ago can easily appear as a mile-high mountain of parts purchases and labor bills in a very different economic climate.
It’s within this context that you’re going to see higher-mileage exotics, cars that “just need a little work” to get back on the road, or vehicles that have questionable provenance in terms of past ownership records or repair histories bubbling to the surface. Normally, if a deal looks too good to be true, it usually is, but in a crowded market of well-priced vehicles it’s going to be harder to separate the risks from the rewards.
The answer, as always when making a major automotive purchase, is to do you due diligence. If you’re looking for a project, that’s fine, but make sure both you and the seller are completely transparent about expectations when discussing a vehicle that requires repairs or restoration. A reputable seller will be happy to document a car, and it’s perfectly reasonable for you to ask for proof of what’s being claimed about its condition and origins.
This can include a third-party inspection, as well as being vouched for by a local shop or dealership that has put in wrench time on the vehicle in the past. Double-check titles, make sure there are no liens, match reported mileage to what’s showing on the odometer and review the overall condition of the vehicle itself. Well-worn seats on a low mileage car are a red flag, just like brand-new paint on a higher mileage model. If you don’t feel confident in your knowledge of the vehicle you’re looking at, don’t be afraid to tag in an expert opinion, either.
Do the Right Thing, The Right Way
You may be wondering how ethical it is to purchase a sports car, collectible classic, or exotic from a private seller in the midst of an economic crisis. To answer that, remember what out watch collector said earlier in the piece. It might seem as though you’re taking advantage of someone to pick up a vehicle at a lower price than what it might go for in a stronger market, but from the perspective of the seller, the inverse is often true.
It’s not always easy to find a buyer for a unique vehicle, and the seller has lowered the price because they would prefer to have the cash than to park the car in their driveway. You’re helping them get more liquid at a time when that means more to them than owning a ride that only gets exercised on the weekend, and most people will appreciate your interest if you’re smart and respectful about your approach, and empathetic to their situation.