ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, November 27, 1996 TAG: 9611270019
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
COLUMN: Marketplace
SOURCE: JEFF STURGEON
Melinda Thomas of Roanoke, student, single mom and bargain hunter, last weekend bought a car for $5.
She had seen the newspaper ad: "Car Dealer Announces $5 Used Car Sale!" and went to First Team Auto Mall in Roanoke to pick up new wheels to replace a broken down car with a cracked engine block. She was one of more than 150 people who turned out for what seemed like an unusual car sale - actually a long-standing dealer promotion also used in other states to get customers onto car lots. She was one of two people to get bargain vehicles.
A few older cars in less than top condition go for the advertised price of $5, while many more are for sale at regular or special discount prices.
First Team Auto Mall had accumulated a number of older, high-mileage used cars and trucks and gathered them at its Peters Creek Road location. George Pelton, president of the dealership, said his company decided to advertise the trade-ins to the public, before offering them to independent used car dealers, as is normally done. That way, Pelton said, a buyer could avoid the used-car dealer markup.
By calling the event a $5 used car sale, First Team Auto Mall hoped to draw a crowd and expose its cars to more potential buyers. First Team Auto sells new cars as well as used vehicles generally selling for more than $5,000.
A newspaper ad, two days before the event, was eye-catching, although it didn't explain the dealer's motives, nor was it required to, by law.
As long as it made clear the number of $5 cars was limited, the ad was proper, said Peggy Bailey, a spokeswoman for the Virginia Motor Vehicle Dealer Board. Dealers also must carry a "reasonable supply" of cars at the advertised price. The law does not give a number or way to calculate the required minimum supply, however.
First Team Auto hyped the event as a bargain-hunters' nirvana where everyone present would have a shot at a $5 car. Customers had to call ahead of time or attend the sale to get the fine print, stated in a flier handed out Saturday: "The majority of vehicles will be priced between $5,000 and $20,000. P.S. The $5.00 cars are not good reliable transportation. We do not warrant their condition."
The public began showing up even before 8 a.m. for the sale that didn't begin until 10. About 75 used cars from the 1980s to the early 1990s were on display. There were few salesmen and nobody could take a test drive. Rather, the dealer asked anyone interested in a car or truck to stand beside it and wait for the sale to begin.
Only a few vehicles had price tags and none was for $5. The remainder of the price tags - including the $5 ones - were to be brought out and placed on the cars at 10. There was no way to know for sure in advance which vehicles would end up being priced for less than a movie ticket.
Before long, every vehicle was staked out. Thomas sat in a 1990 Hyundai Excel, its broken visor in her lap. "I knew it was a good deal because of the rejection sticker," she said, pointing to a red windshield decal which indicated the car needed work on its exhaust system and brakes.
The would-be buyers were a mix of people hoping they picked a lucky $5 car, others hoping they'd selected a car for another low price and still others who appeared to be serious buyers expecting to pay a regular price.
Shortly after 10 o'clock, a salesman emerged with a stack of giant price tags, and a crowd followed as he placed them one-by-one on windshields. He stickered more than 50 cars before plunking down the first $5 tag on a Chevy Celebrity with 117,000 miles and defects with its steering, headlights and brakes. The crowd roared its approval, and the buyer smiled.
Down the row, Thomas got the news that she, too, was sitting in a $5 car. She, her mother and friend got out and started cheering.
"I've been without a car, riding the bus, with my son, trying to get back and forth to school," Thomas said.
Both of the $5 cars had failed safety inspection and legally could not be driven for more than 15 days without repairs. A $2 fee for a 30-day license plate brought each buyer's bill to $7.
Through the sale, First Team Auto Mall sold 10 other cars, most of them destined for a used-car lot. The next cheapest after the $5 cars cost about $1,000.
Pelton said he didn't control or know in advance the number of $5 cars that would be offered, or the quality of vehicles at that price. That's a function of the dealer's ever-changing inventory.
The Virginia Independent Automobile Dealers Association declined to comment on the event. The Roanoke Better Business Bureau said the dealer did what many grocery stores do - sell an item at a loss to bring potential customers who might buy other items.
However, R.B. Grisham, who directs the National Independent Automobile Dealers Association in Arlington, Texas, questioned the $5 tactic in light of the group's code of ethics, to which the state association also subscribes.
Pelton disagreed. "I did exactly what I said I would do. We advertised it. We sold it. We gave exactly what we said," Pelton said. "It's not too good to be true. We sold cars for $5. Did we or did we not?"
When Precision Acura/Holiday Mitsubishi in Roanoke ran a $5 used car sale Nov.2, it offered and sold eight vehicles at that price and 23 other used and new cars at higher prices. More than 300 people came. "It was very successful," co-owner Wayne Maddox said.
Pat Murray, who manages Fred Anderson Toyota in Raleigh, N.C., sold eight cars for $99 at a similar used car sale last Saturday. He also sold 45 other new and used cars at the sale which drew more than 500 customers.
Murray lost more on the marked-down cars than he would have liked, but he may repeat the sale "just for the publicity," he said. "When you walk outside and see 500 people on your used car lot, that's a great feeling."
LENGTH: Medium: 100 linesby CNB