Wrecked U.S. cars in demand

CLAYTON, N.C. -- Victor Montes de Oca scanned several damaged vehicles as they rolled past an auction stage.

"Everybody wants a Ford truck in Mexico -- Central America, too," said Montes de Oca, a buyer for Honduran importer Travecor Peres.

He comes every Wednesday morning to Insurance Auto Auctions off U.S. 70 here, where he might buy as many as 10 vehicles to ship to Latin countries.

"People there can't afford a new car, but these they can," he said.

As the dollar sags against foreign currencies, exporters are finding an increasing market overseas for vehicles that can be fixed and resold at a profit.

In Poland, people chase after Subarus, Nissans and Toyotas. In Lithuania, Lexus is in demand. Many Russians and Mexicans like four-wheel drive.

Heavy damage

Most of these vehicles are damaged to the point of being declared losses by insurance companies. That generally happens when the repair would cost more than 80 percent of a vehicle's retail value.

A few being auctioned are intact stolen vehicles recovered after 30 days, after insurers have written them off.

In both cases, increasing global demand has led to more than 20 percent getting shipped overseas, said Dan Oscarson, vice president of marketing for Insurance Auto Auctions.

The Chicago company sells more than 1 million salvaged cars a year through 136 auctions.

At the Clayton auction, local mechanics, merchants and consumers compete increasingly with buyers on the Internet, who now generate 44 percent of sales.

Durham and Wilmington, N.C., and Panama were just a few of the bidder locations flashing on a small computer screen behind the auction line a recent morning.

Buyers from afar

Auctioneers say they regularly hear from buyers in Guatemala, Honduras, El Salvador, Mexico, Bolivia and Eastern European countries.

Those Internet buyers have helped double the average sales price for cars over the past four years, though most vehicles still sell for less than $2,000, Oscarson said.

Insurance Auto Auctions makes money from bidders who pay to enter auctions and from insurers and rental companies that pay to have damaged cars taken off their hands. The company remits all sales proceeds to insurers.

Gary Prestopino, who tracks the auto-salvage industry for Barrington Research in Chicago, says salvageable U.S. cars will sell anywhere in the world there is burgeoning capitalism.

"People in these markets still covet U.S.-made cars," Prestopino said. "Because of the currency effect, they can get them at relatively cheap prices."

He said parts of Africa are also getting into the trade.

Roma Saricevs, 24, of Klaipeda, Lithuania, is a purchaser for UAB Eurovestika, which buys 200 to 300 cars a month, all from Web-equipped U.S. auctions.

"Demand is higher for these vehicles every year," Saricevs said. "We used to buy most of them in Germany, but now it's cheaper to buy them in the United States."

It costs about $1,000 to ship a damaged car overseas, but the economics work because of the weaker dollar and lower repair costs abroad.

The dollar has lost 22 percent of its value against the euro in the past two years and has fallen against most other currencies. Overall, that slide has helped make U.S.-driven cars about 30 percent cheaper in Eastern Europe than comparable European-driven cars.

As for labor, the cost is as little as $8 an hour in many countries, compared with an average of about $50 an hour in the U.S.

Money per vehicle

When repairs are included, importers such as UAB can make the equivalent of several thousand dollars on a vehicle, or $400 to $500 to simply buy, transport and sell it.

Saricevs' company does both, selling to merchants and consumers in Russia, Belarus, Lithuania and other Eastern European countries.

The cars are considered desirable because they offer power steering, automatic windows and other niceties that cars in Eastern Europe don't typically have.

Dave Taylor, Southeastern regional manager for Insurance Auto Auctions, said Canadians are also getting into the game.

"They've been coming further south to buy cars as the dollar dropped," Taylor said. "The South Americans have been coming further north."