It’s a Saturday afternoon and you’re watching binge watching old re-runs of Wheeler Dealers, marvelling at Edd China’s skills with a spanner and Mike Brewer’s gift for the gab. We’ve all been there. Your brain begins to stir and you start fantasising about quitting your 9 to 5 and buying an old Jaguar, which you’ll bring back from the dead over the course of a week or so. Then sell it for a healthy profit and move on to another car. After all, you’ve worked on cars before, why wouldn’t it work?
In this domain, Mike and Edd are the kings – and they’ve set a high benchmark. I’ve done the maths, and after flipping a total of 121 different vehicles I calculate they’ve made a profit of £246,418 – that’s an average of £2,036 per vehicle. Good money, no? I think Wheeler Dealers really is a fantastic show and as far as automotive entertainment goes it is difficult to beat, but forgive me for a moment while I put on my serious glasses…
If you’re going to try replicate Mike and Edd’s success for yourself, there’s going to be a few issues. Firstly, you need to consider that Mike and Edd have been at it for 12 years now – divide their total profit down and they made just £10,267 each, per year. That suddenly isn’t sounding quite as fantastic. Secondly, you must take into consideration that Edd already had a full garage set up with every single tool he needed, not to mention a two-post hoist. The landlord also must have been an amazing man, too, renting out the workshop seemingly free of charge – although in theory you could do a similar thing in your garage at home with a trolley jack.
Mike and Edd didn’t get off to a very good start, either. In their first year they made just £1,518 profit, and £956.50 in their second year. Their third year netted them just £203! But despite these gloomy profit figures, Mike and Edd have shown that you can indeed make money from flipping cars… just not enough to make a living off. So don’t quit your day job yet!
So, how can I do it?
Well, the main thing to remember here is you need to purchase a car for less (much less) than its market value. Invariably, this means the car will have one or more big-ticket problems, and its up to you to judge how much time and money it will take for you to fix them. If the purchase cost of the car and the repair costs add up to be higher than the car’s market value, then you’re setting yourself up for a loss. Remember, market value is how much other vehicles of the same make, model, similar specification and condition are selling for. Not simply how much people have them advertised for.
Secondly, you need to know what you’re getting in to. This means never, ever purchasing a car which is a non-runner. Perhaps the car doesn’t start or won’t even turn over, or the engine and other components of the car have been partially disassembled. Just walk away! If you can’t drive the car and it is in far from roadworthy condition, the risk of you selling the car at a loss increases ten-fold. You need to be able to at least take the car for a drive and try to ascertain what faults might need to be rectified. Does the steering feel loose? Does the engine pull well and gearbox shift smoothly? Clutch juddering? Any knocking noises from the suspension? Do all the electrics in the interior work well? These are just a few questions which can’t be answered on a car that doesn’t run. You’ve been warned!
Thirdly, you’ll need to work out to the best of your knowledge whether you’ve for the mechanical skills required to fix the issues you’ve identified. Paying a mechanic to do the work is expensive, and 9 times out of 10 probably would rule out any possibility of you being able to turn a profit. Doing the work yourself means more money in your back pocket come sale time, but you must be careful not to bite off more than you can chew. You’ll also need to consider the possibility that the car might have additional or more serious problems that you don’t know about.
Once you’ve decided on a vehicle to purchase, the next important step is to purchase it for the lowest price possible – and this is where the negotiation skills of Mike Brewer would come in handy! When speaking with the seller, don’t be afraid to identify the car’s faults and use them to your advantage in negotiating a lower price. Everything from bald tyres, dents or rust in the body, issues with the engine, suspension or interior are all items you can discuss. You’ll need to do some serious haggling, and if the owner is unwilling to budge on the price then be prepared to walk away. Your own money is at stake here, and there’s always more cars out there!
In an interview with Totalcar Magazine, Mike Brewer from Wheeler Dealers explained that he works backwards with every car, and why the Syrena105L achieved such a high sale price.
“We work backwards from the sell price of the car. So I always look to what we could sell the car for first before I go and buy the car and we do the mechanics in the interim. So, yes, the Syrena we sold for £8,000 because in Poland that car may only be worth a couple of thousand euros and be laughed at but in the UK where we have a large Polish community it’s a very, very popular car in the UK. It’s very rare but it’s a very popular car in Poland so therefore in the UK it’s got an intrinsic value. And the value was because of its rarity and because of how unusual the car was, it has that value attached to it. And every single person who comes and buys a car from us is absolutely genuine. And every car we buy from people is absolutely genuine. And why not, you know? That Syrena had a complete nut and bolt restoration done amazingly by Edd and we even got a nod of approval from your very own Polish Ambassador.” – Mike Brewer
I’ve bought a car! Now what?
Fantastic, now the really fun part starts. Or alternatively, your life becomes a living hell! You could start by giving the car a thorough clean and de-grease, so you can see more clearly what you have to work with. Giving the paintwork a polish might rectify or at least minimise some light scratches or slight imperfections, while car interior cleaners and leather treatment creams could do wonders to the vehicle’s interior. Any cosmetic items that can’t be improved might either need to be replaced or repaired.
From that point on, it is up to you to work out what items on the car you are going to either repair or replace, at all times working with the budget in the back of your head. If you purchased the car for $2,000 and the market value is approximately $4,500 to $5,500, aim to spend no more than $2,000 on your quest to get the vehicle roadworthy and in a sellable condition. In theory, you could at least get $500 profit for your troubles. You’ll also have to be prepared to mitigate your loss and sell the car off should you discover a major fault which could potentially blow your budget out of the water. There’s no point sinking more money into the vehicle if you’re never going to get it back! Should this happen, cut your losses and move on, or find another way to get your money back. Speaking with Totalcar Magazine, Edd China recalled a time he encountered such a vehicle.
“I think probably the most obvious example was the Suzuki we did a long, long time ago. And when we were doing that car the more work we did on it the more rot, if you like, or rust that we found with it. And so probably about halfway through we worked out that it was pretty clear it was never really likely to make it back on the road. And we tried very hard to do as much work as we could but we just couldn’t get on top of it in the end. But then what we did is change the buyer, if you like. So rather than trying to sell it as a car for the road we sold it to a farmer who used it on his field and therefore it didn’t have to go through the road test to make it legal on the road.” – Edd China
Mike Brewer added, “If you put the work in and you do it right there’s always going to be somebody at the end of the day that’s going to buy it and we always follow that process. We just keep pushing through, keep doing the best thing for the car and the right thing for the car. And ultimately you will find the right buyer for it. If you’ve put the work in somebody else out there will want it.”
When it comes to selling the car, don’t be afraid to hold out for the price you really want or need to achieve, unless there’s a good reason why you need to sell the car quickly. If you’re having difficulties finding a buyer in the current market and have spare storage space available, you could even consider storing the car until the market value improves.