From the May 2018 issue

A $30,000 Bentley Continental Flying Spur emits a siren call, even from behind a razor-wire fence at an un-Googleable used-car dealership off a pitted secondary street en route to the airport. It is called something like “EuroLux Motors” or “LAXotics,” if it even has a name at all. If you follow your basest instincts and mosey onto the lot, might a magic subaltern world of affordable ultraluxury vehicles reveal itself?

Not exactly. You will be greeted by a salesman who will emerge, smoking, from a cramped trailer. He will be wearing studded jeans and windshield-sized Louis Vuitton glasses and sporting eyelash extensions. He will look at you suspiciously, as if you’ve just wandered into the delivery room in which his sister is giving birth.

When you ask how a car with a list price of $200,000 or more, a car meant for titans of industry and the tightened of facelifts, ended up here, priced like a mid-level Malibu, he will rattle off a highly inaccurate list of the Bentley’s standard features. When you ask about a test drive, he will say he doesn’t have the keys. When you ask who does, he will stare at his phone, which has a flip-out keyboard and is turquoise, until you stop asking. Looking more closely at the Spur, you will wonder if the front end is starting to sag before your eyes, like an ice-cream cake left out in the sun.

Despite the allure of your imagined baller lifestyle, you will decide it is better not to suggest a no-cash trade on your 2016 Grand Cherokee. But as you drive off, you will ponder, nearly existentially, where that Bentley has been and where it is going.

Car and Driver

It is not only accepted wisdom that new cars depreciate in value, it is proven. This holds even for ultraluxury cars, though the absolute amount they depreciate each year is significantly higher than average, due to their higher initial prices. The big difference is in the depreciation curve. According to Eric Ibara, director of residual value consulting for Kelley Blue Book, within the first year of ownership, an average car may lose as much as 38 percent of its value, a decline that continues through a vehicle’s seventh year, when it’s down to about a quarter of the original retail price. In comparison, high-end vehicles such as Rolls-Royces and Bentleys hold their value at a better rate initially but lose more of their value after seven years.

“The demand for these vehicles is all toward the newer end of the supply chain,” Ibara says. “Whereas with a mainstream vehicle like Camry, it’s more evenly distributed.”

This is a market result reflecting the motivations of ultraluxury car buyers. “These are what I would call flavor-of-the-moment ego cars,” says Keith Martin, collectible-car-valuation expert and editor and publisher of Sports Car Market magazine. “So you buy them because they make you look good. And when the next model comes out, or the model after, suddenly you’re not making the same statement of success that you were before.”

Compounding this steep later-in-life depreciation for vehicles of this sort is the fallout from their brands’ own recent success. Since the Germans took possession of this elite British segment of the automotive market, they’ve streamlined product development and increased production significantly. (Rolls-Royce and Bentley were sold to Volkswagen in 1998, a complicated deal that resulted in the formerly joined brands separating and BMW assuming control of Rolls-Royce in 2003.)

“In 2003, Bentley sold just a few hundred cars here,” says Fadi Elias, who’s worked with vintage Rolls-Royces for more than 30 years and owns Classic Motor, a tidy and well-reputed shop in the Los Angeles suburbs that specializes in such vehicles. “In 2004, the company sold thousands.”

In fact, Bentley’s U.S. sales peaked at nearly 4000 cars in 2007. Rolls’s numbers were smaller, but it consistently sold twice as many cars in the U.S. in the late Aughts as it did at the decade’s start. These vehicles have since left the heated garages of their original pampering owners, or found their way off-lease, or sailed past secondary ownership via a franchise dealership’s certified pre-owned program. They have exited warranty coverage and dealer servicing and have thus entered the phase of their lives where they are simply used cars. And there are a lot of them.

Capitalism often works in predictable ways. With a glut of vehicles in supply, and with demand clustered around a relatively small number of well-maintained, low-mileage recent models, prices on average have dropped. “In the past two or three years, I would say the market for these cars tanked by about 45 to 50 percent,” Elias says.

This descent has had an interesting effect on the market for older Rollers and Bentleys as well. These cars might have typically rebounded from the nadir of their depreciation curve and begun their voyage toward the higher prices associated with collectibility. But with abysmally low prices on newer cars, vintage British luxury is also declining. “A 1982 Silver Spur, a 1985 Spur, a 1977 Shadow, a 2000 Arnage . . . they just have no value,” Elias says. It saddens him, since he’s been dealing with these cars since his childhood, when his family ran a Rolls repair shop in Lebanon. “They’re not desirable anymore because the Bentley [Continental] GT came out in 2004, and it killed the older cars. A guy will tell you, ‘Why should I buy your 1989 Rolls-Royce when I can go out and buy an ’04 GT for $35,000? What am I going to do with this old beater you have?’ ”

Even good “no stories” examples of these later-model cars at their depreciated and discounted prices aren’t exactly bargains. One major challenge of buying a $200,000 car for $30,000 is that it’s still a $200,000 car at heart. Parts, service, and labor are priced at extortionate levels. And as these vehicles find their way downmarket, they often reach consumers who are less likely to be able to afford to have things done properly. Routine annual maintenance for these vehicles is in the mid-four-figures, and that’s if nothing breaks. To fix the third brake lamp on an early Bentley GT can cost a few thousand dollars. A new convertible top runs five figures. “I would be willing to bet that in any of those lots where you see those cars for $25,000,” Martin says, “there’s probably $20,000 in deferred maintenance sitting in every car.”

Of course, a complex, hand-built car can suffer worse fates than neglect before landing on the lot of a less-than-reputable dealer. It could have been involved in accidents severe enough to cause airbags to deploy. Or stolen, stripped, and recovered. Caught in a fire or flood. Maybe even grafted together from two damaged vehicles. Some of these troubled cars come to dealers’ lots via insurance auctions, a subcategory of the wholesale business. The auctions sell vehicles that have been written off by an insurance company, meaning the vehicle’s damage is more than 70 percent of its value. Insurance companies recoup some of their payout by selling the remains. Though these auctions have typically been open only to registered dealers and repair shops, online versions have opened the door to average consumers through websites such as autobidmaster.com. “We are the middlemen between the auctions and buyers,” says AutoBidMaster founder Yury Strachuk. “We basically provide a license to bid at the auction.”

This has expanded entry to a new cohort of profiteers, since salvage cars can sell at a 50 percent discount compared with cars with clean titles. “They buy damaged vehicles; they know how much it will take to put them into a retail-ready condition, and then they just specialize in it,” Strachuk says. “They repair them, the cars pass all the inspections, and then they sell them to dealers.”

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In California and most other states, dealers are legally obligated to disclose if a vehicle has a salvage or rebuilt title. But even the California Department of Motor Vehicles’ website says that “the law is difficult to enforce.” This is especially true if the car comes from or has been retitled in another state with different rules.

We visited a number of Los Angeles dealerships with cars like these on offer, and none of the salespeople (or websites) were forthcoming about the cars’ troubled pasts. Caveat emptor! At one local lot, we inquired about a 2006 Continental Flying Spur with 80,000 miles. The salesman informed us that the Spur was totally clean, with low miles and no accidents. A quick Carfax search revealed that it had suffered a significant side-impact collision. At another lot near Hollywood, the salesman refused to talk on the record about the 2008 Continental GTC he had for sale. The car was advertised as having a clean title and ice-cold air, but no mention was made of any frame damage, which Carfax reported. “We’re here to sell cars, not to do radio or TV interviews,” he told us.

Elias from Classic Motor says more-scrupulous dealers won’t deal in troubled or salvage cars. “No bank will touch it, and you’re going to have a hard time insuring it, too. And when a customer calls, it’s too much explanation,” he says. “And then if you put it on your website, and it shows ‘salvage,’ people will say, ‘Oh, this guy has one salvage car. Maybe everything he has is salvage.’ It’s just not a good reputation for us.”

Car and Driver

Given all the potential pitfalls, who is buying these cars? When we asked this question at one Los Angeles lot, the salesman said, evasively: “I have customers everywhere. I can sell to next door. I can sell to New York or overseas.”

He was not being hyperbolic. “When you’re talking about discount dealers that more or less have a wholesale setup, they will usually be right by airports,” says dealer and auctioneer Steven Lang. “The reason is, you can fly in, get what you need, and go.”

Such businesses thus often cater to an international clientele with different standards. “They usually go overseas, because salvage to them is the same value,” says Elias. “They go to Dubai or they go to China.”

The global export of rough, inauspiciously titled, U.K.-built, American-abused ultraluxury cars may seem like an unlikely and cost-ineffective prospect. But it makes more sense than you might imagine. The U.S. market for these cars has long been the largest in the world, so quantity is high, which, as previously discussed, deflates the price. And as it turns out, shipping is crazy cheap.

“To Europe, for just one car, you’re looking at about $1500,” says Rigo Zavaleta, sales executive with the Port of Los Angeles–based shipping company Direct Express, which specializes in transporting high-end vehicles overseas. “To Asia, it’s actually a little cheaper. You’re looking at anywhere from $800 to $1000.” It can cost more to truck a car to Detroit from South Dakota.

What happens to these vehicles when they arrive at their overseas destinations? They’re often further repaired and resold by local dealers. “They tend to focus on higher-mileage vehicles, because they can usually roll back the odometer and not get killed for it,” says Lang. “They rely on cheaper labor to do fixes on the vehicles. You’re not going to have someone who is certified to work on that particular brand.”

This sentiment is echoed by AutoBidMaster’s Strachuk. “You take a car to the Middle East, to China, to Asia, and the type of document that it sells with is a branded title. A branded title means that a vehicle has been written off. But it doesn’t really matter for them in those countries. Plus, you get new documents. Each country has its own set of titles.”

The lesson here is clear: Rather than stopping in to shop that clapped-out 21st-century Bentley or Rolls, allow it to continue its degraded, end-use ride toward Cairo or Manila, like so many bundles of recycled T-shirts. Instead, maybe consider a classic Rolls or Bentley from the last few decades of the 20th century.

“[The lower-volume cars] used to be desirable 10 years ago. We used to sell them for 100 grand wholesale,” says Elias. “Now they’re 20 grand. You can buy a Bentley for 20 grand! I think that’s a bargain. You can’t even buy a [new] Kia for 20 grand.”

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