Wholesaling Used Cars: The Ultimate Dealership Guide

Even the best dealers will experience this at some point. You can’t sell a single unit despite analyzing market data, using new technology, and motivating salespeople to move older inventory. You may have accepted a trade in that didn’t fit your inventory mix. You may have accepted a trade-in with high mileage in order to get a retail price.

You should then start to consider your options when it comes to wholesale used cars.

Why wholesale is a better method of selling used cars?

Wholesalers purchase vehicles from auctions or dealers who are struggling to sell them. Then, they sell the vehicle at a substantial profit.

The wholesaling of trade-ins can be seen as an essential evil to manage inventory. It allows you to move older units and free up money. The way cars are sold wholesale differs from retail sales. The goal is to move the unit as quickly as you can and minimize your loss. It used to be that you would call wholesalers and see what they had to offer, or take the vehicle to an auction. These limited options are neither cost-effective nor efficient. You might also have to offer an inventory bundle to get rid unwanted vehicles. This can lead to long and time-consuming negotiation.

Online channels make it easier for dealers to sell used cars and increase their profits.

How is the wholesale value of a used vehicle determined?

Wholesale price can be used to describe a car’s value, but it is also the price that a dealer will pay for a vehicle at an auction or from a manufacturer. This measurement translates to a dealer’s costs, the total pre-sale investment in a specific car. Profit margin is the difference between the asking price of the seller and the cost. This profit margin is sometimes higher than the one for a brand new car.

The wholesale value of a vehicle is determined by:

  • Vehicle condition: Whether the vehicle is in good, fair, or poor condition.
  • Model year is the vehicle’s age.
  • Kelley Blue Book and Edmunds value databases provide the current estimated value of a vehicle.

The rise of smartphone applications and the evolution of wholesale car dealerships

Even for those in the auto industry, wholesaler auto dealers have been a bit mysterious. The wholesalers take inventory that the dealership cannot sell and find another dealership willing to purchase it. How do wholesalers earn money is a question that people ask all the time.

Wholesalers who are successful can sell used cars at wholesale prices largely due to their ability to value used vehicles. Over the years, they’ve built up a dealer network. They know how much a wholesale vehicle is worth on the lot of a particular dealer. Another factor that helps traditional wholesalers to remain profitable is low overhead. Wholesalers in some states don’t require a storefront nor insurance. The only thing they need is a wholesale license, and the capital necessary to purchase their first car.

After a few bad experiences, many dealers have lost trust in wholesalers. Dealership owners may also have to deal with time-consuming negotiation and checks that bounce if the wholesaler is unable to honor payment. The industry is changing, and the wholesalers are no longer supported in the same way they used to be.

Dealers now have more power because they can access information. Online, there is a wealth of data on car sales that are up to date and updated every day. Used car managers have been able to level the playing field between wholesalers and used car managers by increasing transparency.

Online auctions have also changed wholesalers. Traditionally, wholesalers and auto auctions were considered to be more cost-effective. Wholesalers who sell at physical auctions have to transport the car and compete with other dealers to attract the attention of the few buyers.

Online auctions has completely revolutionized the process to the benefit of dealerships. The vehicles don’t need to be at the auction site and there is a much wider pool of online buyers. The advantage of selling older inventory to a wholesaler has been diminished by this new option.

Apps that are geared towards the customer have been introduced to the wholesale car business.

How do wholesale car dealers make money ?

Three methods are most commonly used by automotive wholesalers to make money.

Auction to auction

The wholesaler buys vehicles from auctions to try and resell at a profit in other auctions. Relisting and reselling is a simple process, thanks to the swings in values of certain models and to the ability to do an automotive detailing or restoration.

Auction to dealer

The wholesaler buys vehicles at auctions, and then resells the cars at a profit back to used car dealers. The business model is similar to auction to auction. It takes advantage of fluctuations in value and demand, and fixes up the auction finds.

Dealer to dealer

This involves purchasing used cars at dealerships, and then reselling them for a profit to other dealerships. Dealer-to-dealer work is often conducted by phone, and porters move cars.

Wholesalers can make money using each method. When done in large quantities, this can lead to substantial weekly earnings. These are only a few examples.

How can I find wholesale vehicles?

Traditional auto wholesales are based on relationships formed between dealers and used car wholesalers. Finding people who you can rely on to accurately represent a car, provide a fair price, and keep their end of the bargain is key. To find the best person to sell the car, you have to call and send out several feelers. Both sides are prone to getting burned.

Dealers who didn’t have strategic partnerships used to find it difficult, time-consuming and more risky to sell wholesale cars.

Some professionals who have been in business for many years know the best way to wholesale cars. Many dealerships prefer digital strategies to handle wholesale cars.

How to use an auction app to wholesale used cars

Wholesale car sales are vastly different than they were a decade or so ago. Wholesalers have noted that 20 years ago, the Internet was a game-changer. Apps that are available on tablets and smartphones have become the next big wave of innovation.

Carvana and other large tech-based companies introduced the concept of app-based solutions, which quickly caught on. Dealers are no different from any modern consumer. They’ll use the smartphone option if it’s quick and convenient.

You can also be assured that you will minimize your loss or make a profit, compared to dealing with wholesalers one-on-one and traditional wholesale auctions. The app’s representatives first come to the dealer to create a detailed auction listing. The data points on your inventory allow other buyers to make confident purchases, which results in better offers. The dealer may choose to make a counter-offer or accept the highest bid after the online live auction. This allows them to get the price that they believe is fair.

Our app is also cheaper than other apps. In the past, physical auctions for wholesale cars charged steep fees which made it less profitable for both buyers and sellers. Online auctions run through apps are much cheaper to operate and pass the savings on to sellers as lower fees.

We are maintained its position as the top online wholesale marketplace for dealers by offering time-saving and money-saving apps like an app. It’s because the wholesaling of used cars is a $15 billion dollar industry built on saving dealers money and time.

How to buy cars wholesale and sell them retail

The apps aren’t only used by dealers to get rid of old inventory. The apps are also used to locate wholesale vehicles that fit their market.

Dealers have more control of their used inventory when they know how to purchase wholesale cars, without waiting for a local distributor to locate what you require. The app doesn’t replace the traditional wholesalers, who always seem to find a way of getting a share of the action. Auction apps allow used car managers to easily see what wholesalers are offering, making it easy to fill in inventory gaps. This creates a more fair marketplace by leveling the playing field.

Wholesalers and dealers who buy dozens, or even hundreds, of vehicles each month must be confident about what they are buying. Our team of auto inspectors creates detailed condition reports, which are almost as good as seeing a car in person.

New wholesale auctions fueled by dealer app experiences

App wholesaling is a solution that has been adopted by many in the industry.

Dealers have noticed that the app is:

  • The wholesale car auction is made easy with a streamlined process.
  • This allows dealers to spend longer on the lot, while still acquiring and selling more wholesale vehicles.
  • Transparency in wholesale purchasing and sales.
  • Send notifications to alert you when a new bidding session is about start.
  • Reduced fees encourage more business.
  • Has a live dealer representative providing customer service.
  • No more “day of the sale”
  • The condition report and detailed descriptions make it easier to buy out-of-state.
  • It is easy to find a good value car with the large selection available.
  • Includes arbitration and dispute resolution support.

We revolutionizes the auto wholesale industry, one online auction at time. This is a simplified auction platform designed to help wholesale vehicle dealers buy and sell vehicles at any time, from anywhere.

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