Why dealers send cars to auction

The dealer may need the physical space on the lot and or need the working capital in preparation for the busy season ahead. Many dealers simply need to reach a certain dollar number in sales every month to satisfy investors, accountants, finance companies or banks, etc.

In that respect the car auction is like the stock exchange, it turns the cars into cash really quickly, however, the dealer may not like the price. Like clothes fashion, car colors come in and out of vogue. Our tastes in cars are always changing, and they often change really quickly. So imagine a dealer with a ton of Sedans and not enough Crossover style cars.

There are certain types of cars dealers absolutely love to buy and some they hate. You have to remember dealerships make a good bulk of their profit through the sale of used cars. They actually make more profit on each used car sale than they do on a new car. So that means they're usually eager to buy your trade-in and replenish their used car inventory.

Generally, there are 3 things that dealers can do with your trade-in. Recondition and Sell It Dealers are always looking for cars they can sell on their lot - but not every car will qualify. If your vehicle is less than 6 years old and has less than 80, miles, it's a good candidate to be resold on the lot.

The dealer will recondition it to make sure all the visibilly worn parts are repaired or replaced and that it passes smog tests and any other state requirements.

If the car is only 3 or 4 years old and has less than 50, miles, it's a good candidate to be resold as a certified used vehicle. It will go through a strict multi-point inspection and usually come with an extended warranty. Dealers simply LOVE late model used cars, so if you have one, make sure you aggressively negotiate with multiple dealers to get the best price. Wholesale It If a dealer doesn't think the car is a good fit for their used car lot, they will usually try to wholesale it to another dealer.

This usually happens if the vehicle is older or has a lot of miles, or if the car is a different brand than what the dealer sells. Private auctions are only accessible by car dealers, not by the general public.

This is the type of auction that a used car dealer will typically go to for inventory. Some auctions are now held online, and they allow people to buy the car virtually. Buyers register for the auction site to join and use the site's information to choose their car. The US customs service or another government body may also hold auctions. These auctions are meant to sell off excess or old vehicles that were impounded or seized.

Police or government agencies may also use auctions to sell off their fleet of vehicles when they upgrade. While some low-end auctions sell troubled cars, most cars at auctions are high-quality used cars. This is especially true of the private auctions that many dealers attend. Compared to an average car buyer, a dealer also has a better eye for vehicles and can quickly assess feasible options. They're also likely to get the cars repaired and cleaned up so they can sell them for more.

However, it would be best if you still were careful when buying a car from a dealer that came from an auction.

Here are some things you should do to ensure you get a quality vehicle:. One of the major benefits of buying a car from a dealer from an auction is the ability to negotiate.

First, pay attention to the window stickers. Both of those stickers indicate that the price adjustment could be to sell the vehicle for a larger price without a clear reason. Either way, you can use the knowledge that the car came from an auction to your advantage. If the dealer bought the car from an auction, there's a great chance they got a huge deal on it, which means they will have more room to negotiate.