How much do dealers save at those huge auto auctions?
How much below blue book value (on average) do used vehicles go for at those huge dealer auctions? I’m thinking about buying some land and starting a new career as an used auto dealer.. Any insight from dealers would be appreciated!
The old adage you get what you pay for?? Same is true at auto auctions. Auto auctions for dealers are just like buying a car anywhere. I love when a customer tells me they “know someone in the business” that will take them to auction and tell them they should go they will probably get a great deal ;)
Fact of the matter is many buyers from the dealer ships are guys that have been on the biz 20+ years. Say you find the elusive “cream puff” that grandma kept in the garage and is 5 years old and only has 10k miles. The price gets bid way up and it becomes a case of who is going to sell it for the least amount of profit. A car like this more than likely would run like a champ. Being in Florida if we had price may be above KBB on the lot as this is a cream puff, from Florida and it commands a premium due to low miles.
Many of the cars are junk we know we are shipping to auction when get as trade in’s. Smaller lots ( buy here pay here) shine em up, throw them on the lot and bad credit people pay more than they should due to bad credit and they can’t get financed from a major dealer. When the car breaks down, they stop paying and credit gets worse.
In between ones, you may purchase and spend 1500-2000 to get lot ready ( repairs, cleaning, tires, painting etc.) than it depreciates on your lot every day. You seldom get a lot ready car at a dealer auction.
It is a tough business for someone with no experience at all ( but not impossible). If you have the capital, I would see if I could like find a retiree that was in the business that could guide you for a while to help you learn what you are doing. There are locally some decent small dealer ships that strictly sell used and have a fantastic reputation. That would be your best bet as you will have to get a great reputation to compete with the big guns. Good Luck.
at auction a 3 to 5000 dollar car could got for 500 to 1000 dollars. there is a big markup on the used car market. But the business is at the bottom of the food chain, as there needs to be government regulations on the entire industry. deception and lies are what that that industry is made of.
First it depends on which State you are in. Different dealer laws. Also, my suggestion would be to work for a used dealer first, there is a lot more than doing well at the auction. BTW, I see the new comers get skined (at auctions) by the guys who have ‘paid their dues’.