How do Dealer Wholesale Auctions work

[Computron]

Hi guys,

I've run into several situations that have made me wonder how used cars that don't sell on dealer lots get disposed of. It seems like the dealers turn to Dealer Wholesale Auctions to sell them off after a used car has sat on their lot for a while unsold. Is this correct? If so, how does that auction process work?

I'm asking because I have been looking recently for a 2011 or 2012 Acura RL and two different dealers on two different cars have both refused to sell their car to me at the Kelly Blue Book Private Party value and are sticking pretty much to KBB Retail value. The cars sit on their lots unsold (because the RL is not in such hot demand) until eventually I thought the cars were sold, but then I find out they were sent to auction instead. I CANNOT BELIEVE that they can get a better price at auction than the KBB Private Party price, so why would they do that over selling it to me?? Is there something I am missing? Do they get a break somewhere or kickback somehow or tax advantage or something? It just doesn't make sense to me. I thought I would get my price when they realize that used RLs don't sell very well on dealer lots, so I wanted to wait them out. But I was wrong... they got rid of the cars via auction rather than sell to me.

Can someone with experience in this area enlighten me? Thanks a bunch!

 

[skafia]

Maybe they get better pricing when sold to wholesale dealers at volume.

 

[Computron]

Maybe they get better pricing when sold to wholesale dealers at volume.

You think the cars are sold as a lot, rather than individually? That seems kind of risky considering they could throw a junker in the mix.

Has anyone here ever worked at a dealer or have experience buying and selling at dealer wholesale auctions?

 

[skafia]

This article has good information on wholesale dealerships and it supports my theory above. Dealerships will sell the unsold cars to wholesale dealers and wholesale dealers will try to flip the better cars to other dealers and the unwanted ones go to auction.

https://answers.yahoo.com/question/index?qid=20091015155439AAHe5bX

 

[Computron]

This article has good information on wholesale dealerships and it supports my theory above. Dealerships will sell the unsold cars to wholesale dealers and wholesale dealers will try to flip the better cars to other dealers and the unwanted ones go to auction.

https://answers.yahoo.com/question/index?qid=20091015155439AAHe5bX

Wow... thanks for the link. That's very enlightening. So it seems like dealers use the better cars as an incentive against the crappier ones they want to get rid of and makes the wholesaler take them all as a lot. Then I guess I can see why they may not lower the price enough for me to take it off their hands. Still sucks for the end buyers though!

 

[nsxtasy]

two different dealers on two different cars have both refused to sell their car to me at the Kelly Blue Book Private Party value and are sticking pretty much to KBB Retail value.

So you're surprised that dealers would expect to sell their cars at a fair retail price? I'm not. I'm surprised you expect dealers to sell you cars at a price far less than retail. If you want to buy a car at the private party value, maybe you should look for one from a private party.

Incidentally, KBB is often wildly inaccurate. NADA is a better barometer for dealer pricing.

 

[Computron]

So you're surprised that dealers would expect to sell their cars at a fair retail price? I'm not. I'm surprised you expect dealers to sell you cars at a price far less than retail. If you want to buy a car at the private party value, maybe you should look for one from a private party.

Incidentally, KBB is often wildly inaccurate. NADA is a better barometer for dealer pricing.

I'm not surprised if the car is a popular one in hot demand. But for a not so popular one that no one is really shopping for, I thought the price would just continue dropping until they get a buyer. I didn't realize they have this other avenue to get rid of their cars rather than lowering it to private party levels.

As for KBB and Nada, yes, I know typically the dealers use NADA to value your car when you trade in, but they don't use NADA on the selling side. They know NADA has lower values compared to KBB. So when they quote value for a car they are selling they use KBB and won't budge. Sucks.

 

[guanacoracing]

This just posted over at Jalopnik...

http://stevenlang.kinja.com/the-dee...-markets-dictate-which-br-1688784105/+pgeorge