Speaking as someone that has been on both sides of the car business, referring to retail and remarketing I have to say that I am continuously amazed.  I get to speak to used car managers, general managers, dealer principles, wholesalers and rewholesalers on a daily basis in several states.  What I have become aware of is the amount of effort, money and training that is expended in the new car environment to increase profits.  How can we get more gross in the front end?  What can my F&I department do to get another hundred dollars per copy?  How can we sell more service?  The one thing that is almost never addressed is minimizing wholesale losses or even managing to turn a wholesale profit. 

I would call it a combination of tunnel vision and following the path of least resistance.  Just as different banks help you maximize your profit on different customers, different wholesale avenues help maximize your return on trade vehicles or aged inventory. 

Wholesalers can be convenient.  They come right to your door, pay you for vehicles sometimes without even requiring the title first. That service comes at a price.  A large portion of the vehicles sold to wholesalers show up at local auto auctions.  These cars have sometimes been shaped, money has been spent on transporting them and on the sellers fees at the auctions.  With all the added expenses involved the majority of those vehicles are still being sold for a profit.  The two main reasons cars are sold to wholesalers are as follows.  They will pay more than a car is worth occasionally when you make a mistake appraising a car.  Some UCM's actually think its good will but its reallly because when you take in a trade right or even behind book they are not paying what they should for those vehicles.  That leads me to reason two, accountablity.  It is very hard to judge how well your managers are appraising cars and structuring deals when they manage to break even on almost every trade including the ones you should be turning a profit on.  I have talked to dealers that do not actually separate trade value from ACV.  Therefore whatever ridiculous number is giving for the trade becomes your ACV so that they can show a profit on a deal that is a loser.

Working for an auction I still will not say an auction is the perfect outlet for every trade in or aged unit on your lot.  What I will say is that it is the best outlet for most.  Most auctions give you the option of not only running cars in dealer consignment lanes but also blending your vehicles in bank and manufacturers lanes.  By actually taking the time to look at each vehicle you will be surprised at how much money is being left on the table.