A wholesale car is a vehicle purchased from an auction specifically for dealerships. Wholesale vehicles are typically used inventory dealers received on a trade-in that doesn't fit in with their standard inventory, or are vehicles that have sat on their lot for extended periods of time, taking up their floor plan.
For example, an Audi dealership might have a customer trade in a two-year-old Ford F-150 with 30,000 miles on it. While a nice truck, that is not the type of vehicle a customer shopping for an Audi would typically be interested in. So that F-150 might be going to auction.
When a car goes to be sold off to another dealership, it will be sent to one of the dozens of auctions around the country running on an almost daily basis. These businesses range from smaller local auctions to massive Manheim lots where thousands of cars run across multiple blocks each week. At these auctions, dealerships can purchase online or in-person, competing against other dealerships all over the country.
The cars at these auctions aren't just trade ins. Dealerships with vehicles that are struggling to sell often find their way to these auctions. The longer a vehicle sits on a dealer's lot, the longer it takes up the floor plan of the dealership, which might better be spent on a vehicle that will sell easier.
Dealers usually take a loss on vehicles they send to auction, but they are reliable ways to free up space for another car.
Car wholesalers purchase wholesale cars and resell them to dealerships for a profit. These wholesalers look for vehicles they believe are under valued, purchase them and sell them to dealerships - either directly or at local auctions - pocketing any profit with the sale.
These wholesalers act as the middle men for many dealerships, many willing to pay a small premium to purchase vehicles from wholesalers they trust and have built relationships with.
As we have car wholesalers on staff who browse thousands of cars every day and we can task them with finding a car for you! If you're interested in this free service, head on over to our CarFinder and submit a request. If you need help deciding on a vehicle, check out our guide here.
Dealerships that sell vehicles at wholesale prices like Car City Wholesale's vehicles offer the same quality vehicles at competitive prices.
The definition of a wholesale vehicle dealer may vary slightly though there are many similarities. All of the definitions begin with the basic premise that a person selling vehicles to dealers must be licensed by the jurisdiction. A wholesale dealer can only sell used vehicles and only to licensed dealers and cannot engage in the retail sale of vehicles to the general public. In most jurisdictions, laws allow wholesale dealers to purchase vehicles from anyone and also permit the sale of vehicles to licensed dealers in other jurisdictions.
Many jurisdictions require a wholesale dealer to have a physical presence within the jurisdiction where records are kept and can be examined but do not require a vehicle display area. In some cases the jurisdiction acknowledges this may encourage several wholesale dealers to co-locate and therefore they restrict the number of wholesale dealers in one physical location. Once jurisdictional law defines wholesale dealers and the transactions they are permitted to conduct; the laws, rules, and policies further define the jurisdiction’s license application process and licensing requirements.
AAMVA has a white paper summarizing the challenges and provides some steps jurisdictions have taken to overcome them. The whitepaper was developed by the Internet Vehicle Sales Working Group
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