Wholesale or Retail?

I was recently talking to a dealer friend of mine, and they were telling me how difficult it is to buy used cars these days and in the same breath, they turn around and tell me how much they are making in wholesale profit. I was taken a back, if they are having such a hard time buying cars, why are they wholesaling them.

I couldn’t help myself, I had to ask them that exact question. They proceeded to tell me that the vehicles they were wholesaling required too much reconditioning in order to be front-line ready. This immediately made me think about when I used to wholesale vehicles that required too much reconditioning, that I could flip on the wholesale market for a quick buck.

The year was 2009, and I was the Used Car Manager at a Nissan Store in Northern California. I had just started working at this dealership a few weeks prior. At this point in my career, I had a lot of experience work with used cars, and I felt I was pretty darn good at my job. However, I was about to learn a valuable lesson that was going to make me a whole lot better.

The dealership I was working for was a part of one of the big publicly traded automotive groups and they has a Used Vehicle Director that was visiting the store to meet and get to know me. After a few pleasantries the UVD wanted to take a walk and look at the vehicles I planned to wholesale. Which was not many, in fact it there was only one. 

Outside we went to the back lot where our trade-ins were parked. We walked up to the one vehicle marked for wholesale. This vehicle was a 2001 Nissan Altima. The Altima was gold with completely oxidized paint, and a drive’s side window that was hanging off the track. The one thing the car had going for it was it had only about 50k miles on it.

As I grew up in the car business, as a used car manager I was trained to recondition used vehicles to the best condition possible. After having this Altima checked out by our service department, with the cost of the smog and safety, an acceptable paint job, and repairing the window the costs of completing the repairs plus the actual cash value, our total cost would be well above retail value. So, naturally, I marked the vehicle for wholesale, expecting to make a quick buck.

After walking around the vehicle and asking me why I had marked this vehicle for wholesale, my UVD told me, to “RETAIL IT.” Quickly, I protested with all the facts and costs about the reconditioning the vehicle needed. The UVD responded with, “I did say fix then retail it. I said retail it. Just make sure this vehicle passed state smog and safety laws, otherwise sell it as is. And disclose all repairs the vehicle needs that were declined.”

Reluctantly, I agreed, I mean, he was my boss. So, I changed the vehicles status from wholesale to retail and checked the vehicle into the shop to complete a smog and safety only. Meanwhile thinking the entire time, I thought to myself, “This car is never going to sell in its current condition. The UVD will be wrong on this one.”

The very next day, the Altima is out on the lot and a customer comes in asking for a lower price range, like under $5k. When the salesperson came to me, I told them about the Altima and went and had a conversation with the customer. I proceeded to tell them about all the benefits car, the repairs we did, and the ones still needed. The customer asked about fixing the window. I showed him the estimate from our service department. The customer responded with, “Can I get this fixed for this price?” I said of course. They responded with, “So I can pay the $4995 plus tax and license, plus the cost of repairs for the window and drive this home.” I replied, “That’s correct.” They then replied with, “I’ll take it.”

After the customer completed the paperwork, the customer took their new to them Altima, pulled into our service drive and proceeded to get written up to repair the window. I could not believe it. I felt like I was being set up or pranked. However, I was actually being taught a valuable lesson, as my father used to say, “There is an A$$ for every seat.”

Retail Everything

8 Benefits of Retailing Everything

Every vehicle that you send to auction is going to be retailed eventually by someone. Why not you? Here are 8 benefits of retailing everything that can be retailed.

  1. You Gain a Customer
  2. You Service Department Gains Additional Work
  3. A Salesperson will Earn a Commission
  4. Potential for additional profit through retail
  5. Potential for finance profit
  6. Potential for a trade that can be retail and restart the process
  7. Potential for Repeat & Referral Business
  8. One Less Car You Have to Fight Over at Auction

Now I am sure there are even more reasons to retail everything, but this list is a good start. The next time you are thinking about wholesaling a vehicle, think about how you can retail it. The more you retail, the better for everyone.  



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