Three Ways Used Car Wholesalers Make Money

1. Auction to Auction

Some guys spend their life buying cars from one auction and selling at another auction. For example: there are a ton of guys who buy cars up north and bring them down south to sell them for a profit. It is very common to find cars from Massachusetts or Michigan at sales (auctions) in Atlanta or Dallas. If you can just make a $300 spread and sell ten cars a week – not a bad living! How can you research this price discrepancy?? This is worth the price of this course many many times over. Ready for this? Get your pen out and write this down. Highlight this next sentence! Go to manheim.com and do a market segment comparison!

For example: Use the MMR (a tool for car dealers only) to look up what three year old Camry’s sold for at Manheim Auto Auction in Lancaster, PA and see what three year old Camry’s sold for on Atlanta, GA. Calculate a few hundred bucks in for transportation and few hundred for auction fees and see if you can buy Camry’s in PA and sell them in GA for a profit OR visa-versa. It is done all the time – especially with diesel trucks!

If you find a market fluctuation of $700 on a particular car, can you can buy a truck load (nine cars or so) you could make $6300 on one truck load in one week! Make sure you calculate your travel costs! You also have to have access to a large floor plan or cash to make this work.

Some guys will even have full detail shops to clean the cars before they are taken to the next auction. These detail shops are on their land! They hire some guys to detail the cars once they land. These guys work their butts off! Pay them well and give monthly bonuses if you did well! Some wholesalers have a warehouse to park their cars – especially if they specialize in high line cars.

2. Auction to Dealer

There are guys (and gals) who buy cars at auctions and sell them to dealers. Most of these cars are pre-sold before the wholesaler ever bids on the car.

For Example: Let us say auction day is Wednesday. On Monday or Tuesday the wholesaler calls or stop by all the car lots he knows the UCM (Used Car Manager) pretty well. He asks what the dealer needs. They discuss what he needs in inventory and the wholesaler basically gets a list of what the dealership MIGHT be interested in buying. So, he arrives at the auction on Tuesday, the day before the sale. He gets the “run list” (list of cars running through the auction) and highlights what he is looking to buy so he can resale to his network of dealers. Then he walks the inventory and inspects every car meeting his parameters. After he walks all the cars, he goes to dinner and looks up the wholesale money for the cars. Maybe log onto manheim.com to do a market comparison. Then he calls his dealers and “calls the car” to the UCM (we will discuss calling the car later in the full study coruse). Then talk about the “money” on each car. The UCM will want to know if there is a title present on the car. This information you MAY know and may not know at this time. He might be willing to pay a hundred or so MORE for the car if the title is present! Make sure you discuss this especially IF you are selling the car to a dealer in a state that requires him to have the title present BEFORE he can retail the car!

The UCM will give you a BUY BID on each car. Usually the buy bid is a little MORE than he would pay for the car at the sale himself. Why would he be willing to pay more? He is not investing his time, effort, or money into going to the sale. So, you doing his work for him is worth something! Right?

Now, assuming you called the car correctly to the dealer, the dealer is an owner if you can get the car to him for the buy bid or under. Of course, your goal on Wednesday is to buy the car for LESS than the buy bid so there is room for you to have a profit! The spread between your buy bid and what you have in the car (what you paid, auction fees, and transportation) is your profit. Make sure you include transportation fees and auction fees into your numbers!

Immediately after the sale, call the UCM’s and tell them what they will be getting and the money on each car and which cars you have titles for. Get the car to them ASAP with all the paperwork ready and hopefully title in hand! Make it easy for them to sign and get out of there.

Now… the DREAM wholesaler job in my opinion works like this: A wholesaler has a deal with a dealership or dealership group where he buys cars for the dealership for $200+ or so a car. He buys 10 – 40 cars a week. Not a bad living! It takes years to get a deal like this! Don’t hold your breath for this to come anytime soon. Just know it exists.

Another way: Buy (LOTS) of cars at smaller-obscure or far-away auctions and have them in a holding pen. Dealers will come to your lot to buy cars. Have some old men drive the cars once they are sold. I know a couple guys who do this is note cars (cheap cars) and make a killing.

3. Dealer to Dealer

There are guys who run all over town buying & selling cars between dealers. To me, these guys are the true ‘whores’ of the business (pardon my language) but its how I feel. They work so hard for their money but they can make a killing once they develop a strong reputation. They can do all their deals over the phone and have their porters (guys who drive cars for them) deliver the car, paperwork, and pick up the check. I find these guys to be the best schmoozers and bull shit artist on the face of the planet. In my experience, I usually don’t trust this type further than I can throw him. You have to know what YOU are doing so you do not buy something you don’t want or need NOR do you want to pay too much! Be on your toes. These guys are hustlers, movers, and shakers. Stay up or you will get caught with your pants down!

Its common to make few hundred a car. Top guys move 20-30 cars a week. Do the math…. NICE!

There are OTHER ways too….

Success!!
George Dean