Managing inventory has traditionally been a time-consuming process for car dealers, but with the introduction of new technology, how you buy and sell your cars has changed forever. We know this, and we are here to help. There are two different ways to sell vehicles, retail and wholesale. Getting your price right when selling to either market is essential, getting it wrong and you either undervalue your stock or risk not selling it due to unrealistic pricing.
There are significant differences auto dealers need to know about wholesale prices vs retail prices, but first, we must say that discussions on pricing are always subjective. For example, when it comes to vehicles between $7,500 and $25,000, most dealers will be looking for approximately a $3,000 difference between their wholesale and retail pricing. Theoretically, this spread is required to cover the safety of the car, advertising, reconditioning costs and more. Luckily selling to the wholesale market through our platform takes away these pain points, meaning making that sale is now easier than ever before.
Why sell wholesale?
Usually, dealers will look to wholesale their vehicles due to one or more of the following reasons:
- The unit has been on the lot for 90 days or more
- The unit is too old
- The vehicle has too many kms on the clock
- The car doesn’t fit within their current inventory (ie a Honda dealer gets a BMW as a trade in)
Auto dealers will know their stock better than anyone else. Sometimes a used car lot will have several vehicles in a particular price range. For example, you can have a dealership with most of their stock priced between $10,000 and $20,000, so they are likely to sell on any cars traded outside of this price range.
A dealer can virtually sell any car they receive, just not always through retail. Selling a vehicle that is going to take up space on the lot otherwise can be a successful move, and it moves your customers to become both the suppliers and buyers of your product.
Valuation
Auto dealers know the value of their stock, that’s a fact, but they don’t determine the value of the car. The market says. The most accurate way to get the retail value of a vehicle is through researching the average price of all other cars of the same kind currently for sale; you will want to check:
- The year of thevehicle
- That it has the same features as the vehicle you are selling
- It’s in the same overall condition
- Has the same Km on the odometer
Once you have the average retail price, this will give you a better indication of the value you will need to sell at through wholesale to get that quick turnaround. Traditionally speaking a dealer will take the retail value and will take off a percentage, in most cases approximately $3,000 of a difference for any vehicle retailing over $5,000.
For a more vehicle specific wholesale price, we recommend taking the same steps as above but looking at the average wholesale value of all transactions on the same car over the previous 6-12 months.
As we mentioned an auto dealer will know the value of their inventory, but our sales team is always available to discuss pricing and can offer insights based on their experience in the wholesale market to help dealers price their stock for the best sale possible.
How can we help?
This one is a little tricky as we said because most dealers will know what their vehicle is worth through either retail or wholesale. Sometimes, however, in their desire to make a sale or through a fear of undervaluing their vehicle, cars can be put up for wholesale but using their retail price. Sometimes it’s just down a case of being too optimistic, and they will overprice to try to get the most money possible. Especially in the wholesale market, dealers are looking for a deal, so trying to sell a car at the retail price in this arena will not work and the result will be that the vehicle will not be sold.
We are always here to help our dealers; we want both buyers and sellers to get a win-win solution. That’s why our expert Inside Sales team are only ever a phone call away. We can help evaluate a dealer’s current inventory and make recommendations as to what units they could use and what price a vehicle should be listed at.
For example, if a dealer is missing a particular type of popular car or brand from their range such as minivan’s, SUV’s or subcompacts we will help by suggesting that the dealer wholesales a current vehicle in their scope while also recommending a car on offer to round off their inventory. Outside of that, if a dealer has several cars with high mileage, we can look at selling some of this stock and freshening up the range with some lower mileage models on the platform.
Conclusion
In essence, pricing is of primary importance when buying or selling a vehicle through retail or wholesale. In the wholesale market, dealers are street wise, and if a unit looks overpriced, then it will not be purchased. Sometimes this will mean having to look at the inventory as a whole rather than on a unit to unit basis. This means that sometimes you will have to sell one car for less than you would like, but if you have another vehicle in your inventory that can be sold for more, you will still end up with a net profit.
Overpricing might seem like a fast way to make a quick buck, but inevitably it ends up with inventory taking up space on the lot and not being sold. Price is reasonable, make the sale, buy a car you can sell at retail and watch the money roll in.
If you have questions on pricing or you want to talk to our Inside Sales team regarding your inventory and stock we have available, call us on (905) 909-0906. We look forward to helping you manage your inventory turnover like never before.