How To Find The Wholesale Price Of A Car

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When it comes time to trade in a car, you have to know cars wholesale prices. When pricing a car there are three distinct values: retail, private party and wholesale (otherwise known as trade in value). The retail price is the price a dealer is expected to charge for a car prepped and ready for sale. The private party price is the expected value when purchasing a car from an individual. The wholesale price is what a dealer will normally offer for a trade.

Learning more about used car wholesale prices can help you understand how dealerships purchase used cars for their inventory and help you leverage this information to negotiate a great deal at a used car dealership. It is important to remember that used car valuations are never set in stone and that wholesale prices may vary up or down significantly based on local or national market conditions. This guide will help you learn how dealerships purchase used cars at wholesale prices and how other expenses can raise a dealership’s investment in a vehicle.

Buying a Car: Wholesale Price Explained When you are in the market for a used vehicle, used car wholesale price may become a topic of discussion while you are at the dealership. Simply put, wholesale value is the amount that vehicles may be purchased for during dealer-only wholesale car auctions. Wholesale value is impacted by vehicle availability, mileage and condition. As used car dealerships aim to make a significant profit on their used vehicles, wholesale values are much lower than the retail price of used cars.

Just as they purchase at wholesale prices from an auction, similar values are offered when vehicles are appraised for trade-in at a dealership. Although the trade-in value is not equal to the wholesale value, they are similar enough to give you an idea of what a vehicle’s wholesale value should be. Let’s say you see a 2007 Honda Civic LX sedan that sold at auction for $4,360. That would seem like a great price and it might be a vehicle that you would like to purchase from a used car dealer.

However, before you dial your cell with your credit card in hand, think about this. A Honda Civic LX is a mid-line vehicle that should sell in the $8,000-$12,000 range, even at wholesale auction. Determining Wholesale Value When a car is traded in and doesn’t fit the requirements to be sold on the dealers used car lot, it is normally sold at an auction. The wholesale price is determined by an average of the auction selling price and is adjusted on a regular basis and is the raw information on which used car prices are set.

To find the wholesale price of a vehicle, take into consideration the overall condition of the car and use websites like Kelley Blue Book or NADA GUIDES to estimate the value. Pay close attention to the condition descriptions and be as honest as possible to get the most accurate value. Another way to obtain the wholesale value of a car is to have it appraised by a local dealer. Be aware that they might inflate the value in hopes of selling you a car.

If they quote a number higher than expected, be wary. One way to help to get the best possible price when trading a car is spending a little time prepping it–a little time spent washing, waxing and cleaning the inside might gain a few hundred dollars more. Additions to the Wholesale Value While a dealership will attempt to purchase vehicles for the wholesale value or below, there are other fees that will increase the dollar amount the dealer-owned vehicle.

These additions to the wholesale value are worth considering when you negotiate with a dealership and estimate their used car costs. The most common expenses dealerships incur after purchasing a vehicle are transportation, reconditioning, detailing and certification. Transportation costs vary wildly but the average vehicle that requires interstate transport will cost at least $500 to move. Reconditioning costs will also vary by vehicle, as some vehicles will require no maintenance and others will require thousands of dollars worth of work.

Prior to a vehicle being offered for sale, most dealerships will also complete a thorough interior and exterior detail that will have an internal dealership cost of between $100 and $150. If the vehicle will ultimately be sold as certified pre-owned, there will also be a charge of up to $1,000 for the extended factory warranty. Subsequently, you will see why a dealership cannot normally negotiate as low as the trade-in or wholesale value of a used vehicle.

The wholesale price is simply a guideline used by dealership managers as they purchase vehicles for their inventory. As a result, vehicles are shipped to and reconditioned at the dealership—more than $1,000 of additional expenses incurred by the dealership before the vehicle is offered for sale. There is no disrespect intended in this step, as it is quite difficult to interpret what the pricing you are seeing means.

Let’s say you see a 2007 Honda Civic LX sedan that sold at auction for $4,360. That would seem like a great price and it might be a vehicle that you would like to purchase from a used car dealer. However, before you dial your cell with your credit card in hand, think about this. A Honda Civic LX is a mid-line vehicle that should sell in the $8,000-$12,000 range, even at wholesale auction. If one sells for $4,360, you have to ask “what’s wrong with it?” Is it a flood car? Is there a title problem? Is it a high-miler? What are the issues that have kept its price so low? ← Previous Post Next Post →

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For anybody whos thinking about getting into the business enterprise of offering wholesale solutions at retail costs, the very first thing that comes to brain is, the place do I obtain the wholesale merchandise from? The next thought will probably be, which wholesalers or fall shippers can i belief?

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(Special Report: "How To Get The Best Price On A NEW Car") This article is on the long side. That's because determining wholesale value or trade-in value is not as straight forward as one might wish ... even for Dealers. But by understanding the various factors involved, consumers will be in a much better position to save money. What IS A Car's Wholesale Price, Anyway?Well, it may not be what you think.

The average profit made per used car sold in the U.S. is right around $1,500. Surprised? I think some people think car markups are like other retail items sold at two or three times cost. It would be nice for the dealers if this was true, but it's not. I'm not saying that ALL cars are sold with a $1,500 profit. I'm aware of some Dealers that tack on $4,000 or more and are successful selling to less informed buyers.

But the "average" profit is right around $1,500. What exactly is the wholesale price of a particular vehicle? The simple answer is that its wholesale price is its trade-in value. And how is this price determined? Well, this is where things start getting a little complicated.The basic answer is that trade-in value is actually the price a Dealer pays for the same vehicle at any given moment in time at a Dealer-Only car auction.

In other words, when you bring a car to a Dealer to trade-in, the Dealer is going to get online to check the prices actually paid for that particular vehicle during the last few days at the Dealer auctions. He won't pay more than he could buy one for at the auction (unless he has overcharged you for the vehicle you are buying ... also see this best price information on Buying A Used Car).Dealers get these auction prices at sites such as Manheim (the largest Dealer Auction company and the one we use the most often).

Only Dealer members have access to their sales data. They group their model data into classifications such as "above", "average" and "below", depending on the condition their own inspectors have assigned to each and every vehicle going through the auction. This helps Dealers matchup prices with the trade-in they are evaluating. Obviously, this can be a bit subjective and can be one of the reasons different Dealers make different trade-in offers for the same vehicle (price gouging by a Dealer is another reason, of course .

.. give you a good price on a car purchase and a bad one on the trade).Dealer lingo for this number is the "MMR" (Manheim Market Report). Actually, here's a video that shows what a typical MMR looks like.Now, as soon as you throw in "subjective" issues in pricing, you also throw in "risk" factors for both the Dealer and the car owner. Has the Dealer's assessment of the vehicle been accurate or will he find out something about the vehicle later that will determine he overpaid for the vehicle? He's worried about this so he'll likely offer less for the trade just to add a margin of safety.

The person trading the car also has risk. Again. has the Dealer valued the car properly? Has the car been classified in the correct category (i.e. above, average, etc.)? Does the vehicle actually lay somewhere between two categories? You can see how things begin to cloud up. It's just not a black and white issue.So, What Is A Consumer To Do?Although unable to give you the precise answer you're looking for, use valuation services provided by such sites as Kelley Blue Book, NADAGuides and Edmunds.

Interestingly enough, you're going to get different numbers from the different services for the exact same car! Sometimes significant differences.This is because, while they all say they check both the prices of vehicles sold by Dealers as well as at the auctions, each has their own unique algorithm on how these numbers should be extrapolated. And they can get really foggy. Here's what Kelley Blue Book says, for example: "Used values are determined by a proprietary editorial process.

This process starts with a thorough analysis of all collected data along with historical trends, current economic conditions, industry developments, seasonality and location." In other words, there's other factors besides pure prices that influence their respective values. When you see words like "editorial", "trends", "conditions", "developments", etc., you're again seeing subjectivity being introduced into the formula.

And, do you remember the product of subjectivity? That's right ... Risk ... risk that the number is off the mark.And indeed this is often the case. I've seen values of some BMWs, for example, that are $3,000 or $4,000 too high. I'll check on AutoTrader and see 80% of the vehicles listed below KBB's Retail value and many at or below trade-in.On the other hand, there are individual vehicles that are significantly undervalued.

Take a hard-to-find Mazda3 s Hatchback, for example. This has been a car that many people want but has been in short supply. KBB has been quite low on their valuations at times. Something is being missed.I don't mean to be picking on KBB. In fact, I strongly recommend that car buyers check the prices from each of these services. The more information you have, the more informed buyer you become. And by perhaps using an aggregate of these values, you'll get a better idea of true value.

Notice that I said "idea", not actually a precise value. Very useful none-the-less.Now Let's Complicate Things A Little Further.Wholesale prices can also go up. You wouldn't think so but it happens. For example, during a strong car market in late 2004 and the winter of 2005, we saw used car prices actually rising. There were a lot of car buyers and Dealers who found themselves short on inventory.

They bid aggressively at the auctions to fill their needs which drove up prices. And, of course, these prices were passed along at the lot. This wasn't just for a week of two, but continued until March of 2005.Here we had a depreciating asset rising in value for four or five months. And we found the valuation services unable to accurately reflect this increase in prices.In the Spring and Summer of 2006 with gas prices in the $3.

00 per gallon range, and even with a used car market that was fairly weak overall, we saw prices rise for good gas mileage vehicles ... and especially for diesels. These vehicles became scarce at the auctions (many still are) and prices rose. And again we found valuation services struggling to account for these price increases.And it happened yet again more recently during the economic crisis of 2009.

Car buyers turned away from new cars because of the economic uncertainties and many bought used cars instead. Dealers then beefed up their used car inventories to meet this demand, which pushed prices higher for nearly the entire year.Recommendations:   Ask Dealers for a printout of the MMR (or whatever they call it at the auctions used by the Dealer). Although it's not perfect, it's probably the strongest indicator of value available.

Some will give it to you. Some will not.   Visit sites such as AutoTrader and and check the Dealer prices for your vehicle. Try to determine an average price for vehicles with similar features and mileage. Then deduct approximately $2,000 from that price (the $1,500 average profit and perhaps $500 for the Dealer's inspection, reconditioning and advertising costs).For more expensive vehicles, deduct more (for example, I'd estimate $3,000 for vehicles over $40,000 and $4,000 for vehicles over $60,000).

   Get values from Kelley Blue Book, NADAGuides and See if there is a consensus. Or, average the prices. Discuss these valuations with the Dealer if his offer looks out of whack. How can he explain his low offer? Make the Dealer make sense.Conclusion:Wholesale price and trade-in value are one and the same. Because of the fluidity of prices and human subjectivity, determining an exact "fair" and accurate trade-in price is challenging.

While this is also true for the Dealer and he assumes risk on the trade-in, the Dealer does have access to more information than the consumer. The Dealer also does this everyday and can spread this risk around an inventory of trade-ins.By following the recommendations above, consumers can utilize resources available on the internet to help determine a fair price range they would find acceptable and avoid the possibility of being taken advantage of on a trade-in price.

Wishing you happier car hunting! - Josh And like our Facebook page for more tips, car news and fun. Related Resources:How To Buy A New Car At Invoice Or BelowIt's totally unnecessary to pay retail prices on new cars, especially given the current economic environment. Here's the super easy and effective method for paying the least for a new car.Getting Access To Wholesale Car Auctions In Your State.

.. whether to find your own wholesale deal or to buy cars to resell.

Hazel Gordon

Saving cash may be the main concern for anyone or retail business, and the easiest method to accomplish this is to find marketing at low cost.