How Do Used Car Dealers Operate?

carsHave you ever wondered how used car dealers operate? Maybe you’re considering buying from a used car dealer but you’re unsure whether you’re getting a good deal? Or, maybe you’re considering setting up your own used car business and you’d like to learn more about the industry?

Below you’ll discover how used car dealers operate, from checking a cars history to setting the right prices for each vehicle.

Checking the cars history

One of the most important things a used car dealer needs to do is check a cars history before buying it. This is because not all sellers can be trusted. Checking the cars history allows you to see how many owners it’s had, when it was last serviced and perhaps more importantly, whether the car has been reported as stolen.

Some dealers will also double check the details of the service history. While it is rare, some sellers do create false documents so ringing up the garages listed on the service history and checking what work was done and when it was done will confirm the history is genuine.

Setting the right price

Once the dealer has the car, the next step is to figure out how much to list it for. Most will use a valuation service, such as the one offered by CAP HPI. This takes into account current market prices, as well as every factor which could affect price regarding the make and model.

Of course, the dealer needs to make money. So, to do this they’ll try to buy the car for as little as possible, and sell it for a profit. This can mean trying to lowball sellers for example, not offering as much as the car is worth. It sounds bad, but it’s not illegal and it’s actually a smart move for a dealer as why wouldn’t you want to make as much profit as possible? Sometimes the offer isn’t a lowball, but sellers have an unrealistic idea of what their car is worth.

So, when looking at how much to sell the car for the dealer typically takes into account:

  • How much they paid for it
  • The make, model, mileage, and condition
  • Current market value
  • Profit margins

Overall, used car dealers get a lot of help from valuation and car history checks. Technology has really helped make it simpler to identify what a car is worth and whether it’s reliable.

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