How do wholesale car dealers make money? Especially in California.?

Forget about being a used car wholesaler unless you have lots of experience in the business, know lots of used car managers in new car dealerships and have huge capital. Here is the way it works. People trade in used cars at new car dealerships. If the car is a late model, has good mileage and no prior accidents the dealer keeps the car and retails it. The rest of the trade ins are wholesaled. Lets say after one week the dealer has 25 wholesale cars. Now a wholesalers come along and bid on the cars. However the wholesalers can not cherry pick, they must buy all or at least a package of cars. The new car store will insist that the wholesaler take lots of undesirable cars in order to get a few nice ones. If the dealer does not know you he will try to unload all his garbage on you.

Now lets assume you buy all these cars. You have to have a way of getting rid of them and make a profit. The nice cars you can resell to other dealers but what about the undesirable cars? The only way to get rid of them is at the auction. However unless you are a high volume wholesaler the auction will give you bad sale numbers. Your cars will run at the end of the day when everyone has gone home and they won't sell. If you do not have a retail license you can not get rid of then that way either so you will be stuck.

Wholesale Car Dealers

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RE:

How do wholesale car dealers make money? Especially in California.?

I am laid off and have some liberty at my hands to try out some business. I am attracted to becoming a used car dealer. In California you could become either a retail or wholesale car dealer. I am not quite sure how the wholesale care dealers make money and whether they make any significant money.

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Wholesale dealers make money buying used cars from people and dealerships who no longer want them. This is either because the dealer does not think he can sell the car or does not want to put the money in it to fix it. Wholesalers take these cars and flip them to other dealers/customers for a profit

Wow all the previous answers were very negative. If it were easy to make money everyone would do it. Like all industries, you need to know the market and the product. If you think about the word "wholesale," don't you correlate that with "volume?" You make a few hundred on each car and do several a week.

Nobody else mentioned buying and selling at auctions. There are still lots of deals at auctions.

Nobody mentioned retailing a car by using consignment. Place your car at a dealer, pay them a fee and they do all the paperwork.

Get your license, go to an auction, wait for a good deal and start with one car at a time. Focus on the product you know there very best. Flip that baby and reinvest your profits. Success will depend on your commitment to the project and to the education of the industry.

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First off, your biggest impediment will be the mandatory garage liability insurance which runs $2500-3500 per year.

Then you have license fees, bonds & so forth which can run $300-1000+ for just a wholesale license.

Its difficult to make any real money wholesaling cars. You have to be VERY, VERY good and you have to know values.

You buy from one place, and sell it at another for $200-300 more hoping the entire time that you don't wreck it because if you do, you are going to eat the loss.

Its not a business for someone with no experience. Failure is almost guaranteed.

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