What Are Wholesale Cars in Layman’s Terms?

Even if you’re not familiar with wholesale cars, you’re probably already acclimated to the wholesale industry. Don’t worry, though. Even though there are entire degrees and college-level courses on supply chains and the wholesale industry, you don’t have to have an advanced degree to understand the idea behind wholesale cars. Here’s how it works in layman’s terms;

Start With Retail

You may not be fully aware of how the auto industry works, but you’ve certainly dealt with other forms of retail shopping. Retail is essentially a store that sells goods or services directly to the customer.

The most critical part of the retail sales process is that it involves the end-user. That’s the person who actually uses the good or service. When people buy products at the store for their own use, it’s considered retail.

Of course, retail can involve various supply chains and distribution channels. The process can be somewhat complex, but it’s something we’re used to doing every day.

In the world of auto sales, your local car dealership acts in the retail sales capacity. When you go into buy a car for yourself and your family, it’s considered a retail transaction. Auto dealers also have various supply chains from different auto manufacturers as well.

What is the Wholesale Industry?

Wholesale companies are those that sell goods and products to another company. Wholesalers tend to sell massive quantities. Most of the time, you can get a lower price per item by buying a larger order. Typically, wholesalers don’t sell directly to end-users. They sell to other businesses that eventually sell to the end-user.

Stores like Walmart and Old Navy tend to get their supply of products from wholesalers. In terms of the auto industry, manufacturers like Ford and Chevrolet could be considered wholesalers as they don’t sell vehicles directly to drivers. Instead, Ford and Chevy sell their completed inventory through a supply chain that ends in your driveway.

What is an Auto Wholesaler?

When you walk into your local Kia dealership, all of the vehicles on the lot were first purchased from an auto wholesaler. An auto wholesaler is basically a car dealer that sells vehicles to other car dealers and not the general public.

State laws are pretty strict about how auto wholesaling must work. There are limits to where the car dealer parks the cars. Of course, the wholesaler also makes a profit during this process, but that profit is also controlled by state laws. Each time the car moves from one dealership to the next, the price has to go up.

Can I Buy a Wholesale Car?

Remember, one of the defining elements of the wholesale industry is that the product doesn’t go to the end-user. Of course, wholesale cars should have a lower price than retail cars, so you might be wondering how you can get in on the wholesale action.

The good news is that buying a car wholesale or closer to wholesale price is possible, but it takes some work. Wholesale dealers can get special permission/certification to sell to the public. You can also attend car auctions that come from bankruptcy, rental companies, and more.

The earlier you can purchase a car in its supply chain, the less expensive it should be. It may not be possible to buy your personal commuter sedan directly from Hyundai, but it may be possible to get a great deal that’s pretty close to the wholesale price. Do your homework and explore various options before trying to jump in.

Even though you now have a basic concept of the Wholesale Industry, putting this knowledge into practice is more complicated than it may sound.