Which Car Dealership is right for you?

by Don Elliott on April 20, 2011

Car dealerships are resilient businesses. They adapt to changes in the economy, gas prices, vehicle supply, manufacturers’ incentives and changes in financing. Except for the obvious difference between new and used car dealers, each dealership specializes in certain types of cars or specific services that provide that dealership with the most return for the dealership’s investment.

For example, with gas prices at an all time high, many dealerships are shifting their used car inventory away from “gas guzzlers” and towards more fuel-efficient vehicles. At the same time, other dealers see great used car values in larger, less fuel-efficient vehicles that may be available at a lower cost for the used car shopper. Knowing which dealerships specialize in the car or truck that you need might save you some time and money.

New car dealers obtain their new car inventory directly from the manufacturer of the brands that they are licensed to sell. However, dealers have some ability to order certain models and equipment levels to match their market. They also can order more or less volume depending on their local market conditions. New car dealers often trade inventory with other franchised dealers to acquire a specific model or to balance inventory. All dealers would rather sell cars on the lot rather than adding costs to acquire a car from another dealer.

Shopping at a new car dealer provides several advantages. First, the manufacturer’s suggested retail price (MSRP) is listed on the window sticker. All cars from that manufacturer for that specific model and equipment level will be the same price, making shopping for a new car fairly transparent. New car dealers offer financing, often supported by the manufacturer’s captive finance company. They also service their cars and support the manufacturer’s new car warranty. On the downside, new cars are way more expensive than used cars.

Used car dealers can’t “order” their inventory like new car dealers. Wholesale car auctions provide the quickest resource for a wide selection of cars and trucks for the used car dealer. They also obtain cars through trade-ins, direct purchases from individuals, and online resources. Savvy wholesale buyers have to pick and choose to find the best cars for their lot. It is not unusual for a used car dealer to spend $500 to $1000 to make a car ready for sale.

A few used car chains are big enough that they actually look like new car dealers and offer many of the same services. Carmax, DriveTime, and JD Byrider are a few examples. However, most used car dealerships are small, independent, locally owned businesses. In order to provide the best service, these small used car lots have to focus on cars that they know well and that meet the needs of the customers that come onto their lots.

Price most often determines which car a dealer will buy to match the needs of his customers. Older cars are less expensive than newer cars. Higher mileage cars are less expensive than lower mileage cars. Damaged cars can often be repaired for less cost than the same car if it were not damaged. Finance companies may only finance certain cars depending on the credit history of the used car buyer.

Each dealer has a history of success with a certain brand, mileage range, model, condition, and vehicle history that defines the cars offered for sale at that dealership. Finding the right dealer is an important step towards finding the right used car value for your next car.

Do you have a dealership experience that helped you find the right car? Tell us about it in the comment section.

Google+ Comments

Previous post:

Next post: