Article

Inside The World Of Wholesale Auto Dealers

September 2006, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

In the world of wholesaling vehicles, if you can't be trusted to make a deal after a few minutes on the phone, chances are you won’t go very far in the business. This is one of the last professions in the country where your word is your bond. A wholesaler may guarantee a price on a car after a two-minute conversation, sight unseen. He'll sell it to another dealer much the same way. If the A/C doesn’t work or some unexpected damage shows up, he had better be prepared to make it right for the dealer. Otherwise, the phone stops ringing and business goes dead.

According to wholesales J.D. Tomlinson, the most important aspect of a successful wholesale operation is "the ability to be able to have a working relationship with a lot of dealers. Thinking long-term, that’s probably the key." Tomlinson runs a wholesale operation along with his own retail lot in Gainesville, Florida.

Thinking long-term means wholesalers have to avoid short-cuts or quickie deals aimed at winning a few extra dollars at a dealer's expense. For Tomlinson, who has been wholesaling for the past 20 years and whose father has worked at it more than 40 years, earning a reputation as a straight shooter makes it possible for five guys in his wholesale business to market about 300 to 350 vehicles a month to a network of 60 to 80 dealers. Each of those five guys has a dealer network of his own and each spends all day on the phone, walking the walk in a business that relies on fast turns and slim margins.

Shirlie Slack, who runs Shirlie Slack Auto Center, has built up her reputation in the wholesale business over 38 years, and she's quick to attribute her success on things that never change about the business: "The right set of cars, honest representation, and building a relationship with people you sell to."

Most of her cars come directly from dealers and undergo a rigorous reconditioning before they go up on the sales block of the Fredericksburg, Va. auto auction. That means they go on the block clean, without chipped windows or any dings. There's another feature about her cars that dealers like: each one has her name on it. "It’s front-line ready," says Slack, "with no apologies to be made for the car. They can see what we did."

Both sides have to play by the rules. "The most important thing about this business is finding dealers you can work with," says Tomlinson, "working with the dealers, instead of trying to make it a one-time shot [deal] and getting the better end of the deal."

"We have a no-negotiation process," says Ben Harned, who runs Performance Motors of Amarillo and wholesales most of his vehicles in Texas and New Mexico. About 60 percent of his deals are done over the phone. "If you are not happy, we'll just buy it back." In part, that's to protect the dealer, but the no-negotiation policy also helps Harned.

"In the past, dealers sometimes came back looking for a $500 discount," says Harned, claiming the car wasn't everything Harned had made it out to be. That $500 typically represents what Harned expects to make off a deal. "We'd get the car back and find no issues. I don’t want to ship a car 500 miles and have the dealer say, 'let's hit him for a discount because he doesn’t want to ship it back 500 miles.'"

For the dealer, a good working relationship with a wholesaler can mean a break from the auction scene. Wholesalers may never fully replace a steady stream of auction vehicles, but they can provide a big part of the mix. For dealers trying to figure out ways to cut down on their transportation costs or scale back the amount of time and expense of going to auctions, a direct working relationship with a wholesaler can make a world of difference.

"Dealing with someone direct is just more efficient than dealing with someone at the auction," says Tomlinson. There are also no auction fees to pay. A dealer can take more than the 20 seconds he may be allowed at an auction to make up his mind.

Ease of service is a key selling point. "We price with transportation included," says Harned. "It's less hassle. Independents want cars tomorrow, delivered, the way we say they are. We price our cars sitting on their lot." To make it all work, wholesalers need to develop a near-instinctive sense of a car's value. Any wholesaler will tell you in a heartbeat what a car, any car, is worth, or they don’t stay in the wholesale business very long.

"After you lose money on a few cars," says George Dodd of Dodd Motor Company, "you'll know what they're worth." Specialization, he adds, is not encouraged. "When you're wholesaling," says Dodd, "you can't be picky about what you buy. You go with everything. You can't say, 'I'm just going to buy a certain type of car.'"

Dodd was quick to add that any wholesaler worth his salt understands what kind of vehicle turns the fastest in his market. “Right now, buy here/pay here is hot,” sums up Dodd. "Some lots handle just under $4,000 vehicles, others just under $8,000 and others under $20,000. You've got to know what they're looking for."

A good relationship with a wholesaler can also provide dealers with some valuable market intelligence on what's selling. All wholesalers do all day is buy and sell large volumes of cars, trucks and vans. They also get a steady stream of feedback about market conditions.

Wholesalers usually work over a big enough territory so a car that might go begging in one area can be moved to a dealer in another area who will typically turn it in days. "A small town may not use imports," says Harned, ticking off the Chevrolets, Fords and Dodges that sell on Main Street America. If they get an import trade-in, chances are it's a wholesaler who gets the call. "We're able to market that import trade-in from the smaller market and resell it in the larger cities or franchise markets," says Harned.

At the same time, a wholesaler's crew can make it awfully easy for a dealer to swiftly unload an aging unit that has been stubbornly sitting on the lot for weeks. A few phone calls around the network usually turns up someone who feels they could move it quickly to a different pool of potential buyers.

"In today's corporate market," says Harned, "most have a 60-day turn on inventory. We can buy old-age inventory." If a dealer suddenly finds himself staring at a trade-in he doesn't know too much about, a quick call to Tomlinson's crew is a snap method for insuring himself a deal and moving the vehicle – in one phone call.

"If a customer comes into a Cadillac dealership with a Camry or van, they know they don’t want to keep it," says Tomlinson. "They also don't know the market or the car. They call us and we'll say the car is worth “X” dollars. If the dealer trades for that car, they'll give us the car for that amount. It's like insurance. If we gave them a figure and they trade for it, assuming everything they said about the car was correct, then it's our car."

This may all sound easy enough, but any wholesaler knows there are plenty of pitfalls to watch out for. "Reliable haulers are kind of hard to find," admits Tomlinson. A wholesaler always has to worry about pickups and deliveries, seeing inventory – and values – damaged in the process.

Also, a wholesaler has to trust his dealers as much as they trust him. “There are times,” says Tomlinson, “the car isn't everything the dealer made it out to be. Some dealers take advantage of the fact that we would give them a figure on a car and use that figure as a guarantee. Then they shop the car. If we insured it for them and stepped up so they could make a deal and they don’t produce the car, it’s just not a fair thing to do. They may keep it, but you can't do that consistently in a relationship."

Another pitfall according to Tomlinson is that many times, if a dealer misses something they expect the wholesaler to buy as is. But if the wholesaler sold it to them, they'd expect the wholesaler to make it right.

In addition to watching out for pitfalls, wholesalers also have to keep up with the latest technology. "The Internet has affected the wholesale industry, like a lot of other industries," says Tomlinson. "A lot of dealers are finding cars online. We've had to adjust to that, becoming more of a presence online and still providing the same services." Once again, though, trust is the key. After all, who are you going to trust most, the Web site of some anonymous seller or the Web site of a wholesale dealer you've known for years?

The Internet has fundamentally rearranged the business cycle. "In years past, before the Internet, tax returns didn’t hit until April or May. Now its January, February. We have to start buying in November and December, which used to be the soft time of the market."

Online title history services from operations like Carfax.com have made it easier to weed out the salvaged vehicles. Check 21, a law that took effect in October 2004, which triggers an immediate transfer of funds via an electronic copy of the original check, has put a premium on established dealers with reliable credit. With that much inventory going through a wholesalers hands, they have to have a relationship with their banker that's every bit as good, or better, than the one they have with their best, most loyal dealers. Being able to take a vehicle and sell it quickly through a network is a big plus. "The turn might be a few days versus weeks or a month or two for retail," says Tomlinson. "That turn helps cash flow. A lot of times the car is sold before you have to pay for it."

Whether you are a wholesaler or a dealership working with a wholesaler there are a few keys to remember. Clearly state your expectations. Keep your word. Deliver as agreed and you will create a long term relationship that will serve both parties well for a very long time.

Vol 3, Issue 6

Comment

  1. 1. al [ December 29, 2013 @ 04:54PM ]

    I need 20 2013 toyota venza 25,000 mile or less limited models all wheel or maybe 4 wheel drive. some can have minor damage $ 25000-28,000 ready to buy . im in tampa fl

    813-444-3353

  2. 2. Roger [ February 24, 2014 @ 10:43AM ]

    Really nice article, thank you for sharing the information. If someone is looking to buy a new car in LA you can contact Okuma Inc they claim they can get the best deal in the market.

  3. 3. Nando [ August 17, 2014 @ 04:48PM ]

    Hi, I'm looking to get in to the whlesale I live In florida

  4. 4. Nick [ September 01, 2014 @ 04:50PM ]

    I am also looking to join the wholesale scene in am in Detroit MI

  5. 5. Darren [ October 05, 2014 @ 10:45PM ]

    If you are serious about getting into wholesaling cars contact either Bruce or Lori at Carsplusautogroup and please tell them that Darren sent you!

  6. 6. eric Paulin [ January 24, 2015 @ 07:11PM ]

    i am a new wholesale dealer. i havent even bought a car yet. but i am about to go full throttle and give it all i got. whatever it takes. if any one that knows what to do to be successful (HONESTLY) i would love the feed back.

  7. 7. Scott [ April 04, 2015 @ 05:51PM ]

    Okuma Enterprises gets the best lease deals on new cars.. A los Angeles car broker over 50 years!

  8. 8. Rachel Blatt [ May 05, 2015 @ 11:06PM ]

    I specialize in hauling for wholesalers, trusted and reliable. Contact me anytime [email protected], you need to ship your vehicles. I have many references

  9. 9. James Jacobs [ May 07, 2015 @ 05:59AM ]

    I am looking for a black Infinti QX56 2011 or 2012 with wheat interior less that 60,000 miles

  10. 10. Nick [ June 17, 2015 @ 02:28PM ]

    RITEDRIVE.com is a great site to acquire luxury and exotic inventory. Private party individuals can sign up for free and request the car they are looking for as the dealers can also so this. Dealers will mark aged units for wholesale which allows them to trade within the community. Both exotic dealers and private party individuals can buy, sell, and trade within the community while general postings are available to the public.

  11. 11. kalaiarasan [ August 19, 2015 @ 11:08PM ]

    i need whole sale lot for 10 lakh if you have inform to me.i need show room stock items exess product

  12. 12. Scott Fischer [ August 30, 2015 @ 10:35AM ]

    If anyone is looking for some high-line/exotic vehicles at wholesale prices, I have a good selection of aged units that are pristine, 1 Owner w/service records. I'm looking for some trustworthy outlets to move aged units by 60 days. Everyone knows, it's all about timing with some of these high-line cars, trucks and SUVs. I may have a stunning Aston Martin priced thousands lower than any other on the market, and get one lead on it in 60 days. Someone that has a bigger presence with this type of vehicle in Dallas (where I'm located) or another market. There are outfits that offer online networks to wholesale cars, but it's a low percentage of turn. I also have some cheap cash cars that I don't mess with recon, and are potentially good BHPH or just cash flips for people that do that. I run a solid, ethical and do good business. If anyone is interested in talking, please contact me!
    WWW.FBDALLAS.COM

  13. 13. Antonio [ September 03, 2015 @ 06:07PM ]

    I'm looking for some trading cars to buy cheapest cheapest between 8 and 10 years old , New York New Jersey area

  14. 14. Jakson [ September 07, 2015 @ 09:40PM ]

    Informative article, thank you so much share it. If you are looking for car dealers in New Jersey for sale your car or buy a used car than contact Jersey Car Cash at 732-925-2602 and hassle free deals with Jersey Car Cash. For more info you visit this source: http://www.jerseycarcash.com

  15. 15. Lourdes B [ September 14, 2015 @ 09:41AM ]

    I am looking for a good reliable company to ship a car to Central America, can anyone recommend a good
    company thank you

  16. 16. Tony T [ September 18, 2015 @ 10:55PM ]

    Like to pair up with someone to get in the wholesale car business in southern ca very knowledgeable in European cars

  17. 17. lee granger [ October 16, 2015 @ 09:06PM ]

    Tony T, I'm in SoCal, and I to am about to jump. Let's talk.
    leerandyg at gmail

  18. 18. S.LEWIS [ October 26, 2015 @ 08:30PM ]

    IM A NEW JERSEY LICENSED RETAIL DEALER LOOKING TO PARTNER UP WITH A WHOLESALE CAR DEALER SO YOU CAN SELL CARS TO PUBLIC EASILY AND LEGALLY

  19. 19. S.LEWIS [ October 26, 2015 @ 08:32PM ]

    IM A NEW JERSEY LICENSED RETAIL DEALER LOOKING TO PARTNER UP WITH A WHOLESALE CAR DEALER SO YOU CAN SELL CARS TO PUBLIC EASILY AND LEGALLY CONTACT ME AT [email protected]

  20. 20. F. Smith [ December 29, 2015 @ 08:03PM ]

    Looking to sell my 2003 Monte Carlo. New rims, tires, radio, tint, paint job, blackout lights, interior led lights, led reverse lights. If interested let me know.

  21. 21. F. Smith [ December 29, 2015 @ 08:04PM ]

    Dallas TX area

  22. 22. Dan Susco [ January 04, 2016 @ 10:28AM ]

    Looking to flip some cars quickly

  23. 23. Dan Susco [ January 04, 2016 @ 10:29AM ]

    Looking to flip some cars quickly. [email protected] .

  24. 24. stephen easter [ January 21, 2016 @ 11:48AM ]

    I would love to join up with some wholesale dealers myself. Dad has been in business over 30 years but cars are just getting harder to find. Email me any info [email protected] Thanks!

  25. 25. jay [ February 02, 2016 @ 11:42AM ]

    I'm looking for some serious wholesalers in the USA. I'm an export dealer from Canada and have some clean carfax verified vehicles. Because us dollar is high our vehicles are super cheap and working with a exporter like me you won't have to pay taxes when we do business. I deliver the cars and trucks(only way to avoid paying the taxes).

    Email me [email protected]

  26. 26. Robert McCave [ February 14, 2016 @ 11:07AM ]

    hi my name is robert im looking to buy and sell cars in phx az i have my dealer license and looking to lean the ropes anyone out the willing to teach me phx seem to be very hard to move cars so many big fish out here

  27. 27. Ralph [ February 15, 2016 @ 05:24PM ]

    In 1978 through late 90's wholesalers where everywhere. Good thing when they came in to buy cars they brought chips, coney's, and normally had the used car manager on their "pad". You know give me a check to the house for 1000 and give me 200 in cash. It was very common. Some principal dealers turned their collective heads if their gross was good. I never understood why but assume they viewed it a part of the pay plan as long as they got theirs. When the first credit tightening came scores of small b guys (small dealers and wholesalers) lost their lines of credit. Made it tough for most, takes a bit of money to float the cars the period necessary to get it sold and title transferred. Chased some bad checks myself, terrible feeling. Fast forward the auctions have about eliminated traveling wholesalers. I still know a few but its a tough game. The price of vehicles, lease payoffs and lien release time stalls the flow of cash, auction checks always cash. And most of all why sell to one person, if you can get a few bidding. In person, bricks and mortar auction, online ie; Ally Smart Auction. Just put proxy bids on some Chrysler sale at Manheim Detroit. Have cars running at Adessa, Flint Auto Auction, and sometimes other points for various perceived strengths. Back to the old days with wholesalers moving Ford trade in to a ford store from a GM store is pretty much over. Car sale persons early retirement from taking ups was wholesaling. Great article got a deuce for me.

  28. 28. Vlad [ February 16, 2016 @ 11:19PM ]

    Robert McCave please email me so we can talk about business.
    Thank you

  29. 29. Michelle [ February 23, 2016 @ 05:19PM ]

    Hello...working the field trying to get people to your lot is hard any pointers please.

  30. 30. Durrell Avison [ April 11, 2016 @ 08:14AM ]

    My company is Vaniva Ltd and we are located in Canada, we wholesale vehicles to dealerships throughout the United States and Canada. Vaniva takes care of all shipping documentation and delivery of the vehicles to your dealerships. We are a fully insured and liscenced company. Your company lets me know what vehicles your looking for and the specifics of your vehicle and we take care of the rest. Looking to make a solid relationship with companies. Feel free to contact myself with any questions by phone or email.
    Durrell Avison
    403-894-6255
    [email protected]

  31. 31. Alysha [ April 18, 2016 @ 11:12AM ]

    I'm a wholesaler here on the central coast in California. Always looking for new relationships. I work with dealers as far south as Oxnard, CA and as far north as Paso Robles, CA. [email protected]

  32. 32. Corey [ May 11, 2016 @ 01:22AM ]

    New wholesale licensee in Redondo Beach Ca. Quick learner, strong ethics, would like to team up with like minded individuals. Passionate about cars and fair play.

  33. 33. Matthew [ May 13, 2016 @ 11:50PM ]

    Good article! I've had my wholesale license for almost a year in Costa Mesa, CA and it is tough. Most retailers just go to auction themselves or put in proxies. The retailers have advantage of making money on the back end also, so they can bid up prices higher than wholesale. There are diamonds in the rough but it has been a year of learning more than making $. Anyone want to network email me info @ as oc llc .com

  34. 34. Mark [ May 21, 2016 @ 08:16AM ]

    Nice article. I'm in Texas looking to start new wholesale relationships. Contact me at [email protected]

  35. 35. Michael [ June 05, 2016 @ 03:56PM ]

    I'm recently licensed as a Used Auto Dealer in Louisiana, and may be interested in help from a wholesaler.

  36. 36. stephen [ June 15, 2016 @ 04:03AM ]

    Very good article and i used the auto dealers mobile app https://play.google.com/store/apps/details?id=com.autodealer.activity&hl=en

  37. 37. Ali [ June 15, 2016 @ 07:49AM ]

    am a trusted person I am looking forward to meet some good God fearing that could trust me with no fear of God to employ me to work for them in the car business because that's what I ever think of doing in this life because I am a business minded kind of guy ,for me if I will make some good money the rest are history .

  38. 38. Richard [ July 04, 2016 @ 02:39AM ]

    Hi I'm a wholesaler living in Sydney Australia working at a dealership buying and selling ,valuing euro, exotic & classic cars across Australia I'm trying to make My way to the sates LA or Miami to do the same line of work and not sure who to speak to or even where to start if anyone can point me to the right direction or if I can get in contact with anyone that would be great

  39. 39. Tom [ July 30, 2016 @ 07:05PM ]

    Looking for Canadian exports to the u.s. In Montana. Email me at highwaytradersmt.com

  40. 40. Tony Lara [ August 14, 2016 @ 12:02PM ]

    Gear article, I sell Lexus in NYC, pre-owned, of course new. I have a great selection, feel free to contact me.

  41. 41. chris [ September 20, 2016 @ 06:50PM ]

    Hey All,

    New to the business but not cars, looking to get my dealers license but have many questions. I am in CALI and just dont know where to begin, one of the major questions is would i need a lot? Also is it more beneficial to get a dealers license vs a wholesale license?

 

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