For decades, dealerships had a unique advantage that the common person could never counter. This advantage was private auctions of government vehicles. However, nowadays there are actually a large number of government auctions that are completely open to the public. Government motor auctions will still have a lot of dealerships showing up to grab as many deals as they can, however as long as you enter the auction with the right strategy, you can easily use government motor auctions to beat the dealers at their own game.
Many people have no idea how they can compete with dealerships that send representatives with deep pockets and near-unlimited spending options. However, if you can start to understand how dealers think, you will have no problem competing with them Here is a closer look at the inherent weaknesses that dealers have and how you can exploit them.
The primary weakness that a dealership has is that he are there to generate a profit. But how does this help you? Let's assume that there is a car that could be resold by a dealership for $7000. They obviously won't pay nearly this much to purchase it because they have a number of other costs outside of the purchase price. They will have to a pay percentage of the profits to their salesperson, which on used cars can be as much as 25% or more. They also have to pay to have it cleaned on, at minimum, a weekly basis, plus they have to consider the space that it takes up. If they are deciding between two similar vehicles, they will always choose the one that will sell the quickest, even if it creates less profit. A used car dealership has a limited amount of space for each unit and wants to make sure that they get the maximum value out of each space. This means that if they purchase a car for $5,000 and sell it for $7,000 six months later. The have a profit of $2,000, however $500 of that goes to the salesperson. Now they have a $1,500 profit, except they had it washed once a week at $10 a shot. That is 24 washes at a price of $240. Now they have $1,260 in profits. That means that the space that the car occupied only made them $210 per month ($1,260/6 months).
This means that you can easily compete with them because as long as you do your homework and choose a reliable car, you will easily get a deal. You can pay $5,000 for the same car and keep it for 5 years. This means that the car only costs you $1,000 per year, which is just over $80 per month.
As you can see from these two examples, if you both have to compete for the same vehicle, you will get much more value out of it than a dealership would. Because of this, the dealership will likely not put up much of a fight because they know that you will only want to bid on one vehicle and they can focus on getting 5 more cars at a cheaper price later in the auction because you will no longer be bidding against them. Now that you understand what is going through the dealers head, you should have no problem attending government motors auctions and beating the dealers at their own game.
