Used Car Business Model
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Let me share the best used car business model I have ever seen with you. I was fortunate to be the service director and lead technician for one of the most clever used-car sales businesses in the NY Metro area.
In fact, I have never come across one quite like it to this day. I'll uncover why it succeeded and why it failed despite being successful. Keep in mind I've seen really good ideas like "Her First Car Lot" selling cars that appealed to young female drivers.
The dealership discussed here specialized in and only sold used upscale vehicles. They purchased all the cars at auctions to fill inventory as needed. The Owner would also acquire a few units from desperate people in over their heads. The lot also had one of those obligatory, we buy cars signs. This snared a few unsuspecting people once in a while.
The owner also had sales people scour local papers for private sale cars on slow days. He was famous in the area for offering a low ball cash now bailout offer. Sometimes it made people cry.
Armed with an ample amount of working capital he controlled the situation and was always willing to walk away from a deal. Any purchased automobiles were obtained far below wholesale prices.
These units were then reconditioned both internally and externally. Then resold well above retail value. I helped inspect and evaluate the cars before purchase. This provided the owner with an idea of how high he could go and still make a profit.
This isn't what made the used car business unique. The basis for making a profit in the car sale business hasn't changed in the last hundred years. You buy low and sell high. Although he did bring this skill to a new level, it wasn't what made him successful.
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