Is being a car wholesaler a profitable business?

[vtec4life]

I know no matter what you do it takes hard work to be succesful. My questions is does a good hard working wholesaler who has been doing it for a few years make good money?

"Good money" is a subjective term, to me it means six figures at least while at the same time not having to work 24/7 and being able to enjoy life/family. Any wholesalers on beyond? Can anyone share some personal experience in this field?

I sold cars for about a year so I know the retail side of things. At the time it was just too up and down for me, needed something more stable.

I love cars, just trying to find my niche in the industry that I think would be fun and profitable.

Thanks

[Redlyne_mr2]

It's a really really tough gig. If you can get in with a dealer then maybe you'll survive but I see so many wholesalers struggle. You have to be prepared to loose money on deals and that can be tough for most people. Retail cars sales is much more stable than wholesaling.

[RickDaTuner]

With the exsistance of places like Odessa and other business of the like , the most profitable way to make money on while sale is buying them from dealers and reselling direct.

Although this requires an am if license possibly a facility and a guy to turn wrenches for you.

Gotta remember that any type of wholesaling is about volume.

[you&me]

There's no such thing as a wholesaler not having to work 24/7. Almost by definition, that's what the job requires. To be successful, you need to be on your phone all day, every day, day and night.

The successful wholesalers I know work on a huge volume and very small margins... Like anywhere from 2-5 cars a day and sometimes only making a couple hundred bucks, just to "get the deal done" and to keep up the cashflow. As Redlyne said, losing money on a deal is not uncommon, but many guys do it just to keep their dealers happy and the phone ringing.

It's all about networking and knowing the right managers at the right dealerships. Problem with starting out, is most of those managers already have there go-to guys and it can be a tough nut to crack.

You also have to know a lot about the product... Desirable options, colours, rebates on the new cars, mechanical issues, etc. It's hard to be a "cheery picker" wholesaler, so you need to know all of this for almost any car... The best way to build relationships is to be a one-stop shop for the UCM, so you need to know everything, so he can call you on everything that comes through the door. And when he calls, he expects you to spit out a real number that you'll sign a cheque for... There's no "I'll get back to you", cause he'll just call the next guy and you've lost your shot and moved down the list of who he calls. And you also better not spit out a wrong price you'll pay... Too low and he'll stop calling. Too high and you'll not leave yourself any profit (or have to lose!)... Razor thin margins...

Lots of guys want to get into it to drive cool cars for "cheap", but thats not how you make money doing it and that will kill profits quickly.

If I were you, I'd get back into the retail side of things and start building relationships from the inside...

[vtec4life]

Originally posted by RickDaTuner
With the exsistance of places like Odessa and other business of the like , the most profitable way to make money on while sale is buying them from dealers and reselling direct.

Although this requires an am if license possibly a facility and a guy to turn wrenches for you.

Gotta remember that any type of wholesaling is about volume.

To wholesale you do need an amvic license but a shop/mechanic is not required.. For retail sales you need a lot for sure and mechanic I believe.

How much below blue book to cars tend to be at Adessa?

Would I be competing with all of the dealers in AB as they can buy cars direct from Adessa?

[you&me]

You'd be competing against dealers from across Canada, as the sales are typically online...

[vtec4life]

Originally posted by you&me
There's no such thing as a wholesaler not having to work 24/7. Almost by definition, that's what the job requires. To be successful, you need to be on your phone all day, every day, day and night....

If I were you, I'd get back into the retail side of things and start building relationships from the inside...


Thanks and I appreciate the honest info.

I do have a few contacts in the industry. I know I can get in the door in a couple of places. In regards to working 24/7 yes you are right any true small business owner is constantly working.

I agree the margins are very small and it will be all about volume.

I'd like to say I know a lot about cars but I probably dont in the grand scheme of things. Japanese cars yes.. domestics not so much. I pass time going on Kijiji and seeing what certain cars go for on the market. Although these numbers are very different than numbers you'd be talking with a dealer about.


How many cars on average do you think a wholesaler is holding at any given time?

[you&me]

Originally posted by vtec4life



Thanks and I appreciate the honest info.

I do have a few contacts in the industry. I know I can get in the door in a couple of places. In regards to working 24/7 yes you are right any true small business owner is constantly working.

I agree the margins are very small and it will be all about volume.

I'd like to say I know a lot about cars but I probably dont in the grand scheme of things. Japanese cars yes.. domestics not so much. I pass time going on Kijiji and seeing what certain cars go for on the market. Although these numbers are very different than numbers you'd be talking with a dealer about.


How many cars on average do you think a wholesaler is holding at any given time?

If you ask them, they like to say "none"... It's a game of hot-potato, turn turn turn...

A lot of guys start out brokering the deals, but you risk being cut out and losing your contacts... A good wholesale "hole" can be like a gold mine.

The numbers you see on kijiji aren't necessarily indicative of the wholesale market... Sure you can assume that wholesale pricing is lower, but there's no magic formula and some cars have higher margins than others. You can't be a wholesaler by buying based on what you see something advertised on kijiji for... There's a good chance you'll guess wrong and your wholesale "edge" is gone. You might be able to "retail out of it", but that's not the point, is it?

Like I said, it's a tough gig... I'd highly recommend starting back at a dealership to get a feel for the numbers again... Think of it as an education...

[vtec4life]

You seem very educated in this business.. Are you in the Auto industry?

What do you mean by a wholesale "hole"? Are you talking about a dealer that does not have a reliable go-to wholesaler? (basically)

Again, I appreciate you sharing your knowlege. I'd like to keep the posts on this thread as other people may have the same questions.

[corsvette]

There is a huge Adessa misconception out there. People tend to imagine insanely cheap vehicles selling there.

#1 Adessa is for dealers or Wholsalers only.
#2 Adessa is about as close to full tilt retail as any auction I've ever been to. There are very very few good deals there. There are probably ~ 300 guys at each sale on the floor, plus a few hundred online at least. These are both retail buyers and wholesalers alike. If you can buy decent rigs at wholesale prices send them up to Adessa, there are enough retail dealers there to drive prices up to near retail levels.

Most retail dealers have a floorplan financed through AFC, and adessa is part of that plan. They buy there, and finance the inventory there. Any good vehicles that sell there are whats called a "green light" car. This means you can arbitrate the sale if the car has a major issue. I've bought several vehicles there and pay an extra $75 for a BPP (buyer protection plan) After the sale it gets inspected at their shop and if it needs more than $800 work on ONE item you can back out of the deal.

The key with wholesaleing is having a good "in". You need connections plain and simple, there are very established wholesalers out there that buy sight unseen over the phone all day.

You also have to compete with auctions, lots of larger dealers are in bed tight with Adessa, they dont wholesale any vehicles they only sell at the auction. To be perfectly honest if I ran a used car dept for a dealership I would sell at Adessa as well, I'd get way more money selling to a crowd of 300+ retail used car dealers than shopping the car out to a few wholesalers. Plus you can put reserves on the price to protect it from going too cheap.

Then theres the public auctions like Michner Allen, Osman auctions (who also are very well known wholesalers) Regal auctions, grahams, etc. Auction companies are allways bugging dealers and companies for their used vehicles.

All in all its a tough gig. If you're drinking buddies with a dozen or so managers of dealerships you might have a chance. With anything time and hard work bring rewards. Good luck!

[vtec4life]

Wow thanks a lot corsvette.. good stuff.

So your saying if I get my wholesale license, in a perfect world a good gig is buying wholesale/cheap cheap from wherever I can and selling at Adessa? And unless you get a car for a steal dont expect to make more than 200-500 on a car on average?

I have a lot to learn that is for sure.. thanks again for sharing the knowledge.

Right now I'm just finding deals where I can and flipping a car here and there. I do have a career, this is just a side gig right now but I enjoy it. My problem is I only look for cars that I personally like lol. I need to start buying Rav4's and trucks in this city haha

[kvg]

One thing to remember is the minute you are a AMVIC licensed dealer there is no such thing as as-is and you are still legally on the hook if the car blows up, etc.

[Rat Fink]

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[corsvette]

Originally posted by vtec4life
Wow thanks a lot corsvette.. good stuff.

So your saying if I get my wholesale license, in a perfect world a good gig is buying wholesale/cheap cheap from wherever I can and selling at Adessa? And unless you get a car for a steal dont expect to make more than 200-500 on a car on average?

I have a lot to learn that is for sure.. thanks again for sharing the knowledge.

Right now I'm just finding deals where I can and flipping a car here and there. I do have a career, this is just a side gig right now but I enjoy it. My problem is I only look for cars that I personally like lol. I need to start buying Rav4's and trucks in this city haha

I've seen it done, I know a guy who spends all day on Kijiji looking for good deals, finds one snaps it up, does a quick cleanup and drives it over to Adessa and sells it. If its a pos he sells it redlight as is, if its a decent ride he'll sell green light. He makes out real good on some.

[you&me]

Originally posted by vtec4life
You seem very educated in this business.. Are you in the Auto industry?

What do you mean by a wholesale "hole"? Are you talking about a dealer that does not have a reliable go-to wholesaler? (basically)

Again, I appreciate you sharing your knowlege. I'd like to keep the posts on this thread as other people may have the same questions.

Yep, most dealers end up having one or two go-to wholesalers, and that's their "hole" (like a fishing hole)...

Corsvette is making some great points...

I should emphasize that not all wholesale deals are only in the $2-500 range, it's just that the majority of high-volume guys get to their high volume by their willingness to do deals for those token amounts.

And not all wholesale cars are junk, so don't let Ratfink's experience disuade you... Ferraris are traded in and wholesaled too ;)

[askcleo]

Originally posted by corsvette


#1 Adessa is for dealers or Wholsalers only.
!

They DO have open to public days. What a great way to take advantage of uneducated publics paying retail prices, while auctions are the last automotive entity in Alberta that can legally still sell vehicles with the "as-is" statement :thumbsdow ("as long as everything is disclosed" :rolleyes: ) Keep up the great work AMVIC, I mean good old boys club protecting their own private giant auto businesses.

[gamman]

corsvette responses x2.

pick a car that you know retail well. Tell me make/model. I bet if I list the "market value" price of the last 5 sales there will be 1 smoking price (POS), 2-3 ok ones, and one really expensive one (where you go wtf). Condition matters. When someone I knew was looking for a newer truck, all auction trucks were "expensive and not mint, cream puffs, were not clean enough for him", was better for him to buy new.

When you add tax and buyers fees, and the occasional oops (IE: dealer didn't know there were no speakers in, 1 bad rotor (?), bad transmission/etc), there will be a loss. Can you do all the work yourself? Good stuff (low mileage lease returns) from some companies DO NOT go to wholesalers - branded dealerships only.

Part of it is, as stated above, retail dealers can sell for more, due to their advertising/standing, etc, so they "bid the prices up", but they also have pro's buying. Not much crap gets bought by a retail dealer, you have to outbid 250 to 500 more than them. Guys who buy 20 cars a day. You may buy one per week. If you buy, you have to outbid them, and then sell to them. Why wouldn't they just buy the car you just bought?

Unless you focus on one make or model, and get known as the mustang gt guy or something like that. maybe that would work.

keep flipping the minimum per year, and don't quit your day job. And be picky about what you flip, make more per unit.

Good luck, it is very impossibly hard.

[ddduke]

Originally posted by corsvette


I've seen it done, I know a guy who spends all day on Kijiji looking for good deals, finds one snaps it up, does a quick cleanup and drives it over to Adessa and sells it. If its a pos he sells it redlight as is, if its a decent ride he'll sell green light. He makes out real good on some.

There's lot's of people who do this. The shitty thing is that most of the good deals on kijiji get scooped up within about 45 minutes and you literally have to re-load the same page every 30 mins just so you don't miss a potential opportunity.

I bought 2 rams this year for re-sale. Both were in amazing shape and sold for thousands below cost. One of them I caught when the ad was 12 minutes old. During the 10 minutes I was with this guy he recieved a half dozen calls, which in the end gave me no leverage to negotiate further (which at first he was willing to do).

IMO most of the auctions are a huge waste of time. Especially at places like Grahams. Go on a no reserve day and you'll really see how stupid the people are there. Almost every car goes for retail as long as it can drive through the corral. It's a great outlet to unload your vehicles if you got a good deal on them though.

I ran one of our company vehicles there last weekend because I didn't want to remove the signage, the brakes were shot, had 333k km on a 6 year old truck, tires were as bald as they could get, was throwing some codes, etc. The truck is worth anywhere from $1000-$1500 but because auctions are full of morons for the most part, I'm going to get a cheque for $2250 tomorrow.


Another option that you have and that my friend does is:
Goes to addessa, buys a handful of the best priced vehicles he can get, slaps his plate on and drives them directly to Grahams or Regal then just collects. Last I talked to him he was was making anywhere from $5-$7k/month and had tons of time left over to import vehicles from the states.

[corsvette]

[


Another option that you have and that my friend does is:
Goes to addessa, buys a handful of the best priced vehicles he can get, slaps his plate on and drives them directly to Grahams or Regal then just collects. Last I talked to him he was was making anywhere from $5-$7k/month and had tons of time left over to import vehicles from the states. [/B][/QUOTE]

Also a great idea, use auctions like Grahams or Regal where you can set a reserve price. Bring the 10or so units, Sit back and wait for that right buyer to come along and pay near your asking price, the auction is now your own personal retail car lot with great benefits
- They handle all the calls
- They handle the viewing
- You never have to meet the buyer
- You are 100% off the hook for any mechanical issues, leins, or undesclosed damage.
- If you have a GST# you get the tax back you paid when you bought it.
- You can bring any problem car to the auction, as long as it drives through the ring ,who will ever know how well it drives down the road?

Reserve baised auctions are a great place to sell vehicles, with growing amounts of retail buyers attending the prices fo sold units is quite strong.