Huge bankruptcies for used car firms have exposed Wall Street’s entanglement with the sector. Far from derisking after the Great Recession, banks rebuilt the economy on obscure financial intermediaries that are now sinking.
My brother in law works at a pretty big dealership in the area. He said the markets so stupid right now that they’re buying new cars from wholesalers and holding them for 30 days so they can sell them as used. Somehow this has been incredibly profitable for them. I don’t really understand how but it apparently works out that the customer gets a hefty discount on an essentially new car without the manufacturer warranties and the volume is big enough to where the dealership is hitting record numbers.
I think it’s something like they but the car for $20k from the factory, it sells for $35k new, but instead they let it sit and sell it as used for $25k. I think they get some sort of refund or something from the manufacturer if the new car doesn’t sell within x days or something like that.
The way it was explained to me in they’re making almost nothing on each sale, but they’re the only place in the area that can get decent cars in right now so enough people are coming in and doing this where it makes sense to keep it up.
My brother in law works at a pretty big dealership in the area. He said the markets so stupid right now that they’re buying new cars from wholesalers and holding them for 30 days so they can sell them as used. Somehow this has been incredibly profitable for them. I don’t really understand how but it apparently works out that the customer gets a hefty discount on an essentially new car without the manufacturer warranties and the volume is big enough to where the dealership is hitting record numbers.
None of it makes sense.
How are they making money though? How can you buy a car at the price of a new one and sell it at the price of a used one and be profitable?
I think it’s something like they but the car for $20k from the factory, it sells for $35k new, but instead they let it sit and sell it as used for $25k. I think they get some sort of refund or something from the manufacturer if the new car doesn’t sell within x days or something like that.
The way it was explained to me in they’re making almost nothing on each sale, but they’re the only place in the area that can get decent cars in right now so enough people are coming in and doing this where it makes sense to keep it up.
That sounds wildly illegal and fraudulent.
Sounds like it should be wildly illegal, but we all know it isn’t.