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There are lots of reasons to dislike car dealers but we never thought this would be one of them. You know that used cars are at a premium, right? Even rental car agencies are buying them because they can’t get new cars. That’s because new cars are in huge demand and at a premium. But now car dealers are in such a frenzy for used cars they’ve turned their salesforce into buyers. 

Dealership sales staffs are becoming used car buyers

Used cars at Metro Ford | Jeffrey Greenberg/Universal Images Group via Getty Images

Some dealerships are paying a bounty to their salespeople for scoring used cars. According to Automotive News, some dealers are paying between $200 to $400 per car to their sales staff. So that means now you are competing with dealerships for that prized used Prius. Or F-150. 

This is just one more reason to hate car dealers. Automotive News talked with one dealer bragging about a salesperson finding 10 vehicles in May that he made $40,000 in profit from. Hey, we’re all for everyone making money, but local car dealers are probably buying up all of the good stuff so you can’t. 

This dealer goes on to say that buying used cars off of the street “is the smartest thing I’ve done in 20 years.” So the shortage is creating a frenzy among car dealerships for used cars. Never mind independent buyers looking for a personal car. But there’s more.

Some dealers won’t sell to out-of-towners unless they have a trade-in

A group of people at a car dealership shopping for a new car
Potential car buyers. | Patrick T. Fallon/Bloomberg via Getty Images

Some dealers make it tougher for out-of-town buyers to their dealership. To prioritize their local customers some dealers require out-of-towners to have a decent trade-in before they can purchase anything from their lot. Prioritizing locals is in hopes of getting their repair business later. 

And the shortage is real. Some dealers have only 15-20 percent of what they would normally have sitting on their lots. There are dealership groups that have gone from providing 1,000 cars to various lots within their group to only a few hundred. 

Some dealers are putting pressure on leasees to turn in their cars early. They have a somewhat built-in source with most providing service. When the customer comes in for an oil change they begin working on them to sell. 

Dealerships are even relaxing their low-mileage preferences taking in 100,000-mile vehicles

Potential car shoppers walk around Charles Hurst Usedirect used car dealership on Boucher Road
Car shoppers at a dealership | Liam McBurney/PA Images via Getty Images

In other cases, dealerships have more vehicles on their lots with over 100,000 miles, for the first time. And the cars dealers do have are hanging around for less time. “Used average days on market continue to decline even with that slight improvement in inventory levels, which really shows that strength in demand for used vehicles currently,” said Kevin Roberts, CarGurus’ director of industry insights and analytics. 

Now that we’re in the middle of June we are beginning to see a slow reduction in car sales. Maybe we have finally hit the top of the wholesale price market. But that doesn’t mean that prices will begin to fall off of a cliff. 

Many say that when it does come the slow-down will be more like a trickle. In the meantime, dealers float lots of ways to snag more cars. From the seller’s perspective, there could now be more built-in equity than when the lease was formulated. So there could be these market-driven responses that favor the vehicle owner. So at least in the short term, it is absolutely a seller’s market.


Why Is it Harder to Negotiate on Used Cars in 2021?