They’ll typically have higher prices not only because they buy nicer vehiclesat auction but also because their fixed costs for employees, real estate and
advertising are larger. One of the costs at any dealer is what is known as“pack.” Pack runs from $250 to $700 depending on the dealer, and is
added to the wholesale purchase cost of everything they take into theirinventory. It covers such expenses as rent on the real estate and the
financing that pays for the dealer’s inventory. It is rare for a dealer to owntheir inventory outright; normally they get “floor plan” financing from a bank. (^)
Independent dealers vary more in quality of vehicles and the experienceyou’ll have at them. Some are really terrific, many are sketchy. If you’re
willing to do more work (independent inspections, etc.), better pricing canoften be obtained there—though with more risk.
FRANCHISED DEALERS
Most franchised (new car) dealers sell used cars now; the monster drop innew car sales that came with the recession forced them into that business, (^)
if they weren’t there already.
These range from single-point (one-dealer) stores to nationwide chainssuch as AutoNation and Sonic, who have hundreds of dealers. In general, (^)
the larger dealer groups have higher reconditioning standards for their usedcars, but often ask higher prices, too. The sales process is very refined at
these places and they do tremendous volume, so it is important tounderstand their sales systems, which I cover in the chapters on new cars, (^)
dealer profit, and the finance office.