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How Car Dealerships Work

You’re sure to see a range of car dealerships if you drive down almost every main road. These shops give the customer a large selection of cars, both new and used. Their brand is one that isn’t always easy to market, but they can do a lot of business, or so it seems. If you’ve ever wondered how a car dealer works, don’t ask any more, just read on.You may want to check out Local Car Dealership Spotlight for more.

In one of two ways, your dealerships will work. Either they will get vehicles to sell on consignment or they will purchase the cars and sell them for a profit. Let’s take a look at both alternatives.


The manner in which the consignment operates is fairly clear. The company which owns the vehicles will allow dealerships to keep and take care of a number of cars on their premises. Every vehicle has a value that the company that owns it expects to get for it. Selling the vehicle for more than the amount and then paying for the car that has been sold is up to the car dealership. Here both sides run a risk. The business that owns the vehicles runs the risk of not selling the cars. Auto dealerships run the risk of stolen or defective cars, in which case they will also be responsible for the cost of the car.

Purchase to sell

In this type of car dealership, the dealerships will buy the cars they feel they will sell. Sometimes they can only buy one or two of a particular car model and use it as a demo vehicle to test drive for prospective buyers. When a customer wishes to buy a car, the car dealership will order exactly what the customer wants from the manufacturer of the vehicle. At a mark-up, the car is then sold to the buyer. The car dealerships make some losses on the selling of demo vehicles, but they compensate for it with the amount of cars with a large mark-up that they sell brand new. For the automobile manufacturer and the car dealership, this model is a lot less risky.