Wholesale prices are high and still going up

One of the things I like about buying cars at the auction is that you get to see what a vehicle should sell for before you bid. The data used to come up with these prices is very reliable as it’s based on actual sales data that’s updated daily. So if you see that a car in average condition should sell for $5000, then by golly it should sell for $5000.

Except that’s not what I was experiencing.

I make spreadsheets for each auction I’m bidding in, I list the cars, condition and the average price among other items. As the auction progresses I enter in what cars actually sold for and can then see how close “average” is to reality. My own research showed that cars were selling at about 115% of average, thus when bidding I used this data when coming up with my bids.

Well, I just read an article that confirmed my findings. System wide, Manheim is showing that cars are selling at 114.1% of average.

This means that prices are going up. It’s not like dealers just eat this increase and call it a day. No, dealers just adjust the retail pricing or more likely, they adjust their actual sales price on a car. So instead of putting in a floor of $7000 on a car, they may raise that up to $7300. The average buyer might not notice this as they paid $7800 for the car, but for the tough negotiator they’ll never get that price down below $7300.

What it means for me is annoyance at the auction. Having to tack 15% on the price, then adding in fees and such.. it’s annoying. But, all dealers are having to do this, even the cursed CarMax guy.