Many dealerships advertise offering competitive terms for trade-ins. They accept vehicles in poor condition when people need to acquire new transportation. The buyers can use the value of that vehicle to help pay for their new vehicle.
Some dealerships actually fix up the vehicles that they receive as trade-ins and then resell them to the public. However, doing so does involve a degree of investment and financial exposure. The more the dealership knows about a vehicle’s defects, the more the business and its employees have an obligation to disclose to prospective buyers.
Many dealerships acquire the majority of their used cars through an alternate system that helps them ensure a steady stream of vehicles onto the lot without a large amount of exposure for the company. That system may work to keep stock available for buyers, but it may put those acquiring vehicles at a disadvantage. How do dealerships acquire used vehicles to sell?
Many used vehicles come from auctions
Used vehicle auctions have become the standard for most large-scale vehicle traders. There are many different types of auctions that occur with some regularity, ranging from police auctions of seized property to massive dealer auctions where dealers bring vehicles to sell.
Auctions can see vehicles travel from one state to another in large lots. They give used vehicle dealerships an opportunity to acquire supply at competitive prices. Unfortunately, auctions also create a degree of separation between the dealership and the vehicle.
Even after performing an inspection and making some repairs, the dealership that acquires used vehicles at auction may be unaware of blatant defects with the vehicles. They may then sell the vehicles to buyers without knowing or disclosing those issues.
Buyers sometimes only discover that a vehicle has experienced flooding or fire damage when their mechanic has to make repairs in the future. The practice of acquiring vehicles at auction can be fast and cost-effective for dealers, but it also limits the information available to those acquiring used vehicles.
In some cases, a failure to properly investigate used vehicles or disclosed issues with them may constitute autodealer fraud. Buyers not given accurate information about a vehicle can sometimes take legal action against a dealership. Holding dealerships accountable for selling vehicles in poor condition can potentially compensate consumers who have overpaid for a vehicle in mediocre conditions.