At a recent NADA Dealer Academy session, 20 veteran, professional used car managers were asked to assess a vehicle and determine its value as a trade. Each man examined the vehicle, and made his appraisal. Each wrote the appraisal down on a piece of paper, and handed it to the NADA trainer.

When the trainer recorded the appraisals, it turned out that there was a $5,000 spread between the lowest and the highest ones. Some of those managers were wrong, by thousands of dollars. If the vehicle had shown up at their dealerships, they would have made it impossible for their dealership to make a wholesale profit that month.

The automobile business is one of America’s largest retail industries. Yet in the wholesale sector, prices are a mystery. Why do veteran used car managers come up with widely differing values for the same car? Why are auction prices so different from trade-in values? Why do dealers sell vehicles to wholesalers for prices far lower than they could get at bid lots? Based on our decades of experience, we offer our insights on the many different levels of pricing in the wholesale automobile business.