How do used auto dealers work?

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There is a full fledged underground supply chain and process.

1. Local used auto dealers get cars from big dealers
Ever wondered where did your old car, which you exchanged at OEM showrooms, go?
Yes, OEM dealers sell off your old car to local dealer network.
Local dealer prepare the car (denting painting) and sell it off to other small fishes. Sometimes other big fishes from other states buy such cars to sell in their states (Used cars from Mumbai are delivered to other cities as well !)

2. Supply from classified portals
Dealers crawl online portals to get supply.

3. Supply from individual
There are two cases here- park and sell or investment
Dealers sometime invest in a car (pays amount upfront) depending upon demand or allow seller to park and sell at his location (commission based)

4. Paper work
Dealers have their contacts in local RTO offices, insurance and bank agents who gets paper work done.

5. Demand
At a given time demand in city for a particular model is a function of locality. Mumbai suburbs have high demand for hatchbacks and south Mumbai has high demand for sedan.
If a south Mumbai dealer has a hatchback in his inventory, its more likely he would sell it off to his network dealers in Mumbai suburbs.

6 Team
Generally used auto dealers have a team of purchasers/evaluators, sellers and mechanics.

7. Margins
Margins depends upon type of dealing a dealer does
a. If dealer has invested money in the car  (Upfront payment), margins are near about 10-15% !
b. If its “Park and sell”, margins are near about 2-4%
c. Sometime dealers pass on a potential lead to other dealer at 1000/- bucks, if deal closes.

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