The used-car sales department is also critical to a dealership. It not only provides products for customers who may not be able to afford a new car, but it also serves the essential role of handling trade-ins from new-car customers.

Running this department is tricky. The manager has to decide which of the trade-ins will appeal to the kinds of customers who are interested in the store's new cars; you don't go looking for a nice, pre-owned luxury sedan at a Jeep dealer. Trade-ins deemed unsuitable are sent to auction, while the rest are inspected and prepared for resale. To round out the inventory, a used-car manager also buys cars at auction. "That inventory is more volatile than the new-car one," says Ragsdale. "That must be an even lesser supply because a high-priced used car will depreciate $100 to $200 per month sometimes."

Wholesale auctions are open only to licensed dealers. They're where the real action is, and they most assuredly are not the local so-called wholesale auctions held weekly by dealers and auction companies clearing out police impounds, bank repossessions or charity donations. If you don't need a dealer's license to participate, it isn't a wholesale auction.

The very best used cars are available at wholesale auctions, as cars coming off lease are auctioned only to dealers. This gives dealers the chance to get the newest, lowest-mileage cars available and put them on their lots for their customers to consider.

Vehicles at wholesale auctions are sold at or near - surprise! - the wholesale price listed by most major used-car buyer's guides, including IntelliChoice. Thus, dealers don't sell these cars for that price, because that's what they paid for them before they had them trucked back to their location and prepped for sale with potential expenses like a fresh set of tires and brakes. At a minimum, the dealer has the cost of a complete wash, wax and detail job to spiff up the vehicle's appearance, in addition to shipping costs. Figure the better part of a day's labor to detail an auctioned car for retail sale.

Because dealers have to pay cash for cars at these auctions, most have a significant amount of money tied up in used-car inventory. This isn't like putting cash into mutual funds or bonds; used cars depreciate from the minute the dealer buys them. So the goal is to sell the cars as quickly as possible to beat the depreciation and to free up the cash sunk into them.

Used-car sales are sometimes handled by the new-car sales staff, but at most larger dealers, the used-car department will have dedicated salespeople who can spend time getting familiar with the cars in inventory.

During slow parts of the day, a dealer's salespeople may spend time in training, studying product information and the details of financing, insurance and warranties. The NADA even has a certification process that tests salespeople in ethics, laws regulating dealers, customer satisfaction, professional sales practices and manufacturers' product training.