[hajile]

Used car auction prices are basically fixed. 80-90% of all cars are bought in auctions run by just one company (Cox). Sale prices low/high is usually in a range of about $100.

As supply costs are so thoroughly controlled, the biggest way to increase margins is increasing prices either directly or through service contracts and/or financing. There is a slight economy of scale to owning fleets of car transports and the like, but the actual competitive advantage of those things over smaller dealerships is pretty minimal and I don't doubt is completely cancelled out by the extra administration overhead smaller dealerships don't have.

Carmax used to mark up cars $2000 over auction price. That isn't pure profit though. They have to pay to transport the cars from the auction to their dealership. They have to pay for the building/lot and administration. They have to pay for any necessary repairs. They have to pay interest on the vehicles as they are leveraged on the vehicles they buy (one reason they resell so fast, but may lose money that must also be made up elsewhere). Most significantly, they have to pay the sales team.

By the time you're done, they probably make more like $100 or less per vehicle directly and the rest indirectly through warranties, service deals, and loans.