What is an Auto Broker?

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Another incentive for selling cars to brokers is that dealers have to pay financing costs for the cars sitting on their lots. Keeping a $15,000 car around for four months could easily cost $550—more than the dealer’s profit on that car might have been.

But don’t assume that brokers have access only to slow-selling cars. Dealers who sell large numbers of cars to brokers know they have to supply them with popular models, too. And brokers say there’s always a way to get a car that’s in demand, such as ordering it directly from the factory through a co-operating dealership.

The second seeming incongruity is the question of price. How can the consumer save money on a car by adding a middleman—a broker who is going to receive a commission?

For one thing, the broker bypasses the showroom salesperson, who would otherwise get a share of the dealer’s profit on the sale. For another, the broker can entice car dealers with the prospect of high volume. “I know dealers who make as little as $5 a car,” says the vehicle-leasing association’s Nerenberg. “But they might sell 20,000 cars a year to rental companies and brokers.”