That most used cars are sold by intermediaries (i

This phenomenon can be explained by the market for lemons. This model was set up George Akerlof in the 1970s. The lemons model basically assumes that owners of used cars have an information advantage over potential buyers associated with the quality of their vehicles. Owners of bad cars try to sell them to ill-informed buyers while owners of good cars hold on to theirs. This information is most clearly known by the used-car dealers who broker deals in such a way that they can exploit the assymetry in information of the customers. Whereas new car delaers only cater to a certain audience who are aware of the specs of the new vehicle and cannot attempt any sort of exploitation or clever tactic to offload excess vehicles by taking advantage of adverse selection.