It usually doesn’t work quite like the example above. Using that example…the dealership will only give you $4k for your old car, even though it’s worth $10k. They then turn around and sell it for anywhere from $8-12k, netting themselves a tidy profit on the vehicle now for the second time.

The convenience makes this worthwhile for most car buyers, even if they could get another few thousand if they did everything themselves and paid full taxes. Dealership of course loves it and laughs all the way to the bank.

Not manufacturers, dealers. A legally required middleman in most of the US. They'll take your $10k car for $7k and try to resell it for $12k. Even if it gets negotiated to a fair price, they still get the opportunity to upsell used car buyers into extended warranties and maintenance plans.

Tesla is a little different in that they do not have dealers, so they instead do no-negotiatiation sales on their used cars. It's good for them because they can do the same buy low sell high deal. But when the model is not selling, they'll have to buy it and sit on that asset for months or dump it at auction.

Because they can (usually) resell them for more than they give you for it.

Usually. They might have trouble with Teslas.

Because they lowball you

CPO cars print money.

Charge 3k more in order to give the car a once over and then offer a few years extra warranty that will probably never pay out that much in repairs (assuming there's anything at all).

Yep, really depends on your personal feelings around your money.

I am generally a used car kind of guy, but this is how trade-ins work. For some people, they'd rather just not have to deal with selling a car even if they could get a lot more for it. The dealerships provide them that service at a significant cost. 🤷‍♂️