Mike, that may be the way it works where YOU do/did business - but that is by far not universal
Most new car dealers up here make more money on used cars than new, and sell more good used cars than new cars. They LEASE a lot of new cars.
Those leased cars come back in and are SOLD as used cars. The heaps that come in on trade are either shuffled off to local car lots or wholesalers, sent to the auction, or scrapped, depending how bad they are. The REAL GOOD ones go back on their lots for resale.
MANY dealerships DO buy used cars from the large centralized auctions because their market for used cars is larger than their supply of latemodel trades or lease returns. It is this wholesale auto auction activity that sets the blue-book value for used cars. If there is no demand at the auctions for a particular car, the Kelly Blue Book will reflect that with a low wholesale value.
They also buy from their manufacturer's auctions - lease returns, company vehicles, executive driven vehicles, etc - and with dealer principals owning more than one franchise, they often end up on "competitor's" lots.
If there IS a high demand, it will reflect that with a high wholesale value. In YOUR area a vehicle may sell better or worse than the regional average, so you may have trouble either getting close to book value for a car, or buying one for close to book value.
That's how the "iron" business works.