Exactly. If you notice they usually put all the nice cars on the front row as well. Those are the cars that get people "in the door" (how many people's dream car is a brand new Ford Taurus?) and when they find out they can't possibly afford them because of the outragous pricing (well above fair retail for even a Starmarked car) and really horrible used car financing they get "pulled" over to the new section where they have more buying power. Occasionally you will get someone dumb enough to buy one of them or they get tired of looking at them and lower the price to something reasonable to make room for some newer cars to lure people in. Trade ins at a domestic car dealership are usually either 2-5 year old domestic cars and they are usually totally ragged out.

All dealerships are different. I bought my 126 from an Arab guy that does the same thing. Mostly Mercedes BMW and Landrovers. These low end used lots all buy from the same auctions so watch out about their claims about one owner because they have no idea about that. Most low mileage one owner cars never make it to the local auctions to begin with. Auctions are generally stocked by car dealers that dump units they don't want to the auction house. It all depends on the dealerships. Most of the "one owner" cars that are anything worth writing home about get bought by the sales staff or get sold to friends and family of the sales staff. A friend of mine just bought a 40K 107 SL in pristine condition that was traded in at a Local MB dealer. It went from a salesman from the MB dealer to his friend a salesman at a VW dealership and then to its current owner who happened to know him. Even after being traded in and sold by two car dealers he still got a steal of a deal on it.

As for trade in values. The reason why these dealerships have to lot stock is because of the laughable trade in amounts they offer for cars. Nobody in their right mind is going to take 20K for their late model S600. These car dealers would rather get their cars at auction than pay a dime more to a customer than they have to.

If you want a good used car value I would try going to a local car dealer that does swift business but is willing to put other makers cars on their lot. Here you may get a good deal on a one owner reasonable milage trade in that the dealer would rather liquidate to the public for a small profit rather than sell it to the auction for one of his competitors to make a profit off of it. Most high end Mercedes, BMW and Volvo dealers only want their manafacturers car on the lot and usually only a few years old with low mileage. Some of the middle of the road dealers put other makers cars on the lot. I bought my 140 at a BMW dealership that had changed ownership to a company that owns many different dealerships in the Atlanta area. They sent some of the lower end cars to auction but kept as many of the nicer cars at their lot. They had everything from one year old Honda Accords to an S class Coupe to Volvos and Jaguars. All of them usually traded in on new BMW's. I bought my 1999 S320 for thousands under book price because they were selling a lot of new BMW's and their used cars were going slow and the lot was getting quite crowded.

My experience is mostly based on the Atlanta market. Many people in the Northeast will pay $10K for a 123 wagon so I take it that market is quite different considering the rust problems and other issues they have there. Im guessing though that the auctions and dealers operate similarly though.