According to our sources dealers who use the auctions to dispose of their customer part-exchanges are making record profits from this stock. Some are only half joking when they say that maybe they should put all their cars through the auction because they would make more money than retailing them. The reasons for this are varied; not enough cars around in general leading to higher than expected demand, better presentation standards and descriptions etc. The point is that this is all very good from a dealer’s point of view. Most are generally budgeted to break-even in this area, thus encouraging them to maximise on the volumes they could sell by ensuring that customer trade-ins are valued to give a good chance of selling another vehicle.
With the market as it is though – and no one really understanding the pace and size of the change in used car sales – it is important that any potential buyers do their homework before attending the showroom. The problem is that with nothing but bad news being reported and car sales and dealers, in fact anyone with any business in the car market, on a downward spiral it is much easier to convince a customer that the value of their present car has plummeted. The truth is they are much more likely to believe this when they read in their newspaper, see on the TV or hear on the radio what a desperate state the motor trade is in!
This scenario has actually played into the hands of some car dealers and perhaps they have inadvertently, by trying to be cautious in their valuations, been caught out with just how large the re-bound in used car values has become. So as far as customers are concerned they may think they are getting a great deal on the car they are purchasing, but in reality may at the same time be getting short-changed in the value of their existing car.
Here are some MTI tips on ensuring the best possible price for a trade-in:
Always ask the dealer how he arrived at the value he has given and always question the price, blind acceptance will ensure you get a lower value. Even if you think the price offered is great, in this bullish market it could be worth more.
As we have tirelessly reported, prices have risen steadily this year and everyone has been taken somewhat by surprise, but as the price of the used car you want to buy is now rising with lack of cars around, just make sure that your old car rises accordingly!