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Old 10-04-2002, 14:28   #1 (permalink)
JR
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Trade-in Valuations - how is it done?

After opening a big can of worms with my last thread about dealer delivery charges, I thought I'd go for Pandora's Box this time and ask a question about dealers trade-in valuations.



I've noticed as I've been researching the new Falcon around the net and hunting out financing options, that a lot of financial sites seem to be linking to the Redbook (www.redbook.com.au) website to give you an idea of the value of your trade.

Apart from Redbook though, the one name that sticks in my mind is the Glass Dealers Guide, but I'm not sure if this is Australian, or if I've just read about it from lots of US websites.

I had the sales rep at Peter Warren say to me when I mentioned the redbook value we don't like to think in terms of 'book' value. In a way, I find this statement to be patently absurd, as of course the valuers have to use a wholesale market value as an indicator of what to offer, but what I'm asking is what mechanism do they use?

Could I expect any valuation given by the redbook site to be reasonably accurate, and can I use it as a negotiating tool in the sale process.

I'd be especially interested to hear any comments from guys like 61sg on this subject, as he's a Ford Dealer.



I've always felt that I've lost out in the trade section of the sale in the past - worst case was a Festiva I owned years ago that was traded for $8200, and a week later sat on the lot with $13990 on the windscreen.

One of the reasons I ask, is that my car has a lot of mods done (17" alloys, body kit, engine, exhaust, brakes & suspension) and I get really offended when the sales rep says things like well, those things don't really effect the value of your car.



Before anyone states the obvious - sell privately - yes, I know I would get more, but then you have the problem of transport until the new car arrives. It's just so much more convenient to swap cars when the new one arrives (and yes, I know it's attitudes like that that cause the problem I'm talking about to occur).


Cheers

Jason


PS - CDAA, no ranting! I don't want Russell to spank me again
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Old 10-04-2002, 19:00   #2 (permalink)
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My only suggestion is firstly, be happy with the car you have and if they don't offer a decent trade, walk away. I traded a 4 month old VX11 SS with leather and 15000km and got 45000 as a trade on a 61000 CV8. I know have 20000 on that and while I will be perfectly happy to keep it, I'm starting to get to much attention from the cops (its the only 1 of that colour) so I'm looking to trade to either a VY SS or (if I can get to see one) a BA XR6T. I get the phone call about the VY tuesday and so far the only BAs'around here are XTs. If I don't get what I want, basically no cost changeover on the VY or money back from the BA then no deal will happen.
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Old 10-04-2002, 19:23   #3 (permalink)
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Without going into the question of how mods affect the value of a trade in let us look at the process that is (theoretically) followed.

Certainly the various valuation guides are used by the dealership valuer as a starting point but the tendency these days is to look at the total value of the deal from the dealership perspective.
Referring to my posts in your other thread I pointed out that the experience in Ford dealers of late has been that new cars have not been a profit centre as they have tended to give away most of their margin to get the deal.
Now it should be obvious that the dealer is not running a charity and thus their porofit has to come from somewhere and typically this has been from the mark-up on the trade-in. It is absolutely true to say that you aren't going to win both ends as a customer. If you get a heavily discounted new car price then you can bet your last razoo that there is a fair margin in the trade in valuation.

Other factors play a part including:

1. How easy your trade is going to be to move - obviously holding cars in yards costs money so the quicker they believe it will sell the more generous they are likely to be. This can be affected by things like colour (sometimes a colour becomes an orphan), transmission type (four cylinder autos are a boon for dealers) and the quantity of similar vehicles on the market at the time.

2. Condition obviously plays a role. You are not going to get near the upper end of the range if you take in a shabby, tired looking vehicle.

3. Options fitted - or absent can have an impact. It is easier these days to sell cars with air and CD players and the absence of these items has a negative impact on value.

4. Your relationship with the dealer can have an impact - for example if they know the car service history then they don't have to factor in as much margin for fixing things.

While on the topic of margin in used cars, it exists to cover statutory warranties, fixes to achieve RWC (in Vic) and the holding costs of the vehicle (plus a profit of course).

The deciding factor in any deal - and I've done a lot of them - has to be the figure to actually change-over. You aren't going to get it both ends so concentrate on the actual costs to you rather than become focused on just one factor.
For us Ford owners we can expect to get a few shocks when we look at the change over number. As an example of this I know of a very nice condition AU2 with about 60k kms that traded recently for $15,000 - this is actually a bit better than a few months ago to a small shortage in low mileage AU stock as people have hung on to them. Sadly this is still only 40% of it's original cost and will leave a nice big gap to a BA XT that may well end up being Fords biggest hurdle with the new product.

Cheers
Russ

(see NO spanking).
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Old 10-05-2002, 15:10   #4 (permalink)
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Russ,

Thanks for the info. I spent a fairly harrowing day yesterday going to 3 seperate Ford dealers going over the figures and I've got them to within $1000 of what I wanted for the final change over. If I can get to withing $400-$500, I think I'll still be happy.

I can tell you that pressure selling techniques are alive and well, as all three dealers would offer me more for my car if I signed the deal right now, but when you ask them to put it in writing so you can go think about it over the weekend and compare their price to others they just aren't so keen. In the end, only 1 (Sinclair Ford at Penrith) would put their best offer in writing.

Another of my favourites is the lowball first offer on the trade, then I can talk them up about $1500-$2000 after 2 trips back to talk to the valuations guy, then we need to call the dealer principal to see what they can do about a better offer (this was used by 2 of the three).

This comes back to my though in the other thread - mandatory drive away pricing would take a lot of the hassle out of the equation for both parties.



But my all time favourite line of the day (and this story is off on a tangent, but bear with me):



My sister and her husband have just had a baby, and are looking at buying one of the Escape/Tribute 4WD twins.

The sales rep at Penrith City Mazda stood in front of my brother-in-law and I and said that the Mazda Tribute is better because it's the original car and the Ford is just a copy, and the reason for this is that the Mazda is Japanese imported quality, while the Escape is just Mazda supply the bare shell bits and Ford putting the rest on the Escape to build it here.

While normally I would bite my tongue (mainly to stop from laughing), the look on the guys face when I said straight out that he was full of shite and that both cars were produced on the same line at Mazda's Hiroshima plant (not sure if I got the plant right, but you know were this is going), was worth it.

My Sister will now be shopping elsewhere.

Another interesting point is obvious dealer discrimination against you depending on the visual you present when you go into the dealer.

for the last two weeks, my mother has come with me when I've been car shopping (she'll be using this car a lot on weekends, so I thought it fair to include her in the process of choosing the car), and reps have been falling over themselves to serve us.

Yesterday, my B-I-L and I were looking to spend $90K between us, yet the reps don't want to know you at first as they assume it's just 2 guys walking in to tyre-kick.

I understand that in a lot of case you do get time-wasters, but some of these reps could really work on their people skills in this regard.
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Old 10-06-2002, 03:12   #5 (permalink)
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car valuations:
The dealer you are talking to often isn't the one buying your car. My car was shopped around endlessly and no Ford dealer wanted to buy it outright - just wholesale. I found the sources they were talking to eventually and not all were in Sydney.

When I worked car transport (Sydney base) we picked up dozens of cars every day which were shipped to wholesalers/auctions in Melbourne. Two days later the same cars were back on a truck up to a dealer in Sydney. You'd be amazed how many hands some cars go through between trade-in and retail.
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