Dealer mark up
Thread Starter
|
Logistics Pro
Joined: Feb 2000
Posts: 3,955
Likes: 50
From: Mesa
Dealer mark up
After 8 weeks of trying to sell my F350, the wife and I decided to trade it in on a new Edge for her. One fella who showed a little interest(he was the ONLY one) emails me and asks which dealer I traded with hoping that they will be able to take his truck in on trade for my old one. I gave him the details and asked that he let me know how things go. Well he emails me back stating the truck in in the shop getting reconditioned and the asking price is $27,500! They gave me $20,000 for it. I couldn't sell it on my own for $22,500. The finance guy even told me that the 20k they gave me was really good and that they would not be able to sell the truck because of the V10. Best of luck to them! 
Posting Guru
Joined: Jul 2005
Posts: 1,617
Likes: 4
From: Denver, Co
Yeah, that is pretty typical. When I traded in my '05 for the '06, I had to fight tooth & nail for almost 90 minutes to get the dealership's offer for my '05 up into the neighborhood of Blue Book. And even then, we finally settled on the new '06 at invoice and the '05 at $1,000 below Blue Book. Within 3 days after closing the deal, the '05 was parked at the entrance to their lot with a price tag that was about $1,500 over Blue Book.
Now, from the dealership standpoint, they have several things working in their favor.
Now, from the dealership standpoint, they have several things working in their favor.
- Unprepared customers - Let's face it. If you do not know what it is worth, you are not going to be able to negotiate very effectively. These are the folks that end up getting a couple thousand less for their trade-in and paying a couple thousand more for the new/used vehicle. Dealerships LOVE these folks.
- The "I NEEEEEDDD it's" - The folks that NEED this shiny new/used vehicle, are blind to everything else, and pretty much jump to signing the paperwork. These people are related to the Unprepareds.
- Financially challenged - This is the group of folks that either have questionable credit ratings or they are still upside down on their current vehicle, but they want/need the newer vehicle. A dealership is one of the very few places that can roll that negative equity into the new loan. And, with high interest rate financing, they can generally finance those folks with questionable credit ratings.
Elder User
Joined: Apr 2004
Posts: 890
Likes: 1
From: Douglas County, GA
That is what they always tell you when they low-ball you. For the price they are asking now, they know they will have to come off that price by $3000 so that the buyer thinks he is talking them down to a good deal. So, after they sell it to the other guy for $24,500, they will still make $4500 profit in the deal.
Like you said, you couldn't sell it at the lower price, but the dealer will be able to sell it for a higher price. For some reason people have the impression that if they buy from a dealer rather than from an individual, it is a safer deal. We all know that is far from the truth, but that's how it is.
Like you said, you couldn't sell it at the lower price, but the dealer will be able to sell it for a higher price. For some reason people have the impression that if they buy from a dealer rather than from an individual, it is a safer deal. We all know that is far from the truth, but that's how it is.
FTE Leadership Emeritus
Joined: Sep 2000
Posts: 23,174
Likes: 1,678
From: Stephensville WI
The dealer will get a higher price. There are numerous reasons for this.
First, people go to the dealership to purchase a vehicle. They don't normally go to your house for a vehicle.
Second, the dealership has a sales staff to market the vehicle and apply pressure to the buyer. You don't.
Third, the dealership can arrange financing. You can't. If someone purchased the truck from you, it'd be a multpile day affair, cut a deal with you, go to bank, arrange financing or withdraw money....at the dealer, it's basically one stop shopping.
First, people go to the dealership to purchase a vehicle. They don't normally go to your house for a vehicle.
Second, the dealership has a sales staff to market the vehicle and apply pressure to the buyer. You don't.
Third, the dealership can arrange financing. You can't. If someone purchased the truck from you, it'd be a multpile day affair, cut a deal with you, go to bank, arrange financing or withdraw money....at the dealer, it's basically one stop shopping.
Senior User
Joined: Sep 2001
Posts: 196
Likes: 0
From: Chicago
We replace 3 to 5 vehicles a year at our company. Dealers typically quote us $1k to $2k on a trade in. (These are well-used, construction service, 5 year old trucks with 125k plus of city driving) I've found that if I just put a For Sale sign on it, including a laughably high sale price, and park it on our busy street, it'll sell for $6 to $10k in a few weeks. I always sell "as is" but I also don't hide anything! Honesty is the best policy and I always tell all I know about the truck. But you need to be patient - eventually the right buyer will come along.
