Smokin' trade-in deal, would you do it?

[181962]

Hmmm. The only $$$ they're really making is the $1225 plus $499, or roughly $1725... Makes one wonder why?

Desperate times call for desperate measures.

If a dealer's new car supply is sharply depleted from normal times then obviously fewer deals are made. Even if the sale-trade profit equation, leaving out the other sources of profit, yields the same profit per deal as in normal times, fewer deals means less aggregate profit.

Deals like the OP surely do not yield the profit of normal times. There isn't even any profit on the financing since there is none. What may happen is more hard sell gets ramped up for other profit opportunities when it comes time to sign the papers--extended warranties, life and disability credit insurance, dealer add-ons with high profit margins like rust proofing, ceramic coatings, an $1,800 bra?

I just checked the KBB trade value on my vehicle. Many commentators say KBB and the like cater to the industry and understate what you can negotiate. Regardless, here are the trend numbers:

August 2020 - Purchase price = $26,275 to the dealer + tax and title with 4,000 miles on the OD, manufacturer certified extended warranty included, less $3,500 trade on a 14 year old Accord, cash deal, no ups or extras.

December 2020 - KBB trade value midpoint for "excellent" condition with a few more miles = $21,947

March 2021 - Same KBB parameters, a few more miles, $22, 860

June 2021 - Same KBB parameters, a few more miles, $26,155

September 2021 - Same KBB parameters, a few more miles = $27,762

Today - Same KBB parameters, now 12,000 miles = $30,319. That's a little above MSRP on a new 2021.

Crazy. If the dealer wanted to make his normal profit on reselling the trade he'd have to charge a couple grand over new MSRP. That's going to be a tough sell; you reckon he'd be sacrificing margin on that end.

So, if I traded at that valuation, how much over MSRP would the dealer have to charge to make the same profit on the new car + profit reselling the trade as in normal times? $4,000? Less if I financed with them and buy a bunch of extras?

The OP's deal is less profit than normal times, that's clear, unless he can pile on more extras than in normal times. And he's got less deals to make in the process.

 

[chickdr]

Nice non-sequitur and obfuscation, but okay, at $2,000/year, yes.

It was April of 2020, so 1 1/2 years. After 15 years that's $20,000, about as much as one is going to pay to replace a used car with new car in 15 years. Or after the inital purchase, think of it as a $166/mmo lease for a perpetually new car.

But no, I wouldn't trade it every year

Not really sure what you mean about a non-sequitur. I was asking you an honest question. You rarely make out well trading a car in so quickly. I traded my 19 for a 21 as my 19 was leased so it was going back in 22 regardless. It was no different to trade in early with the market conditions in May.

 

[hal2]

What did you originally pay for it in 2020? You might be getting more for it than you paid a year ago

Yes, in April of 2020 I paid $33,098 after all fees but before TT&L. As always, we don't know how they slice and dice the trade in vs new sales price. In this case even the $268 fee doesn' matter as they could have quoted price $268 higher with no added fee - all the same net.

Just got back from th dealer, he write it up exactly as shown in the above attachment. As previously said, only $2,000 in the deal for them? There must be some other Mazda numbers they reaching for

 

[hal2]

I have to say $1.800 for a bra is outrageous, but no matter. If you had one now you could use it on the 2021, right?

I used the term 'clear bra' as many don;t know the term PPF - Pain Protection Film, cannot remove and reapply, and $1,800 is about what any good shop will charge. Ask any car guy or member one of the best investments for keeping the car cleaner/scuff and chip free for years.

 

[hal2]

Def unsusual time, ,but we're seeing many people here getting back over 100% of what they paid for their used car a couple years ago. What's more surprising to me is that they're "letting" get teh new car for MSRP - $500 loyalty. Again, we know how they play with the trade in numbers so we don't know how they slice and dice the trade in vs new sales price, and admittedly I'm just looking at the net

 

[181962]

I used the term 'clear bra' as many don;t know the term PPF - Pain Protection Film, cannot remove and reapply, and $1,800 is about what any good shop will charge. Ask any car guy or member one of the best investments for keeping the car cleaner/scuff and chip free for years.

OK. I have no knowledge or interest in such things so I'll assume for the moment that's a fair price. Getting back to holding the car for 5 or 10 years, how much of that $1,800 would you get back in trade? Not much. Probably only to the extent the car looks cleaner than another with more nicks in it.

 

[181962]

Not really sure what you mean about a non-sequitur. I was asking you an honest question. You rarely make out well trading a car in so quickly. I traded my 19 for a 21 as my 19 was leased so it was going back in 22 regardless. It was no different to trade in early with the market conditions in May.

You raise the question of a lease. Leases have a buyout price at lease expiration. There's a good chance a three year lease expiring now has an very favorable buyout cost. Given what 3 year old used cars are going for, it conceivable that buying out, paying the tax, and then flipping it in a trade could have a significant net gain.

Rather than turning the thing back in at lease expiration with the finance company taking ownership and getting a big windfall, you might be able to present a option to the dealer whereby you buy it out and sell it back to him at a higher price where both parties make some money and wrap it all in one package without having to finance the buyout before flipping.

 

[hal2]

OK. I have no knowledge or interest in such things so I'll assume for the moment that's a fair price. Getting back to holding the car for 5 or 10 years, how much of that $1,800 would you get back in trade? Not much. Probably only to the extent the car looks cleaner than another with more nicks in it.

Correct, like most mods there's little resale value of the clear bra other than having a chip free bumper, hood, and fenders. Yes, I'm being a being indulgent for the upgrade infotainment.

Yes, this is a one time thing, but I think if given the opportunity to drive a car for 18 months and only 'lose' $3,900 ($2,100 = Clear bra cost) many would call that a bargain. - how many of you would kill to have a $216/month lease for that time. And, some of that will be recouped as a model year newer car on resale (even with the refreshed 2022's coming out)

 

[hal2]

Not really sure what you mean about a non-sequitur. I was asking you an honest question.

Sorry, I thought you were being a wise guy asking sarcastically "what, are you going to trade it in every year".

 

[dunhillmc]

Yes, in April of 2020 I paid $33,098 after all fees but before TT&L. As always, we don't know how they slice and dice the trade in vs new sales price. In this case even the $268 fee doesn' matter as they could have quoted price $268 higher with no added fee - all the same net.

Just got back from th dealer, he write it up exactly as shown in the above attachment. As previously said, only $2,000 in the deal for them? There must be some other Mazda numbers they reaching for

I think there are some misconceptions as to how dealers make money in a car deal. The $2000-ish balance amount on that sheet isn't what they are making. On the new vehicle, they make the difference between the invoice price (what Mazda charged them) and the selling price. On the trade in, they make money when it is sold to another customer. This is based on the the selling price, the ACV (Actual cash value), then subtract any charges like service bills, detailing, CPO fees, etc. This is a simplified version but it generally works like this

 

[hal2]

Yes, there's the money from invoice price to sales price. I guess the (my) amazement was that there buying mine (or selling theirs) for just a $2,000 spread. Even if they're making a ton of money on theirs and barely a penny on mine (who knows how they spun the numbers) they can't resell mine for that much more than the $38K they claiming to give me and it seems they're still selling theirs for MSRP which seems to be under current market

 

[hal2]

FWIW, I sent that price write up to 2 other dealers,

One dealer mentioned that has 2 cars coming out of service (loaners) and he could *possibly* get me the same price that I posted here. He added that the only way my dealer can do that deal is because they don't have the car yet and tried to talk me in to the idea they may never get the car or that it may not even be here in January. ( I was given a before x-mas date) I had what I perceived was an honest talk with one of the managers at my dealer - he said the ships come to San Diego which is not having the same problems as LA (which I read to be true), and that the last shipment arrived one day after expected. This one is scheduled to arrive11/30.

Another dealer also had a car on it's way in but told me that the owner refuses to sell any cars without their $1,998 dealer add-ons - you know, the overpriced or worthless tint, paint shield, door trim edging, etc.

Finally I contacted the dealer that sold me my current CX-5, he simply said "give him a deposit and take that deal!"

 

[chickdr]

So what are you going to do?

 

[181962]

Anther dealer also had a car on it's way in but told me that the owner refuses to sell any cars without their $1,998 dealer add-ons - you know, the overpriced or worthless tint, paint shield, door trim edging, etc.

No surprise there. As noted in my post #21, be prepared for a hard sell on a whole lot of stuff you don't want when it comes time to sign the contract. What may further complicate issues is that a deposit does not constitute a sales contract. When the vehicle hits the lot, if that ever happens, the terms of the deal may change at signing. "Market conditions have changed," yada yada.

Of course if the deal goes south you can always just walk away. The only thing lost is some time.

 

[hal2]

What may further complicate issues is that a deposit does not constitute a sales contract. When the vehicle hits the lot, if that ever happens, the terms of the deal may change at signing. "Market conditions have changed," yada yada.

Exactly, I'll update when the car is at port. As of now it still seems like a too good to be true offer. Not just for my car, but that they'll sell theirs at MSRP

 

[bluegrass]

Trade in my 2020 Signature for a 2021 Signature for a net difference of about $2,100 (then add $1,800 for a new clear bra).
I only put about 200 miles a month on my car.

So you'd end up paying $3900 to upgrade to a vehicle that is 1 model year newer and 2400 fewer miles?

I definitely would NOT spend that much for such a minimal upgrade.
That works out to $1.63/mile, which is incredibly expensive.

 

[bluegrass]

Just for reference, I recently did the same thing you are suggesting (with my other vehicle, a Honda), but the deal was much more favorable.

I upgraded to a vehicle that was 2 model years newer, had 10,500 fewer miles, and had undergone a manufacturer mid-model year refresh which added a significant level of interior/exterior/powertrain upgrades.

The cost/mile of that deal came to $0.36.

 

[181962]

So you'd end up paying $3900 to upgrade to a vehicle that is 1 model year newer and 2400 fewer miles?

I definitely would NOT spend that much for such a minimal upgrade.
That works out to $1.63/mile, which is incredibly expensive.

To each his own. If I was driving only 2,400 miles a year I wouldn't have traded my 2006 Accord V6 and gone ahead with the timing belt, water pump and spark plug service, and kept driving it for the next 20 years.

 

[hal2]

That works out to $1.63/mile, which is incredibly expensive.

I guess we disagree here, at $216 per month, I'd say that is the antithesis of incredibly expensive.

 

[bluegrass]

I guess we disagree here, at $216 per month, I'd say that is the antithesis of incredibly expensive.

I'm not sure what the relevance of this monthly amount is.

The fact is, you've derived very little utility & usage from your current vehicle.
Since you drive so little, the current car will last a lifetime (will take 50 years to reach just 120K miles).

So spending $3900 to get the same vehicle, but with 2400 fewer miles, provides virtually no value.
The new car isn't going to last you longer, isn't going to cost less in maintenance/repairs, isn't going to provide meaningful resale 10 years down the road.