Guaranteed Trade-In Values?

Big Dog · Mar 20, 2006

Ok, you used car salesman types, what's the story behind this strategy?
My youngest son and I have been shopping for a used car. We found a car at a reputable dealer (Arnold Palmer Motors) that is offered under this plan. Salesman said drag or tow anything in here with a title and we get $5000 trade-in. This is only good on used cars they have had for more than 90 days.

Here's the story on the car:

2002 Pontiac Grand Prix GT sedan, 32K miles, loaded except leather. All three of the major appraisers average a high book at $12.8K. Realistically I would expect to pay approximately $10.5K with heavy negotiation for this car. The dealer list it at $13,900 (NADA high book). Carfax is clean with no problems.

The deal..........

I bring in anything with a title for trade and we can get the car for $8,900!
They explain it as a tax scheme.

I have secured a car if needed for $200. Now what am I missing?

Doc · Mar 20, 2006

I wonder if the fine print says the car you bring in has to have been in your name for 6 months or any amount of time before they'll take it ....otherwise, it sounds like a good deal.
I've heard of these type of offers, but usually they were for 2500 or less. 5k is a nice chunk of change.
Good luck dealing with them.

Big Dog · Mar 20, 2006

Doc said:
I wonder if the fine print says the car you bring in has to have been in your name for 6 months or any amount of time before they'll take it ....otherwise, it sounds like a good deal.
I've heard of these type of offers, but usually they were for 2500 or less. 5k is a nice chunk of change.
Good luck dealing with them.

They said anything even if it's a friends car. They need it to show a loss.

IT DOES NOT HAVE TO BE IN MY NAME! Just needs to be clear, so I buy it, have owners sign the title and turn it over to the dealer!

Dargo · Mar 20, 2006

Of course I can't see the Pontiac you are describing, but my subscription NADA Black Book guide places the ACV (Actual Cash Value) of that unit at $7475 as of the 3rd week of March, 2006. That is the expected price that the car would bring if the dealer were to run it through the dealer auction.

The "guaranteed trade value" type of promotion has been around for quite a while. In the most simple terms, the dealership basically considers the customer's trade at $0 when creating the ad. If they wouldn't get into trouble for false advertising, the dealer would likely give you $5000 for a brick in this transaction. Many years ago I worked as a gm at a Chevy store. I needed to get rid of some custom vans that were eating my lunch. I saw that my list price (a "customized" vehicle is not required to have a Moroni label with the factory MSRP clearly listed since the profit margin on the "custom" part is up to the dealer) was over the cost of a base Chevette, so I ran an ad saying buy a new custom van and get a Chevette free. It worked great for me; I got rid of my old stock custom vans and also got rid of my turd base Chevettes at the same time!

I would simply begin my negotiations at $5k below their asking price for any old age unit. In general, a dealer would like to turn his used car inventory within 60 days. After 90 days it starts to cause heart burn. After 120 days he can no longer take it to the auction without taking a big hit because the price has most likely dropped to where he now has too much in the unit. Depending on the dealer, some dealers actually write down their internal cost of the unit to allow the sales department to ask a more reasonable price to move the unit. Just remember, a used car will continue to depreciate on the dealer's lot just the same as it would in your driveway. The only difference is that it most likely is not accruing additional miles on the dealer's lot.

It is true that you most likely cannot buy a car for ACV. And, ACV is a subjective figure. Also because of demand and popularity, some vehicles will be easier to buy at a figure that is closer to ACV. For example, a vehicle in high demand right now like diesel pickups will bring several thousand over ACV. If that trend continues, the ACV will 'self correct' in the books and rise in price at the auctions. Otherwise, dealers would just buy every good condition diesel pickup at the auctions and pass on all other vehicles. It has generally been easier to buy relatively common domestic sedans for closer to ACV than other units. That's no reflection on the unit, but only a reflection of the market, which we discussed, is fluid.

Make any sense? I've been up and traveling so much lately that I may not phrase it like I mean. Besides, I found out that the real "Dargo" has disappeared while I was in California. I spent all day yesterday looking for him to no avail. I woke at 2am this morning and have been walking through the woods trying to find him again this morning.

Doc · Mar 20, 2006

Best of luck finding Dargo Brent! Man, I know what your going thru and the only thing that will bring a smile to your face now is him coming back up your driveway. Keep the faith.

Dargo · Mar 20, 2006

Doc said:
Best of luck finding Dargo Brent! Man, I know what your going thru and the only thing that will bring a smile to your face now is him coming back up your driveway. Keep the faith.

Thanks Doc! It really is bugging the crap out of me. The sun is up now so I'm heading back out. I wouldn't get much work done today anyway since that's all I'm thinking about. He does have ID tags with my phone number, he has an ID microchip implanted in him, and he has an ID tattoo in his ear. I'm hoping...

Big Dog · Mar 20, 2006

Dargo said:
Of course I can't see the Pontiac you are describing, but my subscription NADA Black Book guide places the ACV (Actual Cash Value) of that unit at $7475 as of the 3rd week of March, 2006. That is the expected price that the car would bring if the dealer were to run it through the dealer auction.

The "guaranteed trade value" type of promotion has been around for quite a while. In the most simple terms, the dealership basically considers the customer's trade at $0 when creating the ad. If they wouldn't get into trouble for false advertising, the dealer would likely give you $5000 for a brick in this transaction. Many years ago I worked as a gm at a Chevy store. I needed to get rid of some custom vans that were eating my lunch. I saw that my list price (a "customized" vehicle is not required to have a Moroni label with the factory MSRP clearly listed since the profit margin on the "custom" part is up to the dealer) was over the cost of a base Chevette, so I ran an ad saying buy a new custom van and get a Chevette free. It worked great for me; I got rid of my old stock custom vans and also got rid of my turd base Chevettes at the same time!

I would simply begin my negotiations at $5k below their asking price for any old age unit. In general, a dealer would like to turn his used car inventory within 60 days. After 90 days it starts to cause heart burn. After 120 days he can no longer take it to the auction without taking a big hit because the price has most likely dropped to where he now has too much in the unit. Depending on the dealer, some dealers actually write down their internal cost of the unit to allow the sales department to ask a more reasonable price to move the unit. Just remember, a used car will continue to depreciate on the dealer's lot just the same as it would in your driveway. The only difference is that it most likely is not accruing additional miles on the dealer's lot.

It is true that you most likely cannot buy a car for ACV. And, ACV is a subjective figure. Also because of demand and popularity, some vehicles will be easier to buy at a figure that is closer to ACV. For example, a vehicle in high demand right now like diesel pickups will bring several thousand over ACV. If that trend continues, the ACV will 'self correct' in the books and rise in price at the auctions. Otherwise, dealers would just buy every good condition diesel pickup at the auctions and pass on all other vehicles. It has generally been easier to buy relatively common domestic sedans for closer to ACV than other units. That's no reflection on the unit, but only a reflection of the market, which we discussed, is fluid.

Make any sense? I've been up and traveling so much lately that I may not phrase it like I mean. Besides, I found out that the real "Dargo" has disappeared while I was in California. I spent all day yesterday looking for him to no avail. I woke at 2am this morning and have been walking through the woods trying to find him again this morning.

Hummmmmmmmm, how did I know to pick on you?

Thanks Brent!

bczoom · Mar 20, 2006

Nothing to do with Greg's car but I hope you find Dargo soon!!!

TOMLESCOEQUIP · Mar 20, 2006

Brent......Do they make a "lojack" unit for animals ? I know former indian player Albert Bell was tracking/stalking his ex girlfriend with one.(planted on her car, not under the skin !) just an idea for in case there is a next time. Good luck with the search. ...........Tom

Av8r3400 · Mar 20, 2006

The dealer I worked for would take a dollar figure (say $100) from every used car sale and "write down" the cost on the oldest vehicles on the lot. This would eventually add up to owning the very old (90 days is VERY old) cars to almost a $0 value to the dealer. Then this car could be "slashed" or "push pull and drag" saled very easily. There are inumerable ways to rob Peter to pay Paul in the car business.

Remember markup on a used car is at LEAST $3000, often more like $5000 on a $12k car.

mtntopper · Mar 20, 2006

Someone somewhere is paying the costs of supporting the dealership. You just don't want to be the one paying for someone elses good luck. If it sounds too good to be true, step back, evaluate and make sure you are making the right decision based on good judgement. There are some good deals for buyers and there are good deals for the dealership.

Big Dog · Mar 24, 2006

Update.............

Long story short, got the car for $8700 BUT they had to have the trade-in! Insisted they needed a titled car for loss right off? They gave me a price of $10,800 without the trade and would not sway. The car was a one owner 36 month lease that was promo'ed out at 32 months. She was inticed by GM by deferring her last 4 months to get into a new lease. Car is nice, even got a moon roof, and my son is on cloud nine. For ya'll that read my Proud Father thread, you know I'm beaming too!

Thanks guys!

BD

Doc · Mar 24, 2006

Congrats Greg! It looks nice. Here's to your boy having thhe best of luck with it!

Big Dog · Mar 24, 2006

Doc said:
Congrats Greg! It looks nice. Here's to your boy having thhe best of luck with it!

Thanks Buddy!

Guaranteed Trade-In Values?

Big Dog

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Dargo

Like a bad penny...

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Dargo

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Just Plinkin Away the $$

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