Quote:
Originally Posted by the-rasta-masta
Old thread, but relevant title. Apologies if the Bump offends. I'm looking at trading in a vehicle, and am looking for some advice on what percentage a dealership is typically looking to make off a trade in.
For example, based on a several comparables, I'm confident that they will sell my car for 50k, and they are offering me 41k plus a GST tax credit of 5%. So all in it works out to $43,050. Two Questions:
1- Does offering this tax credit really cost the dealership anything? Or is this just technically removing the trade in value from the full GST cost of the new vehicle?
2- If I'm looking at the above correctly, and the dealer sells my car for $50k, they are looking at an 18% profit off my trade in for what it costs them at $41k. What range is typically expected?
I realize it's likely easier for me to sell privately for $50k. I'm just trying to determine what I should go back to them and if that would be worth the trade off for my time of selling it privately.
Thanks in advance for any help!
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1. Customers only pay GST on the difference between the trade and the new vehicle when you trade in. So if you sell your vehicle privately you are going to be paying GST on the total price of the new vehicle (5% of $80000= $4000). If you trade in you pay GST on the difference, which appears to be 5% of $40,000 or $2000 so they will tell you you are getting $41 for your trade plus $2000 in GST savings so "in effect we are giving you $43000 for your trade, so no it doesn't cost the dealer anything. But we are all taught the "tax savings close".
2. Being only two years old any repair costs would still be under warranty so reconditioning costs would be minimal, however they add up fast. Minimum costs are $800+/- (Cleaninig, oil change and vehicle inspection). Does it need tires? or more importantly do they have to put tires on before they can re sell it??? $800 to $1500 (original factory tires are typically good for 60,000 km or so, about 3 years. Hows the windshield, is it cracked? $400, does the
car have rain sense wipers or heads up display? easily $1500 for a windshield if it does. Any body damage or scratches? A power polish is $300- $500. All those costs add up. Plus standard known repairs for certain models, not likely in your case as your trade is very new but things like certain models bad with struts, leaking coolant/ power steering transmission lines etc...
Also consider the length of time it will stay on the lot.
Customer- "I really wanted to get $24000 for my mustang".
Me- "But why are you trading it in?"
Customer- "Well i don't like driving it in the winter, it suck on the icy roads"
Me- " Yes right, so knowing that we are going to be sitting on this
car untill spring, thats why we are paying you $22,000. What day do you want to pick up your SUV?
In my world 18% gross is a pipedream, especially on used. As a volume dealership our margins are typically in the 3-5% range be it new or used. Go ahead and question them on their trade in value don't be shy about it., ask them what they plan to retail it for, show them comparables, have your maintnence records, build value in your trade just liek they are building value in what you are buying. you are selling them your
car, they are selling you their
car. Don't think it is "easier" to sell for $50k on your own....
