Quote:
Originally Posted by Basket Case
That is exactly why I have heard as well. I did check 3 different dealerships. The differences I encountered were in how much they were willing to give me for my trade in, and willingness to throw in a few extras or not.
One dealership wouldn't even give me $500 for my trade in, the one I bought from gave me $1700...
|
Did they give you $1700 for your trade or SHOW YOU $1700 for your trade? In other words, were you able to negotiate a lower price along with the $1700?
If you paid MSRP minus $1700, then they basically gave you nothing for your trade because they likely had around $2000 mark up on the front side. If that's the case, then they just gave up most of their markup in order to acquire your trade for free.
A dealer could show you only $500 on the trade in, but then mark MSRP down $2000 and you'd have gotten a better deal... IF you can find a Scion dealer willing to come off PurePrice. This is why BRZs sell for around or below the price of an FRS.
This is why it's always better (financially) to sell your car than trade it in. It is, of course, less convenient. It's also why car salesmen make more money (at least on the front side) selling used cars. At the dealership I worked at, a $27000 used car would have $4000-$5000 markup, but a $27000 new car had around $2000 markup. Thus, if you were trading a car worth $500 wholesale (which is what they always do with a $500 car - wholesale it) on a used car, they could show the trader $2,500 for their trade and still make $2000-$3000 profit. If they showed the trader $2,500 for their $500 trade on a new car purchase there would be very little front side profit in the deal.
Basically, if I sold a used car, I could show the trader a lot more money and still make 25% of a significant amount of profit margin. I sold a number of new cars and made only $50 on the front side (the manufacturer would give each salesman $50-$500 on the back side for a new car sale).