Topic: I think I peed my pants laughing at this TS Wheels article

[Cord]

I contacted OMVIC and complained about the "mandatory" fees.  The woman there asked me this "But did they actually charge you those fees?"  I replied that of course they didn't as I walked out.  She then explained that there was no problem and nothing could (would?) be done as nothing was done wrong.

Yes, unfortunately I can see that happening. Bureaucrats. They'll help you get your money back if you pay illegitimate fees but they won't do anything to stop a dealership from attempting to charge them. 

Did I mention another thing salespeople hate? Having to pay AMVIC $100 per year so they can continue to do good work like the above. In Alberta, dealerships are also charged $6.25 on every vehicle sold to fund AMVIC. They tell us that it is supposed to be an end user charge but so far they have been too gutless to collect it at the time of registration. However, they have told dealerships they must collect it and remit it. Actually I don't think they care if it is collected, just that it is remitted.

[johngenx]

In Alberta, dealerships are also charged $6.25 on every vehicle sold to fund AMVIC. They tell us that it is supposed to be an end user charge but so far they have been too gutless to collect it at the time of registration. However, they have told dealerships they must collect it and remit it. Actually I don't think they care if it is collected, just that it is remitted.

I'm actually fine with this fee. It's a flow through, and dealers are upfront about it.  The tire recycling and AC taxes are to be paid by the new owner, so I'm fine with that.  GST is the same.  The admin fee is just padding the price.  And often, the padding is applied after the negotiating has been done.  But, we've covered this 100x, so...

Trades must be the biggest headache possible.  A source of used cars, but cripes, everyone seems to think their car is worth about $5 less than it was when new four or five years ago.  Now, dealers (Honda and Toyota!) seem to price their 5 year old used cars at new car prices, so that might have something to do with it!

[safristi]

  Have U priced an olde Honda NSX lately...........

[The Mighty Duck]

Trades must be the biggest headache possible.  A source of used cars, but cripes, everyone seems to think their car is worth about $5 less than it was when new four or five years ago.  Now, dealers (Honda and Toyota!) seem to price their 5 year old used cars at new car prices, so that might have something to do with it!

Given what they see used cars priced at on dealer's lots, can you really blame people for overvaluing their cars? Even if you understand buying a wholesale and selling at retail, when you're trading in a car and the dealer says it's worth $5000, and there's an identical car on the lot for $9500, that stings...

[kenm]

Given what they see used cars priced at on dealer's lots, can you really blame people for overvaluing their cars? Even if you understand buying a wholesale and selling at retail, when you're trading in a car and the dealer says it's worth $5000, and there's an identical car on the lot for $9500, that stings...

Aren't you being a little bit unfair? There's at least a day's worth of minimum wage detailing invested in that $9500 car. 

[Wheelboy]

Aren't you being a little bit unfair? There's at least a day's worth of minimum wage detailing invested in that $9500 car.

This is just an assumption but I would imagine the profit on a used car is around 10x the profit on a new car.  Would Cord care to comment?

[johngenx]

Given what they see used cars priced at on dealer's lots, can you really blame people for overvaluing their cars? Even if you understand buying a wholesale and selling at retail, when you're trading in a car and the dealer says it's worth $5000, and there's an identical car on the lot for $9500, that stings...

Yeah, sometimes the differences are very, very high.  I know a guy that traded his Civic in on a new Accord, and they marked his car up $8000.  But, did they make all that?  Maybe, but probably not.  That $9500 retail price will be probably end up at $8000, maybe less, and they might end up sitting on the car for weeks or even months.

The great thing is that there is a solid alternative to trading: selling.  People groan about the hassle of private sales, but I've done it quite a few times, and had great results.  Today, ads are either cheap or free, and the amount most sellers will realize over trading are significant.

[The Mighty Duck]

Yeah, sometimes the differences are very, very high.  I know a guy that traded his Civic in on a new Accord, and they marked his car up $8000.  But, did they make all that?  Maybe, but probably not.  That $9500 retail price will be probably end up at $8000, maybe less, and they might end up sitting on the car for weeks or even months.

The great thing is that there is a solid alternative to trading: selling.  People groan about the hassle of private sales, but I've done it quite a few times, and had great results.  Today, ads are either cheap or free, and the amount most sellers will realize over trading are significant.

Perception and reality are often very different. I was just referring to the way a customer perceives the situation - especially someone who isn't interested in cars and therefore doesn't think about anything else. They just see an $8000 markup and wonder why they got so little for their car.

Selling privately is a great option. Again, I think the seller needs to know or care a little about cars, but with a little effort, there's a substantial cash advantage. Just don't forget about the potential tax savings on a trade-in, as that can reduce how worthwhile a private sale is.

[johngenx]

 Just don't forget about the potential tax savings on a trade-in, as that can reduce how worthwhile a private sale is.

Only 5% in Alberta, so it's not that big of an issue, especially considering the large difference between selling and trading.

If the vehicle you're trading is $30K (which would be high, I think for a traded car), then the tax benefit is only $1500.  On any car I've considered trading, I realized at least $5K over the trade offer.

When I bought my C230, I had a 190E that I was moving out of.  The dealer offered me $3500, I sold it for $11,000.  The tax savings would have been $175.  I think the $7500 extra was better...

(and yes, the dealer had a used 190 similar to mine that they were retailing for $15K, so the $3500 seemed outrageously low, but so what, I refused the trade offer and sold it myself)

[Cord]

Even if you understand buying a wholesale and selling at retail, when you're trading in a car and the dealer says it's worth $5000, and there's an identical car on the lot for $9500, that stings...

Does the dealer make $4500 on that deal? Maybe. But not likely. Here is a more typical scenario based on where I work:

wholesale trade $5000
sent to 3rd party detail company $250 (up to $400)
mandatory inspection $150
perform required repairs, on a $5000 car I'd say average $400.

So now the car is on the lot and the dealership is into it for $5800.

Best case scenario: Somebody comes and pays full price within 30 days, dealership profit on sale is $3700. Possible but not likely.

More typical scenario: Somebody comes in with a trade worth $100 that they think is worth $2000, plus they want a discount of $2000. So we give them the $2000 for the trade and we saw off at $500 discount on the price. Profit on that deal is $1300.

Worst case scenario: The car sits on the lot for 120 days before somebody looks at it. It's winter now and it now needs a new battery. Dealership is into the car now for $5950. By that time, we have lowered the price to $7000. Customer offers $5000. He agrees to $5500. The dealership loses $450.

If the guy originally trading in the car can provide a guarantee that the first scenario will happen then we'd gladly pay him more for his trade. Since that's not possible ...    

 

[johngenx]

Worst case scenario: The car sits on the lot for 120 days

How about four years?  In March of 2008, we bought the Corolla.  I stopped at a lot to look at a 2001 Forester, identical to my current one, but with low km's.  I briefly considered buying it, but they were asking a HUGE price for it.  $15K huge, which is what I had paid for mine in 2004!  I offered them $7K, which was a fair market price then.  They got all huffy, so I left.

I drive by this place 2-3x per week, and they STILL have that Forester.  Amazing.  They have a big "ONLY $7500" sign on the windscreen, which is now double the value.

Who in their right mind keeps a used car on their lot for almost four years?  I figure they're drug dealers, as they don't seem to actually need to sell cars...

[The Mighty Duck]

Does the dealer make $4500 on that deal? Maybe. But not likely. Here is a more typical scenario based on where I work:

wholesale trade $5000
sent to 3rd party detail company $250 (up to $400)
mandatory inspection $150
perform required repairs, on a $5000 car I'd say average $400.

So now the car is on the lot and the dealership is into it for $5800.

Best case scenario: Somebody comes and pays full price within 30 days, dealership profit on sale is $3700. Possible but not likely.

More typical scenario: Somebody comes in with a trade worth $100 that they think is worth $2000, plus they want a discount of $2000. So we give them the $2000 for the trade and we saw off at $500 discount on the price. Profit on that deal is $1300.

Worst case scenario: The car sits on the lot for 120 days before somebody looks at it. It's winter now and it now needs a new battery. Dealership is into the car now for $5950. By that time, we have lowered the price to $7000. Customer offers $5000. He agrees to $5500. The dealership loses $450.

If the guy originally trading in the car can provide a guarantee that the first scenario will happen then we'd gladly pay him more for his trade. Since that's not possible ...    

 

All valid, but not at all the point I was making:

[Cord]

All valid

Thanks.

but not at all the point I was making

Then just consider it education.