How are dealers going to sell '09 cars when they don't want trade-ins

-Chris-

Comer1 wrote: »

Not really the point of my post.

Anyway, back to my original point, are any dealers taking in second cars and giving decent prices? If not how can they expect to survive. It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

Dealers take in cars at prices that they think they'll be able to sell them for (plus a reasonable profit).

Dealers aren't slashing used car prices and passing it on to the guy trading in, the value of used cars has dropped.
That's like saying Estate Agents have slashed the price of houses and now homeowners are in negative equity because of it.

Neither car dealers nor estate agents can control the value of anything - they just take an asset on their books and try to find a new owner for it, making some profit in the transaction.

cashmni1 wrote: »

They lost a sale of a new car for refusing to take the trade in, as explained why in other posts, but still, they should have quoted him a ridiculus trade in price.

That's a fine line to tread - do you state point blank that you don't have an appetite for '08s and therefore politely refuse to quote, or do you give the customer the "bad news" and become the bad guy for valuing their car at less then they think it's worth?

I'd rather not quote the ridiculous price, to be honest. It's a shorter and considerably less antagonistic conversation.


Edit: beaten to it!

crosstownk

Usually at this stage of the year a dealer is beginning to build up a list of orders for the forthcoming January. He does this (in most cases) by offering a price for a trade in, taking a deposit and ordering the shiney new car. This year is horribly different. The value of used cars is changing so rapidly that dealers will not quote as they cannot be sure that the figure quoted will still be realistic by the time January comes around. So some dealers - those fortunate enough not to have a forecourt full of used vehicles - are telling customers to come back in December/January for a quote. Others with a high volume of used stock cannot take trade-ins until they shift the current used stock. Doing the deal regardless of used stock levels is not an option as quite a lot of dealers are already at their credit limit and in the current climate no further credit is being extended by the banks/finance houses. So the dealer is now caught between a rock and a hard place. He can either shift the stock now at a loss or hang on for dear life in the hopes he gets a few sweet deals in the new year. Both options are, to say the least, not good ones.

Assuming the second hand market remains as it is and values keep falling, it is fair to say that quite a few dealers will not be in a position to continue trading. This is one of the factors that will contribute to rising unemployment in 2009.

If customers wish to trade up they are going to have to come to terms with the fact that their car is not worth what they thought it might be and they will simply have to pay more - either that or hang on to their current car and seeing it depreciate further. Some of those that do decide to pay the extra to change will have the added difficulty factor of getting passed for finance which may force them to hang on to what they have.

The van market will suffer from the credit crunch too as anyone in the construction trade will find it considerably more difficult to get finance - if that's the route they take when trading up to a newer LCV.

CrowdedHouse

Just curious...do dealers get much credit from the makers i.e one month,three months or is it COD ?

crosstownk

Usually the dealer will get a set amount of interest free days from a finance company. So the dealer orders the car from the manufacturer/importer/distributor who is paid by the finance company and the dealer cost of the vehicle will be on finance at 0% interest for a set period of time after which he pays interest. This could be anything from 30 days to 180 depending on the model, dealer and manufacturer. Obviously, if the dealer has a heap of cash he can buy it outright avoiding the interest - a luxury in today's economic climate especially as the forecourt is most likely full of used stock clocking up interest daily........

The odd car might be on sale or return but they are few and far between.

ninty9er

Comer1 wrote: »

It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

Second hand cars are plummeting in value, new ones still cost relatively the same as they did last year.

I reckon you were getting a bargain at €4k and you're not doing too bad @ €6,750.

ART6

I wonder if one reason for dealers not wanting trade-ins is that they simply don't have anywhere to put them? Some of our local dealers certainly appear to have used car lots filled to bursting at the moment.

Henry Ford III

ninty9er wrote: »

Second hand cars are plummeting in value, new ones still cost relatively the same as they did last year.

I reckon you were getting a bargain at €4k and you're not doing too bad @ €6,750.

Yeah. The dealer was being generous

TheDriver

I had the same experience OP, its like they didn't want to sell a car to me and made me feel i own a worthless heap of rubbish so hence no enticement to buy a car and my pity for garages went out the window because as one poster said, no loyalty whatsooever. It will be a case of driving stuff into the ground to be honest.............

BrianD3

It's a bad situation even for those with no trade in and who want to buy a new car in a straight deal. Dealers can only discount new cars by so much and once you drive away in your new car it becomes a used car and part of the used car oversupply mess. If you need/want to sell in 6 months, 1 year, 2 years you'll get an absurd price for it. New cars have always depreciated heavily but its far worse now and IMO every make and model is affected. Even cars like the ED BMWs which had up to 10k wiped off the price of a new car with the VRT changes. Unless something dramatic happens I would not like to be trying to sell an Irish bought 2008 520D in 2010. It seems that the motor trade in this country is nearly as ****ed as the building industry

Gregor Samsa

TheDriver wrote: »

my pity for garages went out the window because as one poster said, no loyalty whatsooever.

I don't understand lament for lack of loyalty. Car dealers are businesses. Businesses exist to generate profit. If they can't make a profit on your trade-in, then why should they take it?

The fact is that the economy is not some abstract excuse made up by car dealers to shaft you - it's a reality that most cars are not worth as nearly much as their owners think they should be, and no loyalty can change that.

If loyalty is such an important virtue in these transactions, then where's yours? Why aren't you sticking by your dealer through these hard times, and let him take your car at a price he can make a profit on? You see my point?

TheDriver

i agree with you and my point is that there is no loyalty either way, unfortunately garages closing will be inevitable and thats the sad part

JoeA3

I think someone else here made a good analogy with your TV's, kitchen appliances, etc.
If I went to the Sony Centre today to get the latest Bravia, I don't think I'd be asking him to take my 4-year old CRT in part exchange! The TV I paid €1000 for in 2004 is probably worth less than €100 now - probably unsellable in fact!

Looks like cars are going the same way - disposable consumer items!

coylemj

Agree with the loyalty thing, it's a sad fact that loyalty won't pay the bills. A few years ago I was at one of those focus groups where the client looking for our feedback was one of the big Irish banks. In the group of us consumers was an old geezer who started whinging about the closure of a branch of the same bank in his local suburb, he ranted on and on about his years of loyal custom being repaid by them closing the branch and now he had to get a bus over to the next nearest branch.

After a while when he seemed unstoppable I asked him where he kept his savings and he replied that he had all his money in Northern Rock because they was paying 1/4 of a percent more than the Irish bank - loyalty how are you! He repaid the Irish bank by moving his custom to a UK bank with no branches in Ireland and still expected the Irish bank to keep his local branch open for his convenience!

trellheim

Maybe SIMI will get the Govt. to increase VRT on 2nd hand imports, or make imports much more regulated hint hint ... this would be the easiest thing for them to do.

Climate Expert

Heres whats going to happen in my opinion.
1. Not many orders for new cars due to credit crunch and poor trade ins.
2. New car sales will plummet all over Europe (this is happnening alread)
3. All new cars will be heavily discounted as the new stocks pileup at manufacturers.
4. Manufacturers will then discount for the next year or two to get sales going again.

-Chris-

trellheim wrote: »

Maybe SIMI will get the Govt. to increase VRT on 2nd hand imports, or make imports much more regulated hint hint ... this would be the easiest thing for them to do.

That would be anti-open market (I know, I know, VRT is already an illegal/immoral tax) and protectionist. The Govt couldn't get away with it.

Climate Expert wrote: »

Heres whats going to happen in my opinion.
1. Not many orders for new cars due to credit crunch and poor trade ins.
2. New car sales will plummet all over Europe (this is happnening alread)
3. All new cars will be heavily discounted as the new stocks pileup at manufacturers.
4. Manufacturers will then discount for the next year or two to get sales going again.

I'd say you're probably right. Hopefully they'll use the additional discount to support trade-in prices rather than taking it off the list price - dropping the list prices will just further increase the problems with second-hand values.