Dealers Who Buy Used Cars

Q.For those of you who've tried to trade in an older Toyota for a new one -- have you noticed the dealership really lowballing the prices on the trade in? I'm just wondering if this is typical. The price on the car they wanted to sell me was reasonable enough, to my eyes, but the trade-in price felt like an outright rip off.

A.One of the perplexing things about owning a new car dealership is the relationship of used car sales to new car sales. The average new car sale is 60 to 90 days. Meaning a viable dealer turns over his new car stock in two to three months. On the other hand the average used car sale is 90 to 120 days. During that time, unlike his new cars, the used car is depreciating until it is sold. For a new car dealer to make a profit on the new car sales he must move out his used cars, or tie up his capital on used cars rather than new cars, on which he must pay interest. Contrary to what some in the NG's would have you believe any viable new car dealer that sells his allocation of new cars MUST retail or wholesale 1/3 of his trades every month since nearly every new car sale involves a trade. If you see a vehicle sitting on a new car dealers lot for three months, go make a reasonable offer over wholesale and he will jump on the deal, especially if it is still covered by the factory warranty..

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