QuestionQUESTION: My question relates to negotiating a used car purchase. At the salesperson's desk, the salesperson showed me what purported to be the dealer's cost, which was approximately $1K less than the asking price. The inventory cost option on the dealer's computer was a subcategory under the category "sales desk," so I expect showing me this "cost" was part of the sales ploy. I went to kbb.com, and the asking price is right around the suggested retail value. The trade-in value, however, is around $6,000 less than the suggested retail value. Usually I would start negotiations by offering the trade-in value. This car, however, is a lease return. Is there a way for me to find out the actual dealer cost for a lease return? Does it still make sense for me to start negotiations at the trade-in value, despite the fact that the car is a lease return? Additionally, the car has been on the lot for nearly 100 days, and they recently dropped the price $5k. Might this affect my negotiations? Thanks.
ANSWER: Your thinking is very right on, Congrads. The question that comes up did they buy the car as a lease return at auction or was it a actual lease return to the dealer? If the car was bought at auction, they bought it at market value or close to trade value. If the car was a lease return to the dealer, they bought it for lease end value. Lease end value can be higher, what kind of car,hard to find,miles,still under factory warranty and all books and records. I think they bought this car when the value may have been alot higher 100 days ago, now the market has changed and they need to unload it. No dealer is supposed to keep a car any longer than 60 days on the lot, they lose money, I promise. Your on the right track,you need to look at it this way, if they sent the car to the auction right now what would it bring? You need to ask for the sales mgr if you go back in and let him know he is dealing with an educated buyer, tell them they can take their losses know or later. Let me also add that a lease car will on the avg bring a $1000 to 1500 more than other cars. Go to edmunds.com and look up the car, it will give you trade-in,private owner and dealer averages in your zip, also go to autotrader.com and search a 200 mile radius and see what that car is retailing for? Forget about the price dropping, they started to high to begin with, they thought they had a home run and it's not happening. In the car business there is an old saying "A bad retail deal is better than a good wholesale deal" They will lose money to sell you this car. I would start $1500 over avg trade (They did have to do some reconditioning on the car)I would think somewhere close to that and you have a deal but look up the averages I said and make sure. Good Luck and you know what your doing.
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QUESTION: Thank you very much for your helpful answer. I have one follow-up question: When you say "[i]f the car was bought at auction, they bought it at market value or close to trade value," do you mean retail value or trade-in-value? I.e., do they pay close to trade-in or close to retail at auctions? Thanks.
Answer A Dealers only pay's Trade Value, Avg Trade In or Wholesale Value, they are one in the same.
Let me explain this, A "Lease Buyout or Return" is when the dealer has leased a car to some one and they turn it in back to the dealer because their lease has expired. That dealer will call what ever bank had the lease contract and if the dealer thinks it's a car they want, they will offer the bank "Trade In Value" but a good lease car can bring a $1000 more than trade value. Wether bought at auction or as a lease return, the dealer paid "Avg Trade Value" and when a dealer buy's a car they don't look at or add for the Value of Options, some times they add for miles.
When your figuring out Retail it's just a starting point to start the sell to the public.
