| When trading a vehicle there are four categories that | | | | not selling vehicles, and other situations. One thing |
| will clearly affect the value of your vehicle; (1) Current | | | | learned when purchasing at an auction, talking with a |
| market value. This is an adjustment amount to the | | | | wholesaler, or shopping a trade-in to another dealership |
| book value that is made by the vehicle appraiser and | | | | is that prices vary widely across the board. Realistically |
| occurs when there are real time changes in the | | | | I have witnessed value swings by as much as |
| market that are not readily reflected in current book | | | | $2000.00. (3) Dealership wants. In some circumstances |
| values. One powerful example is the energy crisis that | | | | a dealer may not want your trade. You might have a |
| came along in the fall of 1973. Many consumers | | | | very expensive trade, the dealer does not want to tie |
| panicked (mildly) and began trading their gas hogs for | | | | up money in a slow seller and the dealer cannot find a |
| fuel efficient smaller vehicles. As the extent of the | | | | home for it with another dealer. Therefore to make a |
| crisis and its duration were unknown, and there were | | | | deal he will hit the trade low expecting to find a home |
| no real predictions as to the short and long term | | | | for it at the auction, with another dealer, or attempt to |
| effects, most dealers looked on the gas hogs with an | | | | cheap sell it on his own lot. Regardless, the vehicle |
| eye of concern, specifically in relation to their dollar | | | | may bring several thousand dollars below book, your |
| value. I counseled many buyers during that time, | | | | loss. (4) Dealership need. The dealership may not need |
| encouraging them to be patient and wait it out. Most of | | | | "another one of those". Some vehicles are |
| them, nearly all, traded anyway. They received as little | | | | a glut on the market. An example would be the |
| as 50% of the book value for their gas hogs and paid | | | | dumping of a rental car fleet at the auction, everyone |
| over retail in many cases to purchase a fuel efficient | | | | buys them, everyone has one, and no one needs |
| vehicle. Many of those people returned to the market | | | | another one. Dealership want and dealership need may |
| within a short period of time and traded their fuel | | | | also swing in your favor. There were many times that I |
| sippers for gas hogs. Again, values were adjusted to | | | | paid over book (more than $1200.00) to own a vehicle, |
| allow for the glut of small vehicles on the dealers lot. | | | | knowing that if I did not, someone else would, and I |
| There are always current market value adjustments | | | | would miss the sale on three vehicles; (1) my vehicle, |
| whether just at a dealership, in a city, an area, a state, | | | | (2) the trade-in, and (3) the trade-in on that one. Instead |
| a region, or across the country. These adjustments | | | | of missing business, I would make three profits. It |
| may be as simple as a dealership being overstocked | | | | should be clear that; (1) you must know the value of |
| with used vehicles due to some internal problem; | | | | your vehicle to do business with it; (2) the book value is |
| therefore the dealer has to pay less for vehicles | | | | affected by other circumstances, some of which are |
| currently being traded in. An area may be affected by | | | | beyond your control. However, because you know the |
| an economical crisis that overall affects the | | | | value of your vehicle you have an idea of where you |
| consumers ability or willingness to spend money. Wars | | | | should be, and by shopping more than one dealership |
| and rumors of war have a strong negative effect on | | | | (if you don't get the value up front) there is a very |
| vehicle values, as does the price of fuel. One major | | | | good chance you will get your money. It is absolute |
| factor that affects the value of trade-ins are the deals | | | | that you use a professional source to determine the |
| being offered on new vehicles. The greater the deal | | | | value of your vehicle prior to shopping for your next |
| on new, the less is paid for the trade. Why? Used | | | | vehicle. If you had a wad of $10.00 bills in your pocket, |
| vehicle buyers will step up to new vehicles and pass | | | | a big wad, and you wanted to trade them for $50.00 |
| on the late model used vehicles. In many cases | | | | bills, and if you had never counted them, how would |
| payments on a new vehicle may be roughly the same | | | | you possibly know how many $50.00 bills to get in |
| as a one year old used. Additionally, consumers may | | | | return for your 10's? Would you just throw them out |
| determine that they are better off trading their current | | | | there and take back whatever 50's were offered? Or |
| vehicle sooner than intended, taking advantage of the | | | | would you count them ahead of time, separate them in |
| factory incentives, and driving off in a new vehicle with | | | | $50.00 packets, band all the packets together, and put |
| payments close to where they were, and offsetting | | | | in writing the total amount of all the packets, put that |
| maintenance expenditures in the process. (2) | | | | slip of paper with your packet, and put one in your |
| Dealership attitude. Vehicle values may be affected | | | | pocket? Would you then watch as the other party |
| simply by some issue within a dealership. An | | | | counted your 10's, and as the 50's were counted out |
| inexperienced Used Vehicle Department manager, a | | | | for you? Wise folks count their money first, record the |
| poor cash flow in the dealership, a weak sales force | | | | amount, and observe while others handle their money! |