Saturday, February 28, 2009

Why Click and Clack are right

The Tappet brothers (Car Talk on PBS) recently related that car salespersons are right above lawyers on the "I trust you list," which means they are very nearly at the bottom. And why should we not trust them? Hah. Funny you should ask. Yesterday I went shopping for a car (people who know me will say, "This is news?"). Anyway, I got exposed to the newest wrinkle in car trading.
See, there are a number of ways to assess the value of a used car. The three most popular are the NADA (National Auto Dealers Association), Kelly (The Blue Book), and Edmunds. Until recently, the consumer didn't have access to the information in these books, so the dealer had a certain advantage. An upstanding dealer shared this information; others didn't. Now, since anyone can find exactly what their car is worth, the dealers have lost their advantage. So, they came up with a new one. Many dealers buy their cars at auctions, from which the general public is excluded. Generally, prices at auctions are lower than the trade-in prices noted in the books. So, if your '02 Flashfire low books (low book is the wholesale or trade-in value) for, say, $5000, it will probably sell at auction for $3500 or less.
Here's the way dealers work it now. They tell you, "Forget the book value. I can only give you what the car sells for at auction." Then, they will show you the records for your car at the auction sales for the last little while. When it comes time to pricing their car, though, the auction price never comes up. Instead, they offer you their car at high book, which is the retail price.
In my case, the dealer offered me $3500 less than low book for mine, and asked about $1500 higher than high book for his. I didn't ask for the dealer to let me see auction prices on the car he was trying to sell me (I just wanted out), but I'd be willing to hazard a guess that this particular model would tank badly at the auction, and the dealer, if he tried to wholesale it there, would have to hitchhike home.
None of this is illegal, mind you. Ethically is has a little odor, but hey, whoever got rich being ethical?

1 comment:

bekkieann said...

Oh the stories we could tell, eh? Having only owned a handful of cars in my lifetime, I still can relate. With the number of vehicles you've owned, you could probably publish a book or maybe a series.

So what are you looking at and who is getting traded in (notice I said who not what)?