Originally Posted by Mad Max44
Whaler22, What happens to this formula when you have to order the truck and have a trade in on the east coast where there's not many loaded DRW?
Well, trade is the same wherever you are. The trade has a value -- a real value -- wherever you are. The trick is figuring out what that really IS. If you have a friend in the car business who pays for one of the computer subscription services he can tell you what vehicles like yours have been selling for at auction over the last thirty days. That, and the blue book and/or NADA values are what they'll use to calculate the value when you go to trade. That will determine what they're really
going to be willing to pay for your trade. Of course, if they're selling you a new vehicle too, they'll be more than happy to play the old money sliding game -- where they slide some of the profit in the new vehicle to create the appearance of paying more for your trade. I hate that. I want to deal in real numbers, but the fact is, sliding money back and forth works for them most of the time. How many times have you heard somebody say something like, "Boy did I get a great deal! I bought the new truck for dealer cost and the guy gave me only $2,000 less than I paid for my truck brand new two years ago!" That might be a good story to take home to the little lady, but it's complete baloney... The dealer simply took five or six grand off of the new truck profit and used it to inflate the trade value showing - obviously. Perfectly normal, bright people bite on that all the time -- because they want a new truck and they need to feel they did okay on the deal. (One guy here PM'd me about how he just goes directly to the manager, says "What's your best price?" and pays it. He swears that's the way to get the best deal. I could well be wrong, but I'm betting he's been hosed out of an extra $2K on every trade for years...) Like I said earlier, every guy thinks he's a great car negotiator, but you never really know if you've cut the skinniest deal unless everybody else let you walk away for $100 less than you ultimately paid. I don't want to work that hard anymore. I just want a good
deal. They ought to be able to make a living too -- as long as they're being honest and providing a good service
Obviously, you're always better selling your old truck on your own. You can usually clean it up, and sell it for $1,500 to $2,000 over the "ACV" (actual cash value) of the dealer trade fairly quickly. Still, for some of us, for one reason or another, that's not worth it anymore, so we want to trade.
I usually look at the Kelly Blue Book "trade" number and assume that's where the dealer will be, give or take a few bucks. That number is usually significantly below what the dealer KBB programs show as KBB "wholesale", by the way. Remember, the Kelly numbers may be WAY off too. (They're always
off on the retail numbers, because those are not derived from selling prices. They're just dealer asking
prices, and many of them have no shame: I regularly see KBB retail numbers on 2-year-old trucks that are as much as $2,000 higher then I paid for the new
truck!) They other KB numbers are only a starting point. Sometimes close, sometimes not. (In 2005 Chevy Trailblazers were selling at auction out here for as much as $11,000 and $12,000 BELOW KBB trade. It was grim for the guys who had to get out of their SUVs that were only a year or two old.)
I take the KBB trade number, add some money if it feels right, and drive the vehicle to a few dealers I know and have dealt with. I ask to see the used buyer and say, "Are you a buyer for a _______________? I want _____________? They'll always ask if a) Why are you selling? and b) Do you owe any money on it? Because they want to know the following: a) Are you desperate for money?, b) Can they buy it for less? and, c) Can they sell you a new car? So I tell them, "I have too many rigs, and I already have another truck. If you don't want it at my price, what will you pay?" I'll end up with a couple bids and, if the're close to each other and I'm comfortable that they're fair, I sell it. Then I'm off to work my new deal.
There is a perception that the guys in the new store will twist the arm of the used guys in order to help them make a new sale. There is some truth to that, but it seldom amounts to much money difference, especially if what you're selling isn't something they would normally inventory. Look around at their lot. Do they have stuff that looks like your trade? If not, they're shopping bids over the phone with the dealers that sell rigs like yours, then knocking $1,000 off the bid (sometimes) and telling the new vehicle sales the bid. That way, if the used guy gets the trade, he can try to sell it for a few days and, if he's not successfull in making a few grand, he can sell it to the guy who bid the $1,000 up. If the new car guy presses him enough to help make the new sale, the used guy may give up some of that margin to help, but the more he gives up the harder he has to work to make his nut at the end of the month, and most dealers treat new and used as separate profit centers.
The other part of your question is tough. Supply and demand always applies. My sister and brother in law were stuck passing through New York/Connecticut on the way to Vermont last year and they got totally hosed on a new Dodge truck. They needed a loaded one-ton SRW, and the only one around was a state and a day away. The dealer trade immediately cost them at least $1200, because the dealer who sold their dealer the truck kept the hold-back. And the dealer they bought from insisted on a $2,500 profit. I would NEVER do that. I told sis to grab a hotel and enjoy the sites for a few days while hubby flew out to Dave Smith Dodge/GM in Idaho and bought a new truck for $3,000+ less. But they were tired and wanted the ordeal to be over, so they opted to take their beating out east. (I called the dealer there, told them I knew the real numbers, threatened to just ship my sister a truck from out here, and they managed to miraculously find $500 in savings to help out a little".) Sis took the deal and got on with life.
I always try to support the local dealer if they're good, honest, hard-working folks and they're not trying to "gross" me. I get the feeling that the dealers out there don't have much in stock, don't sell very many, and try to knock the ball out of the park on every deal. The price will always be influenced by supply and demand, and they will rely on you're not being willing to say, "Screw it, I'm going to buy a truck in Ohio".
I recommend calling Dave Smith in Idaho. He sells 1,500 to 3,000 vehicles per month -- yes that's up to 100 per day -- and he's got a website and a 800 number. He's the largest Dodge dealer in the world, and a very large Chevy dealer. Tell the salesman exactly what you want and , ten minutes later, they will tell you want they have in stock. They also have every manner of customization right on site, from stereo, to lift/lower -- even custom leather/ostrich/alligator interior if you want
They'll shoot you a real, reasonable price within ten minutes. No B.S. If you want to buy from them, they'll get it all done over the phone and fax. There's an airport nearby, and hte dealer runs regular shutles to the airport to pick folks up for deliveries. It's pretty cool. Several of my friends now buy all their rigs from Dave Smith because they're tired of the local hassle -- and Dave Smith is about twelve hours from us. (Our states are big out here. It's over eight hours to the eastern border of Oregon from my place.)
One more thing. One potential advantage of the trade is the potential impact for tax purposes and/or business depreciation purposes. I recognize it can make a difference, but I'm not competent to advise. (We don't have sales tax here.) Good luck!