The Scorpion And The Frog

Not crazy about this.

Knowing the car business like I do, it seems ripe for exploitation.  Lets, for a minute, assume that I am the guy in the tower “penciling” this deal.  A customer shows up with a trade that qualifies.  Lets say he or she is trading in an old clunker, and it is a V-8 with lots of miles.  Not too much to worry about there, as the customer will be tickled to get a voucher worth 4500 bucks.  So, I place a value on the trade, of say, zero.  The trade will likely be sold at auction for 500 dollars or less.  But the customer will never see that money, not will that value be credited in his deal.  Like i said, $500 in a car deal is pretty small potatoes.

What if the trade is clean, and has acceptable mileage?  If i know the customer is desperate for that voucher, i am going to low-ball his trade by as much as possible, in fact, much like early lease deals, I’ll probably try to “swallow’ the whole trade, which means I’ll structure the deal in such a way that the customer never knows the value of his trade.  It is done everyday, and to otherwise smart people.

There are other issues, like what is really being saved energy-wise when the trades will likely be sold to someone else.  But this bill is a license to steal.

Its the nature of the car business.

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4 Comments

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4 responses to “The Scorpion And The Frog

  1. OK, so the junker – unless it really is unusable junk, like the drag in the push, pull or drag scam) is probably going downstream to someone sooner or later. But if I come in with a decent car that doesn’t get great mileage, the invoice has to show the sticker, options, trade-in allowance, etc. on it. How does it get hid from people?

    Although it’s easy to find out blue book or typical market value online before you go in to trade, how can the legislation be structured so this protects consumers more?

  2. Trade allowance is a meaningless figure. ACV is key, and the customer never knows what it is. Never. Most of the time, neither does the salesman. It is a tool for the desk to use.

    If I allow you 1000 dollars, but the car is worth 1500, i keep the difference. Sometimes, i have to allow MORE than the ACV, and it comes out of the gross.

    The dealership has it win/win here.

    No idea how to structure legislation to stop it.

  3. I can hear that negotiation.

    Salesman: “I can’t come down off the sticker price any more. Hey, I GAVE you $4500 for your trade it.”

  4. democommie

    Which is why I have never bought a vehicle from anyone except a friend. Out of ten vehicles that I have owned–all except two of them were shitboxes when purchased–and driven somewhere around .5M miles, only three which cost me a total of $850 were bad deals.

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