[mfsoa]

Dear audio buds,
My wife and I tried to buy a used car today and the dealer price was very very far from what we thought we were going to have to pay. I sincerely wish to bounce the scenario off you guys in hopes of understanding if/how my thinking is wrong about what transpired. BTW, we were treated courteously and did the same to the dealer, there is no hint of personal insult etc. involved. The players, with Kelly Blue Book numbers rounded a bit for simplicity:
1) Our car: 2000 Honda Odyssey van, EX, Nav, 115,000 miles, just had waterpump, timing belt, new tires, rear shocks done. Van is in good shape. Dealer retail ~$10,500 , dealer wholesale ~ $6500 (these prices do not include the Nav option, as Kelly didn't have a check box for it).
2) Used car: 1999 Miata, 74,000 mikes, good shape, similar to van, Dealer retail ~ $9500 (his sticker was $9900), dealer wholesale ~ $6000.

Our perspective: We were figuring that since the van is worth more than the Miata, we would offer them the van and hope to get the Miata + ~$1000. We probably would have agreed to an even swap, even though this leaves the dealer with a car more valuable than the one he just got rid of.

Dealer perspective: Retail on the Miata is $9900, wholesale on the van is $6500 and its going to take $500 to clean the van (was just detailed 2 days ago) and get it inspected blah blah, so his offer: Give us the van PLUS $4000 for the Miata. Therefore he wants to make a $3900 profit ($9900-$6000) on the sale of the Miata, and then turn a $4000 profit on the van ($10,500-$6500).
We pay the profit on the Miata, fine, no problem there, but then we also pay the profit on the van since the difference ($10,500-$6500) is not at all credited toward the purchase of the Miata. We pay the dealer close to $8000 profit on the sale of a $10,000 car.

All parties agree that the van is worth more than the Miata. Wholesale, retail, whatever. Yet it would cost me $4000 for the honor of putting the van in the parking space now occupied by the Miata.
I try to explain the if we simply swap cars, he is in a better financial position that he was before I walked in. Nope, it'll cost $4000 for us to put him in that better financial position.

The way I see it, is that if I paid cash, I could give him $9500 and have the car. But if I give him a car he can sell for ~ $10,000, well, no, that doesn't count, that's only counts for $6500 toward the Miata.

I think it boils down to this: I want to give him something of greater value than what I want from him.
Eventually he came down the van+$3500, which is $3500 from where we were prepared to be.

I understand the dealers POV that they pay wholesale for what they bring in, and ask for retail for what goes out. No problem with that. But to completely ignore the profit that they will make when they sell the van- I don't think this is proper. I want to give them the price they want for the Miata, it comes in the form of a van that is worth $10,000 to them.

If you buy a new car and trade in something that a dealer can make say $5000 on, doesn't the dealer give you any monetary credit for this profit?

Anyway, we shook hands, thanked each other for their time and agreed that we were too far apart to make this work. Dealer chose not to make $4000 (difference between invoice on the Miata and his future selling price of the van) for an hours work on a $6000 investment. Must be nice to be able to walk away from that!

Where is the logic in my thinking faulty- I truly want to know if I am wrong or if he was trying to rip me off. I am prepared to be wrong about this but I'm hoping for any of your opinions!! Please!!!  Thank you all very much.

(Anyone want to trade a van for a Miata?)

[2bigears]

honda vans don't have timing belts???? maybe the older ones do????

[kfr01]

The dealer is an idiot, you're not.

This situation is why people sell privately rather than dealer-trade. 

[contrarian]

They're just workin' you.  It's what they do best and they are professionals. Here's what I would do:

Seperate the transactions.  Go shop the van around.  It doesn't take much time.  Just drive into dealerships you think would want the van and ask for the buyer.  Of course they will lowball you, but they will negotiate if they want it.  I'm guessing they will offer you between $5-6K.  Use the offer as leverage or just sell it.

Now, buy the Miata, but don't pay more than $500-$1,000 over wholesale and make sure they give you a 30 day warranty.

Good luck!

[zybar]

Unfortunately, what you described above is pretty much how things work.

If you want to get close to what your van is worth, you have to privately sell it.

If you don't want the hassle of trying to sell it yourself, you must be prepared to get significantly less when trading the car in.

As for buying the Miata...you should negotiate as good as price as possible for the car.  Don't talk to the dealer about financing or a possible trade until you reach a price your happy with.

George

[bpape]

No, it's not - walk away - they're screwing you.  Worst case is an even trade + tax

Bryan

[zybar]

No, it's not - walk away - they're screwing you.  Worst case is an even trade + tax

Bryan

I really doubt any dealer would give an even trade in the situation listed above.

Their goal is to make money on every transaction...what is their motivation for trading one car for another with no profit in the trade?

They aren't screwing you, they are trying to make a profit.

If you feel that the deal isn't acceptable, you simply walk away. 

Just don't expect it to be much different at the next dealership...

George

[srb]

Based on the wholesale prices, the Odyssey is only worth $500 more to the dealer than the Miata.

1.  The Miata is more of a known mechanical entity to the dealer, probably having it on the lot for weeks with a number of test drives under its belt.  The Odyssey is more of a crap shoot.

2.  It is harder to sell a used car with 115K on it than one with 74K on it, regardless of the model.

I doubt any used car dealer in the country would trade straight across.

Although I think his offer of +$3500 is too high, I would guess most used car dealers would want at least +$1000, with the above points in mind.

But that's why it's always more advantageous to sell outright.  People trade in for the convenience, and almost always take a big hit.

Steve

[Danberg]

Really it's quite simple.. The Dealership will want to make 30% to 40% on each used car transaction.  They look at the trade in as one transaction, and the sale of the Miata as the second transaction.

I agree with previous comments...never, never, never negotiate for new or used cars while at the same time letting the dealer know that a trade-in is involved.  Always negotiate your best deal on the car you want (or, for the price that you are willing accept to pay for it) before letting the Dealer know that you have a trade-in.

Another method to determining the "going rate" for your trade-in is looking at the same model by individuals in your local news paper auto sales section.

Better luck next time.

[bpape]

Your call.  $4k diff retail to retail or wholesale to wholesale doesn't equate to $4k out of your pocket.  $500 diff is garbage.  The Miata has probably been beat - as most sports cars have.  Sell it outright yourself and save a few bucks.  I don't know about you but I don't have the cash to get screwed like this on a trade.  I've been trading cars for a lot of years and have NEVER gotten less than 25% OVER book for my used cars on trade.

Yes, your vehicle has more miles but is also a much more reliable and sought after brand.

Personally, I'd tell them to go pound sand and look somewhere else.

Bryan

[Magic Robert]

My father was in the car business, so here is an informed opinion.  What really happened is that a dealer will NEVER do an even swap.  Why should they?  One car to sell versus one call to sell.  Why bother?

Plus, you wnat to swap a pretty uninteresting vehicle for a lower mileage convertible just before spring?  Which is going to move quicker?

Bottom line is you need to find a vehicle that costs more than your Honda if you want to do a straight trade-in.

If you wnat to make th best deal, sell the Honda locally to an individual.  Buy another car as a separate transaction.

BTW, the dealer may or may not be an ass, but there is potentially anothe couple who will go into heat over the Miata and pay a premium.  They do it every day.

You were really SMART to walk away.

(Now, I drive a Miata 10th Anniversary and I highly recommend Miatas.  Industructible, cheal to own, and fun.  I sold my old RX-7 to a dealer wholesale (I know him) and walked away from about $1000 potential profit if I had sold it to an individual.  I bought the Miata at 2 years old for $10,000 less than new - with 22,000 miles on it.  There are deals out there if you look.

...and if you are looking for a Miata, try to buy from an individual.  It's like joining a big club - and most owners think of their car as their baby.

There are some asses out there, and people like me who really have been taught that when buying or selling a car is just a car is just a car.

Good luck buying - you made the right first move by nor taking the first thing avaialble.

[mfsoa]

Thanks for your comments,
I guess my expectations were on the (very) optomistic side, and their offer was on the low side.

Oh well, we were planning on keeping the van for a year anyway, so no biggie. And now its really clean!

I didn't mean to imply the dealer was an ass. We both kept things totally civil, reasoned and pleasant. I can walk away happy about that.

Maybe if we get "the call" in a week or two I'll give him a last chance - van+$1000 though I doubt he'll bite.

Really, thanks to all of you for the reality check.

-Mike

[Parnelli777]

Gotta ask why you would want an 8 year old Miata with 70,000+ miles to begin with? The dealer, of course, is trying to get nearly $10,000 for a car that's only worth $6-7000 on a good day.

You only trade in a car when it's too old to care one way or another.

You should sell your van to a private party. Like somebody else said, the dealer will never do any kind of "even trade", certainly not with cash back in your direction. It'll never happen.

[Wind Chaser]

You never come ahead by trading a vehicle in.  Years ago I was told by my brother in law (who’s family owns a Ford dealership) that the profit margin on new cars is very small, especially when compared to used cars, which are highly profitable.

Your best bet is to sell your vehicle privately and play hardball.  Go back to the dealer and tell them you’re serious about buying the car and you’re willing to drive it away “right now” for $7800 – do we have a deal or not?  The salesman will have to talk to his sales manager who will counter, but before he goes to ask his boss, tell him your not there to waste his time or yours.  $7800 all you’re willing to pay.  He’ll most likely come back with some explanation as to whatever price is the best they can do. Tell them that’s too bad and that you came there expecting drive the car away.  Repeat your offer and walk out.  A few hours later the salesman will call you saying his boss sharpened the pencil.  Works for me every time.

[JLM]

It's primarily a matter of your perspective versus theirs.  Why should they trade cars and not profit?  OTOH I agree that $4000 seems like plenty.

I've had a couple of deals ruined by low trade-in offers.  Yes, I dealt on just the new car first, then mentioned a trade (which is the "other foot" that they expect to "drop").  The first time was trying to buy an Acura Integra circa 1989.  Not much room to neogiate on the Integra, understood.  But when they offered $600 for my 6 year old Sentra (and were admittedly embarassed by such a low number), I said that I'd rather give it to someone that needed a car (way back before charities asked for used cars) at that price.  Drove the Sentra for another 27,000 miles and sold it privately for $1500.

[warnerwh]

Unless you make a 100 an hour or more it's better to sell the van yourself and buy the Miata from a Private party. I always do it that way because it saves thousands of dollars and I know cars very well. As a matter of fact I just bought my wife a Mustang today for 2k less than a dealer would want.

In the morning I'm going to look at a Lincoln Town Car for myself. Both cases are private parties. Then I will sell her car and mine on Craig's List and also advertise in the Auto Trader magazine.

Selling a car or buying one is very simple to do. For the thousands of dollars involved I'd spend a whole day doing it. But it only takes a little bit of time. The transaction today involved going to the other person's bank to get the title. I pay with cash, deal done except for ordering the new title. Entire time involved is a couple of hours. For 2k I'll do it all day long.

Dealers have to make a profit. There's a zillion morons in the world too so I think they tend to think pretty much everyone is unless you go to a new car dealer with integrity, a rare breed.  If you're dumb enough to do what they suggest, and many people are, then that's what they will do.

Always negotiate. If I were buying a new car I'd get the price to the point I felt is rock bottom on their end by saying that's too high and say "see ya later". If they let you leave that was their best offer. You'd be surprised how much lower they will be willing to go on numerous transactions. What amazes me is that people don't like to haggle. I look at it like I can save thousands of dollars for little effort. I really could care less what they think, I just want the best price I can get. They have this same attitude toward you, it's just business.