Quote:
Originally Posted by Aaron W.
Maybe. But in the experience of several friends who have gone through the process, what they were initially offered for trade-in at dealerships was about 75% of what Carmax was willing to pay them. Admittedly, there are a couple dozen possible interpretations for this, so I will not immediately conclude that Carmax gives the best value on trade-ins. But it's a big enough gap to have my attention.
Again, I don't doubt your ability to gauge the CarMax appraisal model vs. a new car dealer model, even if I might not yet be ready to recommend you for a GM position at an 8 store group. Each dealer, new or used, has to make their money somehow.
CarMax HAS to acquire inventory. So perhaps their model is to step up for sellers, fail to safely service the vehicle for the buyer, and play some games in finance, making them def not the place to buy a pre owned car. More likely, they are willing to forego a lot of the negotiation and give you about what a new car dealer will eventually give you, but w less hassle. I think the answer lies in your own words - "Initially offered".
If someone has a car w an ACV of $8k, CarMax may give them $7,650 right off the bat, make a few hundo on the trade, and ensure the higher likelihood that they will acquire more inventory, by giving the seller close to the number they had in mind without forcing them to haggle (which some customers enjoy and most despise).
John Elway Ford may offer someone $6,300 and hope they will take it, but will incrementally raise the trade allowance the closer they think they are to selling a car. They may ultimately give you $8,300 for the same trade CarMax will give you $7,650 for (if you haggle correctly while still making it make sense for the dealer), bc they know that along w acquiring inventory for future sale, they will sell a car in the present. J.E. Ford can afford to not step up on your initial trade offer, bc they don't need the inventory as badly as CarMax, esp if it's not for the right price, and they know they can always negotiate. Or better yet, just wait for CarMax to do the work for them and honor the $7,650 for a car that's worth $8k. It's all one big cycle.
These are basic business fundamentals. A $10k car is a $10k car. Dealerships, whether CarMax or J.E. Ford, have to make the profit somewhere. To give to the customer in one respect, they must take away from that customer (or the next) in another.
Quote:
Originally Posted by Aaron W.
@MacauBound - What type of dealership did you work at? Was it mostly higher end vehicles?
The reason I ask is because of this:
The types of cars my friends drive get trade-in values more in the range of $6k-8k.
I can understand that within my wall of text you may have missed the multiple direct and indirect references to one former place of employment in the car biz for me, Acura, but the number $15k has nothing to do w the type of cars we sold. It was just a random even number. I didn't want to go with $6,742.43 bc it seemed unnecessarily complicated. Nothing more or less than that. I've appraised as many $6k-$8k trade-ins as I have $15k cars - prob even more (excluding online auction appraisals), as people have less incentive to trade in a car worth $15k than one worth $6-$8k, as the $15k car is more likely to be in decent mechanical condition.
I'm all car-talked out for the time being. It's not you, it's me. But hopefully you've learned as much as I have. Thanks