Any Questions for a Car Dealer?

isellhondas · January 2006

Someone is toying with us again. but...

It's a Hyundai with a bad transmission!

Anyone wanna guess what it's worth?

bretfraz · January 2006

For how many months? How many payments have you made?

basscadet · January 2006

Well, he went at a dead time, so there probably wasn't a "real" buyer at hand.

No offense, but even when it is my "dead" time, I don't want to waste it indulging the whims of random people.

Even when business is slow, I can be doing something more worth my time like prospecting former customers, checking up on transfer cars and my inventory, etc.

I will, without hesitation, decline test drives to anyone who expressly tells me they are not in the market.

Just because we sell cars does not mean they are public domain.

basscadet · January 2006

It's a Hyundai with a bad transmission!

Anyone wanna guess what it's worth?

$2000 maybe? Maybe?

The sad thing is I be this gal blows $2000 on a new tranny because she'll have no other choice.

I see this kind of stuff every day...you must have sold your soul to the devil to be a salesperson who can sell a 2000 Hyundai w 92k miles. I couldn't live with myself, honestly.

basscadet · January 2006

How much more of a discount should I reasonably expect to get because it is a demo holdover with half a year's mileage?

My peers might disagree with me here, but as a salesperson I would say that 6000 miles is a used car. You are absolutely right to equate 6k miles with half a year's mileage. I have two or three used cars on my lot that have less mileage than that.

I would shoot for at least $3000 below that $25,512 number.

bolivar · January 2006

And by golly, you DESERVE a new car on your birthday!

It's just the American way!

snakeweasel · January 2006

Take a 2nd mortgage on your house for the amount of the new car plus whatever you're upside down on the Sonata and finance it for 15-30 years.

Doing that will be a big mistake. The car will rust out before you get any positive equity on the car.

snakeweasel · January 2006

Unless they have a 2 year loan or traded in a car that they were upside down on they are toying with you.

british_rover · January 2006

If it is an untitled Demo then it is not used it is still new.

The questions he needs to ask is if Kia has a demo program or now. For Land Rover we have a demo/service loaner program where vehicles are reported punched as a demo/service loaner and Land Rover gives so many thousand extra dollars to reduce the price of these cars when we take them out of service to sell four months later.

This program also starts the warrany on these cars so the car loses four months, or more of warranty depending on when it sells, and however many miles have been racked up. If Kia has a similar program then the price should be reduced substantialy since the warranty has started on that and you really have lost something.

Kirstie_H · January 2006

Just as you can't escape the laws of gravity, you also can't escape the laws of basic finance.

I think this should be permanently etched into the top of every vehicle purchasing discussion we've got. But that's just me

isellhondas · January 2006

I have to deal with this pretty often. On a whim, someone buys a car that they just HAD to have at the time.

Six months later, the novality hs worn off or they decide the payments are too high and they want to "downsize".

Nevermind the fact they rolled 3000.00 in negative equity into this car, they actually want to LOWER their present payment!

Oh, and the new car? Well, it HAS to have a sunroof, leather and be a certain color!

stickguy · January 2006

I will disagree slightly with rover. Yeah, a demo support program is nice for the dealer (since that is where the bonus $ will flow), but to the buyer, the only question should be:

How much is that car with those miles worth?

Same as if they brought it to trade in, it is worth what it is worth. And what the dealer has in it (including manufacturers support) is irrelevant to what it is worth.

basically I don't care if it is new/demo/used (other that the slight factoring in for the used part of the waranty). I just want to know what I can buy the equivilent car for elsewhere.

Dealers shouldn't try to have their cake and eat it too. That is, if I bring back my 1 week old X mobile that I paid 20K for, and they only want to give me 15K for it because that's "ACV", then don't expect me to pay 25K for a leftover that has an ACV of 20K, just because that's what they have in the car.

british_rover · January 2006

I had this happen this past Saturday. Couple bought a 2004 Tahoe loaded with every accessory plus a 100k mile warranty. Only 22k miles actually a very sharp truck. Had nerf bars, brush bar BFG Mud Terrains, ski rack just great looking all over but it is a GM product and they gave their cars away for the past two years.

A year and a half a go after taxes and everything these people payed almost 45k dollars. They only put 2 grand down and I am sure rolled some negative equity into the new car. She wants to get out of the huge tahoe get into a smaller LR3 on a lease which would be smart for her since she does not drive many miles and wants to be in a new car every 2-3 years. She owes 33k dollars though and the tahoe even as nice as it is is only worth 22k dollars. She is just screwed and will never see positive equity on that truck till the last 9 or so months of that loan.

dino001 · January 2006

I guess that's why buying demos or loaners is rarely a good deal. Asking prices are not even close to what it's worth and getting anything off that asking price is next to impossible for at least first few month after the car is put on sale.

I wonder what is the reason of such behavior: emotional attachment, plain greed, or perhaps something else...

british_rover · January 2006

Well sometimes demos or loaners are very good deals when there are either no or very few used cars of that type on the market. I have a couple of demo LR3's that have about 6000 miles on them that would be killer deals for someone. Just for example I just priced one using edmunds and considering it a used car they give me a price of $39,931. Someone who financed through Land Rover Capital Group could buy that car for under 36,000 dollars.

kdhspyder · January 2006

If you look at it from the other side, a demo is just a normal inventory item that someone has driven for a certain number of miles. At least in Toyota's system there is no difference between a 'fresh' off the truck vehicle and one that has 1500 miles on it. The owner had to pay Toyota the same amount for both vehicles. To him and in most states they are both 'new' purchases. The cost to him is the same. It's why they are sold at new car prices iso used car prices.

In VA anyway demo's have to be parked at ~4500 miles to still be considered 'new'. In fairness a demo with 12000 mi really is used and should be priced that way.

So the question is what is the value of the miles put on the 'new' vehicle? Typically it's the same as lease mileage or about $0.15/mi. Thus a 4000 mile demo should have about a $600 discount plus any current rebates etc.

Now rental fleet vehicles like the Toyota TRAC vehicles are different entirely. Those are used vehicles when they come out of the local fleets.

zodiac2004 · January 2006

It's a Kia.

It's a demo Kia with 6K on it - probably not very easy miles. I'd pass on it just in principle - I don't think I'd pay 24K for any Kia, even if it had a Baume Mercier in the glove compartment.

Did I mention it's a Kia.

(Since Terry's off to the dog races, I did my best imitation of him)

dino001 · January 2006

I get it. I think all those reasons are legitimate as long as marketplace can support them. I can see loaner/demo Land Rovers going high, just because there are not many of them, or loaner/demo Camry (because many will be happy to pay whatever is asked).

As one said before: Same marketplace rules should apply to a dealer owner of a demo/loaner as to an "oops" car owner (adjusted for reconditioning of course). In both cases the potential buyer's interest in the "history" is limited only to how it may affect the car's condition.

My point is that some of those "manager's specials" do not seem to acknowledge exisstence of the marketplace at all, e.g. the car is a 7K loaner titled for 6 months, the model has $1000 customer incentive on new, and asking price is say justt $2-$2.5K off MSRP. And when you mention that it might be somewhat unreasonable to ask this much for a used car, they look at you like you just shot their dog or worse...

qbrozen · January 2006

still waiting to hear what is owed on this gem.

i agree with isell, though ... $260/month? Forget 2-year loan, I'm hoping that's a 12-month loan!

With a busted tranny, that car is maybe worth $500 now.

graphicguy · January 2006

q....I think we (you, kyfdx, me) are cut from the same cloth. Once we've had a certain model/brand, we tend to look elsewhere for a different experience the next go round.

BTW....you still got your "Z"? I know you were thinking about selling it.

qbrozen · January 2006

no, i'm sad to say its gone.
i made a confession on the CCBA board a few months ago when I traded my Z for a used Lincoln LS and my wife's Pilot for a new Pacifica in the span of about 3 weeks.

Have you been to CCBA lately? I don't believe I ever heard what you settled on to replace the Stang.

bdr127 · January 2006

With a busted tranny, that car is maybe worth $500 now.

FYI: Current auction listings show that car going for about $2600 (4-cyl) and $2900 (V6) at an average of 83k miles.

With over 100k and a busted transmission, I think $500 would be about right. You might be able to find a wholesaler willing to pay $1500 who will ignore the transmission issue and resell it to the next unfortunate person....

mikefm58 · January 2006

" Doing that will be a big mistake. The car will rust out before you get any positive equity on the car "

Hope you realize I was just being sarcastic......

isellhondas · January 2006

We have been had...again.

At least it does create some interesting conversation when this happens!

snakeweasel · January 2006

Ok, but I know people who actually do take out home equity loans to buy cars. Not the best ideal.

qbrozen · January 2006

It really depends on how its done.
If you take a dedicated loan (ie, no extra home expenses rolled into it) and pay if off in the amount of time you'd pay off a car loan, then you can come out quite far ahead between the low interest and tax deduction (Yes, yes, I know its not legally a deduction since it is not used for home improvements, but, let's be honest, folks would declare it as a deduction anyway).

basscadet · January 2006

If it is an untitled Demo then it is not used it is still new.

It is only technically a new car because it is untitled.

But in reality, it is a used vehicle. A lot can happen in 6000 miles.

smittynyc · January 2006

"I have to deal with this pretty often."

I never would have guessed this. From most of your previous posts, I envisioned your workplace as sort of a dealership Shangri-la, what with all the repeat/referral business; fair, kindly, empathetic owners; sober and upright customers with perfect credit, who never haggle or special order or complain; and not a mini to be seen.

I'm confused.

basscadet · January 2006

When we see people pull up in Kia vehicles to shop for new cars we pretty much know that the deal is already dead.

isellhondas · January 2006

You're "confused"?

Sarcastic too!

Actually, we are in a location where we don't get a lot of people like the one I described but it does happen.

martian · January 2006

Having just bought a SATURN Vue, I thought I'd ask: SATURN (whatever you may think of them) certaily has taken the pressure out of the buying experience. The people i dealt with were very honest and friendly. Which leads me to ask: what will the salesman's role be in the future, if WALMART decides to sell cars (low end cars from china)? And, do you see any future for the smaller dealers? It seems to me that the costs of running a dealership are so high now, that the trend toward the "mega" dealers is inevitable.
Finally, do you forsee "throw-away" cars? Take some makes like the AUDI A4-the consensus seems to be that keeping these carspast 60,000 miles is dicey at best-if multiple systems fail, reparing such a car can easily cost more than the car's value! Some people on the AUDI forum claim that their salesmen advise them to dump their cars as soon as they hit 50K miles.

stickguy · January 2006

Actually, years ago Sears sold small economy cars I think.

Small dealers probably are endangered in many areas, just because the overhead (fixed) is so high, whether you sell 100 or 1000 cars a month. But, some people still like the friendly atmosphere. maybe the trend will be mega dealers buying the mom & pop shops, but keeping them the same (like when Cambells makes a "home made" botique soup!)

And, any buying experience will be no pressure (like Saturn) if you just walk in, they point to the sticker, and you agree to pay that amount.

Now, if Walmart decides to sell cars, it would almost have to be el-cheapo Chinese imports. The big problem with replacing traditional dealerships is not buying the car, it's everything else they do (test drives, trade ins, financing, service). Sure, Wallyworld can retail a Chery OTC, if you have the cash to pay for it and don't want to trade in. Plus, someone has to service it!

Finally, many cars probably are throw away now, meaning that otherwise nice looking cars could get junked because some expensive part fails (ECU, a module, etc.). Even a blown tranny could junk an otherwise nice Euro car, since it might run 10K to replace it! Still, it is perfectly reasonable to own an Audi/BMW/etc. well past 50K if you keep up with routine maintencance. Just don't expect to get a lot for it.

snakeweasel · January 2006

Yes, yes, I know its not legally a deduction since it is not used for home improvements,

Actually it is legal to deduct the interest om a home equity loan used to purchase a car. As long as the total amount of all home equity loans do not exceed $100,000 the full amount of interest paid is tax deductible regardless of the use of the money. If all the loans total more than $100,000 then only the interest on the first $100,000 can be taken. ($50,000 if married filing separately).

The question becomes is the interest rate on a car loan lower than the interest rate on the home equity loan less the tax savings plus any costs to get the loan. Most cases its not the best ideal.

jasmith52 · January 2006

Every Dealership has a low pressure Saturn plan. Just pay whatever price is on the window and you will not be hasseled. I guarantee it.

The throw-away and Walmart car ideas can be combined. Walmart will get a number of manufacturers to bid on building generic sedans at screaming low prices. If their price is 25 cents too high then Walmart will just switch manufacturers to build the very same car. This may come however, issues to work out are service and parts.

Per the Audi being a POS, I will pass and leave comments to others.

basscadet · January 2006

I do think that megadealers like Carmax will ultimately wipe out all but the largest privately-owned dealerships. People simply prefer the high volume/low profit business model: look at the success of Wal-Mart, etc. Cars are no different from Oatmeal and toilet paper. They're just more complex and there is more state regulation, hence the delay in cars being sold in this manner. But it will come to pass.

Throw away cars? Never.

Audi's can be tempermental. Mechanically they are brilliant but their electronics are terrible. If you can keep the electronics working, your Audi will live a very long life (like most German cars). If you sit in a 1980's Audi, the switches still click with an authority that a brand new Lexus could only dream of.

That said, I'd sink my $ into a BMW far before I'd get near an Audi/VW lot.

snakeweasel · January 2006

Actually, years ago Sears sold small economy cars I think.

Yeah like a hundred years ago, I wouldn't exactly call the economy cars as back then cars were little more than a wagon with a motor attached.

FWIW Sears also sold homes, prefab shipped to the site you assemble it yourself.

bcb1 · January 2006

>>She owes 33k dollars though and the tahoe even as nice as it is is only worth 22k dollars. She is just screwed and will never see positive equity on that truck till the last 9 or so months of that loan.

Bingo! There is a fast-spreading wave of stupidity that has befallen the car-buying public over the past 10 or 15 years, it would seem. It's that "gotta-have-it-now", damn the consequences type of mentality. Oh sure...that 2004 Tahoe looks oh so sweet with the bozo sound, the ski racks, the brush guards and wheel flares and flip-down dvd player and God knows what else. But they put down a pittance of a down payment, they're buried in a huge loan and a big fat payment, and they're stuck with no way out.

There is something to be said for that old fashioned concept...oh, what do you call it?...Oh, yeah...saving money! We decided years ago after being stuck with a car payment that we hated, that we would NEVER put ourselves in that situation again.

Our last 2 vehicles, one was bought for cash, and the other we had about 75% down and a small loan. But that requires saving money diligently, every paycheck, month in and month out so that when we finally do need to buy a car sometime down the road, we'll have the funds available. And I'm not sure that too many folks have the discipline to do that.

prius1 · January 2006

I was told by me local new car salesman that I could not get a Prius without a wait of at least 6 months in my Naples, Fl. area. So I bought the one he had on the lot paying $4,000 more than the manufacturer's list price. The next day, I call around and find out that I can get a Prius within a few days for at least $2,000 less. Shouldn't I expect honesty from a reputable new car dealer? Do I have any recourse?

isellhondas · January 2006

In the very early fifties, Sears sold "Allstates" they were actually Henry J's if any of you are old enough to remember those!

mirth · January 2006

Do I have any recourse?

At this point you don't. They either fooled you or were ignorant of the supply, but you agreed to pay and that's that. A car is not like a pair of jeans - you can't return it within 30 days.

I guess it's a lesson about having to be a "first on the blocker", but I understand if that's cold comfort. I guess you could write a letter to the dealership's owner and see what happens, but there's nothing legally you can do. I think the only thing you can really do right now is just not give that dealership your business in the future.

kdhspyder · January 2006

All sales are based on 'caveat emptor'. It's harsh but you didnt do all your homework until after you made a purchase and that's your responsibility. With all the resources available now there is no reason not to know what is going on nationally and even locally.

We have been selling Prius' at exactly sticker price not a dollar over or under since they came out in 2001. It's our choice.

The window sticker on every vehicle states MSRP..
Manufacturers Suggested Retail Price. No dealership is required to sell at this price. Heck they can and do 'sell' them for zero dollars or they can sell them with a market adjustment addendum as in your case.

In your case even the $2000 over MSRP is excessive in our region. Now Naples is somewhat isolated and is relatively well-to-do so the market there may actually be $2000-4000 over sticker. But there are airlines into DC, Norfolk and Newark and I95 runs right back to south FLA.

All this is a long answer to your last two questions. The dealer was being honest, he put a price on the vehicle that he though was fair in his market. You didn't have to accept it. No there is no recourse other than to vote with your feet next time.

mirth · January 2006

The dealer was being honest

Maybe, maybe not. I certainly doubt it would be the dealership policy to say "hey, drive 30 miles and you can beat our price by $2000!" At best, they were hopelessly misinformed at to the supply of Prius's in southwestern Florida. At worst, they played on the Prius hype to fool a gullible, gotta-have-it person to buy a car for way over MSRP - how many stories have we read in the paper about 6 month waiting lists for the Prius, when in fact that's only in a few select places in the country (i.e. Southern California)?

basscadet · January 2006

The good news is that at least the Prius owner has a good car. I think it is worth a shot to write a polite letter to the General Manager explaining how you felt mislead. You'll get some free service, at least.

qbrozen · January 2006

Actually it is legal to deduct the interest om a home equity loan used to purchase a car. As long as the total amount of all home equity loans do not exceed $100,000 the full amount of interest paid is tax deductible regardless of the use of the money. If all the loans total more than $100,000 then only the interest on the first $100,000 can be taken. ($50,000 if married filing separately).

Really? Are you in the tax biz? I'm just curious because I've read articles that say the complete opposite. Not that I'm going to use a loan for that purpose, but if what you're saying is true, I'd like to know so I can be a more informed shopper. Thanks.

mazda6iguy · January 2006

There is a dealer in NE ohio that has on the window sticker "Lack of Availability Charge" of $6,800 for a Pontiac Solstice. Is that the norm for these cars? It pushed the sticker price over $30k.

basscadet · January 2006

Paying sticker, much less over sticker for a Pontiac is the funniest thing I have read on these forums in years.

But seriously...

No reputable dealer, no matter how scarce a car is, would ever charge over sticker price for a car.

By the time the weather is warm enough to drive a convertible in NE Ohio, the prices of the Solstice should surrender to increased supply.

snakeweasel · January 2006

Really? Are you in the tax biz?

Yes its true, and I do tax work (but not as my main job). Read the right column on page 6

http://www.irs.gov/pub/irs-pdf/i1040sa.pdf

kdhspyder · January 2006

No reputable dealer, no matter how scarce a car is, would ever charge over sticker price for a car.

It's not a question of being reputable or not, it really is a question of availability. Seriously if one guy is charging $5000 over sticker and across town another is at sticker .. guess what..

In most cases it's not going to last very long.

But if all the dealers really do have just one or two of these high demand vehicles
a) there is not a reason in the world to discount one even a single dollar; it's not like they can be replaced immediately. It's sold it's gone.
b) while these vehicles are in short supply there really and truly is a supply/demand imbalance that creates a higher price. When/if the supply begins to outstrip the demand the price will fall and there may be rebates as well. It's just normal market adjustments. Noone is required to buy a vehicle at a specific time if the price is at the high end of the market. That's the other good side to capitalism.

dino001 · January 2006

I never understood why people get so steamed about those dealer's ADP stickers with all their funny (sometimes really ridiculous) names. We all pay different prices for everything else: groceries, electronics, appliances - sometimes over the list price (say milk at a convenience store). Nobody cries foul there.

If a Pontiac guy thinks the car is worth a million and there is a buyer with full mental capacity is willing to pay a million, so be it. I wouldn't.

It is not dealer's duty to sell me the car, as it is not my obligation to buy a car from them for an asking price. No agreement, no contract, no sell. Nobody is really happy, but that's free market, too.

jeffyscott · January 2006

So the question is what is the value of the miles put on the 'new' vehicle? Typically it's the same as lease mileage or about $0.15/mi.

That would be only $600 off for a car with 4000 miles...ridiculous. There is no way I would ever agree to buy a demo with a discount that small. Which I guess is why I've never bought one, they never seem to be much of a deal.

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