How much do dealers profit on trade-ins ?

[Rouxenator]

Earlier this week I traded in my 2006 Corsa Lite with 53,780km on the clock. It was pretty much in new condition since it had seat covers from the time it was bought. The only modifications I made was fitting 4 JVC speakers in the standard mounting pods (no cutting, kept it stock) since the default 2 speakers was crap. I also fitted 4 15" allow wheels with new tyres since the standard tyres handled like crap and aquaplaned a lot.

The trade-in book said 60,000km on a 2006 Corsa Lite = R40,000 and that is what I accepted. The salesman did tell me I can get about R52,500 if I sell privately.

Today I checked their site are saw they are selling it for R60,000 : http://reeds.co.za/classifieds/opel-corsa-lite-13181. Strangely the car cost only R15k more when it was bought new back in 2006.
They used a stock photo for the sliver Corsa, this is what the car actually looks like :

So my question is, apart from an R400 vallet, what other costs do they have that they do not pass on to the next buyer and how much profit do they make on a deal like this?

 

[Archer]

Rent of their premises, space is expensive. Commision also is also a factor.

 

[Ancalagon]

I think they have to pay VAT on the sale, whereas you didnt. But yeah, I mean thats dealerships for you. They wouldnt be in business if they didnt have a huge markup.

Also bear in mind, they likely want some room to maneuver with the price. So you go in, you tell them R60k is too expensive. They tell you, okay, R55k, and you think you've got yourself a bargain. Meanwhile, in reality....

Oh and they will probably want R3k to get it registered, which I think costs nearly R300.

 

[Rouxenator]

Haven't though of those things yet, thanks for brining it up. I am not saying they are skelms - I found Reeds to be much better and more honest than Renualt from whom I bought my used Astra in 2004. On the other hand, I am not regretting the fact that I traded it in because a private sale can sometimes be a difficult process and you there is so many things you have to sort out on your own and that could go wrong.

 

[davemc]

Also remember that, although it is advertised for R60 000, they are fully expecting the buyer to negotiate a lower price.

 

[Dolby]

I traded my old RSI for R42,000 and they sold it for R60,000 a few days later.

Traded me newer RSI for R117,000 and they sold it for R150,000 a few days later

 

[Rouxenator]

How much did you pay for them new? I am very surprised that the Corsa Lite I traded in kept its value so well since it only cost R75,000 new. If they sell it for R55,000 then its a 25% depreciation over 4 years.

 

[the graduate]

How much did you pay for them new? I am very surprised that the Corsa Lite I traded in kept its value so well since it only cost R75,000 new. If they sell it for R55,000 then its a 25% depreciation over 4 years.

ok, my honest opinion is that depreciation is only of essence/value with cars OUTSIDE of the budget section....

Also, I think a 2010 Merc E63 AMG will have an enormous depreciation over a period of 4 years compared to a budget bug....consider you buy it for R1.2mil....you sell it after 4 years for....? Well, I don't know....R700 000..?

 

[supersunbird]

ok, my honest opinion is that depreciation is only of essence/value with cars OUTSIDE of the budget section....

Also, I think a 2010 Merc E63 AMG will have an enormous depreciation over a period of 4 years compared to a budget bug....consider you buy it for R1.2mil....you sell it after 4 years for....? Well, I don't know....R700 000..?

Yes, you could have bought a VW beetle long ago for R2000 and now sell it for R10 000 and make money...

PS except inflation exists lol

 

[Claymore]

Also remember that, although it is advertised for R60 000, they are fully expecting the buyer to negotiate a lower price.

And also get certain things fixed. E.g., clutch might need doing, or shocks, or tyres - I've had all of those replaced by dealers after agreeing to buy.

 

[Voicy]

Sounds about right. I wanted to buy a Corsa 1.6 GSi Ltd for R70k from someone I knew. She wanted R78k for it...Later I heard she traded it in for R58k.

 

[Dolby]

First RSI was bought used for R70k and traded for R42k 5 years down the line - 40% over 5 years and 8%pa depreciation

Second RSI was bought new for R200k and traded for R117k 3.5 years down the line - 42% over 3.5 years and 12%pa depreciation

 

[Brawler]

Hmm bought a bantam for R70k early 2008 with 8000km on the clock. Dealers offered me R60k this week. Not bad.

 

[HapticSimian]

It varies. Obviously a dealer will try to maximise any trade-in and subsequent resale, but for every car that comes in at R10k behind book & sells four days later for R50k profit, there will be some sad Peugeot 407 or some such that stands for 8 months and costs the dealer hobbles in interest.

I understand people that feel slightly acid when they see their trade-ins marked up to the stratosphere, but from the dealer's perspective it's always a fight to remain in the black. Most aren't out to screw people on trade-ins; it's just a sometimes-unsavoury balancing act.

 

[Rouxenator]

About Bantams - they really do keep their value! My first was was a Bantam that went for R75k in 2000. After 4 years and 96,000km it was totalled and they paid out R65k.
It was actually bought from the scrap yard and 5 months later some dude from Blue Downs called to collect the keys (both). I wonder if he traded it in on something

 

[EchoZA]

My 2006 Grande Punto 1.4 Active (bought for R128000) is currently valued at R95000 with a re-sale of R114000

 

[Mypro-D]

Reeds are fantastic (long story)

Lets put it this way... He was honest and said you could prob get 52 000-00 for your vehicle.
We do need to pay VAT on the sale so if we sell it for R 60 000 we only get around R 52 000-00 at the end of the day anyways. Now as you all know, you are going to probably want a better price on the car, so lets say we give it to you for R 55 000-00 Vat in. This leaves us with a profit of R 48 000-00. Now we still need to take of provisions ( Every vehicle sold gets this ) varies from +- R 1000 - R 2000, Any Recon needed, advertising, storage and of course the commission paid to the sales guy. So if we make 5k out the deal its al lot.
Of course there are exceptions where you can make up to R 20k on a vehicle but its pretty rare especially in these times. Another thing to remember is that a bank will not finance a vehicle that is way over book.

What did you buy from them if you dont mind me asking? im looking for a new car at the moment too.

 

[Rouxenator]

From all the dealerships I have dealt with, Reeds is the best so far. I bough one of the new upgraded Corsa Essentia models that has everything the Enjoy had except cruise control and front-fog lights. The new engine upgrades means they are now EU 5 complaint and kick out 74kw. Reeds has a special on them for R157k but check out my thread of last week for more info : http://mybroadband.co.za/vb/showthr...t-buying-the-world-car-of-the-year-2010-(Polo)

 

[Mypro-D]

I just read that from start to finish

The Corsa is an awesome car.
I drive an Astra 2.0 Turbo with around 55 on the clock. Looking to change now as its getting out of its plan in January 2011. I took a Corsa 1.6 sport for the weekend, and last weekend had the Corsa OPC. I must say, this little 1.6er is not too bad. cant compare her to mine though but its a very nice drive. The only other option I have is the Astra OPC, problem is the insurance. Im 22 and I pay around R 1300 on my GTC I could only imagine what an Astra OPC would be! Congrats on your car by the way, im glad you bought from reeds !