What about trade-ins?

December 30, 2008

I received an email from Chip asking the following question regarding trade-ins:


Dale, would you recommend the same philosophy in regards to trade appraisals? Obviously, we don’t have control over what we have to appraise. Sometimes it seems that we can’t put a low enough figure on a car with a high market days supply. However, we still have to try. How do you reconcile this?


And this is my reply:



Trades are really tough right now.  First, you’re right, you can’t own a car too cheap that has a high day’s supply.  On the other hand, it takes all the money in the world, and then some today, to get somebody out of a trade.  In most cases, there just hopelessly upside down. 


Can you ever remember a time in the retail business when you could buy cars at the auction for better prices than what you needed to pay a customer to get their trade?  This is where we are for the time being, and we need to recognize it.  In other words, what I’m saying is that this is no time to be a new car selling hero, but rather a time to get your used car house in order and keep it that way. 


I’m glad the pricing profiles helped.  I got three calls yesterday alone from dealers telling me that “it’s working.”  They’re reporting very high levels of traffic and sales with those pricing strategies. 


Stay in touch,