A thoughtful question about what to pay for a car

March 27, 2009

I received the following email from Joe and wanted to share his question and my response with you.

When we are buying fords and Chevy’s am I correct in telling our buyers to only buy vehicles that are able to fit in the top 5 in price rank or the top 5 in v rank? It doesn’t make sense to me to have come in from auction and i own them for what there are 4-10 priced on line for what i own mine for. I realize that it’s ok to pay too much for a low day supply vehicle that is exceptional. Thanks for your feedback. – Joe

My response:

Yes, you’ve got it right. The one piece of advice that I would give you, however, is that for the moment, I think it’s OK or perhaps necessary to buy vehicles that can be priced in the lowest end of the v-rank spectrum and not make a ton of money. In other words, accept smaller profits for the time being and keep the machinery of your sales force, F&I and service department moving. I continue to be optimistic that these values can not continue without leveling off so be patient and follow your strategy.