Re: [MLUG - DISCUSSION] pricing policies for "new" 2003 vehicles?

[Jonathan King <EMAIL:PROTECTED>]

On Mon, 7 Jun 2004, Mike Miller wrote:

> On Mon, 7 Jun 2004, Nathan Odle wrote:
> 
> > Just my humble opinion, but I feel pretty comfortable saying
> > that buying a 2003 with 2800 on the clock in the middle of '04
> > means more than 4% off invoice.
> 
> I think so too.  How can it be considered a new car when it
> already has more than two months of use on it?  When one drives a
> new car off of the lot, one loses, what, 10%?  Hold out for more.

Used vs. new is more a matter of: has it ever been sold, and (by
consequence) what do you have in terms of warrantee coverage?  You
can buy a warantee for a used car, of course, but a good one will
usually cost you several hundred bucks.

The cool thing about the "what you lose" factor is that you can
pretty easily figure out what it is.  Ignoring warantees for a
minute, a dealer should not offer to pay you for a car anything
above what it would cost him to buy the same car elsewhere.  That
cost is roughly invoice minus holdback minus factory-to-dealer
incentives plus destination.

In the not-so-hypothetical case I posted about, I was literally
waiting for Edmunds to generate the freaking page for an appraisal
of a car of that age, mileage and features.  I have to admit I was
surprised at how relatively low it was because I hadn't had time to
work out what I should offer (and hadn't gotten to make an offer
since he asked to get back to me with a price).  As it turns out,
that was probably a major mistake on the part of the sales manager,
since if sales droid had known the dealership cost, he would have
and could have accepted my innocent (= not well-calculated) invoice
minus 4% wild ass initial guess and come out over $1000 ahead.  In
this case, the invoice was (in big round numbers) $24000 while
holdback for VW is 2% and the dealer had also gotten $1500 (I think)  
in "factory-to-dealer" cash for this 2003 model.  So his cost was
right around $22500 (including destination); maybe it was $22000 if
the dealer cash had been $2000.  After the car basically sat there
on the lot for long enough, it must have become the designated
loaner/rental/whatever car, where it racked up 2800 miles.  Job 1
was now to get rid of that sucker before the 2005s came on the
scene, at whatever profit they could get. Lucky for them, I come
along.  Unlucky for them, phone dude was checking with sales manager
while I found out what Edmunds thought a certified car should cost
($21700).  I figured that should be a reasonable offer, since a new
car with warantee should be essentially the same thing.  As probably
more than luck would have it, that price is really close to true
dealer cost minus 20 cents a mile.  It might be a couple of hundred 
higher or a couple of hundred lower, but it's in there.

As it turns out, that offer was almost exactly invoice minus 10%.  
So thanks to Nathan and Mike and others whose gut sense was that I
could do better, and thanks to the sales manager at the dealership
for not empowering his phone dude.  And thanks to the people at 
Edmunds, who nailed every estimate I had to make today (but, man, I 
wish their website wasn't such a hamster-powered affair).

BOY did I (re)learn a lot, and, as far as I can tell, I didn't pay
very much for the experience.  (Well, okay, so there was the time 
spent chasing around dealerships that I would have avoided if 
somebody had told me I could get a Passat GLS wagon with low miles 
and a factory warrantee for as little as this with virtually no pain 
in the haggling...)

jking


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