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Has any other car manufacturer ever had a similar policy of not accepting their own vehicles as trade-ins?
No other major manufacturers sell directly to customers so no. Dealerships don't care as long as you're buying something. Many cars they take as trade wind up going straight to auction.
I mean do they care a bit. If it doesn't sell at auction or goes for basically nothing they could lose whatever value they gave to you for trade in.
I have knowledge of how car salesweasels operate. There's a thing called the Devil's Triange: sale price, trade-in value, finance terms. If they give way on one of those vertices, they claw it back on one or both of the others. When the smarmy git goes out to talk to their manager, they're showing them that they're making their margin on the deal.
That's also why it's hard to negotiate with them if you disclose that you're a cash buyer and don't have a vehicle to trade in: you've removed two of their three degrees of freedom.
As a cash buyer, I went through my last dealership purchase and ordered a car with the $4k “warranty” scam plus accepted their scammy financing. Closed the deal and drove away with my car, then the next day I called and cancelled the warranty for a full refund and took my cash and paid off the loan in full.
It’s a hassle, but you have 3 days to cancel all that scammy junk with no recourse. That’s what it took to get the cash price I wanted.
Ethicsmaxxed route
I can't imagine a court in the country seeing a problem with the call and cancel trick. Although,
permission to moralize?
personally, I want to get a great deal in a way I'll feel good about... maybe have a story to share with fellow misers.
But I do put myself in the business's shoes and I think it's fair for everyone to walk out knowing how good of a deal they got and how much money they made.
And when you're inside the building and they run their numbers and based on that they shake your hand, to go outside of the building and reach back to change the numbers--in a way that'd make them take back the handshake--it exceeds the level of cunning I'd want to be in a negotiation.
Also Lemmings, I promise I am not the parent commenter's mother. Someone, take my soapbox before I make someone else want to log off! 😇
Plus they have their big book that shows current values and trends with used vehicles (like KBB on steroids) so just a cursory glance at your trade-in to ensure the transmission isn't falling out and dragging on the ground should be a safe bet that they'll be able to recoup most of the book value on the trade.
What is that trade-in? You give your old car to get a discount for a new? How does it work? Why does it work? I do I understood this completely wrong?
That's right. Where I am it's a tax scam to support dealerships.
If you trade in a $10k car on a $20k one, you pay sales tax on $10k. If you sell your car to someone else for $10k and then buy the $20k car, you pay sales tax on $20k and the new owner of your car pays sales tax on $10k.
Why would car manufacturers want their old cars?
It usually doesn’t work quite like the example above. Using that example…the dealership will only give you $4k for your old car, even though it’s worth $10k. They then turn around and sell it for anywhere from $8-12k, netting themselves a tidy profit on the vehicle now for the second time.
The convenience makes this worthwhile for most car buyers, even if they could get another few thousand if they did everything themselves and paid full taxes. Dealership of course loves it and laughs all the way to the bank.
Or they give you more on the trade-in and claw it back by offering you shit terms from their captive finance company.
Some carmakers don't make a profit manufacturing and selling cars, they only make it on finance.
Interesting, wonder how the economics work for the different players. Also, tangentially:
A decade or two ago, a lady working in dealer finance lamented how internet bank rate comparisons had really rained on their parade
“I want this rate”, she explained customers would say, pointing at a printout or their phone and expecting a match.
Imagine how fat those margins would’ve been when they knew a customer hadn’t yet called around researching rates!
Good point, this is fairly common as well. I’d recommend avoiding financing entirely if at all possible because of this, simply not worth it for a car unless it’s the only way you can get one that’s in decent shape.
If you have to finance, often times you can get a much better rate from your local credit union instead. Use that to make the purchase, instead of the dealer’s financier.
It’s what Game Stop (and a myriad of other “buy, sell, trade” stores) does with used games and consoles but with cars. eBay exists but most people don’t want to go to that much trouble.
Not manufacturers, dealers. A legally required middleman in most of the US. They'll take your $10k car for $7k and try to resell it for $12k. Even if it gets negotiated to a fair price, they still get the opportunity to upsell used car buyers into extended warranties and maintenance plans.
Tesla is a little different in that they do not have dealers, so they instead do no-negotiatiation sales on their used cars. It's good for them because they can do the same buy low sell high deal. But when the model is not selling, they'll have to buy it and sit on that asset for months or dump it at auction.
Because they lowball you
Because they can (usually) resell them for more than they give you for it.
Usually. They might have trouble with Teslas.
CPO cars print money.
Charge 3k more in order to give the car a once over and then offer a few years extra warranty that will probably never pay out that much in repairs (assuming there's anything at all).
What? Where is that legal? You should be paying tax on the full purchase price of the new vehicle. In every transaction I've done, the trade-in is simply treated as part of the down payment or the full payment if you aren't financing.
https://www.motorenn.com/vehicle-trade-in-tax-benefits-by-state (not the biggest fan of this but can't find one I like better)
The same thing applies to houses and many other large purchases. Also most states that offer a trade in discount also let you sell the car private party (or to another dealer) and claim it on your taxes. You just have to file more paperwork vs the dealer figuring that out for you.
Huh, TIL.
Works just like that. Dealer takes your trade-in, usually paying you a decent amount less than you could get selling it yourself (this is a spot where you have rk make a time value for money decision). You apply that cash to your new car you're buying from them.
The dealer (if they are good) cleans and fixes any issues with the trade-in and either sends it to auction or sells it on their own lot.
This process is so ingrained in the process here in the US that if you look up price estimates of used cars online, they will give you both a "dealer trade-in" value and a "private party" value.
I always sell my cars privately, and I've always gotten good value for them. But then, I never buy new cars. I'll generally buy a low-mileage car that's 3 or 4 years old.
Yep, really depends on your personal feelings around your money.
I am generally a used car kind of guy, but this is how trade-ins work. For some people, they'd rather just not have to deal with selling a car even if they could get a lot more for it. The dealerships provide them that service at a significant cost. 🤷♂️
That's exactly how it works, and the dealer usually gives you a decent deal on the trade in, to make a sale.
It saves a huge amount of hassle for the buyer.
Did you think people threw thier cars out when they bought a new one?
No. Dealerships might have said "we have too many EVs right now" to you if you came in with your Nissan Leaf when there was an over-supply. But the idea that the entire manufacturer is blanket not accepting their own car, that new.