Posted by & filed under Myth Busted.

Car Myth Busted

by Justin Reves, Marketing Manager

It’s been just over a year since I joined the team at the Driving Change Automotive Group. Truth be told, I wasn’t too excited about joining the automotive world as my opinion of car dealers was quite low.

I came from an advertising and technical background and I had honestly never once set foot in any car dealership since I was a kid. They were a bit scary and I kinda assumed that they were full of people trying to rip me off and take my hard-earned money. I’d say I’ve had a bit of an education over the last while. I’ll be talking about a series of myths that have been busted for me since working here. Hopefully they’re helpful to you, too.

Myth #2. Trading In Your Vehicle is a Giant Waste of Money

Let’s just start off that saying that likely the way to get the most amount of money for your vehicle is likely by selling it privately. But that is very different than trading in your vehicle being a waste of money.

Likely, if you’ve never traded or attempted to trade in a vehicle before, there can be shock at how much less you’re going to be offered than what you think your vehicle is worth. And that’s fair. But if you understand the factors behind it, it makes sense as you’re simply paying someone else money to do a portion of the work for you. Let’s look at those factors and talk about what you’re getting in return:

1. Your vehicle may not be sellable

This one often hurts for people to hear as they love their vehicles, but in a lot of cases, vehicles that are being traded in can’t be sold on the lot.  There can be any number of factors as to why the same vehicle that is sellable privately just isn’t at a dealership. Depending on the current market, the dealer’s current inventory, specific things about the vehicle, or the standards people expect in a vehicle from the dealership, there may simply be no place for it on the lot.

They might do a little stint on the lot on the off chance that someone is looking for that exact vehicle, but after a few weeks, the vehicle is shipped off to an auction where the highest bidder is typically bidding less than the dealer did for your vehicle. They’re often giving you more than they know they will at the auction because they want to make the sale and can move some of the money from the new(er) vehicle into the trade-in.

2. Your vehicle likely needs some work

Let’s be realistic here. How many people trade in a perfect, mint-condition vehicle? A lot of people are trading in a vehicle because things are either going wrong or there’s this impending sense of doom that it’s coming quickly. When a dealership is buying a vehicle, they’re anticipating this. As I mentioned in my previous post about used car prices, we have an average of about $1500/vehicle we’re spending on reconditioning. That isn’t counting the piles of vehicles that are old and go to auction – it’s the vehicles that are only 1-5 years old that actually get sold on the lot.

Even if your vehicle doesn’t need anything right now, if it’s going to in the next little while, a good dealership will not sell the vehicle without performing the work. The customer that is going to buy the vehicle isn’t going to be coming after you if their struts go 3 months after purchasing – they’re going to be wanting the dealership to cover it and want to know why their new (to them) vehicle is already having issues.

3. Dealerships Offer Extras

Again, going back to my previous post, there’s lots in the prices of Dealership-sold vehicles beyond just the vehicle. Be cautious mentally if you’re comparing your prices to other vehicles on car lots. There can be tire warranty, powertrain warranty, chemical or protection packages, or other things that are included in the price of the vehicle when it’s re-sold. If you’re comparing the price of the vehicle you’re trading in with one on the lot down the street, the one down the street likely has had things fixed up and is including some extras now.

4. Someone has to sell your vehicle now

This is usually the reason people want to trade in their vehicle. They don’t want to sell it themselves. There’s lots of factors from the pain of having tire-kickers, to not being the best at negotiating, to how time-consuming it can be, or you’re simply not comfortable with the current condition of the vehicle to sell it directly to the person who will be driving it. Whatever the case, someone still has to sell it and now it’s a salesperson at the dealership. Unfortunately, they don’t work for free and the Sales Manager has to give them some commission to sell it. That’s factored into the price of your trade-in.

5. You’re dealing with a business

And that business is in the business of making money. Don’t get me wrong, most businesses want to provide a great value and have you leaving feeling completely satisfied, but at the end of the day, there’s still a lot of other expenses that need to be covered. Between support staff, overhead, bills, interest, etc…, a business still needs to turn a profit to cover those. A portion of the proceeds from your vehicle are going to that.

What you get in return

Ok, so all those things out of the way, let’s look at what you get in return:

1. Tax Savings

Depending where you live and what your province’s regulations are, you get a tax-credit for your trade-in. Meaning, if you are buying a vehicle for $20,000 and your trade-in is worth $9,000, you pay the tax on only the $11,000 difference.

2. Time

It takes time to get your vehicle ready to sell. It takes time to put your vehicle up for sale. It takes time to communicate with buyers and arrange times to show the vehicle. It takes time to keep the car clean. It takes time to show people the vehicle and go on test drives.

3. Energy

Selling something is always draining. There’s the tire-kickers, the low-ballers, or the “I’ll let you knows”. It’s not fun.

4. Peace of Mind

If you’ve ever sold a vehicle to a friend, there’s always that nagging thought in the back of your mind that something could go wrong – even if the car was great when you sold it. You’d feel awful if something big broke and that person holds you responsible. Trading in a vehicle means that you’re likely not going to have someone coming back to you asking for money-back.

5. Immediacy

Selling a vehicle can take a while and sometimes you need a different vehicle now and not 3 or 4 weeks from now. Trading it in means that you are freed up to get the next vehicle right now.

6. Cash Up Front

If you’re going to sell your vehicle, there’s often some things that need to be fixed or cleaned up before you sell it. You may not have the cash on hand to do the repairs before you sell it.

7. Convenience

It’s easier to take it down to the dealership and be done with it. That’s generally why people do it.

Wrap Up

All those things are worth something and add up. If you need a bit cash in the long run more than you need those things, don’t trade in your vehicle.

But if those things are appealing to you and you can afford it, trading in your vehicle isn’t a bad idea.

Does that make sense? Do you agree or disagree? Leave a comment below:

Leave a Reply

  • (will not be published)