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Larry Frank
11-02-2009, 7:47 PM
It was sad today as I drove by the now empty Chevy dealership in the town that I live. It has been there 60 years and was doing well. I have bought five cars there over the last 30 years and liked doing business. Why did it go out of business? It was a victim of the GM bankruptcy, the government loans and GM being able to just shut down any dealer that they wanted. All of the people who worked their are now out looking for jobs elsewhere and I wish them well.

The same thing happened to the Dodge dealership where my wife has gotten minivans. In both cases, the dealerships were making a profit but GM and Chrysler broke contracts and shut them down. I thought that we were trying to save jobs with a bailout and these two dealerships were xxxxxx!

How does this happen?????

Dennis McGarry
11-02-2009, 7:53 PM
....

I know the feeling as well. The ford dealershop and dodger one as well both went under, then a Huge toyota moved in. But no where near the same jobs..

Its a said said time...

Matt Meiser
11-02-2009, 7:55 PM
They might have been profitable, but were too low volume for GM/Chrysler to keep them as a dealership. Since it costs GM/Chrysler money to have them as a dealer, it has to make sense from both sides.

How does it happen? Failure to change led to bankruptcy, where the contracts were voided. There was no way to save every job. A lot of these cuts should have been made long, long ago.

Apparently the Chevy dealership closest to me lost their franchise too as they have exactly 2 cars on their lot, neither of which is a Chevy. I used them for service a couple times when I had my Colorado and they were decent, but too low volume I'm sure. I've not heard anything like I have about a few other dealers in the region though.

Rob Russell
11-02-2009, 7:55 PM
This thread is already into that gray area that could be considered politics and we don't do politics per the SMC TOS.

Please keep your responses non-political or we'll have to pull the thread.

Thanks in advance from your friendly moderators.

keith ouellette
11-02-2009, 8:03 PM
They might have been profitable, but were too low volume for GM/Chrysler to keep them as a dealership. Since it costs GM/Chrysler money to have them as a dealer, it has to make sense from both sides.

How does it happen? Failure to change led to bankruptcy, where the contracts were voided. There was no way to save every job. A lot of these cuts should have been made long, long ago.

Apparently the Chevy dealership closest to me lost their franchise too as they have exactly 2 cars on their lot, neither of which is a Chevy. I used them for service a couple times when I had my Colorado and they were decent, but too low volume I'm sure. I've not heard anything like I have about a few other dealers in the region though.

How does it cost GM when a dealership is low volume?

not that I'm arguing the point , I'm just curious. It was my understanding that the dealerships don't get the cars for free, they buy the cars from GM , often through loans from the finance section. At least thats how I thought it worked and was told that from a former Ford dealer.

Matt Meiser
11-02-2009, 8:34 PM
I'm far from an expert, but from my understanding, GM has to have management to oversee that dealer's activities, provide sales and marketing programs, provide IT systems for them, training programs, etc. Those are basically fixed costs whether the dealer sells 1 car or 1000.

Jeff Monson
11-02-2009, 9:09 PM
I think its more about protecting dealers marketshare than the cost of the dealership to GM. They would rather have fewer dealers having a better marketshare and being more profitable than dealers scattered randomly everywhere like before. I have seen alot of small dealers in our area that have had their franchise taken away (GM and chrysler), sad for the small towns that are hurting to start with.

Paul Ryan
11-02-2009, 9:55 PM
I think its more about protecting dealers marketshare than the cost of the dealership to GM. They would rather have fewer dealers having a better marketshare and being more profitable than dealers scattered randomly everywhere like before. I have seen alot of small dealers in our area that have had their franchise taken away (GM and chrysler), sad for the small towns that are hurting to start with.


Jeff is exactly right. It doesn't really cost the manufacturer anything to have a dealership open. The dealer is charged all costs associated with marketing, IT, advertising, just about everything. The advantages of have less dealership is less competition. Instead of GM having to run large rebates, and incentives to help the little guys. With less dealers you dont have as much dealership A undercutting, dealership B to make a buck. Eventually people will begin to buy vehicles at sticker, and the rebates will get lower, and lower, until they are gone. An you have shipments of parts and vehicles that cost money to. With less dealers less transportation costs. There is more to it but that is the jist.

I worry if they cut to many dealers you will have Honda, and Toyota syndrom. As you move west in MN and the rural areas, you have less and less people that will buy a foreign car because who will service it. The nearest dealerhship is 100 miles away. If I have a warranty issue I dont want to take it that far for a, "we will turn the light off and see if it comes back on." An once it is out of warranty nobody will work on the darn thing.

Dave Lehnert
11-02-2009, 10:06 PM
We had a small Chrysler dealer here that was said to only sell about 7 cars a year. Said they made a profit with service and such.

I heard that Toyota sells more cars than GM with half the dealership. Or something like that.

Ken Fitzgerald
11-02-2009, 10:28 PM
Paul,

GM has been creating the Toyota/Honda syndrome for decades. I was the ultimate Chevy Man until I got burned by a brand new factory ordered '83 Chevy full-sized Blazer. The dealer did what they could but GM's calloused attitude towards resolving my issues broke me of my Chevy fetish. The Lewiston Hill is a known killer. There have been 9 truckers killed on that hill since we moved here in 1982. When my Blazer was in for brake failures for umpteenth time and I met with the GE Regional Rep about the brakes failing while my wife was driving down the Lewiston Hill with our 3 kids in the car...his reply "She should have down shifted". HUH? At that time we were on the 3rd of 5 transmissions due to transmission failures. That is the only vehicle I have owned that ever lost a transmission. When the 5th one started having problems, I got rid of the vehicle.

I replaced it with a used Toyota 4-Runner. I put 167,000 miles on it in 16 years....same transmission....same USED transmission that came with the vehicle. Only reason I traded it, I was worried it would break on my wife. In 16 years...2 alternators and I replaced the timing chain at 120,000 miles.

Prior to the '83 Blazer I owned and drove a '56 2 door sedan Chevy and a '64 SS Impala convertible...327 - 4-speed. I was young, invinicible and drove that way. I got married at age 19 and settled down. I then had a '71 Pontiac T-37 and then a '72 Chevelle...350...auto....8 track...a/c.....vinyl roof....drove it for 99,000 miles and traded it in on a 4WD so my wife didn't get high-centered in the roads in the Cascade Mountains of Oregon.

Two Hondas parked in our carport these days. GM is getting what they deserve IMHO.

Back to the subject at hand, however. Think about this folks. GM must have been losing money on these dealerships or they wouldn't be closing them. If the competition has a dealership in town and the nearest competing dealership is 30 miles away, I probably won't drive that 30 miles. When you are marketing a product, have a distributor closeby is a boon! There had to be some financial reason GM is closing these lower volume dealers. Got to be.

Pat Germain
11-02-2009, 10:29 PM
I agree, Larry. It is very sad, especially when small communities lose dealerships and their access to service and parts support. I wish somehow all the dealerships run by crooks were shut down leaving the honest folks in business. But I guess that's just pie in the sky.


An once it is out of warranty nobody will work on the darn thing.

Are you suggesting only dealerships will work on Japanese cars?

Paul Ryan
11-02-2009, 11:13 PM
Are you suggesting only dealerships will work on Japanese cars?

Pat,

I am not saying only a dealership will work on it. But out hear in the sticks where I live. If you take your shiny new camry, accord in for a check engine light, they look at you like you brought in a flying saucer. Larger cities are fine, but in the little old po dunk towns we live in good luck getting your rice burner serviced.


Ken,

I am sorry you had such trouble with your blazer. And that is for you to decide wether or not you buy another. I had bad luck with a camry that is suposed to be so great. So it can and does happen with all of your makes. I am not saying the domestics are the greatest, they all have had bad designs. But for all the years I have worked in dealerships I honestly believe it is customer preperation. Foreign vehicle owners have it programed into their brains, "DO YOUR SCHEDUALED MAITENANCE." Like god talking to them. Domestic owner, "I only change my oil, the filter is only needed every 5th oil change" Or 30k maitenance, "Im not doing that is costs to much, I didn't do that on my 57' chevy." Well you didn't expect a 57' to go 300k with out valve job. We can go on and on about the failures of the domestic maufacturers, from union wages, to horrible suppliers. But just because you had bad luck with one doesn't mean you will have trouble with the next. It seems today not many people remember about the wonderful Bronco II's, or pintos. Fords are selling like hot cakes now.

Ken Fitzgerald
11-02-2009, 11:32 PM
Paul,

Here in the sticks where I live are 2 Certified Honda Master Mechanics that have their own business. They charge the same rates as the dealership but these guys aren't on the same time clock and do good work. When our youngest son was in college and I was doing most of our mechanicing and letting them do the more technical stuff, I've called them and they gave me the answer over the phone. The kid was a ski instructor while in HS and college. His '79 Accord developed a problem that only showed up when he was going up hill. I relayed this information to one of these guys over the phone, he told to me to check the fuel filter which was in a clip near the rear axle. He'd bet it had come out of the clip resulting in a pinched fuel hose. Doggone if he wasn't right. The point being they keep our local Honda dealer honest.

As far as a Chevy. A couple of thoughts come to mind......Burn me once shame on you...burn me twice shame on me...is one.....

A reputation once tarnished is damn near impossible to recover is another.

Every year at a local celebration "Hot August Nights" a 3 day show and shine with entertainment by famous rock bands from the '60s and early '70s, the LOML and I walk through the cars enroute to the concert. When ever we see a '64 SS Impala convertible, I have to break out my handkerchief to wipe the drool off it. That's what I was driving when I met her 11 days before leaving for bootcamp. I sold it the day I left for boot camp. She rode in it maybe 4 or 5 times. We were married two days after I got home from bootcamp. Would I buy another '64? IF I had that kind of money I'd buy one in a heart beat just for the sentiment. Buy a new Chevy? When friends tell me they are having the same reliability with their Chevy that I'm having with my Honda or Toyota, I will consider it. Until then, I'll remain skeptical.

Dave Lehnert
11-02-2009, 11:33 PM
I have a 1997 Ford F150 V6. 75,000 miles. Had to replace the engine out of warranty last year. The thing that gets my goat I lost coolant from the day I drove that truck off the lot new. Not much but some. No drips on the drive. Had that thing to the dealer many times. Got to the point they said there is nothing more to replace. I gave up and thought "well I just top off every two month or so" Boy was that a mistake. Searching the web found it is a very well known defect in the 1997 V6. You can find them on the bay and CL all day long with blown engines at 75,000 miles. When I called around for a price for a new engine they did not have to look it up. The guy knew the price without looking. I called one shop and said "I need a price for a new ford engine" I Kidd you not, he said "For a 97 F150 V6?"
Ford knew they had a problem but put it's customers off in hopes it was out of warranty by 75,000 miles.

Point of my story. I won't say I will never buy a ford ( I love the looks of the new Ford trucks) but after that, It will make me look at another brand first.

Curt Harms
11-03-2009, 7:34 AM
......
A reputation once tarnished is damn near impossible to recover is another.
......


Just so. Even if the management and unions come to the conclusion that it's no longer 1959 and they're invincible, they still won't recover in 6 months what they've been squandering for decades.

Bill Arnold
11-03-2009, 8:14 AM
... We can go on and on about the failures of the domestic maufacturers, from union wages, to horrible suppliers. ...
Our next-door neighbors had been in the market for a new car for several months. My wife and I had bought two Ford products early this year - a new Mercury Sable Premier for her and an '08 Escape for me. The neighbors really liked both vehicles - she likes the view from the Escape - he kept talking "union"(?) and was unwilling to go with anything but a GM product. They ended up buying an '09 Buick. Now, they complain about noises, the seats aren't as comfortable as our Sable, etc., etc. It's in the shop now for the dealer to try to fix a few things.

I think it's great that people have brand preferences. We prefer Ford products, although my wife currently still uses her '04 Kia Optima as a work vehicle. Our Sable is fantastic for road trips. My Escape has been a great replacement for the '97 F150 I traded for it. We're doing our part to help the domestic manufacturers. The GM faithful will help keep the company going through its recovery.

American-made vehicles? How about Toyota? Kia is building a plant here in Georgia. Some Fords are built in Mexico and some GM products are built in Canada. Guess the line is getting a little fuzzy! :confused:

Mike Wilkins
11-03-2009, 10:23 AM
My .02 cents of opinion. In my area there were 3 Chevy dealerships, and many more within 30-35 minute drive away. Even before the well-published problems with the Big-3, I felt there was a problem with market saturation.
Why do we need 3 dealers of the same brand in one county?? GM probably should have done this years ago, but top management was too thick headed to listen.

Julian Nicks
11-03-2009, 10:26 AM
Dave, I hear what you are saying about ford. I have a 99 e350 with the crappy modular v8 in it. Well guess what. That model engine has known issues with the engine blowing its spark plugs out the top and the auto lifter adjuster doesn't do its job. There are many thousands of frustrated ford owners out there that have been told by ford that this issue will cost them big bucks to fix. It's something that should be a recall but it's not. Luckily I have not had problems with the head spitting out the sparkplugs, but I do have the lifter issue. I guess it all comes down to doing your research online BEFORE buying that new car. The old saying of not buying a first generation model still applies in my book.

Pat Germain
11-03-2009, 1:31 PM
Pat,

I am not saying only a dealership will work on it. But out hear in the sticks where I live. If you take your shiny new camry, accord in for a check engine light, they look at you like you brought in a flying saucer. Larger cities are fine, but in the little old po dunk towns we live in good luck getting your rice burner serviced.

I can understand it would be frustrating not having any service centers nearby who could work on a Japanese or European car. Colorado Springs isn't that big, but we have many such shops who do very good work. We even had one shop that worked on Hondas and Acuras exclusively. They are so good, the dealerships often send work there. They recently started working on Subarus as well.

It sounds like opening a small import shop in the sticks would be a worthwhile business endeavor.

I can understand how lack of maintenance can contribute to problems with a Ford, GM or Chrysler. But it won't cause the dash to fall apart, the rack and pinion to blow out or the car to fail to start if it's raining. I've heard many first hand reports of those specific problems and more.

Ben Hatcher
11-03-2009, 2:33 PM
...Why do we need 3 dealers of the same brand in one county?? GM probably should have done this years ago, but top management was too thick headed to listen.

Closing dealerships has sparked lots of backlash and they did it in the middle of a bankrupcy. Can you imagine the PR dissaster that they would have suffered if they closed underperforming dealerships prior to the melt-down?

Horton Brasses
11-03-2009, 3:27 PM
I can't say how much or exactly what it costs-but there is a significant cost to the manufacturer to keep a dealer going. A lot of the small Mom and Pop dealers only need to sell a few cars a month to be very profitable-but they are costing the factory money.

New car dealers make much more off the service end than the sales end. The best dealers (large and small) have "100% service penetration" which means that 100% of their costs are covered by service. Sales generates pure profit-they can also sell for less than dealers without 100% penetration as they really are just looking to get cars on the road and into a lifetime of service. So you can see how a small dealership can sell 5-10 cars a month and have a small garage that covers all the costs. Essentially, being a franchised dealer allows them to bill lots of service to the manufacturer and their customers (depending) and sell enough cars to keep the garage full all the time. Not good for the factory, but good for the dealership. Big dealers are best for the factories whether they have 100% penetration or not.

Paul Ryan
11-03-2009, 6:53 PM
New car dealers make much more off the service end than the sales end.

Horton,

This is another one of those old wives tales. I used to think the same thing. Working in the service department it is easily to think that service is the real money maker. But in reality profit for most dealers is about 37% sales, 35% service, and about 28% parts. If you have a body shop then they make some money too. The big down fall to the service side of a store it the over head. There is a much larger amount of overhead to run a service department then there is for sales. Sales over head is very very minimal. The bigest cost the sales department has is advertising. Payroll cost is very minimal because most dealers pay on a commission base only. There service department has huge over head in payrol, and then you have insurance, utilites, tools, uniforms, subscription costs on service equipment, and the list goes on and on. So if you look at total money brought in the service department is king, but bottom line, the sales department makes more money if operated properly.

Tom Godley
11-04-2009, 6:10 AM
Chrysler, GM and Ford have been in a death spiral. With so many factors working against them - it became impossible to stop the slide. MAYBE this will give them a second chance. Jeep may survive out of Chrysler.

So many of the "Big Three" dealerships became weakened shells left over from the glory days when they had real market share. Most of the dealerships - especially Chrysler - were not able to invest in the businesses given their current sales level. Reading the closing list and the corresponding sales level was a real eye opener.


Now all they have to do is design and produce products that they can sell at a competitive price and still make money -- and get people to by them a second time!

Pat Germain
11-04-2009, 10:50 AM
New car dealers make much more off the service end than the sales end.

It would seem that way. But consider all the profit potential from selling a new car:

- MSRP is significantly higher than dealer cost. And the markup isn't just on the car. There's also a significant markup for every option, or option package. That's why dealers can come down from MSRP and still make money. A dealer can generate any kind of paperwork, with any price, and call it "Invoice". But invoice has nothing to do with the actual cost of the car. If a car is in high demand, you'll sometimes see a "Dealer Market Value" fee added above MSRP.

- Wipe on a $20.00 bottle of paint sealer and sell it as "Paint Protectant" for $800.

- Spray $10.00 of Scotch Guard onto the seats and sell it as "Fabric Protection" for several hundred dollars.

- Squirt some goo into the doors and sell it as "Rust Proofing" for several hundred dollars. (Most people are learning that rust proofing is bogus and sometimes even promotes rust by clogging drain holes. So, you don't see rust proofing as often as you used to.)

- Peel and stick some clear plastic sheeting to the front of the car and sell it as "Invisi-Bra" for several hundred dollars.

- Sell an oil change package with the car. Not only does this make money on its own, but it brings customers back to the dealership again and again making it much more likely they'll get expensive, regular maintenance performed at the dealer and not elsewhere at a discount.

- Charge the customer for administrative fees, DMV work, processing fees and anything else they can throw in. These fees often have strange names. Sometimes they're just added with no explanation, but they're, "Non-negotiable". A local Toyota dealer actually has signs posted on the showroom floor informing customers, "A fee of $399 will be added to every car sold". :rolleyes:

- Sell an extended warranty with the vehicle for $2,000. I don't know what these warranties, which are really insurance policies, actually cost the dealer. But I do know they can sell them for half the regular price and still make money. That's why there's such high pressure to sell them.

- Sell a loan to the customer and collect a comission from the lender. That's why dealers are always happy to help with financing, which can sometimes be convenient and a good deal if the buyer has good credit. (Buyers with bad credit may have no other choice.)

- Sell a "Gap Insurance" policy with the car and collect a comission.

- Sell a "Credit Life" insurance policy on the loan and collect a comission.

- Sometimes the dealer has an auto insurance salesman on site. For example, a local dealership is managed by the owner's son who recently became a Farmer's agent. My buddy, who is also a Farmer's agent, tells me this son is setting records for signing new policies. He collects a comission for every new policy and then another comission every year when the policies renew. Nice.

- Lowball the buyer on his trade-in. Dealers can just jack up the price of the new car to make it look like the buyer actually got a great price for his trade-in. Then, send the trade-in vehicle to the service department and have it detailed. Put it on the used lot and sell it for a huge markup. If the dealer is lucky, he can also sell all the above, high-profit products to the guy who buys the used car.

- What's that? The Mrs. is upset because you're looking at a new truck and she wants a new washer and dryer? Well, no problem. Tell you what, the dealership is such a "charitable" organization, they'll throw in a new washer and dryer with the truck! Of course, the cost of the appliances was just tacked onto the truck loan. And, what do you know, there was even a markup for the appliances.

- Once the vehicle is sold, the manufacturer sends the dealer a check. This is called "dealer holdback" and is an incentive to move cars off the lot. Therefore, it really is technically possible for a dealer to sell a car at actual cost and still make money. (Although, they rarely do so.)

- If the dealership sells a lot of cars, they get discounts and incentives from the manufacturer. This allows dealers to make even more profit on a car and gets them priority for getting the most popular vehicles.

So, consider all these profit makers and it becomes clear how dealerships can sell very few new cars and still make a killing. Dealerships who sell lots of new cars make profits unimaginable to us little guys. My local Toyota dealer recently opened a new compound. It looks like an upscale ski resort! That compound sure didn't come cheap.

Jim O'Dell
11-04-2009, 12:04 PM
We had a small Chrysler dealer here that was said to only sell about 7 cars a year. Said they made a profit with service and such.

I heard that Toyota sells more cars than GM with half the dealership. Or something like that.


That is part of the reason for closing some dealerships. Imports have done it for a long time. While keeping the selling price up doesn't help the manufacturer's bottom line, it does make the dealership more profitable. There is always manufacturer money to the dealerships to help with factory mandated renovations. Notice how most all dealerships, foreign and domestic cars, have a similar appearance within one brand? Part of the brand recognition concept.
And without making this a political statement, wasn't the committee that decided which dealerships would close a government appointed committee, and not a manufacturer appointed one? In other words, didn't the same committee decide which Chrysler and GM stores would close? Seems I read something like that when it was going on. Jim.

Pat Germain
11-04-2009, 1:34 PM
And without making this a political statement, wasn't the committee that decided which dealerships would close a government appointed committee, and not a manufacturer appointed one? In other words, didn't the same committee decide which Chrysler and GM stores would close? Seems I read something like that when it was going on. Jim.

The decisions were made by GM and Chrysler and not politicians. I heard rumors about certain dealerships in specific Congressional districts being protected targeted by the Obama administration or protected by members of Congress. I did some research and found this to be bogus. There was no evidence; only speculation.

Paul Ryan
11-04-2009, 1:38 PM
Before Bankruptcy around 95% off all new vehicles from the big 3 were sold with in $500 of dealer cost!. So there isn't a huge profit made there. They did get something called hold back on the vehicles that was as high as $1000 on some vehicles. And to the best of my knowledge GM and Chrysler were still using an MPA practice. MPA was a set # of new vehicles that the manufacturerer set for them to sell each month. Kind of like a quota. After that number was hit the dealer would get an additional chunk of money back on every car sold for that month. That amount usually ran between $500-1000. This is what hurt the little mom and pop stores. The little store may have a # like 7 for the month. So they sold 8 cars that month and got 8 grand back. But the big dealer 30 miles away might have a # like 50. So the big dealer at the end of the month sells their cars for under cost just to make their MPA. At the end of the month the big dealer sold 56 cars and end up getting 56k back.

And yes there are huge profits in everyhthing from fiancing to accessories. Most stores have a seperate finace manager/person. 9 times out of 10 they will not quote you the best finace rate they can for you. They will ask you something like where do you want your payments to be. You might say $500 per month. They look at there little chart and realize they best rate they have would be a 4%. But if they finace you at 6% they still get your payments real close to that $500 mark. Now the store gets a kick back from the lender for the difference in finacing percentages. So if you ever go into buy a car shop lenders also, the dealer is lying if they can get to what other lenders will do. Most time the dealer can finace you for rates as low or lower than credit unions. It is up to you if you buy the other crap that they try to push. Rust proofing used to be a big deal. But nothing rusts anymore. Everything, and I mean everything is negotiable. I knew a dealer that had taken a horse in on trade before. There is a reason they are called horse traders. That is illegal, but only if you get caught.

Pat Germain
11-04-2009, 1:54 PM
Before Bankruptcy around 95% of all new vehicles from the big 3 were sold with in $500 of dealer cost!

I would expect that period was primarily influenced by soaring gas prices, a tanking economy and a very lackluster reputation for big three vehicles. Before this period, I would bet the markups were far greater than $500.


I knew a dealer that had taken a horse in on trade before. There is a reason they are called horse traders. That is illegal, but only if you get caught.

Interesting. Why is it illegal to take a horse as a trade in? I would think it would be up to the dealer to trade whatever they wanted as long as they paid the right taxes. Personally, I think it's kinda cool that a dealer would do so. :)

Bill Arnold
11-04-2009, 2:38 PM
... Interesting. Why is it illegal to take a horse as a trade in? I would think it would be up to the dealer to trade whatever they wanted as long as they paid the right taxes. Personally, I think it's kinda cool that a dealer would do so. :)
Even before the current situation arose, dealers would occasionally run and ad that said, to the effect, "If you can drive it, ride it, pull it or haul it in here, we'll trade!" I'm sure they meant it, too! Maybe you only get $5, but they offer you a trade!

Then there was the situation a few decades ago up in Yankeeland. A colorful dealer who always did his own ads told his audience, "You can have this little car today for only 1,000 bananas!" A lively woman rode up to the dealership with a load of 1,000 bananas - and her attorney, I think. The dealer had to go to court to save his hide. After that, I assume he decided it was safer to use the term "dollars" rather than clams or bananas!

Pat Germain
11-04-2009, 4:26 PM
Even before the current situation arose, dealers would occasionally run and ad that said, to the effect, "If you can drive it, ride it, pull it or haul it in here, we'll trade!" I'm sure they meant it, too! Maybe you only get $5, but they offer you a trade!

The proverbial "Push, Pull or Drag" ads must be effective because they never seem to end. Locally, the come on is, "We'll give you $1500 for your trade! No matter what the condition! If your car is worth more, we'll give you more!".

If you do trade in a junker, what those dealers actually do is just tack the $1500 onto whatever car you buy. Thus, they actually give you nothing for the trade in and provide only the illusion that you got $1500 for your junker. Then they call the local salvage yard and ask them to come and pick up all the junkers. Most salvage yards will haul off the junkers for free and sometimes even give the dealer a little money for them, depending on the current price of scrap steel.

If you don't know any better, you come off thinking you got a great deal. "Wow, they gave me $1500 for that piece of crap car!". If you're tickled pink about getting $1500 for your old junker, you probably won't notice you're getting reemed on the car you're buying.

Paul Ryan
11-04-2009, 5:54 PM
The cash price, and price with a trade in are always different. Unless you have a good trade. The sale price of most vehicles with in about $500 of dealer cost had been going on since about 2001 after 911. That is when you started to see all of the 0% interest loans, a huge rebates, sometimes up to $12,000 of the price of a truck. That tells you the mark up in trucks, the mark up in cars isn't even cost to that usually around 2k. That is why Ford and GM were so heavily in SUV's and trucks that is where the money was and still is.

That piece of junk camry I traded in this past Feb I got a real good price on. Because the used car manager had the same opinion as half of america. "It's a toyota they never break down". I new I was trading in a "real nice car" and the manger thought he would be able to sell quickly for a nice profit. So after haggleing for about an hour he agreed on a price that the salesman though he never would to begin with. I didn't feel bad because it didn't do anything to mask the problems of the car. If he would have checked it over thoroughly he would have realized a rod bearing was bad, and the converter was shot.

Something in MN law says you can only trade in the type of property that you are selling. So motorcycles, atv's, boats, horses, and other things are illegal. My great grandfather was a true horse trailer. He traded a reefer truck made by dodge back in the late 40's plus $1000 cash for a cabin on a lake. The cabin and more importantly the property is still in out family to this day. Now the orginal cabin is on the property that my grandfather owns, and an additional cabin on the other side of the property that his sister owns. Each side has 60' of sandy beach front and each are worth about 500k.