How are dealers going to sell '09 cars when they don't want trade-ins

Comer1

I went into my local Honda dealer for my annual "how much to change" conversation last Sat. I currently drive a 08' Civic saloon which will have about 18,500 miles by Jan. This is my 9th Civic in 12 years, and since the new model in 2006, I've been changing for about €4,000. With the current situation regarding used cars filling forecourts, I did expect to pay a little extra. But I was shocked to be asked for €6,250. I pointed out that if I continued to change for this money, I would be spending over 62 grand in ten years (approx life of the car) for a car that I could walk in and buy for 26 grand without a trade-in. The answer I got was "look at the comfort you're getting." I dont thing it's 40 grands worth of comfort!:p

The reason of course is that he would find it very difficult to sell my car. And I completely accept that, but is it not worrying that if garages won't take in cars. How do they expect to sell any? This morning I heard of someone who trades his Audi every year for 7,000, this time he was quoted 16,000!!!:eek:

And just to show his level of interest in my custom (and respect for me as someone who has bought 9 cars from him) he didn't even want to show me the new Accord. My real interest this year is to buy a new Accord Desiel. I told him this two weeks ago and the same on Sat. When I asked could I have a look (it was locked), he told me he left the keys at home. I then told him I'd come back during the week. He asked was I really interested in the Accord, I told him I was (which should have been obvious:rolleyes:.) He then went to his car and came back with the keys. Pretty low eh?:D. If I do buy an Accord, it'd be difficult to go back there.

Anyway, I rang a couple of other Honda dealers and I'd say they wont be able to do much better. It's a bit worrying for the industry in this country.

JoeA3

You're asking to be taken for a ride if you are changing the car every year.

furtzy

The last thing a dealer wants now is a high value 08 trade-in to sit on his forecourt for the next 6 months.

Changing your car every year is a mugs game. Why would you want to part with all that money just for the niceity of a new 09 plate that no-one will even notice

fenris

And you keep going back - why???

If he is treating you like this now, how badly was he screwing you when times were good.

You have to ask yourself what you are being loyal to here and what you get in return that is better that what you get down the road - maybe even from a different car manufacturer, if you are not being treated right when you are giving them money, what will it be like when you are askeng them to spend money to look after you in the event of a problem.

biggus

Imagine how much a dealer would need to change a buyer from an 06 S-class Merc or 7-series Bmw into an 09? €80k ?

I Think the days of driving cars into the ground are back for us Paddies.

Anyway most modern cars would have a 15 year trouble free run .

smash

reg snobbery... the sooner people in Ireland realise that it's a total waste of money - the better!

You don't need to get a 09 car. If you want something different but new enough, sell the 08 civic and take a trip to the UK and get a 08 Accord - it'll be cheaper and probably have more extras!

kmick

Added to the fact that the private market is non-existent most people wont be able to afford to change cars. Probably not a bad thing.

Darragh29

Comer1 wrote: »

The reason of course is that he would find it very difficult to sell my car. And I completely accept that, but is it not worrying that if garages won't take in cars. How do they expect to sell any?

Unfortunately from what I see, there is no current answer to your question OP. There is no sign of a strategy emerging to get car sales moving again.

astrofool

Aren't people going beside the point of the post to take digs at the OP?

How are dealers going to survive if they aren't taking trade ins/are upping the price it takes to change your car.

javaboy

astrofool wrote: »

Aren't people going beside the point of the post to take digs at the OP?

How are dealers going to survive if they aren't taking trade ins/are upping the price it takes to change your car.

They're not upping the price it costs to change. Economic forces beyond their control are pushing the value of trade ins down. And to answer the question of how are they going to survive, many of them will not. It's as simple as that.

cowenstaff

Look at it from a buiness point of view - the dealers have large stocks being devalued every day due to imports from the UK and also a lack of demand. A trade in sold ot a big loss 3-4 months down the line would wipe out any profit on the new car i.e. overall tradingin at a loss. As Alan Sugar said "I could sell ten quid notes on the street for a fiver all day long".

All will be well again whn the market bottoms out in line with imports - but the days of changing every year for a "few bob" are well gone.

I think if he had made you an offer for your car at the price your car is really worth - you'd have been more annoyed. If you think you should get something extra for years of loyalty - go to your bank with the same attitude and see what happens - everybodys in the same boat.

Comer1

JoeA3 wrote: »

You're asking to be taken for a ride if you are changing the car every year.

Not really the point of my post.

I never change for the number plate. I change every year for €4,000. I never pay for a service, tyres, maintence etc. I do approx 30,000km per year so I don't think I'd be able to change for much less that say €12,000 after 3 years, plus I would have some of the expenses mentioned above. Obviously the cheapest option is to keep a car until it dies. As for going back every year, up until last Sat, he has treated me fairly well, and I considered my cost of changing was very good. Now that it looks like I will have to hold my cars longer, I'd like to go for a bit more comfort...like the a.

Anyway, back to my original point, are any dealers taking in second cars and giving decent prices? If not how can they expect to survive. It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

javaboy

Comer1 wrote: »

Not really the point of my post:p

I never change for the number plate. I change every year for €4,000. I never pay for a service, tyres, maintence etc. I do approx 30,000km per year so I don't think I'd be able to change for much less that say €12,000 after 3 years, plus I would have some of the expenses mentioned above.

That's a good point and something often overlooked by people who criticise people for changing annually. You effectively have a permanent warranty, you take advantage of any new features incl. safety features.

For the most part it doesn't make financial sense to change every year but at €4,000 a go, it's not that bad. Consider the depreciation on that car if he held it for 7 years with 210,000kms done.

Comer1

cowenstaff wrote: »

I think if he had made you an offer for your car at the price your car is really worth - you'd have been more annoyed. If you think you should get something extra for years of loyalty - go to your bank with the same attitude and see what happens - everybodys in the same boat.

Again, not the point of my post (lots of aggression here, I wonder if I had more than 20 posts?...)

I am not annoyed at the price I was offered, I was surprised. As for loyalty, you must think I'm very naive indeed if I expect any kind of major price reduction on that account. I completely understand that the price he offered me is based on conditions completely out of his control. I'm simply asking where does the motor industry go from here in this country. If English imports are part of the problem, can that be tackled?

pburns

Comer1 wrote: »

Not really the point of my post.

I never change for the number plate. I change every year for €4,000. I never pay for a service, tyres, maintence etc. I do approx 30,000km per year so I don't think I'd be able to change for much less that say €12,000 after 3 years, plus I would have some of the expenses mentioned above. Obviously the cheapest option is to keep a car until it dies. As for going back every year, up until last Sat, he has treated me fairly well, and I considered my cost of changing was very good. Now that it looks like I will have to hold my cars longer, I'd like to go for a bit more comfort...like the a.

Anyway, back to my original point, are any dealers taking in second cars and giving decent prices? If not how can they expect to survive. It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

It's simple market forces. In an ideal world they'd cut you some slack for being such a loyal customer but it's not an ideal world and the industry is in trouble. It's a time for sitting tight, waiting for the s/h market to improve and maybe planning for a change in 09. If the downturn continues they may be only too happy to sell you a new car by then.

I have a 08 and would consider changing only if I really didn't like something about the car. At that it would play havoc with my conscience for paying for all that 1st year depreciation. BTW a brother of a friend changes every year and quotes the whole 'I don't pay for servicing or tyres' stuff. After a few pints (and under duress) however he will admit it's the shiny new number plate he likes!

Darsad

Write a letter to Brian Cowen and Bertie they are the idiots who in ensuring they clung onto power did the deal with the snots ( Greens ) which allowed them introduce the most penal CO2 system in Europe on top of the present credit crunch has destroyed trading conditions for the motor industry and will lead to lots more posts along this line.

AlanD

Comer1 wrote: »

Anyway, back to my original point, are any dealers taking in second cars and giving decent prices? If not how can they expect to survive. It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

Unfortunately, this is how the business works. No dealer will take a hit for a customers loyalty because that loyalty is not a two way street, meaning the customer can move on to buy elsewhere at any stage. So a dealer's priority in an economic climate like this is protect the business. Cars are expensive assets to have on the books and they are assets that depreciate at a rate that will have most people running for the hills. And so to manage it, you need to think about what a car is worth now and possibly in 6-9 months time and work out your deal accordingly. Looking for an extra 6k or so from you is not a reflection of you as a customer but a reflection of the economic climate we're in. The spending habits or lack of, of many people affect the deals other people can get.

In many ways it is a much safer bet to not sell a new car than to sell one with a trade in that cost too much. Why? Well if you only paid 4k to trade in your '08 civic for an '09 car, then the dealer may have to bear the cost for a considerable period. As cars depreciate he may not be able to sell it at the current price and so drops the price to sell. When he sells your car at a lower cost, he may have to take in another trade in and that too may depreciate faster than normal and so on until the whole sale ends up making a loss. Remember, a dealer doesn't make actual cash on a new sale with a trade in until he eventually sells the trade in for cash (i.e. no trade in). So depreciating assets like this, in a climate like this are to be avoided.

We used to be main dealers up until a few years ago and we got out of the business. But back in the 80s when noone had money to buy cars then either, we kept the business running by not taking in trade ins unless the deal was too good to leave behind or we knew we had a buyer for the car or the car cost us very little to keep on the lot. This meant offering the customer a sometimes poor price for their car. It was cheaper for us to not sell a car, than take one in potentially costing us a fortune in depreciation. There's balances to this too, so it's not all a one way street, you can give to one and take from another, but what I've said above is the basics of it. Running a car business in a climate like this requires extreme caution and one eye firmly on the bottom line.

The big difference today though is that unlike 20 years ago, dealers have all had to build very expensive showrooms and so the repayments on construction loans for these premises could eventually cripple them. So running costs are high.

What will happen eventually is that the market will bottom out and only then will a scheme to promote car buying again will work.....remember the scrappage scheme? It'll be required again I reckon when we have a nation full of scrap on the road because we've kept our cars longer than usual.

Ah the cycles of the motor industry.....it's more complicated than people think.....but I'm so happy we're out of it.

peasant

Darsad wrote: »

Write a letter to Brian Cowen and Bertie they are the idiots who in ensuring they clung onto power did the deal with the snots ( Greens ) which allowed them introduce the most penal CO2 system in Europe on top of the present credit crunch has destroyed trading conditions for the motor industry and will lead to lots more posts along this line.

less of the ranting please

faceman

Um yeah anyway getting back to the OP's question which was "How are dealers going to sell '09 cars when they don't want trade-ins?"...

The simple answer is they arent. With the rise in unemployment and insecurity in the economy its going to be harder to shift new cars. Whats the margin on a new car compared to a second hand car?

When it comes to motorbikes, dealers that focus on second hand sales do alot better than dealers that focus on new bikes during a recession. Im not sure if that translates to cars like for like tho.

bazz26

micmclo wrote: »

And you've been giving this place repeat custom? Take your business elsewhere even if prices are similar.

Driving into any dealership with a trade-in at the moment is like having a very contagious disease. They simply don't want them.

Comer1

bazz26 wrote: »

Driving into any dealership with a trade-in at the moment is like having a very contagious disease. They simply don't want them.

Dam, I knew that night in Soho would come back to haunt me:(

robbie99

Comer1 wrote: »

I've been changing for about €4,000. With the current situation regarding used cars filling forecourts, I did expect to pay a little extra. But I was shocked to be asked for €6,250.

I'm shocked as well but only by how good the price is! In the past you've been trading in like for like at €4k.

The most expensive 4 door civic I see is the 1.8I-VTEC SE-S A/T at €27770
http://cars.rte.ie/newcars/index.cfm?fuseaction=Details&vehicle_id=716077320080701&strSpecs=SSCIRL2002

A new diesel Accord starts from € 35,895 .
http://cars.rte.ie/newcars/index.cfm?fuseaction=Details&vehicle_id=749475220080701&strSpecs=SSCIRL2002

So the Accord is an €8k better car but you're being asked to pay only an extra €2.25k for this :eek:

coylemj

bazz26 wrote: »

Driving into any dealership with a trade-in at the moment is like having a very contagious disease. They simply don't want them.

Agree 100% and as if to let you know that this is the case, Foster Motors in Sandyford last week had a raft of 07 and 08 secondhand Golfs parked outside their showroom during the VW Open Day promo. Since they moved to Sandyford the original premises at the top of Fosters Ave now sells the secondhand cars and the new showroom in Sandyford only sells new cars but during the open day they strategically placed several used Golfs outside the new car showroom as if to say 'look at all these used Golfs we can't sell, do you really think we want more of them?'

Comer1

robbie99 wrote: »

So the Accord is an €8k better car but you're being asked to pay only an extra €2.25k for this :eek:

The 6.25k was for another Civic, he wants 14k for an Accord (which is €34800 new)

Comer1

coylemj wrote: »

do you really think we want more of them?'

No I don't, but surely that spells the end for alot of car dealerships in this country.

robbie99

Comer1 wrote: »

The 6.25k was for another Civic, he wants 14k for an Accord (which is €34800 new)

Oh, right. My mistake.

AlanD

Comer1 wrote: »

No I don't, but surely that spells the end for alot of car dealerships in this country.

it does indeed......but there's very little they can do about it. Taking in trade in's for the wrong money will only hasten their demise.

cashmni1

Not only that, I heard over the weekend that someone was trading an 08 focus for an 09 - very similar to the OP - and the salesman just refused point blank to take the 08. No trade ins at all. "by instruction of the management". I can't see them being in buisness next year. They lost a sale of a new car for refusing to take the trade in, as explained why in other posts, but still, they should have quoted him a ridiculus trade in price.

Gregor Samsa

cashmni1 wrote: »

They lost a sale of a new car for refusing to take the trade in, as explained why in other posts, but still, they should have quoted him a ridiculus trade in price.

Why should they have quoted a ridiculous trade in price designed to get rid of someone, instead of doing what they did and honestly saying saying "we have too many cars as it is, we don't want any more"?

mikemac

cashmni1 wrote: »

They lost a sale of a new car for refusing to take the trade in, as explained why in other posts, but still, they should have quoted him a ridiculus trade in price.

And if they gave a ridiculous price for the trade in, the customer may end up getting offended and walk away. Sure we've seen many threads here about buyers being insulted at the prices they were offered.

The salesmen told the truth and gave it to them straight. I'd prefer to get that instead of what happened the OP here where the salesman pretended they couldn't find the keys.

What, a car salesmen tells the truth (for once! :pac:) and still posters find fault with it?

Dermo123

Brother in law got quoted 26K to change his 07 BMW 520d SE Estate for a new '09 one. He is not going for it but it does get horrendously expensive the further up the models you go.....

Could you imagine how good a car you could get for 26K like this one http://www.carzone.ie/search/Mercedes-Benz/CL-Class/200845190800924/advert

You could have the CL500 bought, taxed and insured for 3 or more years and keep the 07 BMW diesel as well.

-Chris-

Comer1 wrote: »

Not really the point of my post.

Anyway, back to my original point, are any dealers taking in second cars and giving decent prices? If not how can they expect to survive. It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

Dealers take in cars at prices that they think they'll be able to sell them for (plus a reasonable profit).

Dealers aren't slashing used car prices and passing it on to the guy trading in, the value of used cars has dropped.
That's like saying Estate Agents have slashed the price of houses and now homeowners are in negative equity because of it.

Neither car dealers nor estate agents can control the value of anything - they just take an asset on their books and try to find a new owner for it, making some profit in the transaction.

cashmni1 wrote: »

They lost a sale of a new car for refusing to take the trade in, as explained why in other posts, but still, they should have quoted him a ridiculus trade in price.

That's a fine line to tread - do you state point blank that you don't have an appetite for '08s and therefore politely refuse to quote, or do you give the customer the "bad news" and become the bad guy for valuing their car at less then they think it's worth?

I'd rather not quote the ridiculous price, to be honest. It's a shorter and considerably less antagonistic conversation.


Edit: beaten to it!

crosstownk

Usually at this stage of the year a dealer is beginning to build up a list of orders for the forthcoming January. He does this (in most cases) by offering a price for a trade in, taking a deposit and ordering the shiney new car. This year is horribly different. The value of used cars is changing so rapidly that dealers will not quote as they cannot be sure that the figure quoted will still be realistic by the time January comes around. So some dealers - those fortunate enough not to have a forecourt full of used vehicles - are telling customers to come back in December/January for a quote. Others with a high volume of used stock cannot take trade-ins until they shift the current used stock. Doing the deal regardless of used stock levels is not an option as quite a lot of dealers are already at their credit limit and in the current climate no further credit is being extended by the banks/finance houses. So the dealer is now caught between a rock and a hard place. He can either shift the stock now at a loss or hang on for dear life in the hopes he gets a few sweet deals in the new year. Both options are, to say the least, not good ones.

Assuming the second hand market remains as it is and values keep falling, it is fair to say that quite a few dealers will not be in a position to continue trading. This is one of the factors that will contribute to rising unemployment in 2009.

If customers wish to trade up they are going to have to come to terms with the fact that their car is not worth what they thought it might be and they will simply have to pay more - either that or hang on to their current car and seeing it depreciate further. Some of those that do decide to pay the extra to change will have the added difficulty factor of getting passed for finance which may force them to hang on to what they have.

The van market will suffer from the credit crunch too as anyone in the construction trade will find it considerably more difficult to get finance - if that's the route they take when trading up to a newer LCV.

CrowdedHouse

Just curious...do dealers get much credit from the makers i.e one month,three months or is it COD ?

crosstownk

Usually the dealer will get a set amount of interest free days from a finance company. So the dealer orders the car from the manufacturer/importer/distributor who is paid by the finance company and the dealer cost of the vehicle will be on finance at 0% interest for a set period of time after which he pays interest. This could be anything from 30 days to 180 depending on the model, dealer and manufacturer. Obviously, if the dealer has a heap of cash he can buy it outright avoiding the interest - a luxury in today's economic climate especially as the forecourt is most likely full of used stock clocking up interest daily........

The odd car might be on sale or return but they are few and far between.

ninty9er

Comer1 wrote: »

It appears that dealers are slashing the prices of second-hand cars but then passing this on to the guy who's car he's taking on a trade-in.

Second hand cars are plummeting in value, new ones still cost relatively the same as they did last year.

I reckon you were getting a bargain at €4k and you're not doing too bad @ €6,750.

ART6

I wonder if one reason for dealers not wanting trade-ins is that they simply don't have anywhere to put them? Some of our local dealers certainly appear to have used car lots filled to bursting at the moment.

Henry Ford III

ninty9er wrote: »

Second hand cars are plummeting in value, new ones still cost relatively the same as they did last year.

I reckon you were getting a bargain at €4k and you're not doing too bad @ €6,750.

Yeah. The dealer was being generous

TheDriver

I had the same experience OP, its like they didn't want to sell a car to me and made me feel i own a worthless heap of rubbish so hence no enticement to buy a car and my pity for garages went out the window because as one poster said, no loyalty whatsooever. It will be a case of driving stuff into the ground to be honest.............

BrianD3

It's a bad situation even for those with no trade in and who want to buy a new car in a straight deal. Dealers can only discount new cars by so much and once you drive away in your new car it becomes a used car and part of the used car oversupply mess. If you need/want to sell in 6 months, 1 year, 2 years you'll get an absurd price for it. New cars have always depreciated heavily but its far worse now and IMO every make and model is affected. Even cars like the ED BMWs which had up to 10k wiped off the price of a new car with the VRT changes. Unless something dramatic happens I would not like to be trying to sell an Irish bought 2008 520D in 2010. It seems that the motor trade in this country is nearly as ****ed as the building industry

Gregor Samsa

TheDriver wrote: »

my pity for garages went out the window because as one poster said, no loyalty whatsooever.

I don't understand lament for lack of loyalty. Car dealers are businesses. Businesses exist to generate profit. If they can't make a profit on your trade-in, then why should they take it?

The fact is that the economy is not some abstract excuse made up by car dealers to shaft you - it's a reality that most cars are not worth as nearly much as their owners think they should be, and no loyalty can change that.

If loyalty is such an important virtue in these transactions, then where's yours? Why aren't you sticking by your dealer through these hard times, and let him take your car at a price he can make a profit on? You see my point?

TheDriver

i agree with you and my point is that there is no loyalty either way, unfortunately garages closing will be inevitable and thats the sad part

JoeA3

I think someone else here made a good analogy with your TV's, kitchen appliances, etc.
If I went to the Sony Centre today to get the latest Bravia, I don't think I'd be asking him to take my 4-year old CRT in part exchange! The TV I paid €1000 for in 2004 is probably worth less than €100 now - probably unsellable in fact!

Looks like cars are going the same way - disposable consumer items!

coylemj

Agree with the loyalty thing, it's a sad fact that loyalty won't pay the bills. A few years ago I was at one of those focus groups where the client looking for our feedback was one of the big Irish banks. In the group of us consumers was an old geezer who started whinging about the closure of a branch of the same bank in his local suburb, he ranted on and on about his years of loyal custom being repaid by them closing the branch and now he had to get a bus over to the next nearest branch.

After a while when he seemed unstoppable I asked him where he kept his savings and he replied that he had all his money in Northern Rock because they was paying 1/4 of a percent more than the Irish bank - loyalty how are you! He repaid the Irish bank by moving his custom to a UK bank with no branches in Ireland and still expected the Irish bank to keep his local branch open for his convenience!

trellheim

Maybe SIMI will get the Govt. to increase VRT on 2nd hand imports, or make imports much more regulated hint hint ... this would be the easiest thing for them to do.

Climate Expert

Heres whats going to happen in my opinion.
1. Not many orders for new cars due to credit crunch and poor trade ins.
2. New car sales will plummet all over Europe (this is happnening alread)
3. All new cars will be heavily discounted as the new stocks pileup at manufacturers.
4. Manufacturers will then discount for the next year or two to get sales going again.

-Chris-

trellheim wrote: »

Maybe SIMI will get the Govt. to increase VRT on 2nd hand imports, or make imports much more regulated hint hint ... this would be the easiest thing for them to do.

That would be anti-open market (I know, I know, VRT is already an illegal/immoral tax) and protectionist. The Govt couldn't get away with it.

Climate Expert wrote: »

Heres whats going to happen in my opinion.
1. Not many orders for new cars due to credit crunch and poor trade ins.
2. New car sales will plummet all over Europe (this is happnening alread)
3. All new cars will be heavily discounted as the new stocks pileup at manufacturers.
4. Manufacturers will then discount for the next year or two to get sales going again.

I'd say you're probably right. Hopefully they'll use the additional discount to support trade-in prices rather than taking it off the list price - dropping the list prices will just further increase the problems with second-hand values.