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The car is in pristine condition. Visual inspection by mechanic and vehicle history report are complete. "On the lift" inspection by my mechanic is pending. Will obtain service record history (thank you for the suggestion).
All things being equal, the price the dealer paid at auction is pivotal to the negotiation of price, wouldn't you say? I'm not a "monthly payment" buyer; I'm interested in only one number: the price I pay for the car. I don't have a problem with the dealer earning a fair profit, but obviously want to leverage a fair price for myself in the process.
Even a ballpark idea of what is typically paid at auction would be better than nothing.
A 'fair price' to you has nothing to do with what the dealer got it for.
That's just something you have in your head so you don't feel like you got cheated.
If a car is worth X dollars, it shouldn't even matter if the dealer got it for free from the dealer fairy.
Still worth X dollars.
I can see what the average current auction value of a vehicle is, but I would need all the specifics including year/make/model, mileage, trim level, engine, transmission and complete options list.
Even then, the number I give you wouldn't necessarily be anywhere near what this dealer paid for the car. Auctions as a rule post the results, but they don't post the names of the buyers, so no one has any ability to look that up unless you could find someone in house at the auction it was bought at who is willing to risk their job and tell you.
The best way to approach this transaction given your angle is to aim for a number that is as close to the KBB trade in value as possible. That would most likely be as low as the dealer would be willing to go, even if he could go that low. You state yourself that the vehicle is "pristine". To me that means the dealer probably isn't looking to off-load it at a break even and is most likely willing to wait for a good profit on the sale.
If you want to know what is a real fair price, that would be the market value. Search out similar makes/models and see what they are going for and start at a price about $1k below what the lowest example you find is. You may win the low ball game you are trying to play, but I feel that chances are you won't be getting the car.
I spoke to an Acura dealer last year about a used MDX. Anyway, the car was priced great but it had sold. It was a great color, low miles and a DVD player. Told the dealer I wanted one just like it. He said he couldn't make it happen. Nothing else on the lot was priced even close. All had higher miles, no DVD player and lousy colors. Asked the dealer why the others weren't priced as aggressively. The response was we probably got the car at the right price and it probably needed nothing. Had the same conversation with another used dealer about an RX.
So, I think a lot of dealers are willing to let a car go for a set price above their costs regardless of what the actual market may be. Then again, this was only a couple thousand difference and not 5,000.
Totally agree with what you said about starting 1000 below the lowest priced car. I do an Autotrader search within 500 miles and by doing a wide search you usually pick up a handful of cars priced correctly. My local dealers put huge numbers on the windshield. I also look at a no-haggle volume dealer that I use to compare prices with.
Let's put it this way ... say you won a sweepstake and the prize was a $30,000 car. However, you already have a nice car and want to sell this new one. Should you be expected to make only the "fair profit" of, say, $2,000 since your cost is $0 or should you sell it for whatever the market will bear?
Ha, yes - exactly. Some people I guess would not buy the car at all but go find a dealer that has one for sale for more money and beat them down to a 500 or less profit out of principle.
If you are so scared if paying a dealer a profit on a used car you should just become a dealer yourself. Invest a few 100 thousand to a couple of million to get the facilities you need to buy your own cars at wholesale - transport and recondition and clean them yourself.
You could open up your own dealer, and get these really good auction deals for yourself? Or you could just support the folks that dropped a couple of million bucks to do the same.
Sorry, you don't have to drop a couple of million bucks to get dealer lisences. Here in MS, it's a $100 per yr to get one and I can go show at auctions. I know plenty of people that have gotten theirs'.
Sorry, you don't have to drop a couple of million bucks to get dealer lisences. Here in MS, it's a $100 per yr to get one and I can go show at auctions. I know plenty of people that have gotten theirs'.
Hes likely referring to those with enough capitol (either business or business+personal collateral) to have a lot, $500K+ floor line with a bank and/or auction house, bond with the state, maintain advertising, blah blah blah.
A dealer's license is cheap. The rest isn't. Hes not talking about some dude getting a dealers license to flip a few cars a year. It easily costs a mil plus to obtain a franchise new car dealer, or operate a reputable used car dealership.
Have you ever seen a dealership's financial statement?
Hes likely referring to those with enough capitol (either business or business+personal collateral) to have a lot, $500K+ floor line with a bank and/or auction house, bond with the state, maintain advertising, blah blah blah.
A dealer's license is cheap. The rest isn't. Hes not talking about some dude getting a dealers license to flip a few cars a year. It easily costs a mil plus to obtain a franchise new car dealer, or operate a reputable used car dealership.
Have you ever seen a dealership's financial statement?
You are probably correct, but I think what twest86 was getting at is that you don't have to spend all that dough if your goal is to buy cars cheap through a dealer auction. That's what fits the context of the thread, anyway.
You are probably correct, but I think what twest86 was getting at is that you don't have to spend all that dough if your goal is to buy cars cheap through a dealer auction. That's what fits the context of the thread, anyway.
Eh ... the OP asked simply how much the dealer paid for the car at auction. But that was years ago.
Anyway - most states required a surety bond to obtain a dealer license, which is a gigantic pain in the ass. CA's is $50k - the actual amount you're paying is significantly less depending on your business's credit and if you're already a dealer (why its easier for existing dealers to obtain other franchises). I know because I used to investigate fraud in this area for the state. Getting a dealer license, in most states, just to buy cars at auction, is not worth it. If your state doesn't regulate its dealers, which has is major negatives on the consumer side, you may have an argument, but what your suggesting here is like going out and obtaining your pilots license, getting a job as a pilot, just to get a free ride on a plane once and awhile.
Please open up a dealer for $100. Please let me know how it turns out.
(and getting a license is not the same thing... at least down here you have to have the space (secured warehouse/dealer space, insurance, plates, etc) to even get a license. Dealers will sell the cars for the most they can. Very simple. Doesn't matter at all what they got it for. Just what its worth to someone else. They may have other factors of course (want to get get more cars, free up some cash, car sitting too long, gotta pay some bills, etc), but you knowing what they paid for it, isnt going to help one bit. Your best bet. And what i do, its pay a dealer friend a few hundred to go with them to auction and buy in their name. Lots will do it, one i know has basically made it a business.
Generally the profit margin will be between $2-6k, depending on the model and how much they needed to do to it.
And contrary to popular belief, a dealer will in fact sell a car at a loss if necessary. I agree with others here though, the dealer purchase price should matter less than what you actually pay for it. If what I pay is reasonable, I really don't care if the dealer makes $1k or $6k.
When I worked at a dealership, I remember at one time, I had two identical, used Jetta GLX's on the lot: Reflex Silver, automatic transmission, basically every available option, similar mileage. Both had been traded in. One, we bought for about $11k, the other, we bought for about $14k; both were selling for the same price, at $16k. All the salesmen were trying to push the former, because there was a higher profit margin and commission.
Stuff like this would happen all the time. Especially at auction; you have the cars that dealers take in on trade that they bought high to make a sale and hit a monthly quota; you have the cars they bought low because they needed work; there are so many variables that there's really no point speculating as to what the guy paid to get it, and at the end of the day, that's really none of your business, to be blunt. I don't know what Rite Aid paid for the Diet Coke I'm sipping right now; all that I know is that since I've spent over $2k at Rite Aid with my Rite Aid card, I get a 20% discount so my 20oz Diet Coke now costs me $1.52. If I pick a Diet Coke up at a mom and pop and they charge me $1.75, I don't start trying to negotiate it down or anything like that... they're a mom and pop who probably paid more for the Coke because they buy at a lower volume... or maybe they paid less... but who cares? $1.75 is a fair price; if I don't like it, I can take my money elsewhere.
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