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Old 09-19-2018, 08:37 AM
 
1 posts, read 162 times
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Has to be a scumbag auto salesman... snake oil sales no conscience whatsoever,i really dont get how some of these lames look at themselves in the mirror reading this thread just makes me mad . Ive dealt with some really shady salesmen and women before and this lame sounds like one for sure karmas a b lame!!!
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Old 09-19-2018, 10:49 AM
 
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Lets say that the dealer only paid $1 for the car. He knows in a short time, he can get $15,000 for the car.

Question: Why should the dealer sell it to you, for less than $15,000?

There is no sensible reason that the dealer should sell it to you for less than $15,000. The dealer knows the bottom line that the car will sell for within a matter of a short time. They are not going to cut the price way down below that figure, just to sell the car, as they know within a matter of so many days, it will sell for the figure that they consider a fair price they can about guarantee they will get. Lets say that someone offers them $10,000 for it, and they would get a profit of $9,999. They have the choice to get a profit of $9,999 or wait a few days longer and get a profit of $14,999. Only a very stupid dealer would take the $10,000 offer, and give up $ 5,000. The only one that would do it, is one about to go broke, and desperately needs money, and that if not going to be happening very often.

What a dealer paid for the car, has nothing to do with what price they will sell a car for. Thinking a dealer will greatly reduce the price below what another buyer will pay for it shortly, because they bought the car cheap, is just a lot of wistful thinking.

Just think, Why should a dealer give you the car cheap, so they have to sell 2 or 3 cars to make the profit they could have made on one sale.

The same principal of business holds true, whether it is a Car Dealer or a $1 store.
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Old 09-19-2018, 11:28 AM
 
712 posts, read 266,210 times
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Originally Posted by sunsprit View Post
A dealer's cost at the auction is not pivotal to the negotiation of price.

If you perceive a good price/value ratio for your negotiated price on a car, then make a deal.

If you think the price is too high and the dealer is making too much profit, then don't buy the car.

I've seen dealers buy cars for anywhere from 20% to 95% of the current retail price. A dealer needs to turn inventory, so they generally buy what they think they can sell. Sometimes, they buy a car right, sometimes ... they don't. But the numbers need to average out for them to survive; so some cars will have bigger margins then others. When you're looking to buy a popular car today, expect to pay pretty close to the average retail price ... even if the dealer obtained it for what you consider to be a big profit margin price point.
Dealers don't buy cars at 95 percent of value. Most auction cars need some mechanical work before being sold. They can't inspect them before buying them. That's a risk. True dealer auctions are closed to the public. Auctions open to the public are totally different.

If you want to know what a dealer bought a car for at auction just look at the trade in value in fair or less condition. It will be near that. Even if you know what he bought it for at auction, it cost money to get a car ready for sale and there is also overhead. If dealers were buying cars at 95 pecent of retail KBB they'd go broke in a week! Especially for lower cost vehicles.
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Old 09-19-2018, 01:12 PM
 
10,869 posts, read 41,150,426 times
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Originally Posted by BeyondtheHorizon View Post
Dealers don't buy cars at 95 percent of value.

You can make all the generalizations you care to post, but the FACT is that I've seen dealers buy cars for that much money.

Why? usually because they have a specific repeat valued customer in mind who wants the exact vehicle and it can be a very quick turn over. A phone call typically to let the customer know that they've got such a car located for their inventory and "it's on it's way to the lot" may result in a sold car within minutes of having bought the car at the auction. Even in the realm of $30,000 cars, that's potentially $1,500 net for a few minutes worth of phone calls for a vehicle that won't go onto a floor plan or require recon/advertising costs.

I saw several MB 280SE 3.5 Convertibles go through one dealer that way when those cars were catching on as a "hot" collectable. The "panache" of being the "go-to" guy for such specialty cars at the time was worth the "word of mouth" advertising he got from his satisfied buyers. People from all over the USA were calling him about his inventory as a result. He wound up buying a 250SE Convertible which he also paid top dollar for … looked gorgeous, needed nothing … but that car sat on his showroom floor for over a year. The dealer made a gross profit of only $1,000 on that car and I've no doubt that it cost him more than that to keep in inventory. But it was a "showpiece" to have on the floor and did generate traffic for him.


Most auction cars need some mechanical work before being sold.

Some do, some don't. A dealer might take a car in trade which doesn't fit their inventory requirements so it's immediately auctioned off, for example.

Just this last week, I purchased a 1999 F-250 4x4 SuperDuty Powerstroke 7.3 which was bought sight unseen … over the phone … by a car dealer friend of mine. He'd been looking around for me for the last 8 months to find a "nice" one of these trucks to replace my 1995 F-250. When he called me and gave me the description of the truck … which had yet to be shipped to him … I told him I was his buyer if the truck was as described. I made it clear that no recon, no detailing, nothing was to be done to the truck before I had a chance to see it. He was to notify me as soon as the truck arrived at his lot and did so. I got to the lot the next day, checked over the truck, and handed him a check for the purchase. Absent a detail, the truck was showroom condition. The seller had recently put a brand new set of 5 T/A tires on it, which had at most a few hundred miles on them before the truck was transported to my dealer. The last owner had taken fairly meticulous care of the truck. Didn't even have parking lot door dings on it. The truck is completely stock, no chip, no exhaust system work, no 5th wheel or GN trailer hitch installed, etc. Looks like the owner put seat covers on it from Day 1, it currently has a set of top-of-the-line Camo covers from Cabela's which are about mid-way through their service life.

Appears to have been dealer maintained for most of it's life in accordance with Ford factory guidelines. Yes, it desperately needs a thorough detailing. A couple of interior trim plastic parts are broken/missing … such as the facia of the dash mounted cupholder. The central locking solenoids are sluggish, so I'll have to clean those up; this is a well known issue with these vehicles and simply not "a big deal". Oh, and several of the buttons/controls on the OE radio don't work … but the CD player plays and the radio tuning is fine (I'll get a replacement reman, about $180). Didn't have the "remote key fob", but my locksmith supplied one for $90, programmed to the truck. And I got a couple of spare keys, too.

The worst problem I could find with the truck was the driver's side rear door has a spot weld that came apart and the lowest portion of the rear door has been flexing near the front door. So there's a 2" long crack at the interior bottom of the door along a crimped area. I'll be able to "fix" this by riveting in the spot weld area (with 2 rivets, readily accessible to install) and epoxying in a 4" long fishplate over the cracked area at the bottom of the door. Unless somebody is looking up from underneath the door, they'll never see my repair work.

As well, earlier this year I bought a 2007 Subie OBW. I'd stopped at the lot where I've bought several Subies' before, just to see what they might have. While I was kicking around another car from their inventory, the dealer was called by the local franchise dealership to BID on a car they were taking in trade. Again, sight unseen by my dealer friend. By the time I got back from a test drive with the one car, that trade-in car was on the lot. It didn't even need a detail, just a new windshield. I checked the car over and couldn't find anything that needed to be done to it, showing 158,000 miles. Test drove fine, looked good on the rack. I bought it on the spot for a very reasonable price.

Then I went down the street to the franchise dealer to see if they had service records on the car. Indeed, they did. The lady that had owned the car lived on a few blocks away from the dealership. She was a constant "nitpicker" about the car; ie, if anything squeaked, rattled, or didn't operate perfectly, she was on their service department doorstep. The car had not only been maintained IAW Subie schedule, but had 20 additional service department tickets. Other than needing a new set of tires within a few thousand miles, the car was in mint condition. Again, not even any door dings on it … although one little slight dent in the right rear quarter by the gas fill flap … accessible and small enough that a "paintless dent" outfit could fix it in minutes.


They can't inspect them before buying them. That's a risk. True dealer auctions are closed to the public. Auctions open to the public are totally different.

While I've been to a number of dealer wholesale only auctions with a dealer friend, the numbers of "casual" dealer licensed buyers has been pretty strong at some of them. With so many states requiring that anybody who turns more than a small number of cars per year is deemed a "dealer" and must get a license, there's a lot of people there that aren't really storefront retail dealers. As well, there's a lot of folk that have a dealer friend who give them the credentials to get admittance to the wholesale auctions. They buy the cars under their friend's dealer license, pay their friend a nominal fee for the processing, and the cars are resold on many sources … local newspaper, local advertising, eBay, CList, or similar.

The dealers cannot run the engines before the car goes through the sale ring, but they certainly can go over the car as much as they want to check for their concerns before bidding on it.


If you want to know what a dealer bought a car for at auction just look at the trade in value in fair or less condition. It will be near that. Even if you know what he bought it for at auction, it cost money to get a car ready for sale and there is also overhead. If dealers were buying cars at 95 pecent of retail KBB they'd go broke in a week! Especially for lower cost vehicles.
KBB or similar listings for "trade in value" are about as bogus a source as anything in the industry. The reporting in this industry is very poor, and nobody has a real certain number as to what a car is worth "wholesale" before recon/costs of sale, etc.

"true price discovery" of the auction price is only known for real by the auction house and the buyers/bidders on the day of an auction for a given vehicle. As I pointed out previously, I've seen car go for a fraction of their likely retail sales price to as much as 95% of that number. This ain't conjecture or wishful thinking, pal … I've been to those auctions, I've been a party to those deals.

I'll agree that paying 95% of likely retail sale price is a risk in the general sense at a dealer auction, but I've seen it happen time and time again over the last 50 years of being in the business. It all depends upon what the buyer/dealer believes he can do with the car. Personally, I've turned a fair number of BMW's and MB's for minimal money to accommodate a client because my main profit center was the "service after the sale"; ie, if I got a customer into the 'benz they wanted, I'd be seeing that car in my repair shop for years afterwards. So buying a car with not much room in it for the retail price was justified for my business purposes … and yes, I've sold cars in the $20K range needing no repairs but yielding less than 5% mark-up. Of course, I didn't have the overhead of a true retail storefront car dealership because I was handling the cars through my service shop. And sometimes the car with a keystone margin in it showed up and I was happy to take advantage of those cars, too … typically, an MB diesel that was running poorly, the owner had been told it needed a lot of work ($$$$'s), and they just wanted to dump it for a few bucks more than a dealer would give them in trade. Time and time again I was able to restore these cars to proper functioning with little more than a tune-up, new filters, etc … and then turn them for a nice profit.

And I've seen guys at some of these auctions thrilled for a day's work to buy a carload of cars that they turnover in a day or two for $200-500 per car. Such is the power of advertising/market channels these days. Obviously, they don't put a lot of money into the cars for recon/capital costs … most of their time/expense comes in a quick detail and a glib story for their buyer.


PS: I've watched more than a few times when a couple of dealer buyers were caught up in the "auction frenzy" of trying to buy inventory for their lots … and popular cars were coming through the auction. My best recollections of such cars were during the days of Monte Carlo's popularity and dealers were paying close to retail just to have these cars on their lots to bring in foot traffic, if not a sale. Obviously, that's a few years ago, but the current "hot movers" in the available wholesale inventory still command top dollar for the car lots that deal in them.

For me, I wish now that I'd bought a whole bunch more BMW 2002 model cars than I did … especially the small bumper/round taillight models. There was a time when I was buying these for under $3,000 and parking them until I had a chance to recon them. Rust free examples abounded in my area of the country and they weren't a hot commodity at the time. I'd sold all of them in the last few years except my personal '72 which I bought brand new in CA for $2,500 (sticker price) in Feb '72. Sold it last month for a decent price … and at the last minute when I'd accepted an offer, got a text from a CA buyer who offered me $14,000 for the car if I'd tune it up, replace some of the rubber & windshield, put new tires on it, and deliver it to him in the bay area. I hadn't driven the car since 2003, it'd sat in my hangar all these years under the wing of my plane. Was almost a nuisance to do the annual on that side of the plane, to access the cover plates with the car in the way. Happy to see it go to a new enthusiast owner who plans on a full resto. He was thrilled to call me the next day to advise that the engine started right up, sounded good, and had a clean exhaust. I'd been using the car as my "fuel dump" for the fuel samples from the plane … the 2002 loves 100LL avgas. 'specially with the higher compression pistons and hotter cam than stock that I'd put in so many years ago along with the TII distributor.

Last edited by sunsprit; 09-19-2018 at 01:38 PM..
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Old 09-19-2018, 01:31 PM
 
712 posts, read 266,210 times
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Originally Posted by sunsprit View Post
KBB or similar listings for "trade in value" are about as bogus a source as anything in the industry. The reporting in this industry is very poor, and nobody has a real certain number as to what a car is worth "wholesale" before recon/costs of sale, etc.

"true price discovery" of the auction price is only known for real by the auction house and the buyers/bidders on the day of an auction for a given vehicle. As I pointed out previously, I've seen car go for a fraction of their likely retail sales price to as much as 95% of that number. This ain't conjecture or wishful thinking, pal … I've been to those auctions, I've been a party to those deals.

I'll agree that paying 95% of likely retail sale price is a risk in the general sense at a dealer auction, but I've seen it happen time and time again over the last 50 years of being in the business. It all depends upon what the buyer/dealer believes he can do with the car.

And I've seen guys at some of these auctions thrilled for a day's work to buy a carload of cars that they turnover in a day or two for $200-500 per car. Such is the power of advertising/market channels these days. Obviously, they don't put a lot of money into the cars for recon/capital costs … most of their time/expense comes in a quick detail and a glib story for their buyer.
kbb gives you an idea. I'll admit Kbb is owned by the car industry so it inflates some of it's values. Kbb was bought by autotrader a while ago.


https://www.youtube.com/watch?v=yUwx3TEJuAs

All that being said, dealers aren't going to be paying much more than the trade in value for a car at auction. It's a safe bet to assume that which is my point.

Paying 95% is a super rare event and he better have deposits BEFORE he buys for some super rare car and be charging an arm and leg. If not, It's not a risk. It's idiocy. 99 percent of cars don't fall into this category.

Think about it. If a car dealer will give you only 50 percent of the value of your car for a trade in and they can actually inspect in, then why would they pay 95% of the value or anything near that at auction? ALso, The risk at auction is the car needs a ton of work and they can't inspect them. They are bidding on hundreds of vehicles.

Selling a car for 200 more than you bought for is a recipe for disaster. You're losing money on that deal due to overhead. You have to pay the salesman, the manager, the front desk person, the lights, the real estate rent/purchase/taxes, reconditioning of the vehicles, potentially tires/brakes/check engine light ect.
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Old 09-19-2018, 07:34 PM
 
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Originally Posted by BeyondtheHorizon View Post
kbb gives you an idea. I'll admit Kbb is owned by the car industry so it inflates some of it's values. Kbb was bought by autotrader a while ago.


There's way too many games that are played by the car industry to inflate the "reported" trade-in values. For example, most people are only concerned with the "out the door cost" of their purchase. So some dealers will write up the new car purchase at the full retail, then show a "trade-in" number which works out to the bottom line agreed price.

An example: I bought a 1964 356C Porsche with the intent to sell it to a customer of mine who wanted out of his 745i BMW. I traded a 3.0CS BMW with a whole bunch of aftermarket mods on the 356C. The dealer and I agreed to the trade-in and $8,000 cash to make the deal. The Porsche was written up at $24,000 and the 3.0CS trade was deducted as $16,000. No way was the 3.0CS worth that kind of money "trade-in" at the time, but the dealer got to report the inflated valuation for the trade.



https://www.youtube.com/watch?v=yUwx3TEJuAs

All that being said, dealers aren't going to be paying much more than the trade in value for a car at auction. It's a safe bet to assume that which is my point.

In my experience, most dealers pay a lot less than the "trade in value" for most of their inventory. Again, it's those fictitious numbers from KBB and similar sources that mislead the buying public.

Paying 95% is a super rare event and he better have deposits BEFORE he buys for some super rare car and be charging an arm and leg. If not, It's not a risk. It's idiocy. 99 percent of cars don't fall into this category.

I didn't say that this happened too often. But you challenged that it happens at all, complete with an explanation about overhead/profit as to why it couldn't be done. Sorry, pal, but it does happen from time to time for numerous reasons between dealer/buyer … as I explained in my prior post about some MB convertibles. Saw the same thing happen with '71 280SL's for a year or two, too.

Think about it. If a car dealer will give you only 50 percent of the value of your car for a trade in and they can actually inspect in, then why would they pay 95% of the value or anything near that at auction? ALso, The risk at auction is the car needs a ton of work and they can't inspect them. They are bidding on hundreds of vehicles.

Selling a car for 200 more than you bought for is a recipe for disaster. You're losing money on that deal due to overhead. You have to pay the salesman, the manager, the front desk person, the lights, the real estate rent/purchase/taxes, reconditioning of the vehicles, potentially tires/brakes/check engine light ect.
This is where this discussion is going nowhere. You persist in assuming that I'm some newbie with no experience in the car biz and treat me like I'm an idiot who's not been around the block at least a few times. What I've reported here is the results of actual deals which I've seen the paperwork on at my dealer friends, not guesswork.

Perhaps in the low dollar value cars segment of the marketplace that you appear to be familiar with, low margin/small profit deals are losers, so they don't happen.

But, OTOH, I've seen a fair number of low margin deals go through over the years. In fact, the 1999 F-250 that I bought last week was part of such a package. To get that "cream puff" truck, the dealer had to buy 2 more trucks as a package to justify the transport from Western Colorado to the Front Range. The two other trucks were pretty edgy. My dealer friend was happy to off them for $200 each to another dealer who specializes in that level of merchandise.

There's other ways that cars show up in the auction marketplace that don't need work. For example, my in-laws bought new cars every year. In their later years, the cars rarely had 4,000 miles on the odo when traded in. The dealer they did most of their trading with for 25 years didn't always have a buyer lined up for such "cream puffs", and with all the incentives/holdbacks and promo's was better off to sell a new car rather than selling a year-old model for almost the same price. My FIL used to do his Sunday AM routine, the "goin' to church car" that day would get vacuumed, cleaned up, and frequently got a quick wipe-down with Nanowax or similar "spray and wipe off" cleaner/wax. By the time he had a car for a year, it looked as good … if not better … than new. My parents were almost as fanatical about their cars … in my Mom's last years, she got a new Taurus every year … the trade in rarely had 2,000 miles on it.

My son recently worked for an "auto broker" who aggressively seeks cars to satisfy his clients who'd rather deal with the broker than a dealer. That broker has numerous connections with dealers who see a lot of lease car returns. Many of those cars are in great condition, well maintained, and very low mileage. They'd flood the market at the dealership, so they send to auction a sizable percentage of the cars that come back in from a lease. They don't need any work, they're not junk. They're just unwanted at the dealer who doesn't want them to compete with new car sales and leases. There's only so many CPO cars that they want to sell, partially to keep the perceived value & market as high as possible.

The bottom line is that you don't know all of the markets and segments around the country. Your generalizations don't always apply to each deal, each car, and each dealer. There's a lot of auction cars that are quality merchandise, not being dumped because they "need mechanical work". Of course, if that's the market segment you're dealing in, than that's the type of merchandise you can easily find.


PS: Scotty gets off on the "gray market" tangent in the industry. There were some very good years of activity in that segment, particularly with German cars that were prohibitively expensive to pass a recurring TUV inspection. They could easily be bought for pennies on the dollar, shipped to the USA, and modified as needed to meet USA emissions/safety requirements. But as Scotty points out, the rules have changed and compliance with USA emissions/safety is now very expensive, so the market has dried up.

PPS: I've been the buyer from a dealer on some of those "$200" mark-up cars. More than a few times, some of the dealers I supported with my service shop bought packages of cars where a car or two in the package was a dog … for various reasons. Could be a color/interior combination/condition which the dealer didn't believe he could sell in a reasonable time frame, could have been a car that just wasn't suitable for his inventory/lot, could have been some problems with the car that they didn't want to deal with or pay to have repaired. Perfect example: a '71 MB 220D with a low compression engine that wouldn't start in Denver cold weather. I took it off a dealer's hands for only $200 over what he paid for it … and I saw the paperwork for it and his Sight Draft to pay for the car so I know for certain that's what he paid for it. Just happened I had a wrecked 240D in my lot with a decent condition engine in it. So buying the 220D and installing the 240D engine was a viable deal for me. And yes, I did make a couple grand on the deal a few months later.

Last edited by sunsprit; 09-19-2018 at 08:01 PM..
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Old 09-20-2018, 05:35 AM
 
712 posts, read 266,210 times
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Originally Posted by sunsprit View Post
[color="blue"]This is where this discussion is going nowhere. You persist in assuming that I'm some newbie with no experience in the car biz and treat me like I'm an idiot who's not been around the block at least a few times. What I've reported here is the results of actual deals which I've seen the paperwork on at my dealer friends, not guesswork.
.
Stop taking things so personally. What difference does it make to you what I think anyway. I was just stating some simple points. I don't think you're an idiot and never said you were.
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Old 09-20-2018, 08:26 AM
 
Location: Ft. Myers
15,577 posts, read 9,650,106 times
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Originally Posted by ERH View Post
I'm looking at buying a 2007 vehicle that was turned into Dealership A at the conclusion of the lease. The AutoCheck report says Dealer B acquired it at auction. Is there any way for me to find out what Dealer B paid for it at auction (either the actual transaction or using the dealer black book)?

At one time, my one son had his dealers license, so we went to auctions a lot. Cars do not go as cheap as you would think. The buy here, pay here guys will pay a premium for a car because they know they will make their profit on the interest and also that they will probably repossess that same car a few times, making them even more money.


We stopped shopping at the auctions because we could buy cars cheaper from private owners.
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Old 09-20-2018, 09:18 AM
 
Location: D.C.
1,816 posts, read 1,548,951 times
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Auctions, since they're not freely open to the general public, do not dictate the market value of the vehicle. They represent the investment value for those qualified to make that investment (hence not open to the general public).


Market value is fluid and always changing with the times. It is determined by what the general public is willing to pay for it.


To assume a car dealer is ripping you off because he paid $10 at auction and sold it to you for $10,000, is the same argument that when you list your home for sale and the buyer says you're trying to scam him because he can see what you paid for it 10 years ago on Zillow, and is therefore basing his value assumption off of that number. Capitalism just doesn't work that way..
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Old 09-20-2018, 01:33 PM
 
Location: Raleigh
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Originally Posted by oldtrader View Post
Lets say that the dealer only paid $1 for the car. He knows in a short time, he can get $15,000 for the car.

Question: Why should the dealer sell it to you, for less than $15,000?

There is no sensible reason that the dealer should sell it to you for less than $15,000. The dealer knows the bottom line that the car will sell for within a matter of a short time. They are not going to cut the price way down below that figure, just to sell the car, as they know within a matter of so many days, it will sell for the figure that they consider a fair price they can about guarantee they will get. Lets say that someone offers them $10,000 for it, and they would get a profit of $9,999. They have the choice to get a profit of $9,999 or wait a few days longer and get a profit of $14,999. Only a very stupid dealer would take the $10,000 offer, and give up $ 5,000. The only one that would do it, is one about to go broke, and desperately needs money, and that if not going to be happening very often.

What a dealer paid for the car, has nothing to do with what price they will sell a car for. Thinking a dealer will greatly reduce the price below what another buyer will pay for it shortly, because they bought the car cheap, is just a lot of wistful thinking.

Just think, Why should a dealer give you the car cheap, so they have to sell 2 or 3 cars to make the profit they could have made on one sale.

The same principal of business holds true, whether it is a Car Dealer or a $1 store.
I know...I really don't get it. I don't see what the Gas station paid for the slim jim I bought. I don't know what the laundry detergent cost Target before I bought it.

Or people compare historical prices (like an SUV listing a year old when gas was much more expensive) or the idea that a homebuyer "doesn't want the seller making too much money off me."

Its. Not. About. You.
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