Focus Fanatics - View Single Post - 2012 Focus is NOT holding value
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Old 10-06-2012, 04:15 AM   #264
Chaddz3
Focus Enthusiast
 
Join Date: Mar 2012
Fan#: 96992
Location: Marion, IA
What I Drive: 2012 Ford Focus S Ingot Silver

Posts: 216
FF Reputation: 17 Chaddz3 Great Standing Member
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You guys got this ALL wrong... Comparing MSRP when new to the Dealer trade in value isn't a fair comparison. They're not even the same type of pricing.

MSRP - the RETAIL price on the sticker suggested by ford..

Dealer Trade In - This is the recommended WHOLESALE price paid by a dealer to purchase a used car to add to their inventory, which they will mark up significantly to sell at USED RETAIL to the next owner. The trade in estimate is often times close to what a dealer will pay for a car at auction or what they pay for a car when buying a car from another dealer...

the difference between these two is going to ALWAYS be very steep.. otherwise the dealers don't make a profit when they sell it as a used car.

Compare the MSRP (or your actual agreed on purchase price to the PRIVATE Party Sale numbers... Or the Suggested Used Retail Price to make a fair comparison...

And still ... ALL new cars drop like a ROCK. Thats why you buy USED.... and let the first owner take the hit... and negotiate to pay as close as you can get the dealer to go to Trade-In value when you buy it...

A little more behind the scenes info....

A new car dealer makes his profit in the following order...

1. Service Department (this is where they make the most money)
2. Finance Office (they make more on the financing of a new car than they make on the car itself) Why do you think they push leases so much, they hate it when you pay cash... since it eats away their profit.

3. Used car Department. This is why the trade in value is so crappy compared to the MSRP of the car when new... its manipulated by the NADA in order to maximize profit on that car when the dealer Re-Sells it. They would rather have you buy a used current year than a showroom new current year. (if they can get you to finance that used car when you buy it, they make even more...

Example... A 20000 new car.. has an invoice price of 16500.. which the dealer essentially leases until it is sold.. the first owner talks em down to 17ish lets say...
6 months later.. the first owner trades it off and gets a trade in of 11500...
Then that dealer puts it in the used lot with a sticker price of get this... 17995... which the next owner talks him down to say 15995... so now the dealer gets almost a 4500 profit selling it used.. Where when that same dealer sold that same car "NEW" he would have only made a potential of 500 or maybe 750 dollars profit (if he's lucky)... THIS is why the trade in vaule drops SO much.. most people will buy used over new, since its usually cheaper... this is not a game.. this is done by DESIGN.....

The new car they will try to get you to lease....
Once sold as a used car.. they will try to get you to take out a standard loan on it...

Heres why...
As you can see above.. the average car dealer will make usually less than 1000 dollars on the sale of a new car.. (according to a report relesed by NADA at one time its $82.00 profit on average for the car itself...)

If they can get you to finance the car with traditional payments, the contract is then sold to a bank or something like Ford Motor Credit, and the profit margin jumps from $82 dollars on average to around $800 dollars on average...Plus they get a cut of the interest that loan accrues...

If they can get you to lease, that lease contract when sold to Ford Motor Credit (or who ever its leased through) pushes the profit margin to as much as $1700...

bottom line.. Buy it Used after it is about a year old... negotiate the hell out of it.. and pay cash..
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