those going for this…there is a clear drawback…if you trade in a US car, your car will be estimated really low (and manuf. offer the employee discount)…the truck we had was about $3000 lower than in the blue book only 2 months ago or so before the E.D.
so if you trade in a US car, what you get from the E.D is lost on the other side…
If you have a Carmax nearby get an offer from them on your car. If it is up to blue book (and you can haggle with them) sell it to them for money and then go to the dealer.
couldn’t you say that yesterday??? darn…too late 
oh well…next time 
You can sell it yourself too.
That’s what we did when we bought our new car (before the employee pricing thing). Took a little extra effort, but made significantly more money than we would have if we traded it in.
If these new car deals keep getting better, the used car market is going to be hurting even more than it already is. The value of our 2 year old car has dropped significantly in the past few months as the price of the same car brand new has dropped so much.
It doesn’t have to do with the employee discount. It has to do with 1) meager profits for the dealers from selling new cars, so by taking yours really cheap, they might make a few hundred bucks of selling it wholesale. And 2) the cost of new cars has dropped, so the used market is in the toilet.
If you took your truck to a dealer that is not offering the employee discount they will still give you a crappy trade in.
But it will be “shittier” with the discount. Case in point - my wife went to trade in her car on a new Subaru. Established her trade-in at “x” dollars, called me, i told her great, come home and we’ll go in tomorrow to sign all the junk and take in our IMBA deal thing (which is like the employee discount, I don’t even MTB, but IMBA is a great organizatiopn and you get “dealer price” on subarus with your membership)
SO we go back the next day with IMBA certificate and what do you know, the trade-in dropped $2500 overnight. Instead of “x” it was “x-2500”, and of course I could have taken the time to sell it on my own, yadda, yadda, yadda, but it’s VT, i don’t have that large of a market here! I pressed and pressed and finally cornered lowly salesman who said, and I quote “we have to make money somewhere”…nice dude, like I’ll EVER go back there.
right now, trading a US car for a japanese one seems to be a big no no…you get screwed…
Trading a US car for anything is a big no no. Of course, I just traded a BMW for an Acura, got a shitty deal on the trade-in - but in retrospect, I think the Acura dealer was the one who got the shitty deal. That Bimmer was a stinking bavarian turd.
You realize that the Vibe you are buying is an American car, right?
if a model year for any car is discounted appreciably. the price you get for a trade in is going to way down.
for instance if you buy a $20,000 CAD ford and take the employee discount of say $3,000. that car brand new is only worth $17,000. now if you were to turn around and sell it in a year, there’s no way you would get that much. maybe $14,000.
however, if that car never recieved a discount, a year later you might be able to sell that same car for $17,000.
as time goes on, the problem gets worse.
basically a car will depreciate 60% in the first 3 years after it is purchased new. but that is really based on the lowest selling price of that model year - not what you actually paid for it. a $20,000 after 3 years would be worth $8,000. a $20,000 car that got sold for $17,000 that year would only be worth $6,800.
is it worth it? probably, because that difference between the employee discount and money lost on used selling price is $1,800. so you’ve save yourself $1,800 rather than the $3,000 you thought you were saving.
the best time to buy a car is when it is 3 years old. depreciation started to level off an there are a lot of cars avail. of lease and lots of parts avail. for repairs. however, if you’re going to buy new, it’s best to buy something that holds is value well, like a toyota or honda.
That is part of the Total Cost of Ownership as from my other thread. My Aurora cost as much and more than some of my other cars…and was worth MUCH less than the imports after 3 years…so, again. Even though the US car may cost less…it costs much more in the end.
I was just trying to get rid of my 04 Nissan Titan. Paid about $32,000 for it Fall 04. Books now at low $20K range. I guess I’ll be keeping it for a while.
I don’t see how the original price affects the resale. At least in the US resale is guided by the Kelly Blue book value of the car and is not based on what the original purchase prices was. They don’t track what promotions were going on at what time, if I was unfortunate enough to purchase my car the week before the promo came out and I paid 3K more, a year later I’m not going to lose and additional 3k. Now based on accounting depreciation methods yes that would make a difference, but used car values aren’t set according to that. They are based more on availability and reliability and demand for a car.
Who decides the lowest selling price to be based on? I have seen dealers doing “employee pricing” based on what the dealer gives it’s employees and not some national deal. If what you are saying is right then anytime you buy a car the depreciation would be based on these prices whether they are being offered by the car company or not since they are always available.
resale prices are guided by the blue book, or the red book, or the black book. those are all guides based on calculations too complex for me to know. however, they are decided by the editors of those books. if they say a car is worth so much, then that is what the selling price is for a used car is based on. it may go for more. it may go for less. i’m not sure what the deal with employee pricing is in the states, but in ontario it is mfr based, not dealer based. i suspect the same in the us. state to state resale prices will fluctuate, based on supply and demand.
who decides what a used car is worth? you do? in a way. but so does everyone else that is buying that car. there are about a trillion civics on the road, but they still command a high resale because there is such a high demand. a used neon is going to cost way less for a similar model year, b/c most people don’t want one.
the thing about having massive discounts on new cars is that once a model has been discounted, there is a lot less willingness for people to pay the higher prices. say you have a civic that sells for $20,000 and depreciates 20% after one year. you try to sell it and you’re going to get $16,000. now if that civic had been discounted $3,000 at some point during that year. someone has paid $17,000 for it brand new. are you willing to buy a car that has only depreciated by $1,000 effectively over that year? probably not, you’re going to say: well if you only paid $17,000 brand new i’m only going to pay $13,600 for it a year later. maybe the person did pay the whole $20,000, but how do you know they did? and what does it matter? you can go down the street and pick the car up from someone willing to part with their car for 20% less than the $17,000 they originally paid.
See, the other thing about the imports…is they dont HAVE to offer 0%, employee price, rebates or any other fake “deal” to sell their cars. They cars sell…and smart people are happy to pay more upfront as it costs less in the end.
exactamundo!
as Bob Lutz, GM’s Vice Chairman says: if GM can hang onto their market share “legitimately and not by buying subsidized leases, then I would consider that a significant achievement”
yes, some domestics are good cars. and you can get a new one for a great price today. just don’t think that there’s not going to be any repercussions in the future. the reputations of foreign cars right now means that you might pay slightly more up front, but you’ll probably get it back when you resell.
if you’re thinking of buying a new car with or without discount, a good idea is to try to figure out how much they typically depreciate compared to their other competition. i’m not saying that the discounts aren’t worth it. it’s just something to keep in mind.
Heard at a US Car delaership…
“sure, we can discount your price, and give you a rebate, all at 0% intrest what a great deal”…all while knowing the buyer will be “upside down” on their loan the second they pull out of the lot unless they gave 40% down…then they are only “upside down” on their money skills.
With these deals (where the price of the car is fixed), the only way a dealer can compete with another dealer is on what is offered on the trade in. We always get A Plan pricing on Fords so we have learned to go to a couple dealers when we want to buy to see who gives us the best deal on the trade in and go with that dealer.
“I pressed and pressed and finally cornered lowly salesman who said, and I quote “we have to make money somewhere”…nice dude, like I’ll EVER go back there.”
Doesn’t GM, Ford, et al reimburse the dealers for the employee discount? if so, sounds like your dealer was feeding you a line and making an extra 2,500 in the process.
yeah, when they’re factory-directed discounts, the mfr basically gives the dealer the money back. can you imagine if the dealship had to pay full price and THEN discount it below their actual cost? dealers pay about 2% less than msrp on cars, so when you have a 3 grand discount on a 20 grand car, there’s no way the dealer is financing that themselves no matter what they tell you.
the employee discounts are actually really good for a dealer in the short term because they get to give everyone a deal without haggling and still make their profits. if there is no discount people have the tendency to want to haggle to get the price down, which cuts into dealer profits.
however long-term profitability can suffer because the mfr is making less on each unit and you can’t run a business giving discounts forever. it also begs the question - if they need to give a discount to move the car, what is wrong with it?