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What are the economics of a used car lot?

Posted on 8/12/16 at 3:02 pm
Posted by baybeefeetz
Member since Sep 2009
31635 posts
Posted on 8/12/16 at 3:02 pm
Say I go to an average used car lot to dump a 2010 ford fusion. What kind of profit margin are they looking for on a car like that? Put another way, how much am I paying them to sell the car for me? Or is that not the right way to look at it?

This post was edited on 8/12/16 at 3:09 pm
Posted by LNCHBOX
70448
Member since Jun 2009
84081 posts
Posted on 8/12/16 at 3:12 pm to
quote:

Put another way, how much am I paying them to sell the car for me?


The last car I traded in is listed for $1995 more than the trade value I received and the dealer matched the lowest price I found on an equally equipped model of the vehicle I bought. They didn't have to do any reconditioning to mine (just had new tires put on and it was in as good of shape as it could be in). This was a big new car dealer though. On the used lots they probably like to have a bit more margin than that.
Posted by baybeefeetz
Member since Sep 2009
31635 posts
Posted on 8/12/16 at 3:15 pm to
Thanks, boss. My car has a little hail damage, so I'm probably screwed either way. But it does only have like 38k miles on it.

Posted by LSUFanHouston
NOLA
Member since Jul 2009
37080 posts
Posted on 8/12/16 at 3:18 pm to
quote:

But it does only have like 38k miles on it.


So like 5K a year? I'd try to private sell that.
Posted by baybeefeetz
Member since Sep 2009
31635 posts
Posted on 8/12/16 at 3:28 pm to
Yeah, I might try to do that. It's a great car. It's just not good in snow. Actually, it's fine in snow, but I get stuck in my own driveway if we get a few inches, because it's on an incline. I wish I could just trade it to somebody for the same car with AWD and a little extra cash.
Posted by Mr.Perfect
Louisiana
Member since Mar 2013
17438 posts
Posted on 8/12/16 at 4:41 pm to
quote:

My car has a little hail damage, so I'm probably screwed either way. But it does only have like 38k miles on it.


Low miles. Are you selling it because of cosmetic reasons? If so you know they are going to face resale issues for the same.

Posted by TheHiddenFlask
The Welsh red light district
Member since Jul 2008
18384 posts
Posted on 8/12/16 at 5:02 pm to
It varies wildly, but the money is made on the financing of the cars, not the spread.
Posted by Reubaltaich
A nation under duress
Member since Jun 2006
4964 posts
Posted on 8/12/16 at 6:22 pm to
I have always heard that the standard mark-up on a used vehicle at car lot is roughly 35%.

If you are trying to 'trade-in' your vehicle, you are not going to get top dollar. They are going to try to low-ball you as much as possible.
They are trying to make as much money as possible.

Now if you have a high-in-demand vehicle, most will negotiate with you. But if you an everyday, run of the mill vehicle, not so much.

You may get a better price trying to sell to an individual.

I think Craigslist now charges a fee to list your vehicle on their site(I may be wrong on this one). You may want to check out some other sites. I would be interested if anyone knows of any. I just learned of cargurus.com I would guess they charge a fee to post your vehicle.

Put a sign(s) on your vehicle and market the heck out of it.

Good luck.
Posted by Twenty 49
Shreveport
Member since Jun 2014
18752 posts
Posted on 8/13/16 at 9:02 am to
I'd be surprised if a used car lot offered you anything close to reasonable to buy your car. Those guys buy most of their cars at dealer auctions and from the trades that the new car dealers take in.

You're probably better off trying to private sell, or trade in if you don't want that hassle but are willing to take a hit on the price.
Posted by carguymatt
Member since Jun 2015
538 posts
Posted on 8/13/16 at 5:04 pm to
Prices on that kind of stuff right now is very low at dealer auction and what an "average used car lot" (whatever the frick that means) is going to do is look at how much could they buy the same car for at auction, if they have room for or a need for it right now at all. Most likely be looking at $3500 to $4500 for a dealer to buy it with those miles. That's if it's the S series.
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