COMMENTARY: News flash — Trade values are no longer a secret!
There are so many ways for a consumer to get a realistic expectation of what their trade-in is worth, and yet there are still those dealers who try the proverbial lowball and “steal the trade.”
Why? The risk of alienating the customer can’t possibly outweigh the potential rewards.
Trade-ins literally outperform car purchases 2-to-1.
The NADA Data 2022 Annual Report shows that, among franchise dealer sales from used-inventory sources, trade-ins on new or used vehicles accounted for a combined 65.4% of all used vehicles sold.
Not to mention the fact that when dealers take a trade-in, it means they sold something!
What’s the point? Embrace the trade-in — don’t fight it or try to outsmart it.
Every dealer is different and there are several ways of appraising vehicles. Still, to this day, the most effective way to win trades and increase your look to book is by doing an “active” trade appraisal that includes the customer in the process.
By including the customer in the trade-in process, you allow them the opportunity to sell you their vehicle. In today’s retail environment, you need to know as much about the vehicle as possible so you can tell the story to prospective buyers when you put it on your lot.
By including the customer in the process — and eliminating the salesman —– you take the responsibility of the trade amount away from the salesperson.
Now, when it comes to the actual evaluation and putting a number on the vehicle, don’t be so quick to look at all vehicles the same based on the market average. NO TWO USED VEHICLES ARE THE SAME!
It is important to know how many of this particular year-make-models are in your market. The real influence however is exactly what makes this vehicle worth more or less than the market average. You see, to hit the average, you need to lower the higher numbers and raise the smaller numbers. That makes you wrong two out of three times.
Now look at what vehicles deserve higher evaluations: Damage-free, one-owner cars that have been well-maintained, especially if its HOMEGROWN at your dealership – as in, you sold it new and it’s been taken care of by your service department.
It’s a fact: What sells well new sells well used. Why would you lower this evaluation just to hit average? This is your best inventory, and it’s coming from your best customer. Step up and put your car deal together right from the “first pencil.”
Think about it this way: For every vehicle you trade for, that’s one fewer vehicle you have find (and buy) elsewhere. Remember: Trades outperform purchases 2-to-1.
Just The Fax
Robert Grill is the Carfax Senior Partner Development Manager