Fifty Shades of Green…How Much Is the Car You’re Buying Really Worth?

http://www.AutoSaver.com by Kimberly Ann

When purchasing a vehicle, most consumers are looking to get the most bang for their buck.  We search by model, mileage, year and some people want to have a certain color…but ultimately we are looking for the best car we can get within our budget.  And regardless of what our budget may be, we should always know how much the car we’re buying is really worth.  Let’s face it, the closer we can purchase a vehicle at ‘near wholesale pricing’, the less we lose when we turn around and sell that vehicle down the road.

There are numerous guides a consumer can use to validate the price a dealer is asking.  Understand, one guide is sure to produce a value different from another.  To name a few:

Kelley Blue Book

Edmunds

NADA Guides – National Auto Dealer’s Association

VMR

Parker’s (UK)

These guides list a vehicle’s base retail value, but in order to obtain a more accurate figure, you also need to factor in options, as well as, the vehicle’s mileage and con­dition.  Black Book provides more auction-centric (wholesale) data.  Originally a printed guide for dealers only, their pricing data is gathered at auto auctions across the country and is updated weekly.  So, the values you see on Black Book are ‘pre-auction’ values.   Sites like http://www.AutoSaver.com, a near wholesale, used vehicle website, use Black Book’s data for their pricing validation.

Comparison shopping is another great way to establish your vehicle’s value.  Get an accurate idea of what a certain make and model may be worth by checking to see what similar cars in your area are selling for.  Yes, area does play a factor in the value of a vehicle.  A vehicle driven in a warm climate year round yields a higher value than the vehicle driven in snow (and salt) 6 months out of the year.

Last but not least, something I definitely take into consideration when I car shop, is my time.  It is invaluable to me…I can’t put a price tag on it.  I have no desire to go to a car lot without my research in place.  We have all the tools we need, right at our fingertips.  The question is, how much time are we willing to spend researching all the guides, trying to determine what our car is really worth, not to mention the time we spend on-line shopping for that car?  Try to utilize the websites that incorporate both the shopping and value guides to create more of a one-stop-shopping experience.  Knowledge is power…and penny saved is a penny earned.

http://www.AutoSaver.com

It's Always About Price (Don't Let Them Fool You Into Thinking It's Not)

I was talking to an automotive consultant the other day and he was talking about what car shoppers are looking for these days. He said that you may be surprised to know that they're number one concern is not price, but reputation of the dealer and customer service. I agree with this to a point, but when I personally conduct a vehicle search online I don't use the key words "dealer with best reputation" or "best customer service", etc. I search for my ideal vehicle by make, model, year, and mileage first. Then, when I have found the best choices within my area I filter by "price" (lowest to highest).

Now, during this process I never once searched for the most reputable dealer, nor did I search by greatest customer service or most awards received. I want a straight forward and transparent price on the vehicles within my area. That's my primary concern (for the moment). Only after I find my top prospects (vehicles that I deem to be a good deal) will I contact the dealer. You see, I already know that I am getting a good deal, so there's no need to start the haggling process. No haggling means no stress, right? You're dang straight!

If the vehicle's history is clean and the price is the best possible price (validated by NADA or KBB), I already know going into the dealership that I am comfortable with the vehicle. I have verified that the price is competitive and mitigated most of my initial risk, therefore customer service, hot coffee, a nice waiting room and the wall of fame doesn't make any difference to me. I want to get in and get out.

E-Drive Autos provides the intelligent search tools that every consumer needs to make an informed decision on a vehicle BEFORE they step foot onto a car lot. Call me crazy, but this is very simple to me. Why does the industry complicate it?

Aaron Brinsko, VP of Sales
E-Drive Autos, LLC

Contact Aaron at aaron@edriveautos.com.

Why Do Dealers Still Operate From A Disadvantage When it Comes to Wholesaling? Part 2

I was speaking with a GM of a large franchise store yesterday and he was telling me that sales are up and cars are bringing premiums at dealer auction. He went on to say that his total wholesale losses have decreased significantly overall, but the dealership still inccurs thousands in depreciation losses every month.

So, I asked "what about gas prices"? He replied, yeah. We are having trouble moving our SUV inventory and even while overall auction prices are up, prices for fuel-sucking vehicles are actually down. What does this mean? Simple, if you use dollar-cost-averaging across his entire wholesale inventory, you will find that the money he's generating on clean late model, fuel-efficient vehicles is diminished by the lower prices brought at auction on the trucks and SUVs.

The moral of this story is: Markets are cyclical in nature, and although dealers are having success from one area of their business, chances are they may be suffering from hidden costs and depreciation associated with off-makes, odd-inventory and low margin trades.

John "Derek" White
EDrive Autos, LLC

Follow me on Twitter: www.twitter.com/dittocars

Why Do Dealers Still Operate From A Disadvantage When it Comes to Wholesaling? Part 1

The wholesale business is much like the Forex trading market. Many wholesalers operate like they are in the Wild West. Some don't even use a computer - instead opting for a cell phone and Rolodex. These "quick flippers" are not in the high margin business, but look for a smaller profit over a very short amount of time. For example, wholesalers in many cases will have a car sold before they even pick it up!

The typical margins that the average wholesaler targets is somewhere between $200 and $500, but many make as much as $1,000 or more. Where does this profit come from? The dealer. Dealers who sell their older units to wholesalers are basically trying to get out of the vehicle for what they originally paid, plus reconditioning expenses, floor plan fees, etc. In many cases, this doesn't happen. Who wins in this case? You guessed it - the wholesaler!

What if a dealer had more options for monetizing their wholesale vehicles? Would he sell the same amount of cars to the wholesaler? Probably not. What if the dealer could access a vast market of 1 million wholesalers or more within a 7-10 day period? He would more than likely move his wholesale inventory faster and with less hassle. Now, here's where it gets interesting... what if the dealer could sell his "added-value" services such as warranties and financing on every wholesale vehicle to this vast market of wholesalers? Essentially, the dealer would stand to make more profit per vehicle through "back-end" sales and thus reducing his wholesale losses, correct?

Stay tuned...

John "Derek" White
E Drive Autos, LLC