PDA

View Full Version : Dealers refusing to take Trucks and SUVs as trades..


XDCX
06-13-2008, 08:40 AM
There have been an increasing number of reports that some dealers are refusing to take trucks and SUVs in as trade vehicles.

Automotive News indicated that their casual survey revealed that 10% of the dealers they polled were no longer accepting trucks and SUVs as trade vehicles.

What is your store's policy as it relates to ACV on a truck or SUV trade?

How far back of book do you ACV the vehicle to protect the store?

SHACOS
06-13-2008, 08:46 AM
Interesting.

Our company policy on valuation on used vehicles in general is bound by the accounting guidance set out for this since we are a public company.

We must value at lower of cost or market. With the market being so low right now on trucks and SUV's, the trade in values for our customers our suffering. I'm seeing more of customers who won't trade their SUV's or trucks because they don't want to take the hit. Although, there are always those customers more than willing to roll $20K of negative equity into a new rig.

The worst I've seen this week: rolling $25K of negative equity on a 2008 Dodge Ram 2500 into a $50K 2008 Dodge Ram 3500. The reason for this: diesel gets better gas mileage. :)

dealer3100
06-13-2008, 10:49 AM
Cant say that we are refusing, but the consumer is awfully confused these days.

Most customers have internet access and think they know what their trade is worth. But we have many walking in thinking their 05 Yukon is worth $17,000 because they did their research with KBB. Unfortunately it is probably worth $10,000.

We are selling some big utes and Trucks but you have to justify the price to the retail consumer. Some great buys in those vehicles now. Just purchased an '07 Ram Quad with a w/s book of $17,150 for $9500 at a closed Chrysler sale.

XDCX
06-13-2008, 11:25 AM
Interesting.

Our company policy on valuation on used vehicles in general is bound by the accounting guidance set out for this since we are a public company.

We must value at lower of cost or market. With the market being so low right now on trucks and SUV's, the trade in values for our customers our suffering. I'm seeing more of customers who won't trade their SUV's or trucks because they don't want to take the hit. Although, there are always those customers more than willing to roll $20K of negative equity into a new rig.

The worst I've seen this week: rolling $25K of negative equity on a 2008 Dodge Ram 2500 into a $50K 2008 Dodge Ram 3500. The reason for this: diesel gets better gas mileage. :)

Holy smokes - $25K of negative equity - that's insane. :eek: Let's hope that he has GAP coverage on his new truck.

Concerning Lithia, it will be interesting to see how big the Used Car write down is when they report earnings. I've got to think that many of the large trucks and SUVs have taken a 10%+ reduction in wholesale value over the past couple of months.

XDCX
06-13-2008, 11:32 AM
Cant say that we are refusing, but the consumer is awfully confused these days.

Most customers have internet access and think they know what their trade is worth. But we have many walking in thinking their 05 Yukon is worth $17,000 because they did their research with KBB. Unfortunately it is probably worth $10,000.

We are selling some big utes and Trucks but you have to justify the price to the retail consumer. Some great buys in those vehicles now. Just purchased an '07 Ram Quad with a w/s book of $17,150 for $9500 at a closed Chrysler sale.

So you just bought a 2007 Ram Quad for almost $8,000 back of book - WOW. That's an awesome deal - but now you have to factor that price level into your ACVs when your deskmen are doing a deal. In the old days we used to think we we OK if we were $1,000 - $1,500 back of book.

This is a tough time to be in the car business. The mortgage mess, the gas crisis, rising unemployment and record low consumer confidence levels. Let's hope that this is as bad as it gets.