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Old 07-10-2008, 09:10 AM   #1
XDCX
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Question 1 in 4 Customers have Negative Equity?

I was catching up on some of my back-issues of Automotive News when I saw a stat from Edmunds.com that indictated "... one in four people who traded in a vehicle in March was upside down - owing more on the vehicle than it is worth."

The average amount of the negative equity was $4,342.

Is it just me, or does the 1 in 4 number seem incredible low? I would think that most stores deal with negative equity on at least half of their trades.

Do you agree with the 1 in 4 stat? What percent of your trades have negative equity?
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Old 07-10-2008, 09:36 AM   #2
darhaley01
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Because my dealership is in SE MI we see more negative equity deals than most. I would say about 70% of my lease deals have some type of negative equity, overmiles, remaining payments from previous lease or damage on the vehicle they are turning in. On my retail deals I would say the amount is about 40%. We have had more individuals trade their vehicles in sooner so that they can capitalize on the lifetime warranties that Chrysler is offering on their vehicles.
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Old 07-10-2008, 09:55 AM   #3
SHACOS
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1 in 4 seems really low. In my experience it's more like 3 in 4 have some sort of negative equity.

Maybe they are using old data from last year?
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Old 07-10-2008, 11:54 AM   #4
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Quote:
Originally Posted by SHACOS View Post
1 in 4 seems really low. In my experience it's more like 3 in 4 have some sort of negative equity.

Maybe they are using old data from last year?
That's exactly what I thought - I was thinking 3 in 4 would be buried.

I re-read the article and verified that the Edmunds data is for March, 2008. The article also noted that the percentage of customers with negative equity peaked in September, 2003 at 33%

Maybe I've spent too much time working with Domestic Dealerships but I think most deskmen would love to have 75% of their trade customers have equity in their vehicles.
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Old 07-10-2008, 07:49 PM   #5
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Maybe they did a survey of BMW stores?
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Old 07-11-2008, 08:21 AM   #6
XDCX
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Maybe they did a survey of BMW stores?
That would explain it...

You've got to think that any dealer/manufacturer that was big into leasing over the past several years has done a HUGE favor for their customers. With the exception of some small/fuel efficient vehicles it seems like most used cars/trucks are taking a hit on wholesale values.

It seems like BMW has always done a good job with leasing.
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