Customers were buried in their trades 48 years ago too....

[XDCX]

I attended a car show this past weekend and when I saw the following Sales Contract I smiled and figured I had to add a thread to the forum:

As you can see from the area I highlighted with the red box, the customer was granted an allowance of $850.00 for his used 1965 Chevrolet but the vehicle had a payoff of $1055.66.

That's proof that our industry has been dealing with negative equity for at least 48 years and probably a lot longer than that.

[57years]

I just have to diverge from your "negative equity" topic for one post: We used the same invoice form before 1953. I have one on my desk from a car my Dad sold in August 1953. He bought the car back in the early '60's when the customer decided to quit driving. I still own the car....

[XDCX]

Originally Posted by 57years

I just have to diverge from your "negative equity" topic for one post: We used the same invoice form before 1953. I have one on my desk from a car my Dad sold in August 1953. He bought the car back in the early '60's when the customer decided to quit driving. I still own the car....

Life was certainly simpler back then....

Just think, no rebates, no program codes, no dealer cash, significantly less disclosure requirements, etc.

I'm betting that the other dealer tasks like ordering cars, allocations and floorplan reconciliation was easier back then than it is today too.

[steve_biegler]

Originally Posted by 57years

I just have to diverge from your "negative equity" topic for one post: We used the same invoice form before 1953. I have one on my desk from a car my Dad sold in August 1953. He bought the car back in the early '60's when the customer decided to quit driving. I still own the car....

I hope it was a Corvette!

[XDCX]

Originally Posted by steve_biegler

I hope it was a Corvette!

A first year Corvette would be an awesome car to own.

I wouldn't be surprised if the Corvette is the most highly valued/sought after car from 1953.

[57years]

No boys, It was an old lady school teacher's car...Green 4 door sedan. Hell, the interior still smells of the horsehair seat stuffing!

Actually, I disagree on the most highly "sought after", I think it is a 1953 Yellow Chevrolet Convertible. The "valued" side of that would be the Corvette, but only because of the hype that surrounds the "blue flame 6."

[DealerEx]

We need to get Possum to scan and post a sales invoice that's in a glass display counter at his former dealership from back in the early years.... not sure but think maybe from the 1930's. It's a 5" x 7" invoice that simply says:

New Car____$xxxx.xx
Old Car_____( xxx.xx)
Total_______$ xxx.xx

Nothing else on it if I remember correctly. no VINs, no taxes, no license and registration, no inventory/property tax, or anything else. The oldest family owned dealership in Texas until June 9th of 2009. One of the 789.

[XDCX]

Originally Posted by 57years

I just have to diverge from your "negative equity" topic for one post: We used the same invoice form before 1953. I have one on my desk from a car my Dad sold in August 1953. He bought the car back in the early '60's when the customer decided to quit driving. I still own the car....

I just noticed the Reynolds and Reynolds marking on the left side of the invoice - I bet the majority of dealers from that era were using that form.

[XDCX]

When I look at that sales contract I think it's a representation of the "Good old days" of automotive retailing....

• The car is being sold on a two year trade cycle
• The length of financing is only 36 months
• The sales tax and licensing, as a percentage, seem very low
• The financing with GMAC was written at 12% APR

While it looks like the dealer gave up all of his gross with the $578.85 discount, I wonder how much he made on dealer reserve?

[DealerEx]

Originally Posted by XDCX

When I look at that sales contract I think it's a representation of the "Good old days" of automotive retailing....

• The car is being sold on a two year trade cycle
• The length of financing is only 36 months
• The sales tax and licensing, as a percentage, seem very low
• The financing with GMAC was written at 12% APR

While it looks like the dealer gave up all of his gross with the $578.85 discount, I wonder how much he made on dealer reserve?

Given the amount financed, if he was working on a 3 point spread, he might have made $100-150 on the finance reserve. But there was money made on the sale too...that 67 Chevy coupe didn't sticker for $3550 unless it was a Vette, so there was probably at least a $1000 mark up in that number, so even with the discount it made $400+. Also the big profit was made on the trade-in like always. The 65 probably sold for about $2500+ new 2 years prior so he's traded for it at a third of what it sold for. He can price it for 1/2 the real sales price of the new 67 model at $1500 and make $600+ on the trade side...75% margin on that end.

[DealerEx]

Actually I may have been wrong on the price of the new 67 Chevy. I thought it was a Chevelle, but that vin is for a 2 dr Impala V8 Hardtop V8 Coupe and the msrp on it shows $2880, so tack on some options and the $3500 was probably right. That surprises me, because when I started selling in 1976, a new Monte Carlo coupe trimmed out with Landau roof, cruise/tilt, AM/FM/cassette and wire wheels stickered for just under $5000. I would have thought the prices went up more than $1500 in 10 years. In the next 5 years from 76 to 81, the MSRP almost doubled with price increases announced each quarter. In 76 a loaded Silverado 1/2 ton sold for $4700 and in 1981 I sold the first one over the $10,000 mark to one of my high school buddies.

[57years]

Originally Posted by XDCX

I just noticed the Reynolds and Reynolds marking on the left side of the invoice - I bet the majority of dealers from that era were using that form.

We were less than 50 miles from the Reynolds and Reynolds home office. All the Hotshots were familiar to us. Upon the development of electronic dealer everything, we were a pilot dealer (one of 20). Made no Difference to Obama: censored:..."Off with their heads!"

[mr4t60e]

Adjusted to 2015 dollars, the customer was making a $836 a month car payment and eating approximately $1500 on the negative equity.

Something to think about for those who claim cars are getting increasingly unaffordable.

[steve_biegler]

DealerEx made me laugh. I remember the first Wagoneer Limited that we got in 1978 listed for a couple hundred over 10,000.00, and I remember telling my Dad, "five figures, how are we going to sell these things?" HA. Now I have lawn mowers that cost more than that! Thanks for the laugh and great memories of a conversation with my dad, DealerEx.

[XDCX]

Originally Posted by DealerEx

Given the amount financed, if he was working on a 3 point spread, he might have made $100-150 on the finance reserve. But there was money made on the sale too...that 67 Chevy coupe didn't sticker for $3550 unless it was a Vette, so there was probably at least a $1000 mark up in that number, so even with the discount it made $400+. Also the big profit was made on the trade-in like always. The 65 probably sold for about $2500+ new 2 years prior so he's traded for it at a third of what it sold for. He can price it for 1/2 the real sales price of the new 67 model at $1500 and make $600+ on the trade side...75% margin on that end.

Thanks for the information.

I know you corrected your assumption about the selling price in another post but I'm still curious if dealers marked up cars over the Monroney in the old days? I always thought the "ADP" (Additional Dealer Profit) stickers were something that didn't arrive until the mid-80s.

Also, I thought the 12% APR seemed high - maybe I'm just used to the low rates we've enjoyed for the past decade or two.

On a final note, great comment about the opportunities for gross with the used car. There's no question that sometimes the most profitable part of having a new car franchise is the access you get to great trade-ins.