Went to a dealer for trade-in and Shocked by Depreciation!

Lkma on 07/09/2015 - 19:41

Hi Wonderful People,
I have a Honda CR-V series 2 (current model ) top of the range VT-I, bought in Dec 14 , arguably one of the first ones delivered in Brisbane, I paid $43k drive away.
Almost 9 months later I went to a couple of car dealerships on Gympie road today to see what it's worth now ( was hoping to trade in for a slightly used 7 seated).
I was offered $25k at one place and 26k at the 2nd. Now I know depreciation on the new cars especially in early years is quite something but this is nearly 20k we are talking about - strictly speaking 40% of the original value!! I know Hondas haven't been doing great but losing 40% in 9 month does not sound right!

What are your thoughts?

Automotive

Comments

  • dylanando on 07/09/2015 - 19:44
    +1

    You sure they didnt mistake it for a holden?

    • [Deactivated] on 07/09/2015 - 20:36

      LOL.

  • ilsan0 on 07/09/2015 - 19:45
    +9

    Dont bother with dealers. Put it on car sales and sell it private.
    I was offered $19k for my 2011 Cx-9

    Sold it private last month for $31825

    • kma on 07/09/2015 - 20:04

      I get it that they have to make a living for them selves, running a shop with all those costs isnt exactly cheap but I dont think its fair with the customers.

      I haven't but my car on carsales yet so I dont know what the 'real' price might be but i was genuinely shocked.

      • ilsan0 on 08/09/2015 - 15:02

        Did you pay cash for the car or on finance?
        My car was on lease and I owed the lease company $38k when i put it for sale.

        Took me 6 months to sell but I dropped the price every month on whatever I paid to the company which was circa $1100.

        When I sold the car, I was out of pocket $675.

        So not bad considering all things.

        • kma on 08/09/2015 - 19:45

          It actually id a lease vehicle and I pay roughly $1100 a month too

        • ilsan0 on 08/09/2015 - 21:07
          +1

          @amk:

          How much owing on the car? Advertise it for that much. Pay for premium ad and drop down the payment you make every month.

          Mine took 6 months but like I said out of pocket by $600 odd.

  • suchislife12 on 07/09/2015 - 20:04
    +4

    Dealers have insane profit margins on trade in cars. There is no point trading in a newish car like yours…best off selling privately. I would only trade in an old POS car because they would be difficult to sell whereas your new Honda with dealer warranty would sell within a month at the right price. Out of curiosity is there something wrong with the car that's making you want to sell it.

    • kma on 07/09/2015 - 20:15

      I think you might be right, i would have no idea on the profit margins.
      No actually nothing wrong with the car itself, i was just hoping to get a seven seater now (or possibly a slightly used vhecile of the same size in prestige brand e.g 2013 X3 or Q5)

      CR-V itself isn't a bad machine, a bit low on power though (which doesn't bother me much). Its got pretty much every feature I could think of - so much more that some things are duplicated (like multimedia touch screen is duplicated by another non- touch screen, shows the same stuff as the main touch screen, and some of these items are even (again) shown near the speado). It gets annoying haha. Other than that, its roomy. No reliability issues, cheap to run (i am doing 7.7l/100km in mostly-city driving, which i think is pretty good)

  • what on 07/09/2015 - 20:53
    +1

    Definately sell it through Carsales.com

    http://www.carsales.com.au/cars/results?q=%28%28%28Service%3…

  • cloudy on 07/09/2015 - 21:07
    +1

    As others suggested, sell it privately. Though I don't recommend carsales. Friend out his Audi on it and 4 months later, and 5 price drops it still hasnt sold. It's the lowest cost Audi for the same model for the same age on carsales too.

    He actually got just as many enquiries on gumtree as he did on carsales. Not sure if it was worth a hundredish he paid.

    • what on 07/09/2015 - 21:11

      I sold my last car on carsales and it did take me about 4 months to sell. I did not mind that though because my new car was waiting in the showroom with a big ribbon around it. The dealer was good, he was happy to wait for me to sell my car before I was expected to pay for my new car.

      • resubaehtgnolhcs on 07/09/2015 - 21:13
        +3

        Gotta have a lot patience on car sale websites and gumtree etc - you get a lot of tire kickers and low ballers! Which I guess is where you ask yourself am I prepared to sit it out for months on end and have the car depreciate further or do I bite the bullet and accept the $5k plus I will lose if I trade it in…?

        • what on 07/09/2015 - 21:19

          You are so right.

    • kma on 07/09/2015 - 21:31

      With gumtree i have noticed that a lot of enquirers are pure time wasters. They will ask you a 20 thousand questions and in the end will not show up. I have to say i have not sold any cars on gumtree but little items like mobile phones. It eventually was sold but the amount of bullxxxt enquirers that you get is appalling, most of those questions could be answered by reading the advertisement correctly anyway.
      Not saying Guntree in general is like this but that was my experience.

      I tired on carsguide.com.au but don't think a lot of people use it.

  • resubaehtgnolhcs on 07/09/2015 - 21:12
    +5

    According to Redbook (which is like an industry guide to car prices - similar to Glass's guides), a 2014 CR-V VTi-L (auto) has a trade in value of between $25800-$28900 and travelled somewhere between 15000 - 25000kms. Similarly, the private guide price on the car is $31000-$34100.

    So it looks like the dealers (naturally) are offering the lower end of the trade-in guide. With some haggling and depending on the condition of your car, the kilometres travelled, how much you are prepared to pay on the next car etc, you can get to the $28k mark, but this will still be considerably below what you could get if you sold it privately.

    • kma on 07/09/2015 - 21:38
      +1

      I think this here is the most researched comment of all and i also think you are spot on with the conclusion.

    • spackbace on 08/09/2015 - 10:50

      I wish people realised that Redbook isn't actually something we use.

      Anybody valuing a car bases it on market value and what they have to spend on the car, and then the profit margin.

      Redbook isn't even used. Not even once.

      Now $25-26k quotes - They very well could be undervaluing the trade to give them some more profit, so maybe $1k or so. Then most dealers have $3k overheads on a trade (internal costs, advertising, detailing etc). So maybe that's around $30k before they see profit.

      Now the problem could be the market in Qld for Hondas. They're not a big seller typically, and they might be factoring that in. Sure, you might see your car advertised for high 30s, doesn't mean they're selling for that.

      Try this Carsales link

      That paints the full picture. Australia wide from 2014 onwards. I already see a 2015 model, demo from a dealer for $38,888 drive away in Vic.

      • kma on 08/09/2015 - 20:19

        I know it's not something that one would refer to while selling a vehicle but my understanding is that the estimated prices in Redbook would factor in the history of similar spec vehicles.

  • Ughhh on 07/09/2015 - 21:34
    +2

    They buy it off you for $25k and will probably sell it for $30-40k maybe. That's how second hand dealers, including places like cash converters work.

  • RockyRaccoon on 07/09/2015 - 21:50
    +2

    Problem is always if you sell in first year wheer depreciation takes the biggest hit.

    Plus you bought one of the first units, so guaranteed you wouldn't have got any discount.

    The dealer can make $5K minimum on a new car, so do some math.

    Now dont get confused with gross profit vs net profit. He has overheads to cover, fancy showroom, finance on stock held, staff etc. Dont believe he makes no money on cars like the salesman says, He wont stay in business unless he makes money.

    He sells it for $43K he pays $38K (and probably even lower)

    Now you drive it off the lot, its used, a buyer isnt going to pay $43K since its used and the dealer can buy a new one for $38K.

    He will have to discount that car to encourage someone to buy it and he still wants his $5K profit. So he will sell it for $38K so 38K - 5K = 33K and thats for a car just off the lot.

    Yours is now a year old, the guide price as schlong says is $31K for private sale. The dealer wants $5K for his operating costs and profit, so that's $26K - thats very similar to the trade in price on Redbook

  • tonyjzx on 07/09/2015 - 22:47
    +2

    $43k is ridiculous for a CRV. Top of the line models suffer the highest depreciation. Better off surfing carsales for real asking prices.

    • Charity on 08/09/2015 - 10:07

      I love top of the line cars and buyers. Love them. It is what the car is meant to be.

      Having said, that they suffer the most in resale value. All of those lovely options are worth next to nothing second-hand.

      But, 2nd hand buyers (like me) only go after these models.

      Just make sure to do all the maintenance and tick all the boxes on your next new car. I will be waiting for it. hehe :D

      • kma on 08/09/2015 - 10:13
        +1

        Lol it's a good point - may be I should be looking for a year old top of the line for my next car - if I'm able to sell this one

  • Live Dimension on 08/09/2015 - 12:03

    Forget dealerships for such a new car. The main reason for such a big hit is that that car's value is still dropping like a stone due to it being so new. What happens if they are unable to sell it for 5 months? They'll make a huge loss trying to offer you a reasonable price.

    If you want to have a big read into how things go on look at https://forums.whirlpool.net.au/forum-replies.cfm?t=2255054 I also suggest you post at whirlpool about this - there is a large amount of people who have some experience in this. Most people would be surprised how little profit there is in selling and buying cars for a dealership - there is a lot of expenses in it. Most make their bread and butter with repairs and service. It's so tight that many car sales are actually sold at a loss for many reasons.

    A car is worth what someone is willing to pay. Assuming it's in top condition, spend an hour or two and go through carsales etc. Write down (or better yet, put into a spreadsheet) all the prices you see for your car of similar model and age adn km. Since it is so new, there won't be many, but you can look around at similar cars as well. That'll be the baseline of roughly how much you can sell it for.

    Sell it privately since it is such a new car, it's the only realistic way to sell a high end new vehicle for at least a manageable loss.

    Better yet - why not keep the current car? Going from brand new to slightly used - both cars are going to cost a small fortune in depreciation combined.

    • kma on 08/09/2015 - 20:17
      +1

      Thank you live dimesntion for such a detailed reply. I guess the best I can do is to keep the current car for now and may be put it on car sales. It could take 4 to 6 months going by posts here which should be OK..

      • Live Dimension on 09/09/2015 - 09:08

        No problem. You can always put it for sale on more than just car sales, like local notice boards, try an ad in the classifieds, etc. Being such a new car, while the depreciation is a hit there are always people looking for like-new cars that have lost a lot of their value but other then that are pretty much still from the factory. How many KM has it done?

        Since you live in the city there are no shortage of people willing to go for cars like this.

        • kma on 09/09/2015 - 18:05

          It has done 12500km

  • goosegog on 08/09/2015 - 16:57

    I Would like to ask some of you knowledgeable bargainers out there on the resale of my car. It is a 1979 Mercedes 280 SLC ( coupe obviously, not a soft top ). Only 10,500 ever made. Low mileage, reasonable condition - some rust on the drivers side front wing. I have owned & loved this car for over 15 years- paid $18,000 for it then. Runs like a dream & boy can she go when needed ! Unfortunately she doesn't get the use she should , so needs a good home where her beauty & performance will be appreciated. Problem? - Don't know where to advertise & also no idea what price, as they seem to be all over the place for different models. Any suggestions from any of you in the know would be greatly appreciated.

    • spackbace on 08/09/2015 - 17:08
      +1

      Shannons auctions could be worth a look-in

      http://www.shannons.com.au/auctions/upcoming/

      Oh except you're in Perth, so a little more difficult lol

    • fillit on 09/09/2015 - 11:09
      +1

      It's a more unique collectors car, your best bet is to advertise on a few classics or classic Mercedes forums.

      • goosegog on 10/09/2015 - 15:31

        Thank you & I will look into it. It's such a shame to leave this gorgeous, elegant car just sat @ home doing nothing ( I can almost hear her growling with frustration ! )However taking her out to park @ a shopping centre where other drivers don't care whose car they damage with their car doors or shopping trolley makes me cringe - so it's either a regular run around the area or let her go to a new home where the owner will take care of her & maintain.

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